Refrigerated Transport Co., Inc. v. I. C. C.

• Decision Date: 27 May 1977
• Docket Number: No. 75-4259,75-4259
• Citation: 552 F.2d 1162
• Parties: REFRIGERATED TRANSPORT CO., INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1162

552 F.2d 1162

REFRIGERATED TRANSPORT CO., INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America Respondents.

No. 75-4259.

United States Court of Appeals Fifth Circuit.

May 27, 1977.

Alan E. Serby, Atlanta, Ga., for petitioner.

Alan J. Thiemann, Arthur J. Cerra, Gen. Counsel, Thomas E. Kauper, Asst. Atty. Gen., Carl D. Lawson, Dept. of Justice, Catherine G. O'Sullivan, Atty., Washington, D. C., for respondents.

William H. Towle, Chicago, Ill., for Midwest Emery Freight System, et al.

On Petition to Review and Set Aside Orders of the Interstate Commerce Commission (Georgia Case).

Before AINSWORTH and CLARK, Circuit Judges, and HUGHES, ^* District Judge.

CLARK, Circuit Judge:

As regards review jurisdiction by this court of appeals, the Interstate Commerce Commission is the new-kid-on-the-block. ¹ If this case is to be any gauge, a compatible relationship will be slow to develop. Practice before the ICC is strongly oriented to form form which is described in idioms as foreign to us as the notion that substance is not paramount. Today's dispute concerns the effect of recent rules designed to save energy by eliminating round-about routings and their application to a carrier whose purchase of additional operating rights was in the process of approval when the new rules became effective. The carrier contests the ICC's refusal to allow it to handle shipments between points it already served and points on the routes purchased. We affirm the denial of that authority.

The matter comes to us on a petition for review of ICC orders filed by Refrigerated Transport Company, Inc. (Refrigerated), an interstate motor common carrier of perishable food products. Refrigerated filed with the ICC a "gateway" elimination application in which it sought (a) approval of "tacking" of its previously authorized authorities to operate motor carrier routes onto the authorities recently acquired through the purchase of Florida Refrigerated Service, Inc. (Florida Refrigerated), and, (b) that the "gateways" resulting from this approved tacking be eliminated. ²

Notice that Refrigerated was applying for elimination of gateways was published in the Federal Register without any reference to its underlying request for tacking approval. ICC Review Board Number 1 denied both requests in Refrigerated's application, and ICC Division 1, acting as an appellate division, denied Refrigerated's petition for reconsideration. This appeal resulted.

Our review follows these usual constraints:

It is the general rule that the scope of judicial review of decisions of the Interstate Commerce Commission within the area of its expertise is narrow and extends only to questions affecting the constitutional power, statutory authority and warrant in the record for its determination, ascribing its findings the weight due to the judgment of an expert body. It will be presumed that the Commission properly performed its duties. This presumption United States v. Central Truck Lines, 548 F.2d 523 (5th Cir. 1977). The Administrative Procedure Act, 5 U.S.C. § 706 (1967), gives us these further standards:

attaches in the absence of clear evidence to the contrary.

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall

(1) compel agency action unlawfully withheld or unreasonably delayed; and

(2) hold unlawful and set aside agency actions, findings, and conclusions found to be

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error.

The background for the controversy in the present litigation was set in the proceedings instituted by Refrigerated pursuant to 49 U.S.C. § 5(2) (1959), seeking ICC approval of its merger by purchase with Florida Refrigerated. In that section 5 case, the administrative law judge found the merger to be in the public interest and this finding was affirmed by ICC Division 3. The merger was completed in the summer of 1974, but no certificate had been issued at the time of filing the present suit. Refrigerated complains that its decision to purchase Florida Refrigerated and merge the operations of the two companies was prompted in large measure by the anticipated benefits of joining the authorities issued to each carrier so that it could provide through service between points on existing and newly purchased routes. Of the $1,200,000 purchase price, Refrigerated avers that fully $500,000 was attributable to the estimated benefit of the joinder of authorities.

This appeal must deal with two broad issues. First, was tacking by Refrigerated already authorized by the ruling in the section 5 merger case, or at least should tacking have been considered in the present gateway elimination case? Second, was gateway elimination properly refused? Though the tacking question presents myriad problems of interpreting ICC regulations and opinions, the resolution of most of them becomes academic in light of our conclusions that gateway elimination was properly denied. Because some aspects of tacking have limited ramifications for our decision, we will catalog the approaches taken by the parties and discuss the relevant questions. Before reaching these basic issues, we will deal briefly with two related subjects.

The ICC does not question that before the gateway elimination rules of November 23, 1973, it almost certainly would have permitted Refrigerated to "tack" the separate routes of the two companies. However, the existence of this probability under prior regulations does not control the outcome of today's decision. No carrier has a vested interest in the continuation of existing procedures. Changes in conditions may produce new regulatory standards which deny Refrigerated the benefits it had anticipated when entering into merger negotiations with Florida Refrigerated.

We are fully aware that in economic and managerial terms it is the prospect of tacking that inspires the bulk of applications under § 5 for transfer (of the rights . . . Carrier freedom is not as complete as it was prior to the (Gateway Elimination) order before us, and doubtless there will be some instances of what will prove to be unnecessary burdens and perhaps unsound action. On the other hand, this is not an unreasonable price to pay to gain the advantage of the regulations, taken in the large, of fuel savings and other benefits from avoidance of circuity.

of a merged carrier). Nevertheless, as the Thompson ³ opinion shows, the acquisition of tacking rights is a policy of the Commissioner rather than an absolute right of the transferee . . . .

Common Carrier Conference, etc. v. United States, 175 U.S.App.D.C. 244, 534 F.2d 981, 983 (1976) (footnote added).

We reject the contention that merely due to previous authorization to conduct certain operations, Refrigerated might now be entitled to "grandfather" consideration. Refrigerated refers to various changes in statutory methods of certification of carriers previously made in which Congress or the ICC provided that carriers already conducting operations would not lose their authorities because of the new rules. It is contended that the ICC in the Gateway Rulemaking opinion, Motor Common Carriers of Property, Routes & Service, 119 M.C.C. 530 (1974), extended similar grandfather protection. This is based on the statement that in judging whether elimination of a specific gateway would be permitted, no greater burden of proof would be imposed ". . . than that governing regular elimination of gateway applications, but will be somewhat more akin to the standard 'grandfather' procedures utilized by this Commission in the past." Id. at 550. This burden of proof proviso is not a mandate that every carrier then utilizing gateways or tacking will be entitled either to continue or get gateway elimination benefits. The Gateway Rulemaking case and the public interest in resolving the energy crisis which compelled gateway rules indicate that the use of circuitous routes must stop. The normal grandfather considerations for continuing past practices are antithetical to the purpose of these rules and grandfather protection was correctly rejected by the Commission.

TACKING

Refrigerated complains of the ICC's failure to publish any reference to its claim of the right to tack when notice of the proceeding to eliminate gateways was published in the Federal Register. The ICC argues that it was proper to refuse to publish the request for tacking because Refrigerated was seeking to eliminate gateways, not create them. The ICC contends the proper approach for Refrigerated if it wished authority to tack was to seek a modification of its existing certificate under the provisions of ICC Rule 102, 49 C.F.R. § 1100.102 (1975), by attempting to reopen the section 5 case involving the purchase and merger of Florida Refrigerated. ⁴ The ICC also argues Refrigerated cannot now complain since it did not even inquire about the form of the publication until it moved for reconsideration of the ICC decision.

Refrigerated's position is that the rules under which it filed, though related to gateway...