Trailways Lines, Inc. v. I.C.C., s. 84-1039

• Decision Date: 12 July 1985
• Docket Number: Nos. 84-1039,84-1043,s. 84-1039
• Citation: 766 F.2d 1537
• Parties: TRAILWAYS LINES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Greyhound Lines, Inc., Peter Pan Bus Lines, Inc., Seashore Transportation Company, et al., Intervenors. CAROLINA COACH COMPANY, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, Greyhound Lines, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1537

766 F.2d 1537

247 U.S.App.D.C. 119

TRAILWAYS LINES, INC., Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Greyhound Lines, Inc., Peter Pan Bus Lines, Inc., Seashore

Transportation Company, et al., Intervenors.

CAROLINA COACH COMPANY, Petitioner, v. INTERSTATE COMMERCE COMMISSION and United States of America,

Respondents,

Greyhound Lines, Inc., Intervenor.

Nos. 84-1039, 84-1043.

United States Court of Appeals District of Columbia Circuit.

Argued Feb. 11, 1985.

Decided July 12, 1985.

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

Betty Jo Christian, Washington, D.C., with whom Timothy M. Walsh, Washington, D.C., was on brief, for petitioners. Robert Lewis Thompson, Washington, D.C., entered an appearance for petitioners.

Essie F. Stevens, Atty., I.C.C., Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., Dept. of Justice, Robert S. Burk, Acting Gen. Counsel, Henri F. Rush, Associate Gen. Counsel, I.C.C., Robert B. Nicholson and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D.C., were on brief, for respondents. John Broadley and Colleen J. Bombardier, Washington, D.C., entered appearances for respondents.

E. Barrett Prettyman, Jr., Washington, D.C., with whom George W. Mayo, Jr., and David F. Grady, Washington, D.C., were on brief, for intervenor Greyhound Lines, Inc.

Lawrence E. Lindeman, Washington, D.C., was on brief, for intervenor Peter Pan Bus Lines, Inc., et al.

Before WRIGHT, SCALIA and STARR, Circuit Judges.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

These petitions for review return this court to the arena of bus regulatory reform created by Congress' enactment in 1982 of the Bus Regulatory Reform Act, Pub.L. No. 97-261, 96 Stat. 1102 (1983) ("BRRA"). In proceedings before the Interstate Commerce Commission, Greyhound sought and was granted additional route authority throughout the Nation for regularly scheduled intercity bus service in the face of protests by various Greyhound competitors. Having lost before the ICC, the protestants now seek review of the agency's adverse decision. For the reasons that follow, we deny the petitions for review.

I

The BRRA is designed to reduce substantially federal regulation of the intercity bus system. In fashioning the BRRA, Congress anticipated that decreased regulation would, by creating competition in market situations where service by only one carrier had previously existed, increase carrier efficiency and enhance service to the public. Before the BRRA's passage, it was virtually impossible for a bus company either to enter a route already served by another carrier or to discontinue a route which the company was then serving. By virtue of the BRRA, it became substantially easier for a carrier either to obtain a new route or to discontinue an unprofitable route.

At the same time, the BRRA did not work total deregulation of the intercity bus system. Under current law, if a carrier desires to enter a route served by another carrier, the new carrier must tender a "public interest" application under 49 U.S.C. Sec. 10922(c) (1982). ¹ By virtue of the pro-competitive BRRA regime, the Interstate Commerce Commission is obliged to grant the application if the applicant can show that it is fit, willing, and able to serve the route, unless a protestant comes forward and affirmatively demonstrates that granting the application would be inconsistent with the public interest. In determining whether a protestant has carried its burden of proof, the Commission is, "to the extent applicable," to consider four factors enumerated in the statute. Those factors provide the benchmarks for our analysis, and we therefore set out the pertinent statutory language:

(A) the [national] transportation policy [as set forth in] section 10101(a) of [Title 49];

(B) the value of competition to the traveling and shipping public;

(C) the effect of issuance of the certificate on motor carriers of passenger service to small communities; and

(D) whether issuance of the certificate would impair the ability of any other motor common carrier of passengers to provide a substantial portion of the regular-route passenger service which such carrier provides over its entire regular-route system....

49 U.S.C. Sec. 10922(c)(3) (1982). ² Each of the four enumerated factors is to be given equal weight by the Commission in ruling on an application.

II

Greyhound Lines is the dominant carrier of passengers in the intercity bus industry, having "captured up to 71 percent of the regular route or scheduled intercity bus transportation market, whereas its only national competitor, Trailways, Inc., has a market share of about 21 percent." Greyhound Lines, Inc., Extension--One Hundred Fourteen Routes, No. MC-1515 (June 29, 1983), App. B. at 1, J.A. at 1, 18 [hereinafter cited as ALJ Decision]. Trailways is a member of the National Trailways Bus System ("NTBS"), an association of forty-nine independent carriers that coordinate schedules, share a common trade name, and cooperate to offer nationwide service. Petitioner Carolina Coach Company is also a member of NTBS, as are intervenors Seashore Transportation Company, Capital Motor Lines, and Colonial Trailways. ³

A

This case began in January 1983 when Greyhound filed applications to serve 147 new routes. In response, petitioners ⁴ filed discovery requests with the ICC for information and documents on Greyhound, as well as interrogatories, which they deemed relevant to the BRRA's four public-interest criteria, ⁵ as set out above. The Commission, however, remained mute in the face of these discovery requests as of the date on which protests to Greyhound's applications were due to be filed. The petitioners thereupon filed in a timely manner protests to twenty-nine of the proposed routes; the other 118 routes were automatically granted, as provided for under the BRRA's pro-entry provisions.

In its response to the protests, Greyhound set forth its proposed schedules for the new routes, representing that its planned service was modest in extent, namely on the order of one to four buses a day for most routes. J.A. at 1188-89. Greyhound's applications were thereupon referred for decision to an Administrative Law Judge; in an ensuing prehearing conference, the ALJ ordered Greyhound to produce (1) its revenue projections on the proposed routes; (2) information on the ownership of bus terminals; and (3) information as to which carriers were allowed to use those terminals. J.A. at 2249. Greyhound provided the full panoply of information as to bus terminals, but at a conference in June 1983, Greyhound informed the ALJ that it had neither formulated revenue projections nor conducted market research or surveys with respect to the proposed routes. J.A. at 2269-70. It would appear that Greyhound did not develop such data because the routes under protest were, as the ALJ stated, "designed to mesh with existing operations" of Greyhound. ALJ Decision, J.A. at 4. Moreover, addition of the new routes did not require any capital investment by Greyhound. J.A. at 2271.

Greyhound further represented during the June 1983 conference that, in preparing its applications, it had relied principally upon the operating experience and business judgment of its Senior Director of Operations, Ernest Simmons. J.A. at 2270. The ALJ offered the petitioners the opportunity to depose Mr. Simmons during the prehearing conference. J.A. at 2246. However, the protestants did not seek to interrogate Mr. Simmons apparently because, in their view, they needed more documentation from Greyhound before they could mount a meaningful examination of the prospective witness. Petitioners' Brief at 12 n. 21. The ALJ thereupon denied all of the protestants' discovery requests. J.A. at 2291.

As to the substantive issues, the protestants attempted through written submissions ⁶ to demonstrate that approval of Greyhound's applications would not be in the public interest as defined by the four statutory factors. Invoking the third and fourth factors in particular, petitioners argued that if Greyhound's applications were approved, each protestant would suffer a diversion of its own traffic sufficiently grave as to force each competing carrier both to reduce greatly the level of service to small communities and to cut back substantially on its entire system. Furthermore, the protestants argued that the ALJ could not properly evaluate the impact of Greyhound's expansion on the dominant carrier's competitors unless a more comprehensive analysis were first undertaken of the long-term effects on competition in the intercity bus system which would be wrought by the new authority. Specifically, the protestants argued that, by virtue of Greyhound's dominant position in the industry, each incremental increase in market share by Greyhound rendered problematic the competitive situation of non-dominant carriers, all of which are considerably smaller than Greyhound; thus, the argument ran, any new grant of authority to Greyhound would be destined to result in a diminution of competition. In the competitor's view, a global study of the industry, if undertaken by the Commission, would demonstrate that, were Greyhound continually awarded small increases in route authority, the result at day's end would be the virtual elimination of competition. In this respect, petitioners invoked this court's decision in Trailways v. United States, 673 F.2d 514 (D.C.Cir.1982), rendered prior to the BRRA's passage; in Trailways, this court had held that the ICC was obligated to determine whether any detrimental impact on the public interest would be occasioned by granting Greyhound authority that had an incrementally adverse effect on Trailways' competitive position. Id. at 522. The ICC had never made such a Trailways-mandated determination, and the protestants argued to the ALJ that the ICC was still obliged to do...