R-W Service System, Inc. v. U.S., R-W

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore BAZELON, Chief Judge, and TAMM and WILKEY; TAMM; BAZELON
Citation580 F.2d 487
PartiesSERVICE SYSTEM, INC., Petitioner, v. The UNITED STATES of America and the Interstate Commerce Commission, Respondents, Associated Truck Lines, Inc., et al., Intervenors.
Docket NumberR-W,No. 76-1538
Decision Date13 April 1978

Page 487

580 F.2d 487
188 U.S.App.D.C. 224
The UNITED STATES of America and the Interstate Commerce
Commission, Respondents,
Associated Truck Lines, Inc., et al., Intervenors.
No. 76-1538.
United States Court of Appeals,
District of Columbia Circuit.
Argued Sept. 29, 1977.
Decided Feb. 27, 1978.
Rehearing Denied April 13, 1978.

Page 488

Petition for Review of an Order of the Interstate Commerce commission.

Martin J. Leavitt, Northville, Mich., for petitioner.

John J. McCarthy, Jr., Atty., I.C.C., Washington, D. C., for respondent. Mark L. Evans, Gen. Counsel, I.C.C., Peter A. Fitzpatrick, Asst. Gen. Counsel, Mary C. Swann, Atty., I.C.C., Donald I. Baker, Asst. Atty. Gen., and Lloyd John Osborn, Atty., Dept. of Justice, Washington, D. C., were on the brief, for respondents.

Ronald J. Mastej, Detroit, Mich., for intervenors.

Before BAZELON, Chief Judge, and TAMM and WILKEY, Circuit Judges.

Opinion for the court filed by Circuit Judge TAMM.

Dissenting opinion filed by Chief Judge BAZELON.

TAMM, Circuit Judge:

Petitioner, R-W Service System, Inc. (R-W), appeals from an order 1 of the respondent Interstate Commerce Commission (Commission) dated April 27, 1976. 2

R-W possesses regular route authority 3 to transport general commodities between

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Toledo, Ohio, and points in Indiana, Illinois, and Michigan. Additionally, R-W has irregular route authority to transport general commodities between Toledo and all points within the state of Ohio. By combining its regular route authority and its irregular route authority at Toledo, Ohio, R-W is able to transport general commodities between Ohio and points in Indiana, Illinois, and Michigan. However, the commodities must physically pass through the "gateway" of Toledo. To the extent that a carrier's operations are thus "tacked," there is, of course, no underlying determination of public convenience and necessity upon which the extended operation is predicated. 4

By application of July 6, 1973, R-W sought a certificate of public convenience and necessity for irregular routes between all points in Ohio, on the one hand, and three Indiana points, 5 on the other. The matter was directed to Review Board Number 3 for disposition under the so-called "modified procedure." See 49 C.F.R. §§ 1100.45-.54 (1976). In its decision, the Review Board noted that the practical effect of R-W's proposal was elimination of the Toledo gateway. No. MC-55896 (Sub-No. 41), R-W Service System, Inc., Extension Additional Gateways, Doc. # 103 at 16; Joint Appendix (J.A.) at 268. Therefore, its analysis was directed not only toward traditional public necessity and convenience criteria, but also toward the now familiar gateway elimination criteria of Childress Elimination Sanford Gateway, 61 M.C.C. 421 (1952). 6

R-W's application was rejected on both grounds. No. MC-55896 (Sub-No. 41), R-W Service System, Inc., Extension Additional Gateways, Doc. # 103 at 15-25, J.A. at 267-77. R-W filed a petition for reconsideration. J.A. at 294-314. At this stage, R-W mounted essentially a two-pronged attack. First, it attempted to amend its application, arguing that the amended application met the Childress criteria. Second, it argued that certain expressed National Transportation Policy considerations 7 and regulations thereunder had not been applied to R-W, and it had therefore been subject to arbitrary, capricious, and discriminatory treatment. R-W's petition was denied by order of the Commission bearing service date of April 27, 1976. J.A. at 373.

It is the latter of the arguments which R-W emphasized in its petition for reconsideration that it urges most fervently on appeal. The basis of R-W's argument is that, by regulation, the Commission has allowed "gateways" to be eliminated where the bypass will save less than twenty percent of the mileage through the gateway in instances where two irregular route authorities are tacked. 49 C.F.R. § 1065 (1976); Ex Parte No. 55 (Sub-No. 8), Motor Common Carriers of Property, Routes and Service,

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(Petition for the Elimination of Gateways by Rulemaking), 119 M.C.C. 530 (1974). The Superhighway and Deviation Rules, 49 C.F.R. § 1042 (1976), were amended so that carriers tacking two regular routes could operate under a twenty percent circuity rule as opposed to the former fifteen percent rule. See 40 Fed.Reg. 24906 (1975); Ex Parte No. MC-65 (Sub.-No. 5), Petition for Enlargement of the Amount of Operational Circuity Reduction Permitted Under Certain Provisions of the Property Motor Carrier Superhighway and Deviation Rules, 121 M.C.C. 685 (1975).

R-W believes that, even in the absence of a promulgated regulation permitting a similar procedure for a carrier that combines regular and irregular route authorities, the same twenty percent rule should apply to its own petition. However, Ex Parte No. 55 specifically excludes from coverage situations where regular and irregular route authorities are tacked, 119 M.C.C. at 547-48, and the Review Board was cognizant of this in its decision. No. MC-55896 (Sub-No. 41), R-W Service System, Inc., Extension Additional Gateways, Doc. # 103, at 15 n. 4, J.A. at 267 n. 4. We cannot agree that the failure to apply this regulation, inapplicable by the terms of its own promulgation, is an abuse of discretion, nor do we believe that the failure to extend the regulations to carriers tacking regular and irregular routes is impermissible. See United States v. Florida East Coast Railway, 410 U.S. 224, 246, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973).

Finally, it is important to note that the Review Board did explicitly consider energy and efficiency policies as a factor in reaching its conclusion. No. MC-55896 (Sub-No. 41), R-W Service System, Inc., Extension Additional Gateways, Doc. # 103 at 25, J.A. at 277. Whereas, for obvious practical reasons, it is true that the Board is "precluded in ordinary circumstances from affording this factor any overwhelming weight in certification proceedings," Id., there can be no doubt that the Board was well aware of these policies when it rejected R-W's application, and its decision to minimize the weight given to this factor was quite conscious.

We affirm. 8


BAZELON, Chief Judge, dissenting:

The majority today sustains an action of the Interstate Commerce Commission (Commission or ICC), even though the Commission has provided no explanation for rejecting one of petitioner's principal arguments in the proceedings below. Because there is no suggestion that this argument was "so frivolous or so lacking in substance as to permit the Commission to treat (it) in a perfunctory manner," Humboldt Express, Inc. v. ICC, 185 U.S.App.D.C. ----, at ----, 567 F.2d 1134, at 1137 (1977), I can only conclude that the majority's action constitutes an abdication of our responsibilities as a reviewing court. Id.


R-W Service System, Inc. (R-W), petitioner herein, is a trucking firm with operating authority in Indiana, Illinois, Michigan, and Ohio. It is certified as a regular route carrier of general commodities in Indiana, Illinois and Michigan, and as an irregular route carrier in Ohio. R-W extends the scope of its operations by "tacking" its irregular route authority in Ohio with its regular route structure in Indiana, Illinois and Michigan through the common terminal, or "gateway," of Toledo, Ohio.

On July 6, 1973, R-W filed an application with the ICC seeking authority to operate between Ohio and Indiana through three additional gateways, Fort Wayne, Union City, and Richmond, Indiana. The application was opposed by a number of competing trucking companies, which are intervenors

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herein. 1 Initially, R-W sought to have its application assessed either as an application for new operating authority under the traditional public convenience and necessity standard, or as a gateway elimination application under the criteria set forth in G. N. Childress Elimination Sanford Gateway, 61 M.C.C. 421 (1952) (Childress). 2 Virtually all of the evidence submitted by R-W purported to show that it satisfied the Childress criteria and that it should thus be permitted to "eliminate" the Toledo gateway by adding the three new gateways.

On February 15, 1974, after R-W had filed its application, the ICC promulgated new regulations concerning gateway elimination. Motor Carriers of Property, Routes and Service (Petition for Elimination of Gateways by Rule-Making), Ex Parte No. 55 (Sub-No. 8), 119 M.C.C. 530 (1974) (Gateway Elimination Rules ). 3 These regulations were designed to help alleviate the Nation's energy shortage. Their object was "to eliminate such gateway operations as may result in inefficiencies and wasteful expenditures of time, money, effort, and precious fuel," Id. at 537, while preserving the "relatively stable competitive balance" in the surface transportation industry. Id. The Commission estimated that the new regulations would save some 300 million gallons of fuel annually. Id. at 532.

Essentially, the regulations required all motor carriers tacking irregular and irregular route authority to adopt the most direct route available (thereby eliminating gateways) provided the bypass would save not more than 20% Of the total mileage involved in operating through the gateway. If direct operation would save more than 20% Of the total mileage through the gateway, then further tacking was prohibited unless the carrier could specifically show it satisfied the Childress criteria. For convenience, I will refer to this as the 20% Circuity reduction principle.

Although by their terms the Gateway Elimination Rules did not apply to carriers such as R-W tacking irregular and regular route authority, R-W called attention to the 20% Circuity reduction principle of the new regulations in pleadings before the Commission. R-W Reply to Memorandum of Law of Intervenors, J.A. 194-97; 216-22. R-W recognized that the specific procedures established by the...

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