Union Mechling v. United States

• Decision Date: 26 November 1974
• Docket Number: Civ. A. No. 73-1063.
• Parties: UNION MECHLING et al., Plaintiffs, v. The UNITED STATES of America and the Interstate Commerce Commission, Defendants, and Hennepin Towing Company, Intervening Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

390 F. Supp. 391

UNION MECHLING et al., Plaintiffs, v. The UNITED STATES of America and the Interstate Commerce Commission, Defendants and Hennepin Towing Company, Intervening Defendant.

Civ. A. No. 73-1063.

United States District Court, W. D. Pennsylvania.

November 26, 1974.

COPYRIGHT MATERIAL OMITTED

Richard L. Thornburgh, U. S. Atty., Pittsburgh, Pa., John H. D. Wigger, Dept. of Justice, Washington, D. C., for U. S.

H. G. Homme, Jr., Washington, D. C., for I. C. C.

G. Daniel Carney, Thorp, Reed & Armstrong, Pittsburgh, Pa., for plaintiffs.

Donald Macleay, Macleay, Lynch, Bernhard & Gregg, Washington, D. C., S. S. Eisen, Eisen & Mitchell, New York City, for Union Mechling Corp.

Richard J. Hardy, Hardy & Chapman, Washington, D. C., for Federal Barge Lines, Inc. and Gulf-Canal Lines, Inc.

Harry C. Ames, Jr., Ames, Hill & Ames, P. C., Washington, D. C., for American Commercial Barge Line Co., Coyle Lines Inc. and The Valley Line Co.

William F. King, Major, Sage & King, Alexandria, Va., Eric P. Reif, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for Hennepin Towing Co.

Before WEIS, Circuit Judge, and DUMBAULD and SCALERA, District Judges.

OPINION

SCALERA, District Judge.

This is an action to enjoin the order of the Interstate Commerce Commission (I.C.C.)¹ granting a certificate of public convenience and necessity to Hennepin Towing Company (Hennepin), the intervening defendant, to operate as a common carrier by water on certain inland waterways — on the Mississippi River from St. Paul-Minneapolis to New Orleans; on the Illinois River from Chicago to its confluence with the Mississippi; and on the Ohio River, including the Allegheny and Monongahela Rivers.² The authority of Hennepin prior to the issuance of the certificate included authority on the Arkansas-Verdigris Waterway, and restricted authority to operate from or to points on the Arkansas-Verdigris Waterway, on the one hand, and the Mississippi River, from Minneapolis to New Orleans, and the Illinois Waterway, on the other hand.³⁴

I History of the Case

On February 1, 1971, Hennepin filed an application for a certificate of public convenience and necessity authorizing it to extend its water carrier operations. Seven barge lines (including the plaintiffs)⁵ and nine railroads⁶ protested Hennepin's application. The application was supported by over a dozen shippers, various port authorities (St. Paul and New Orleans), and an expert witness who testified that it was in the public interest for the I.C.C. to grant the application.

Following the filing of Hennepin's application, public hearings were held in Chicago, Illinois and Washington, D.C., for a period of over ten days during the summer of 1971.

On June 8, 1972, the Hearing Examiner (now Administrative Law Judge) in his report recommended that the application be denied for two reasons: (1) that Hennepin had failed to establish that it was fit and able to provide the proposed service; and (2) Hennepin had not shown that it was a matter of public convenience and necessity to grant the proposed authority because Hennepin, although it had convincingly showed that substantial increases in future growth of regulated as well as unregulated traffic on the inland waterways would occur, had not demonstrated that the existing carriers will not meet the challenge of these increases or that additional carrier(s) will be needed to satisfy this projected growth.

Hennepin filed exceptions to the Administrative Law Judge's report and recommendation, and plaintiffs filed responses to the exceptions supporting the decision reached by the Administrative Law Judge.

Division One of the I.C.C. reversed the Administrative Law Judge's decision in its report decided April 27, 1973 and served May 8, 1973. The Commission concluded:

". . . a public need has been demonstrated for the proposed service, and that the application should be granted . . ." 343 I.C.C. at 428.

and further that the applicant has

". . . shown itself to be fit and able to provide the proposed service." (Ed. at 430.)

Although the Commission's decision reversed that of the Administrative Law Judge, 343 I.C.C. at 423, the I.C.C. found "the Administrative Law Judge's statement of the facts to be substantially correct in all material respects," and adopted that statement. The Commission adopted the summary by the Administrative Law Judge of the evidence of the supporting witnesses and protesting carriers by including it as an appendix to its decision. (343 I.C.C. at 432-452.)

The decision of the Commission is based on the following factors:

(1) "The likelihood that traffic on the upper Mississippi River and its tributaries will increase substantially in the foreseeable future . . . and there will be a corresponding requirement for substantial expansion of water carrier facilities in order to meet these increased demands for water carrier service" and "to meet these increased demands . . . applicant should be authorized to operate at maximum efficiency." 343 I.C.C. at 428-429.

(2) "Contrary to the determination of the Administrative Law Judge, the evidence presented by shippers of bulk commodities . . . is entitled to consideration," because (1) when more than three distinct bulk commodities are hauled in a single tow the strictures of section 303(b) (the then-applicable Three-Commodity Rule) would transform unregulated traffic to regulated traffic and (2) such evidence relating to the shipment of bulk commodities, although not regulated by the Commission generally, is an important factor for the Commission to consider "in obtaining a more complete picture of the actual transportation scene, which must necessarily include some consideration of the impact on equipment, storage, and the present and future operation of regulated carriers due to the significant tonnages now moving in exempt carriage." 343 I.C.C. at 429.

(3) That contrary to the Administrative Law Judge's determination, Hennepin, a wholly-owned subsidiary of the Upper Mississippi Towing Company, has shown itself to be fit and able to perform the proposed service through the pooling of equipment and joint efforts with its parent company. (Id. at 430.)

The Commission summarily decided that its grant to Hennepin was not a "major Federal actions significantly affecting the quality of the human environment" within the meaning of § 102(2)(C) of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4332(2)(C).

In June and July, 1973, petitions for reconsideration were filed by the plaintiffs, and these petitions were responded to by the applicant, Hennepin. On November 4, 1973, Division One served its order denying the protesting carriers' petitions for reconsideration and outlining in greater detail the Commission's reasoning in reaching its decision that the grant to Hennepin did not require a NEPA statement. Thereafter the entire Commission denied plaintiffs' petition for a finding that this proceeding involves issues of general transportation importance. The Commission therefore held that review before the entire Commission was not warranted.

The plaintiffs filed their complaint with this court on December 11, 1973.

On December 18, 1973, Hennepin's motion to intervene as a defendant was granted, and then, on December 27, 1973, plaintiffs jointly filed a motion to consolidate this action, Civil Action No. 73-1063, with the SCNO proceeding, Civil Action No. 73-956. While intervening defendant Sioux City in Civil Action No. 73-956 opposed consolidation, Hennepin filed a brief on January 22, 1974, supporting the motion to consolidate.

This court denied the motion to consolidate on February 14, 1973, and established a briefing schedule. Oral argument before the three-judge statutory court was held.

II Scope of Review

Judge Aldisert in Leonard Express, Inc. v. United States, 298 F.Supp. 556, 559 (W.D.Pa.1969) stated:

"There have been various judicial expressions of the precise scope of this review. We are impressed by the standard set forth in Illinois Central R. Co. v. United States, 263 F.Supp. 421, 430 (D.C.Ill.1966), aff'd 385 U.S. 457, 87 S.Ct. 612, 17 L.Ed.2d 509:

`The function of this court in reviewing this determination of the Commission is sharply restricted. "It is limited to ascertaining whether there is warrant in the law and the facts for what the Commission has done." United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 536, 66 S.Ct. 687, 698, 90 L.Ed. 821 (1946); 5 U.S.C. § 1009(e). "The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body." Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286-287, 54 S.Ct. 692, 694, 78 L.Ed. 1260 (1934). Once this court finds substantial evidence in support of the Commission's findings, it cannot go further and inquire into the soundness of the Commission's reasoning or the wisdom of the result. Virginian Ry. v. United States, 272 U. S. 658, 663, 47 S.Ct. 222, 71 L.Ed. 463 (1926); United States v. New River Co., 265 U.S. 533, 542, 44 S. Ct. 610, 68 L.Ed. 1165 (1924).'"

"Substantial evidence" in the sense it is used in the Administrative Procedure Act, 5 U.S.C. § 706(2)(E), has been defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126. "It must be enough to justify, if the trial went to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury." National Labor Relations Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 505, 83 L.Ed. 660. This is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. Consolo v....