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ARTUS TRUCKING CO. v. ICC

June 27, 1974

ARTUS TRUCKING COMPANY, INC., Plaintiff,
v.
INTERSTATE COMMERCE COMMISSION, and United States of America, Defendants



Per Curiam

Plaintiff seeks an order vacating and setting aside certain orders of the Interstate Commerce Commission ("ICC") which denied plaintiff's application for motor common carrier operating authority between New York, N.Y. and points within eight states and the District of Columbia, within a two hundred and fifty mile radius of New York, N.Y. The jurisdiction of this three judge court is invoked pursuant to Title 5 U.S.C. § 702 and Title 28 U.S.C.§§ 1336, 2325 and 2284.

The salient facts are as follows. Plaintiff is a motor contract carrier holding a permit issued in April 1962 to engage in the transportation of paper and paper bags between New York, N.Y. and points in eight states and the District of Columbia, within a two hundred and fifty mile radius of New York N.Y. Pursuant to that authority, the plaintiff, up until two years ago, used its storage facilities located at Bush Terminal, Brooklyn, N.Y. to service its contracting shippers. Two years ago, by reason of a condemnation proceeding instituted by the City of New York, the plaintiff had to abandon its storage and terminal facilities at Bush Terminal. Appropriate space was acquired in Kearny, N.J. However, Kearny, N.J. is beyond the radial base point contained in the plaintiff's contract carrier permit. As a result, it became necessary for the plaintiff to obtain appropriate operating authority from the ICC in order to continue receiving and distributing its shippers' merchandise at Kearny, N.J.

Plaintiff made application to the ICC for both the permanent and temporary contract carriage authorization it required. The application for temporary contract carrier authority was granted and permitted the plaintiff to provide substantially the identical service authorized in its existing contract carrier permit but from the radial base point of Kearny, N.J. The plaintiff's application for permanent contract carrier authority was denied by the ICC on the grounds that the plaintiff's service to eleven shippers was not consistent with contract carrier status. See Unthum Trucking Co. Ext. -- Phosphatic Feed Supplements, 91 M.C.C. 691 (1962). Instead, the ICC reasoned that the plaintiff's operation at Kearny, N.J. conformed to that of a motor common carrier. Accordingly, the ICC issued to the plaintiff a certificate of public convenience and necessity conditioned upon the fact that the plaintiff either request cancellation of its contract carrier permit originally issued in 1962 and having New York, N.Y. as its radial base point or request conversion of said permit to a certificate of public convenience and necessity. *fn1" Significantly, the plaintiff did not appeal or seek review of this order. Therefore, the validity of the ICC's decision to grant the plaintiff a certificate upon the cancellation or conversion of its existing contract carrier permit is not before the court. Rather, since the plaintiff sought conversion of its existing permit, the only issue before the court is the validity of the ICC's decision denying the plaintiff's conversion application.

 The conversion application was processed under the ICC's modified procedure. Pursuant to this procedure, evidence is not taken at a hearing but rather through the submission of verified statements. Here, verified statements were filed in support of the application by the plaintiff and six of its contracting shippers. Verfied statements in opposition to the application were filed by five existing common carriers servicing the New York metropolitan area and plaintiff submitted a rebuttal. On April 25, 1973, the ICC Review Board No. 1 denied the plaintiff's conversion application in its entirety. Subsequent thereto, plaintiff filed a Petition for Reconsideration which was similarly denied by the ICC's Division 1, acting as an appellate division, on August 29, 1973. Finally, plaintiff filed a petition with the ICC seeking further consideration of its application on the ground that an issue of general transportation importance was involved. This petition was denied by the ICC in General Session on October 11, 1973.

 The fifth "appearing" paragraph of the ICC's order states:

 
"That in proceedings of this nature evidence of past operations alone is not sufficient, but in addition, shipper testimony which will demonstrate a need for applicant's service as a common carrier is likewise required, Connell Transport Co., Inc., Conversion Application, 95 M.C.C. 312, 319; that the evidence submitted by the supporting shippers herein (1) deals principally with shipments only from Kearny, which traffic applicant is already conditionally authorized to provide, (2) only indicates an occasional and undeterminable need for the transportation of an unspecified volume of the involved commodities on inbound shipments to the New York City area, (3) fails to identify representative points in the destination territory, (4) fails to indicate specific volumes moving to respective destination States or points therein, and (5) fails to indicate any deficiencies in existing services; that on the present record, we are not persuaded that a public need exists for the proposed common carrier service; and that the application, accordingly, should be denied."

 In an attempt to show that the above set forth decision was rendered in an arbitrary and capricious manner and therefore constitutes an abuse of the ICC's discretion, the plaintiff argues that (1) the ICC improperly applied the relevant legal standards, (2) the ICC considered certain inapplicable and unnecessary criteria and (3) the ICC considered only portions of the entire record.

 Much has been written concerning the district court's scope of review in analyzing the decision of an administrative agency. Suffice it to say that the district court has performed its function upon finding that the agency's conclusions have a rational basis. See Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286-287, 54 S. Ct. 692, 78 L. Ed. 1260 (1934); Short Line, Inc. v. United States, 290 F. Supp. 939, 941 (D.R.I1968); Consolidated Carriers Corp. v. United States, 321 F. Supp. 1098, 1100 (S.D.N.Y.1970), aff'd, 402 U.S. 901, 91 S. Ct. 1375, 28 L. Ed. 2d 642 (1971). In reaching this determination the district court cannot substitute its judgment for that of the administrative body, United States v. Pierce Auto Freight Lines, 327 U.S. 515, 536, 66 S. Ct. 687, 90 L. Ed. 821 (1946); Raye and Company Transports, Inc. v. United States, 314 F. Supp. 1036, 1044 (W.D.Mo.1970), but rather the court must accept the agency's findings so long as they are supported by substantial evidence on the record as a whole. Consolo v. Federal Maritime Commission, 383 U.S. 607, 619-621, 86 S. Ct. 1018, 16 L. Ed. 2d 131 (1966); Kent Freight Lines, Inc. v. United States, 341 F. Supp. 787, 789 (D.Md.1972).

 Utilizing this standard of review, the plaintiff's three arguments will be dealt with seriatim.

 Firstly, plaintiff contends that the ICC erred in applying the standards for conversion applications enunciated in Connell Transport Co., Inc., Conversion Application, 95 M.C.C. 312 (1964), to the instant case. More specifically, the plaintiff points to the fact that in the case at bar the ICC cites Connell for the principle that, "shipper testimony which will demonstrate a need for applicant's service as a common carrier is likewise required" rather than for the correct principle that, "shipper testimony which will demonstrate a need for applicant's services as a common carrier rather than as a contract carrier should, therefore, be produced." Plaintiff's argument continues that had the ICC properly applied the Connell standards, upon which it purportedly relied in denying the plaintiff's application, the ICC would have granted the application on the basis of the plaintiff's demonstration of past lawful operations performed under the operating authority sought to be converted and the shipper testimony demonstrating a need for a continuance of its service as a common carrier rather than as a contract carrier.

 Under the particular facts of this case, it is arguable, in a literal sense, that the plaintiff's supporting shippers have demonstrated a need for the plaintiff's service as a common carrier rather than as a contract carrier. However, this demonstration of need is not predicated upon the public convenience and necessity but rather is predicated upon the fact that unless the plaintiff's contract carrier permit is converted to a certificate of public convenience and necessity, the plaintiff will not be able to provide contract or common carrier service from New York, N.Y., due to the restrictive provisions of Title 49 U.S.C. § 310. In essence, it is the plaintiff's position that while its supporting shippers do not care whether the plaintiff services them as a contract or common carrier, they do desire the continuation of the plaintiff's service. Since this service can only be provided as a common carrier pursuant to § 310, the plaintiff reasons that the requisite demonstration of need for its service as a common carrier has been made.

 An historical analysis of the origin of common carrier operating authority and its application to conversion proceedings will show that evidence of past lawful operations and a demonstration of need by supporting shippers for a continuation of the applicant's service as a common carrier rather than as a contract carrier is not sufficient to warrant the granting of a certificate. What is needed is that the applicant submit evidence of past lawful operations and show that the public convenience and necessity require its service as a common carrier.

 Title 49 U.S.C. § 307 states in relevant part:

 
"(a) . . . and that the proposed service, to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied. . . ." ...

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