Port Norris Express Co., Inc. v. Interstate Commerce Commission and United States of America

746 F.2d 69, 241 U.S. App. D.C. 76, 1984 U.S. App. LEXIS 17559

Opinions

Opinion for the Court filed by Circuit Judge WILKEY.

Dissenting opinion by Senior Circuit Judge MacKINNON.

WILKEY, Circuit Judge:

Port Norris Express Co., Inc., petitions this court to vacate an order of the Interstate Commerce Commission (the “Commission”) granting motor common carrier authority to D-X Trucking, Inc. Port Norris’s objection to the order focuses on the fact that D-X was given authority to transport a certain class of commodities (clay, concrete, glass, or stone) in bulk form, without any evidentiary showing by D-X of a public demand or need for such an authority. For reasons discussed below, we remand the Commission’s order which grants D-X bulk authority, with directions to impose a bulk restriction.

I. Background

D-X filed an application with the Commission in January 1983. In its application, D-X requested authority to transport clay, concrete, glass, or stone products nationwide in both bulk and nonbulk forms.¹ D-X supported its application with verified statements from three shippers who intended to use D-X to ship their products nationwide. These supporting shippers expressed a need for D-X’s service in non-bulk form, but the Commission concedes that none expressed any need for the transportation of their products in bulk form.² In fact, one of the shippers (LOF Glass) expressly disclaimed any need for bulk transportation service.³

In its application D-X explained that it would provide the proposed service with its 20 tractors and 39 trailers, including 45-foot, high volume vans, 2 specially designed A-frame trailers, drop-deck trailers, flatbeds, and open-top trailers.⁴ However, D-X did not own any bulk transportation equipment.⁵

Port Norris, a common carrier specializing in bulk transportation, filed an objection to D-X’s application. The basis for Port Norris’s objection was that D-X had failed to show that the proposed service would respond to a “public demand or need,” as required by applicable law.⁶ D-X filed a reply statement arguing against any restriction in the proposed authority against bulk transportation, indicating that its failure to exclude commodities in bulk from its application was influenced by the Commission’s policy of refusing to allow bulk restrictions in grants of authority to transport specific commodities.⁷

In April 1983 the Commission, Review Board 1,⁸ decided to grant the application without imposing any restriction on bulk transportation.⁹ In June 1983 the Commission, Division 2, affirmed the Review Board’s decision and issued D-X a license which contained no restriction on bulk transportation. Port Norris petitioned this court for review.

II. Analysis

The scope of our review of the Commission’s order is defined in this case by the Motor Carrier Act of 1980 ¹⁰ and the Administrative Procedure Act. Under the Motor Carrier Act, the burden is on the applicant to show that there is a public demand or need for the requested service, in order to qualify for an authority to transport that type of commodity. If the applicant does not produce evidence which satisfies that burden, the Commission is not authorized to issue a license covering that type of commodity. Under the Administrative Procedure Act, the decision to grant the authority may not be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” and must be supported “by substantial evidence.”¹¹

The leading case applying these requirements to authorizations for general bulk hauling is American Trucking Association, Inc. v. ICC.12 That case involved a challenge to a Commission order similar to the present case, except that the Commission had refused to impose bulk restrictions in authorities to transport general commodities, as opposed to specific classes of commodities. The Fifth Circuit’s analysis in American Trucking Association was adopted by the Third Circuit in Port Norris Express Co. v. ICC¹³ [Port Norris-Dennis']. Both of these courts held that the Commission must base issuance of an authorization for general bulk hauling upon record evidence of public demand or need for bulk hauling, and could not rely on policy grounds.¹⁴

The Commission had argued that American Trucking and Port Norris-Dennis were not directly applicable to the present case, since the present case deals with authorization to haul a specific class of commodities.¹⁵ Subsequent to the original briefs on this appeal, however, several cases have been decided which extend the holding of Port Norris-Dennis to cover applications for authority to haul specific commodities. In Port Norris Express Co. v. ICC¹⁶ [Port Norris-Alien ] Allen Truck and Trailer Leasing, Inc. had requested authority to haul clay, concrete, glass, or stone products. Neither Allen nor any of the supporting shippers mentioned bulk hauling.¹⁷ The court in Port Norris-Alien did not specifically decide “the exact quantum of evidence required to support the grant of an authority to haul specific com- modifies in bulk,” ¹⁸ requiring only that the certificates be supported by substantial evidence. But the court did indicate what would not be acceptable. It rejected the Commission’s argument based on the “rule of representative evidence,” an argument also advanced by the Commission in the present case.¹⁹ The “rule of representative evidence” argument is that from specific evidence of a need for nonbulk hauling, the Commission can rationally infer a need for bulk hauling of the same commodities. Through this inference, the Commission argues that the statutory requirement of a “public demand or need” is satisfied.²⁰

The “rule of representative evidence” was originally applied in the context of geographical limitations.²¹ For example, grants of statewide authority have never needed supporting evidence from every municipality in the state. Similarly, specific evidence of public need for certain commodities within a broad class can support an authority for the entire class of commodities. However, the Third Circuit in Port Norris-Allen rejected the use of the representative evidence inference when it is used to infer the need for bulk service solely from evidence of need for nonbulk service.²²

We also reject the use of an evidentiary inference to satisfy the clear requirements of the statute. Section 10922(b)(1) requires that the applicant put forth evidence of a public demand or need for the authorization sought. The requirement is not satisfied by an inference, when the inference is not supported by any direct evidence. Contrary to the assertions of the Commission, it is not “perfectly rational” ²³ to infer the need for bulk hauling when there was absolutely no evidence presented of any such need, and when in fact one shipper disclaimed any need for bulk hauling. It is one thing to infer the need for statewide shipping from evidence of a need to ship to several cities in the state. It is quite another to infer the need for bulk shipping without a shred of direct evidence of any such need.²⁴ The need for nonbulk service does not create any inference of the need for bulk service; the two may be, and apparently are here, unrelated. Some direct evidence on bulk service is required.

Our holding in Port Norris Express Co. v. ICC25 [Port Norris-Fiorot ] is not to the contrary. In Port Norris-Fiorot there was direct evidence by one supporting shipper of a need for shipment of building materials in bulk. There was no challenge to the grant of authority for nonbulk shipments. Deferring to agency expertise, this court found that a grant of authority for “nationwide bulk general commodities authority on the basis of a single-shipper showing, when that authority is sought in conjunction with nationwide nonbulk general commodities authority supported by a multi-shipper, multi-commodity representative sampling” ²⁶ satisfied the statutory requirements.

The line between an inference based on one shipper’s evidence of need, and an inference based on no evidence at all of need, is a thin one. But it is a valid distinction and we make it, because it is the minimum distinction required by the terms of section 10922(b)(1).

We are aware of the fact that the Commission bases its policy (of not imposing bulk restrictions unless a protestant can rebut the Commission’s inference of need) on what it perceives is the general congressional intent manifested in the Motor Carrier Act of 1980.²⁷ Whatever Congress’s general intent may have been with the passage of the Motor Carrier Act, Congress also has manifested its specific intent in section 10922(b)(1), which continues to require that the applicant produce affirmative evidence of a public need for the authority sought. The Commission’s policy impermissibly reverses this burden of proof by granting bulk hauling authority unless a protestant can muster evidence that “defeats] the inference of representativeness.” ²⁸ However well intentioned, the Commission’s policy is contrary to the demands of the statute.

In agreeing with the reasoning of the Third Circuit in Port Norris-Allen, we would also note that two other circuits have adopted substantially the same reasoning. In Steere Tank Lines, Inc. v. ICC²⁹ and in Erickson Transport Corp. v. ICC,30 the Fifth and Eighth Circuits, respectively, remanded Commission orders to require restrictions on bulk hauling. Although both of those cases focused on the fitness prong of section 10922(b)(1), the foundation of those opinions also rests on the impermissibility of the Commission’s policy of authorizing bulk haulage with only inferential, “representative” evidence. Our decision today, although based on the reasoning set out above, also prevents an unnecessary split in the circuits on the meaning of a statute and the authority of a regulatory agency. If the various circuits have misapprehended what appears to be the plain meaning of section 10922(b)(1), then Congress can easily correct the error. Until such time, it seems very little to ask that an applicant present some bare minimum of direct evidence of a need for the grant of authority to haul in bulk.

For these reasons, we remand this proceeding to the Commission with instructions to revise the certificate in question so as to exclude the authority to transport clay, concrete, glass, or stone in bulk, or to conduct such further proceedings as may be consistent with this opinion.

So ordered.

Footnotes

1

. Appendix for Petitioner at 1-29. Commodities are transported in "bulk” if they are in a form which is flowable, fungible, and homogeneous, and if they are restrained during transportation only by the walls of the transporting vehicle. John J. Mulqueen Contract Carrier Application, 250 I.C.C. 436, 439 (1942). Bulk hauling of certain commodities may require special expertise.

2

. Brief for Respondents at 5-6.

3

. Id. at 6 n. 7.

4

. Brief for Petitioner at 6.

5

. Id.

6

. 49 U.S.C. § 10922(b)(1) (1982).

7

. Appendix for Petitioner at 65.

8

. Review Board 1 is a panel of three Commission employees delegated initial decisionmaking authority pursuant to 49 U.S.C. § 10305(a) (1982).

9

. Appendix for Petitioner at 68-70.

10

. Pub.L. No. 96-296, 94 Stat. 793.

11

. 5 U.S.C. § 706(2)(A), (E) (1982).

12

. 659 F.2d 452 (5th Cir.1981), enforced by mandamus, 669 F.2d 957 (5th Cir.1982), cert. denied, 460 U.S. 1022, 103 S.Ct. 1272, 75 L.Ed.2d 493 (1983).

13

. 687 F.2d 803 (3d Cir.1982).

14

. Id. at 809-11, 813.

15

. Brief for Respondents at 19-21.

16

. 729 F.2d 204 (3d Cir.1984).

17

. Id. at 207.

18

. Id. at 208.

19

. Brief for Respondents at 16-18.

20

. Id.

21

. See Acceptable Forms of Requests for Operating Authority (Motor Carriers and Brokers of Property), 364 I.C.C. 432 (1980), aff'd in part sub nom. American Trucking Ass'n, Inc. v. ICC, 659 F.2d 452 (5th Cir.1981), enforced by mandamus, 669 F.2d 957 (5th Cir.1982), cert. denied, 460 U.S. 1022, 103 S.Ct. 1272, 75 L.Ed.2d 493 (1983).

22

. 729 F.2d at 209. The dissent believes that both Port Norris and the Third Circuit have confused the "public need” and “fitness" issues. The dissent finds this confusion because Port Norris has consistently buttressed its argument against the Commission’s representative evidence rule with evidence that bulk transportation differs significantly from nonbulk transportation, and that the applicant does not have the equipment to handle bulk transportation. In this case, it is the dissent that is confused. Port Norris, by its own admission, is not contesting the applicant's fitness. It is attacking the rationality of the representative evidence rule. The Commission argues that if evidence of the need for nonbulk service is presented, that can rationally support an inference of a need for bulk shipments. Port Norris’s argument is that bulk and nonbulk shipping are so fundamentally different that such an inference is not reasonable. Thus, the fact that a nonbulk shipper does not even have the necessary equipment to haul in bulk is presented to rebut the reasonableness of the Commission’s inference, not to contest the applicant’s fitness.

23

. Brief for Respondents at 18.

24

. In fact, the Commission may be engaging in a double inference. First it employs the now-accepted inference that evidence of a need to ship a certain commodity — in the present case, mostly plate glass — supports the inference of a need to ship an entire related class of commodities — clay, concrete, stone, or glass. Having already made one inference, the Commission then explains that ”[a]fter all, it is beyond dispute that the commodities at issue normally move in bulk.” Brief for Respondent at 9. The Commission first infers the need to ship an entire class of commodities from direct evidence of a need for only some members of that class. It then infers the need for bulk shipments without any direct evidence, because some other members of the inferred class of commodities normally move in bulk.

The dissent argues that the Commission actually “had before it evidence that two shippers needed bulk service.” That statement is not and cannot be supported by reference to any ship per’s testimony. Neither will it do to say that the Commission only lacked "explicit indications of need.” The fact is that the Commission had neither explicit nor implicit evidence of need. No shipper expressed any need for bulk hauling; one shipper disclaimed any such need. No other evidence of need was presented. As for implicit evidence, D-X stated that it could satisfy all its clients' needs with its present equipment, which does not include any equipment for bulk haulage.

25

. 728 F.2d 543 (D.C.Cir.1984).

26

. Id. at 545 (emphasis in original).

27

. See 49 U.S.C. § 10101 (1982). The Commission defends its policy in Brief for Respondents at 22-28. The United States neither supported nor opposed the argument raised in that portion of respondents’ brief.

28

. Brief for Respondents at 21 n. 19.

29

. 736 F.2d 1094 (5th Cir.1984).

30

. 737 F.2d 775 (8th Cir.1984).