United Transports, Inc. v. United States

245 F. Supp. 561, 1965 U.S. Dist. LEXIS 7739, 1965 WL 154995

• Court: District Court, W.D. Oklahoma
• Decided: September 9, 1965
• Docket: Civ. No. 65-118
• Status: Published

Opinions

LANGLEY, District Judge.

The purpose of this action is to set aside an order of the Interstate Commerce Commission entered in its Docket No. MC-43038 (Sub. No. 404), Commercial Carriers, Inc., Petition for Modification of Existing Certificate.

Commercial Carriers, Inc., of Romulus, Michigan, is the holder of a Certificate of Public Convenience and Necessity issued by the Interstate Commerce Commission under which it is authorized to engage in the transportation of automobiles in interstate commerce as a common carrier by motor vehicle, limited, however, to the initial movements in truckaway service of new automobiles from the site of the Cadillac factory in Detroit to points in Texas. The order complained of here authorized the modification of the certificate to include the secondary movements of new automobiles in truckaway service from Irving and Floydada, Texas, to points in Texas, but restricted “to traffic originating at the site of the Cadillac Motor Car Division of General Motors Corporation at Detroit, Michigan, and having an immediately prior movement by rail”.

The objection of the plaintiff, United Transports, Inc., of Oklahoma City, Oklahoma, and of the intervening plaintiff, Auto Convoy Company, of Dallas, Texas, is that the modification order is in effect an authorization for a new certificate and should not have been issued except upon a showing and finding of present or future public necessity for the additional service in the area, as provided in Section 207(a) of the Interstate Commerce Act (49 U.S.C. § 307(a)), and after an opportunity had been afforded, as required by Section 7(c) of the Administrative Procedure Act (5 U.S.C. § 1006 (c)), to present oral evidence in opposition to the application and to cross-examine witnesses.

The evidence before the court is the record of the Interstate Commerce Commission in its said Docket No. MC-43038 (Sub. No. 404). The record was introduced at the hearing by agreement of all the parties. No other evidence was introduced or offered by any of the parties. It appears from this record, no pertinent factual statement of which is denied by any litigant herein, that in May, 1963, Cadillac began shipping its cars to Texas by rail, terminating the shipments at railheads in Irving and Floydada, and that as a consequence Commercial Carriers, Inc. lost all or virtually all of this traffic to Texas. It therefore applied to the Commission, pursuant to the principles and under the procedures established by the Commission in its order entered in National Automobile Transporters Assn. — Petition for Declaratory Order, 91 MCC 395, for a modification of its existing certificate to permit it to recapture part of its lost traffic by authorizing the secondary movement of Cadillacs from these railheads to points in Texas. United Transports, Inc., opposed the application before the Commission on the grounds that it was authorized under its certificate to transport such vehicles between points in Texas, that it was furnishing satisfactory service and had invested heavily in facilities and equipment to that end, that no additional carriers were needed or likely to be needed to provide adequate service, and that if the certificate modification applied for was granted it would suffer substantial loss; and demanded an oral hearing. Upon these facts, and without affording the hearing demanded, the Commission entered its order authorizing the modification. The basis upon which the modification was authorized, in addition to the record before the Commission, is set out in the order as follows:

“It further appearing, that in its report and order in National Auto Transporters Assn. — Declaratory Order, NATA, 91 M.C.C. 395, (decided October 15, 1963), the Commission inter alia, (a) determined that motor carrier holders of ‘initial’ and ‘secondary’ authority to transport automobiles should be placed in a position to be able to continue to participate in the transportation of certain traffic they enjoyed prior to the advent of trailer-on-flat car and multilevel rail car service, and (b) outlined a procedure for modifying the certificates and permits of such motor carriers; * *

The mention in the order of “initial” and “secondary” authorizations has reference to the classification of certificates and permits into “Initial Movements” and “Secondary Movements” authorizations by Administrative Order No. 75 entered by the Commission in 1938. The “initial” certificates covered transportation of new automobiles from the place of manufacture to the points specified, and the “secondary” certificates covered movements other than initial. When automobile manufacturers began about 1960 to utilize rail transportation to a substantial extent for their shipments, serious problems arose as to the respective rights of “initial” and “secondary” certificate holders. To secure a resolution of the matter by the Commission, the National Automobile Transporters Association filed its petition for a declaratory order. The Commission thereupon made an exhaustive study of the automobile transporters’ problems, with numerous interested parties filing pleadings. After concluding that as matters then stood “initial” certificate holders could not under their existing certificates participate in the completion of a shipment of automobiles which began by rail at the factory, the Commission then outlined a method for granting such authority without imposing upon itself and interested parties the burdens incident to the filing of individual motor carrier applications. The procedure established is as follows:

A great burden would be placed upon applicants, protestants, and this Commission by the filing of individual motor carrier applications for appropriate authority where modifications of existing rights are necessary as a consequence of the interpretation made herein. Under the circumstances presented here, however, the same result may be accomplished by the filing of appropriate petitions to modify existing operating authorities so that the initial carrier may continue to participate in traffic in those instances where initial authority, as here interpreted, does not now cover the movement. Such a petition should be filed in the same docket number in which the initial authority has been granted and would be considered in the same light as an application filed under Section 207(a) of the Act.

It should be supported, as a minimum, by verified statements showing the volume and routing of movements which the petitioners transported within a reasonable time pri- or to the change in movement, and the same data with respect to traffic shipped subsequent to the introduction of rail TOFC and multilevel rail movements. Notice of the filing of such petition will be given by publication in the Federal Register, and interested persons will be given an opportunity to reply. If an existing authority is modified, a petitioner will not be required to relinquish presently held authority, but, at the same time, the change in existing rights will be limited so as not to place petitioner in a position to infringe on the operations of existing carriers. This can be accomplished by appropriately restricting any modification in the authority to meet particular circumstances. See, for example, Auto Convoy Co. Ext. — ■ Secondary Movements from Texas, 86 M.C.C. 614. By the framing of appropriate grants of authority, carriers faced with substantial revenue losses due to these radically changed circumstances in the transportation industry, may seek to obtain appropriate reformation of their present operating authority. If the relief sought is confined to modification to correct outstanding authorities only to the extent necessary to enable a petitioner to continue to participate in the remaining motor movement, and not to encroach on the rights of other existing carriers, it may be that such petitions can be disposed of with a minimum of expense and effort for all concerned, and perhaps without oral hearing.

The procedure established in the NATA declaratory order was approved in Motor Convoy, Inc. v. United States, D.C., 235 F.Supp. 250 (1964), which was affirmed on the merits by the United States Supreme Court in a per curiam decision (381 U.S. 436, 85 S.Ct. 1575, 14 L.Ed.2d 692). The facts in that case were similar to those here. Dixie Transport Company, a motor carrier, was authorized to handle initial movements of new automobiles from Michigan to points in Georgia and Florida. It applied to the Commission for and was granted a modification of its certificate authorizing it to complete shipments to these points which began by rail and ended at railheads in those states. The basis upon which the modification was authorized was the loss of revenue resulting from the switch by the automobile manufacturer to rail shipments. In denying the demand by Motor Convoy, Inc., to set aside the order, the court said:

“We are not ruling that the Commission was compelled to grant Dixie’s application, but only that it was authorized in so doing, nor do we wish to set an unfortunate precedent for future applications wherein it might clearly appear there is relevant testimony that should be considered by the Commission.”

It is clear, therefore, that the procedure followed by the Commission in authorizing the modification of the “initial movements” certificate of Commercial Carriers, Inc. to include “secondary movements” of its former traffic shipped part way by rail from the factory site, has the sanction of the United States Supreme Court and is not open to question here. To the extent that plaintiffs rest their complaint on the failure of the Commission to afford an oral hearing and to find public necessity for additional service, it is without merit. If they are to prevail it must be because the facts before the Commission did not warrant the action taken or because of relevant testimony or other evidence that should have been considered by the Commission but was not. We find nothing to indicate that any evidence in the record before the Commission was not considered, and nothing to indicate that other relevant evidence was available. In its demand for oral hearing no showing was made by United Transports, Ine. as to what it proposed to develop thereby in the way of relevant testimony, and the Commission so found. Nor has any such showing been made here.

With respect to the evidence upon which the Commission acted, plaintiffs characterize the Commission as arbitrary, capricious, palpably wrong, and abusive of its discretion in authorizing the modification in the face of the undisputed fact that the service already supplied was satisfactory and sufficient and that to authorize additional, unneeded service would work a serious financial hardship on them. But they overlook or refuse to see that these facts are not determinative. The purpose of the Commission was to provide Commercial Carriers with a means to re-establish part of its lost traffic if it could, following the conclusion reached in the NATA decision that in situations such as this it was in the public interest to do so. And however much they may complain, it is obvious from the record that any gain in the secondary movements of Cadillacs in Texas realized by the plaintiffs had to come at least in part as the result of the loss of traffic by Commercial Carriers — • and it is for this lost traffic only that Commercial is being allowed to compete. Nor is it determinative that United Transports has invested heavily in anticipation of its windfall of the traffic lost by initial certificate holders such as Commercial Carriers, and stands now to lose by it. The Commission cannot allow its hands to be tied from acting in what it considers the public interest because of investments made by individual carriers.

The court is of the opinion, therefore, that upon the basis of the facts before it the Commission acted within the procedures and principles established in the NATA decision in entering the modification order. And since it does not appear that it failed to consider any relevant facts in evidence, or to afford a hearing as to any such evidence, plaintiffs’ complaint should be dismissed and the order allowed to stand.