Refrigerated Transport Co., Inc. v. I. C. C., 80-7261
| Decision Date | 10 December 1981 |
| Docket Number | No. 80-7261,80-7261 |
| Citation | 663 F.2d 528 |
| Parties | REFRIGERATED TRANSPORT CO., INC., Petitioner, v. The INTERSTATE COMMERCE COMMISSION and United States of America, Respondents. . Unit B * |
| Court | U.S. Court of Appeals — Fifth Circuit |
Serby & Mitchell, P. C., David I. Funk, Bruce E. Mitchell, Atlanta, Ga., for petitioner.
Harry J. Jordan, Washington, D. C., Dennis J. Starks, Charleston, W. Va., for Pitt County Transp. Co., Inc. of Farmville.
On Petition for Review of An Order of the Interstate Commerce Commission.
Before TJOFLAT, HATCHETT and THOMAS A. CLARK, Circuit Judges.
Petitioner Refrigerated Transport Co., Inc. ("Refrigerated") seeks review of an Interstate Commerce Commission order granting intervenor Pitt County Transportation Co., Inc. ("Pitt") operating authority to transport "materials, supplies and equipment ... used in the processing, packing, storing, handling, and marketing of tobacco" between points in ten southeastern states. Because the record before us lacks substantial evidence to support the grant of authority, we vacate the Commission's order and remand.
On November 17, 1978, Pitt applied to the Commission for operating authority to transport the commodities described between points in Florida, Georgia, South Carolina, North Carolina, Tennessee, Kentucky, Virginia, Maryland, West Virginia, and Ohio. The applicant offered only a statement of Philip Morris as evidence of public need for the services. After summary review of Pitt's application pursuant to its "modified procedure," 1 the Commission granted the authority without restriction as to shipper, routes, points of origin or destination within the named states. 2
Refrigerated does not have authority to transport the commodities which are the subject of this application-materials and supplies used in the production, manufacturing, and distribution of tobacco-related products-on behalf of Pitt's supporting shipper, Philip Morris USA, or on behalf of the shipping public generally. Refrigerated does have authority to transport these commodities (subject to certain minor restrictions not here relevant) on behalf of Lorillard, a division of Loews Theaters, Inc., on a radial basis between Lorillard's three facilities in Virginia, Kentucky, and North Carolina, on the one hand, and all points in the 48 contiguous states, on the other. The conflict in the authorities is apparent; Pitt may divert within its ten-state area traffic which might otherwise be served by Refrigerated.
This service is of considerable interest to Refrigerated; it is a prime source of Refrigerated's outbound traffic from these states and thus important in minimizing deadhead mileage out of this area. Moreover, Refrigerated has made substantial investments in maintaining and expanding its Lorillard-servicing facilities.
The Commission based its grant of authority on the evidence before it: Philip Morris' account of its needs.
As one of the largest manufacturers and distributors of tobacco products, Philip Morris USA buys a tremendous quantity of tobacco each year. Tobacco is bought from all the tobacco producing states in the southeast proposed to be served by Pitt County. Typically, tobacco is purchased from farmers or public warehouses and is shipped in bales and wooden hogsheads in truckload quantities weighing 30 to 45 thousand pounds. Raw tobacco is shipped to 15-20 green prizing facilities in Kentucky and Tennessee. Raw tobacco is also shipped to extruder plants at Lumberton and Rocky Mount, NC, Danville, VA, and Greenville, TN. The extruder plants further process the tobacco for subsequent movement to our company's Richmond manufacturing plant.
Tobacco moves at a fairly steady basis throughout the year from the company storage facilities and the extrusion plants to the Richmond manufacturing facility. Tobacco is, however, a highly seasonable crop and during the growing and harvesting seasons there is a tremendous demand for motor carrier service. The peak season runs generally between July and February. During this time Philip Morris USA needs from 250 to 300 trucks daily for the movement of raw, processed, and manufactured tobacco. Generally, one-third of the equipment would be loading, one-third in transit, and one-third unloading. There is just not enough equipment available to our company during this period. The result has been interference with marketing and production schedules. This chronic equipment shortage is one reason for supporting Pitt County's application.... Approval of this application will permit Pitt County to handle packaging materials and other materials and supplies from the extruder plants and supplier facilities in the southeast to our company's processing plants and our main facility at Richmond. By coordinating the movement of tobacco with my company's needs for materials, supplies, and equipment used in manufacturing tobacco products, Pitt County will have an operation substantially in balance, and Philip Morris USA will enjoy the benefits of a more efficient and economic service.
This account does not precisely define the nature of the commodities, their source and final destinations. 3 The company says the commodities are to be moved between the plants and supplier facilities. "Supplier facilities" is not defined. We are told that the commodities are used in the manufacture process. Although the tobacco is grown and stored throughout the application area, product manufacture begins and ends at facilities in the four-state area of Tennessee, Kentucky, North Carolina, and Virginia. 4 Because the transportation of tobacco is exempt, only shipments of other, non-exempt, items may provide the basis for the grant of authority. 5 Nothing more than the movement of tobacco has been shown for the ten-state area. During the period of Pitts' temporary authority, all shipments were made within these four states. Philip Morris apparently only has need to move commodities between its prizing facilities, extruder plants, and manufacturing plant. 6
The Commission, operating through an employee board to which it had delegated its function of initial review, approved Pitt's application, finding that Philip Morris' statement amounted to substantial evidence of a public need. The Commission concluded that Refrigerated's service, restricted as it was to Lorillard traffic, was unresponsive to the needs of Philip Morris and others with similar needs. In response to Refrigerated's argument that potential diversion of its Lorillard traffic would promote inefficiency and waste contrary to the public interest, the Commission concluded, without elaboration, that "(p)rotestants have not shown that a grant of this application would adversely affect their existing operations to an extent contrary to the public interest, particularly since protestants may compete for the traffic involved." We have previously noted that Refrigerated does not have the authority to so compete. On appeal before a panel of Commissioners, the review board's determination was affirmed, one member dissenting. Commissioner Clapp would have affirmed the grant only as to the four-state area containing Philip Morris' processing facilities and in which Pitt had confined its operations under temporary authority rather than the ten-state region encompassed in the permanent authority.
An agency determination such as the one before us must be set aside if it is "arbitrary, capricious, ... (or) unsupported by substantial evidence." 5 U.S.C. § 706(2)(A), (E); Watkins Motor Lines, Inc. v. ICC, 641 F.2d 1183, 1188 (5th Cir. 1981).
Under the "arbitrary and capricious" standard the scope of review is a narrow one. A reviewing court must ...
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