Opposition — Common Carrier Conference-Irregular Route v. United States

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In the Supreme Court of the United States

OCTOBER TERM, 1976

COMMON CARRIER CONFERENCE-IRREGULAR ROUTE,

A CONFERENCE OF THE AMERICAN TRUCKING

ASSOCIATIONS, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA AND

INTERSTATE COMMERCE COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

ROBERT H. Bork,

Solicitor General,

DONALD I. BAKER,

Assistant Attorney General,

ROBERT B. NICHOLSON,

LLOYD JOHN OSBORN,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

RoBerT S. BuRK,

Acting General Counsel,

CHARLES H. WHITE, JR.,

Associate General Counsel,

PETER A. FITZPATRICK,

Attorney,

Interstate Commerce Commission,

Washington, D.C. 20423.

AK JR. CLERK

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In the Supreme Court of the Hnited States

OCTOBER TERM, 1976

| No. 76-209

COMMON CARRIER CONFERENCE-IRREGULAR ROUTE,

} A CONFERENCE OF THE AMERICAN TRUCKING

ASSOCIATIONS, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA AND

INTERSTATE COMMERCE COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App.

la-Sa) is reported at 534 F. 2d 981. The orders of

the Interstate Commerce Commission (Pet. App. 9a,

13a-19a) are not officially reported.

JURISDICTION

The judgment of the court of appeals was entered

on April 23, 1976. Petitioner’s timely petition for re-

hearing with suggestion of rehearing en bane was denied

by orders entered on May 17, 1975 (Pet. App. 6a-8a).

The petition for a writ-of certiorari was filed on August

12, 1976. The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

(1)

2

STATUTES INVOLVED

Sections 5(2)a)-(c), S(11), 207 and 212(b) of the

Interstate Commerce Act, 24 Stat. 379 et seq., as amended,

49 U.S.C. 5(2)(a)-(c), 5(11), 307 and 312(b), and Section 4

of the Administrative Procedure Act, 5 U.S.C. 553, are

reproduced at Pet. App. 20a-25a. Section 208(a) of the

Interstate Commerce Act, 49 U.S.C. 308(a), is reproduced

in the Appendix to this brief.

QUESTIONS PRESENTED

1. Whether the Interstate Commerce Commission’s

gateway elimination rules, insofar as they apply to

transferred motor carrier certificates, are within the Com-

mission’s statutory authority.

2. Whether those rules were issued upon adequate

notice.

STATEMENT

“Tacking” is the practice of combining separate

motor common carrier certificates that share a common

point, or “gateway,” in order to perform a through

transportation service, via the “gateway,” from points

authorized in one certificate to points authorized in the

other. Some certificates of public convenience and neces-

sity expressly permit tacking and others expressly pro-

hibit it. When a certificate neither permits nor prohibits

tacking, the Interstate Commerce Commission in the past

has permitted the practice. Since the Commission had

never found that the public convenience and necessity

required through service via the gateway, the provision

of such service was left to the carrier’s option. When

a certificate expressly permits tacking, the provision of

such service is mandatory.

While some gateway operations resulted in relatively

direct through service, others involved varying degrees

3

of circuity, with a concomitant waste of fuel and loss

of efficiency of service. In 1952 the Commission announced

criteria by which a carrier conducting substantial opera-

tions through a gateway could obtain a certificate author-

izing direct service. Childress— Elimination Sanford Gate-

way, 61 M.C.C. 421.' However, many carriers failed to

utilize the Childress approach and continued to conduct

circuitous operations through gateways. With the advent

of the fuel crisis in 1973 the Commission instituted

a rulemaking proceeding to determine whether, or to

what extent, tacking served the public interest. A general

notice of the proceeding, announcing that “important

changes in the Commission’s basic approach to tacking

and the resulting gateway operations” would be considered,

was published in the Federal Register. 38 Fed. Reg.

32269. A formal Notice of Proposed Rulemaking, issued

the same day, contained an exhaustive discussion of the

proposed rules and indicated that they would apply

not only to applications for new authority “but also to

transfer and acquisition applications.” 119 M.C.C. 170,

197, n. 12.2

‘Under Childress, a carrier can obtain direct authority by showing

that substantial operations are being conducted between the

points involved over the “gateway” route, that it is already

an active competitor for traffic between those points, and that

the direct authority would not result in service materially different

from that already available.

2Section 5(2)(b) of the Interstate Commerce Act, 49 U.S.C. 5(2)(b),

provides that one motor carrier may acquire the outstanding

certificate of another only if the Commission determines that the

proposed transaction “will be consistent with the public interest

*** ” Transactions involving smaller carriers are relieved of this

requirement (49 U.S.C. 5(10)), but must nevertheless satisfy certain

procedural rules governing transfers of certificates (Section 212(b).

49 U.S.C. 312(b); 49 C.F.R. Part 1132). As the court of appeals noted

(Pet. App. 4a), the prospect of tacking has traditionally inspired most

transfer applications.

4

After receiving the views of hundreds of interested

parties, including their comments on the impact of the

regulations on the transfer and acquisition of motor

carrier certificates of public convenience and necessity

under Section 5, the Commission adopted new rules

governing gateway operations. In essence, the rules

prohibit tacking and require a certificate for direct service.

Where the total origin-to-destination distance through

the gateway route is more than 300 miles, carriers may

continue to tack only until their application for direct

service is ruled on by the Commission.’ See 119 M.C.C.

530. These new rules apply only to motor common carriers

holding irreguiar route certificates which neither ex-

pressly permit nor prohibit tacking. They apply to such

carriers whether the certificates were issued directly to

them or were acquired from another carrier.

The Commission subsequently issued a policy statement

establishing procedures for implementing the regulations

in acquisition and transfer proceedings (Pet. App. 10a-

12a), and denied petitioner’s request that such trans-

actions be exempted from the rules (Pet. App. 9a,

1 3a-19a).

On petition for review, the court of appeals upheld

the regulations as they pertain to the transfer of

‘The proceeding was conducted in accordance with the require-

ments of Section 4 of the Administrative Procedure Act, 5

U.S.C. 553. The gateway rules are codified at 49 C.F.R. Part 1065 and

were sustained in Thompson Van Lines, Inc. v. United States, 399

F. Supp. 1131 (D. D.C.), affirmed, 423 U.S. 1041.

*The carrier may sustain its burden under the liberalized Childress

criteria (note I, supra) by introducing evidence of substantial “inter-

change” operations through the gateway in concert with the previous

owner of the transferred certificate. 49 C.F.R. 1065.1(d)(2)(ii)B);

Gray Moving & Storage, Inc.— Purchase (Portion)—Thomas C.

Warner, 122 M.C.C. 316, 329-330.

certificates. It ruled that whatever “technical flaw”

may have existed in the Commission’s Federal Register

notice was overcome by the simultaneously reported

docket notice (119 M.C.C. at 197, n. 12), which dis-

closed the agency’s intent to apply the new gateway

approach to future transfers and generated carrier

comments on the merits of that proposal (Pet. App. 3a).

The court also held that the rules do not offend the public

interest standard of Section 5 because that section “is

not a guarantee that tacking would be allowed where

there has been no satisfaction of the higher standard

of public convenience and necessity” (Pet. App. 4a).

ARGUMENT

The decision of the court of appeals is correct, and

the petition raises no issue warranting revtew by this

Court.

|. Petitioner contends (Pet. 11) that the court of

appeals erred in holding that the tacking of operating

rights is a matter of Commission policy “rather than an

absolute right of the transferee * * *.” But the three-judge

court in Thompson Van Lines, Inc. v. United States, 399

F. Supp. 1131, 1135-1136 (D. D.C.), in affirming the

gateway elimination rules as applied to existing and newly

issued certificates held by individuai carriers, had already

held that authority to tack does not constitute a part of a

motor carrier’s certificate in the absence of an express con-

dition in the certificate. Instead, that authority exists as a

result of Commission policy—and that policy can lawfully

be changed by the Commission pursuant to its broad

rulemaking power under Section 208(a) of the Act, 49

U.S.C. 308(a), to superimpose generally applicable “rea-

sonable terms, conditions, and limitations” on the privi-

leges specifically granted by certificates. See Thompson

Van Lines, Inc. v. United States, supra, 399 F. Supp. at

1135; Warren Transport, Inc., Extension—Dubuque to

6

North Dakota, 98 M.C.C. 761, 763; Transport Corp. of

Virginia Extension— Maryland, 43 M.C.C. 716, 719. As the

court of appeals in the instant case held, Section 208(a)

also applies to transferred certificates, so that, even when

the Commission has approved a transfer as consistent with

the public interest, no vested right to tack is conferred.

There is no merit to petitioner’s contention (Pet. 12)

that the Commission’s “exclusive and plenary” jurisdic-

tion over transfers (49 U.S.C. 5(11)) nullifies the agency’s

general power under Section 208(a) to attach reasonable

terms and conditions to certificates. Instead, Section

5(11) is merely intended to establish the exclusivity of

the Commission’s authority over transfers notwithstand-

ing any state or municipal law or any other federal statute.

See B.F. Goodrich Co. v. Northwest Industries, Inc., 303

F. Supp. 53 (D. Del.); Chicago South Shore & South Bend

R. v. Monon Railroad, 235 F. Supp. 984 (N.D. ill.);

Tsimensi v. New York Ceniral R. Co., 34 A.D. 2d 531, 309

N.Y.S. 2d 22. There is likewise no merit to petitioner’s

suggestion (Pet. 11, n. 5) that the right of a carrier to “own

and operate” (49 U.S.C. 5(11)) an acquired certificate em-

braces the right to tack that certificate with other authori-

ties. Neither the language of Section 5(11) nor its legisla-

tive history contain any reference to the tacking of certi-

ficates. See H.R. Conf. Rep. Nos. 2016 and 2832,

76th Cong., 3d Sess. (1940). The ownership and opera-

tion of transferred certificates are necessarily subject to

whatever conditions are contained in such certificates or

imposed by the Commission pursuant to Section 208(a).

As the court of appeals recognized (Pet. App. 4a), the

gateway elimination regulations do not conflict with the

“public interest” standard governing the transfer of certi-

ficates under Section 5. The transfer of certificates con-

tinues to be governed by that standard. However, if the

transferee intends to tack the acquired certificate with

5

other authorities, it must also demonstrate that the public

convenience and necessity require such ope.*tions. In

advancing the policy underlying the gateway v'mina-

tion rules—curtailment of circuitous and wasteful gatew*v

operations—the Commission has thus afforded similar

treatment to all certificates held or acquired by irregular

route carriers: tacking is no longer permitted. Only if the

carrier shows that the public convenience and necessity

require direct operations may it offer through service. There

is no requirement that the Commission give special

treatment to certificates acquired from other carriers.

2. The court of appeals did not err in rejecting peti-

tione:’s contention that the Commission provided in-

sufficient notice of its intention to apply the gateway

elimination rules to transferred certificates. .A general

notice of the rulemaking proceeding was published in

the Federal Register. 38 Fed. Reg. 32269. The simul-

taneously reported Notice of Proposed Rulemaking in-

dicated that the proposed rules would apply to transferred

certificates. That notice prompted comments from a

number of irregular route carriers on this aspect of the pro-

posal and additional comments were filed seeking

reconsideration of the gateway regulations as initially

adopted (Pet. App. 3a). The court of appeals, recognizing

that Section 4 of the Administrative Procedure Act, 5

U.S.C. 553, “does not require every aspect of the proposed

order to be explained in the generai notice” (Pet. App.

3a), correctly held that this constituted sufficient notice.

See Buckeye Ccehlevision, Inc. v. Feaeral Communica-

tions Commission, 387 F. 2d 220, 226 and n. 26(C.A. D.C.);

Chrysler Corp. v. Department of Transportation, 515 F. 2d

1053, 1061 (C.A. 6); California Citizens Band Ass'n v.

United States, 375 F. 2d 43, 47-49 (C.A. 9).

8

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ROBERT H. Bork,

Solicitor General.

DONALD I. BAKER,

Assistant Attorney General.

ROBERT B. NICHOLSON,

LLOYD JOHN OSBORN,

Altorneys.

ROBERT S. BuRK,

Acting General Counsel,

CHARLES H. WHITE, JR.,

Associate General Counsel,

PETER A. FITZPATRICK,

Attorney,

Interstate Commerce Commission.

OcTOBER 1976.

DOJ-1976-10

9

APPENDIX

Section 208(a) of the Interstate Commerce Act, 49 Stat.

552, 49 U.S.C. 308(a), provides:

Any certificate issued under section 206 and 207

shall specify the service to be rendered and the routes

over which, the fixed termini, if any, between which,

and the intermediate and off-route points, if any,

at which, and in case of operations not over specified

routes or between fixed termini, the territory within

which, the motor carrier is authorized to operate;

and there shall, at the time of issuance and from time

to time thereafter, be attached to the exercise of the

privileges granted by the certificate such reasonable

terms, conditions, and limitations as the public con-

venience and necessity may from time to time require,

including terms, conditions, and limitations as to the

extension of the route or routes of the carrier, and

such terms and conditions as are necessary to carry

out, with respect to the operations of the carrier,

the requirements established by the Commission under

section 204(a)(1) and (6); Provided, however, That

no terms, conditions, or limitations shall restrict

the right of the carrier to add to his or its equipment

and facilities over the routes, between the termini,

or within the territory specified in the certificate,

as the development of the business and the demands

of the public shall require.