Petition — American Institute for Shippers' Assns. v. Interstate Commerce Commission

8

— FILED

„ Y 25 1977

Supreme Court of the Unite States

OCTOBER TERM, 1977 MICHAEL RODAK, JR., CLERK

No.

2671653

AMERICAN INSTITUTE FOR SHIPPERS’ ASSOCIATIONS, INC.,

HARRY DEMONTMOLLIN,

FLORIDA ALL STATE CONSOLIDATORS, INC.,

NEW JERSEY SHIPPERS POOLING ASSOCIATION, INC.,

and

SUNSHINE STATE SHIPPERS AND

RECEIVERS ASSOCIATION, INC.,

Petitioners,

V.

INTERSTATE COMMERCE COMMISSION

and

UNITED STATES OF AMERICA

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Of Counsel: RONALD N. CORERT

ROBERT L. COPE

GROVE, JASKIEWICZ, GILLIAM 1730 M Street, N.W.

AND COBERT -

Suite 501

1730 M Street, N.W.

Washington, D.C. Washington, D.C.

Counsel for Petitioners

May 25, 1977

WILSON . EPES PRINTING Co INC. - RE 7-6002 - WASHINGTON. D.C. 20001

TABLE OF CONTENTS

OPINIONS BELOW .........

JURISDICTION ..... ——

QUESTIONS PRESENTED .........

STATUTES INVOLVED

STATEMENT

REASONS FOR GRANTING THE WRIT...

I. THIS APPEAL INVOLVES SIGNIFICANT

STATUTORY AND POLICY CONSIDERA

TIONS IN THE ADMINISTRATION OF THE

INTERSTATE COMMERCE ACT IN THAT

THE DECISIONS BELOW SEVERELY CUR-

TAIL THE ABILITY OF NONPROFIT CO-

OPERATIVE SHIPPERS’ ASSOCIATIONS

TO MARKET THE PRODUCTS OF THEIR

MEMBERS BY ABROGATING THE RIGHT

OF A SHIPPERS’ ASSOCIATION, EXCLUD-

ED FROM REGULATION BY SECTION 402

(C)(1) OF THE INTERSTATE COMMERCE

ACT, FROM ENJOYING THE INHERENT

ADVANTAGES OF MEMBERSHIP’ IN

OTHER SHIPPERS’ ASSOCIATIONS ..........

A. The Decisions Below Violate The Intent of

Congress That Shippers’ Associations Shall

Enjoy A Preferred Status Within The

Scheme Of National Transportation a

B. The Decisions Below Controvene The Princi-

ples Enunciated In Columbia Shippers And

Receivers, Inc. v. United States, And Create

Serious Anomalies In The Proper Interpre-

tation And Administration Of The Interstate

Commerce Act In That The Decisions Below

„„

1

TABLE OF CONTENTS Continued

Permit A NonProfit Cooperative Shippers’

Association To Utilize The Services Of

Another Shippers’ Association But At The

Same Time Prohibit A Shippers’ Association

From Becoming A Member Of Another

Il. THE FAILURE OF THE COURT OF AP-

PEALS TO ADDRESS THE ISSUE OF

WHETHER THE ICC IS BOUND TO COMPLY

WITH THE PROCEDURAL SAFEGUARDS

OF 5 U.S.C. §558(C) IN A PROCEEDING

LOOKING TOWARD THE WITHDRAWAL

OF A STATUTORY EXEMPTION OR PER-

MISSION LEAVES UNANSWERED A FUN-

DAMENTAL AND VITAL ISSUE OF

NATIONAL IMPORTANCE IN THE APPLI-

CATION OF THE ADMINISTRATIVE PRO-

EY GHIIIOT ccentitneccaiesecnetnenteniingtneemngumapeecceee

— —.— a

Appendix A (Judgment of U.S. Court of Appeals

Appendix B (Opinion of U.S. Court of Appeals)

Appendix C (Statutes Involved

Page

TABLE OF AUTHORITIES

Cases: Page

Baltimore Shippers and Receivers Ass'n v. Public

Utilities Commission, 268 F. Supp. 836 (N.D.

Calif. 1967), aff'd per curiam 389 U.S. 583

e 10

Blackwell College of Business v. Attorney General,

454 F. ad $28 (D.C. Cir. 1971) ............................. 16

Busse v. Commissioner, 479 F.2d 1147 (7th Cir.

ES a 9

Castle v. Hayes Freight Lines, Inc., 348 U.S. 61, 63

SE ERE ee eee eee ee 16

CAB v. Delta Air Lines, 367 U.S. 316, 324 (1961) 16

Columbia Shippers and Receivers Ass'n v. United

States, 301 F. Supp. 310 (D.Del. 1969) 12, 13, 14

Commissioner of Immigration v. Gottlieb, 265 U.S.

RATS . aS a AE 9

Federal Maritime Commission v. Seatrain Lines,

e ON 8

Interstate Commerce Commission v. Delaware,

Lackawanna, & Western Railroad, 220 U.S. 235

CO a oa 9, 10

Miller v. Burger, 161 F.2d 992 (9th Cir. 1947) 8

National Labor Relations Board v. Guy F. Atkin-

son Co., 195 F.2d 141 (9th Cir. 195277 17

Nuclear Data Inc. v. Atomic Energy Commission,

344 F. Supp. 719 (N.D. III. 197277 16

Pacific Coast Wholesalers’ Association v. United

States, 81 F. Supp. 991 (S.D. Calif. 1949), aff'd

CO KS oe 7

United States v. Great Northern Ry., 343 U.S.

EEC 8,9

Wilderness Society v. Morton, 479 F.2d 842 (D.C.

Cir. 1973), cert. den. 411 U.S. 917 (19733 8

Administrative Decisions:

Atlanta Bonded Warehouse, Inc., Common Carrier

Application, 91 M.C.C. 104 (1962 8

IV

TABLE OF AUTHORITIES—Continued

Page

Atlanta Shippers Ass’n-Investigation, 322 J. C. C.

1.2 0 9

California Commercial Ass'n v. Wells, Fargo &

Cn BG EAI. GED GID ccevtcenccctnctenimncttinnctinecnssinsis 8, 10

Investigation Into Status of Freight Forwarders,

IL... e 6

Pacific Coast Wholesalers Association, Investiga-

tion of Status, 264 I. C. C. 134 (1945), aff’d Pa-

cific Coast Whelesalers’ Association v. United

States, 81 F. Supp. 991 (S.D. Calif. 1944),

CLI ee 12, 13

Statutes :

Administrative Procedure Act, 5 U.S.C. §§ 551

et seq.

1 ae 2,16

I SS 2, 4, 15

Judicial Code, 28 U.S.C. 88 1, et seq.

II ree 2

28 U.S.C. § 2850 (a) 2

Interstate Commerce Act, 24 Stat. 379 (1887), 49

Stat. 543 (1935), 54 Stat. 929 (1940), 56 Stat.

284 (1942), 72 Stat. 568 (1958)

Section 402 (a) (5), 49 U.S.C. § 1002 (a) (5) — 2,4

Section 402 (e) (1), 49 U.S.C. § 1001 (e) (1) . 2, 3, 5,

6, 7, 8, 9, 10, 11, 13, 14, 16

In THE

Supreme Court of the United States

Ocroser TERM, 1977

No. ——

AMERICAN INSTITUTE FOR SHIPPERS’ ASSOCIATIONS, INC.,

HARRY DEMONTMOLLIN,

FLORIDA ALL STATE CONSOLIDATORS, INC.,

New Jersey SHIPPERS POOLING ASSOCIATION, INC.,

and

SUNSHINE STATE SHIPPERS AND

RECEIVERS ASSOCIATION, INC.,

Petitioners,

V.

INTERSTATE COMMERCE COMMISSION

and

UNITED STATES OF AMERICA

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

American Institute For Shippers’ Associations (AISA)

petitions for a writ of certiorari to review the judgment

of the United States Court of Appeals for

of Columbia Circuit entered in this case on

STATUTES INVOLVED

Sections 402(a)(5) and 402(c)(1) of the Interstate

Commerce Act, 49 U.S.C. &§ 1002(a)(5) and 1002(c)

(1), and Title 5, United States Code, §§551(8) and

558 (e) are set forth in Appendix C hereto. Particularly

of

the joint petitioners before the United States Court of

sented in this petition.

Sunshine consisted of both businesses and manufacturers,

and also other shippers’ associations operating pursuart

to Section 402(c)(1) of the Interstate Commerce Act.

joined

operations of Sunshine.

The Interstate Commerce Commission (ICC) com-

menced an investigation of Sunshine in order to deter-

4

mine whether Sunshine was operating as a regulated

freight forwarder, as defined in Section 402 (a) (5) of

ministrative Law Judge Gibbons found only one serious

defect in the operations conducted by Sunshine: the fact

that Sunshine allowed other shippers’ associations to be-

come members. Judge Gibbons, however, did not issue a

cease-and-desist order. Rather, because such membership

was not specifically prohibited by any Commission deci-

sion or regulation, and because Sunshine had fully co-

operated with the Commission’s investigation, Judge

Gibbons gave Sunshine a reasonable opportunity to bring

itself into compliance.'

All parties filed exceptions to Judge Gibbons decision

and on August 1, 1975, Division 1 of the ICC issued a

33 page report (350 ICC 391-423). The written report

in aan wali ae

ven an opport to achieve compliance. the

— 1 — tp ts ———

forwarder and issued a cease-and-desist order.

Petitioners appealed the ICC decision to the U.S. Court

of Anpeals for the District of Columbia Circuit. The

ICC took the position before the Court of Appeals that

‘Judge Gibbons, however, did not specifically

558 (c) of Title d. United States Code deprived’ the

that Section

of jurisdiction over the proceeding.

posi the

conceded that Sunshine could bring itself into compli-

the outstanding cease-and-desist order by mere-

enrolling the individual members of Sunshine’s mem-

ber shippers’ associations as members of Sunshine. The

ICC further conceded that these new members could

appoint a representative as their agent to oversee their

interests in Sunshine (Appendix B, page 1). Based upon

REASONS FOR GRANTING THE WRIT

I. THIS APPEAL INVOLVES SIGNIFICANT STATU-

TORY AND POLICY CONSIDERATIONS IN THE

ADMINISTRATION OF THE INTERSTATE COM-

MERCE ACT IN THAT THE DECISIONS BELOW

SEVERELY CURTAIL THE ABILITY OF NON-

PROFIT COOPERATIVE SHIPPERS’ ASSOCIA-

TIONS TO MARKET THE PRODUCTS OF THEIR

MEMBERS BY ABROGATING THE RIGHT OF A

SHIPPERS ASSOCIATION, EXCLUDED FROM

REGULATION BY SECTION 402(C)(1) OF THE

INTERSTATE COMMERCE ACT, FROM ENJOY-

ING THE INHERENT ADVANTAGES OF MEM.-

BERSHIP IN OTHER SHIPPERS’ ASSOCIATIONS

A. The Decisions Below Violate The Intent Of Con-

gress That Shippers’ Associations Shall Enjoy A

Preferred Status Within The Scheme Of National

Transportation

Nonprofit cooperative shippers’ associations have been

in existence in the United States since at least the turn

of the twentieth century. The cooperative shipping move-

ment has grown so that today shippers’ associations are

located in virtually every major city in the United States

and in many smaller cities throughout the country. In

Investigation Into Status of Freight Forwarders, 339

ICC 711 (1971), the Interstate Commerce Commission

contrasted the static growth of regulated freight for-

warders with the rapid growth of shi ’ associ

as follows: * —

If any one thing is clear from the evidence assem-

bled in the course of the present investigation it is

that (regulated) forwarding is at best a static in-

dustry ....

At the same time, the bh of the unregulated

nonprofit shippers’ assu s has been

regular. (339 ICC 792). ä

7

This growth, however, has not been encouraged by the

Interstate Commerce Commission. The seventy year

judicial history of shippers’ associations reveals that the

ICC has repeatedly sought to restrain their legitimate

activities. Each time, however, a conscientious judiciary

has recognized each attempt as being inconsistent with

the mandate of Congress that shippers’ associations re-

main a viable and important segment of this country’s

transportation industry. For example, Pacific Coast

Wholesalers’ Association v. United States, 81 F. Supp.

991 (S.D. Calif. 1949), aff'd 338 U.S. 689 (1950), struck

down an ICC decision that would have limited the opera-

tions of shippers’ associations to those instances where

the member is the actual shipper of the freight, thus

barring a shippers’ association from handling any freight

where the member is the receiver of the freight.

The ICC decision below reflects the same obstructionist

view towards the growth of shippers’ associations as that

expressed in Pacific Coast Wholesalers’ Association. The

ICC holds very simply that a shippers’ association is in-

eligible for membership in another shippers’ association.

The crux of the ICC reasoning is that since shippers’ as-

sociations have no direct beneficial interest in the proper-

ty they handle for their members, they cannot be consid-

ered to be shippers, and therefore are incapable of quali-

fying for membership in an “association of shippers.”

(350 ICC 404). This reasoning, however, is illogical and

conflicts with the Congressional mandate in Section 402

(e) (1) that shippers be permitted to combine and coordi-

nate their shipments by any means whatsoever. Section

402 (e) (1) provides that the ICC shall not construe Part

IV of the Act so as to apply its regulatory terms to a

“group or association of shippers.” The true issue, there-

fore, is whether a shippers’ association can be classified

as a shipper. If in fact the shippers’ association members

of Sunshine are shippers, the inquiry must stop since

Sunshine would in law be an “association of shippers”

within the literal meaning of Section 402 (e) (1) of the

Interstate Commerce Act.

Long before the enactment of Part IV of the Inter-

state Commerce Act, shippers’ associations were recog-

nized to be “shippers” rather than carriers. California

Commercial Association v. Wells, Fargo & Company, 14

I. C. C. 422 (1908). The modern day shippers’ association

has also been held to be a “shipper.” Atlanta Bonded

Warehouse, Inc., Common Carrier Application, 91 M.C.C.

104 (1962). Since shippers’ associations are “shippers”,

it must follow that an “association of shippers” must

include an “association of shippers’ associations.” By

holding otherwise the ICC and the Court of Appeals below

contravened the clear and unambiguous meaning of the

statute.

Since statutory construction is a judicial function,

the Federal Courts are not bound by the construction the

ICC gives to the Interstate Commerce Act but rather

must construe the statute themselves. Miller v. Burger,

161 F.2d 992, 994 (9th Cir. 1947). Nor should the Fed-

eral Courts slip into judicial inertia by standing aside

and rubber-stamping administrative interpretations. Fed-

eral Maritime Commission v. Seatrain Lines, 411 U.S.

726 (1973) ; Wilderness Society v. Morton, 479 F.2d 842

(D.C. Cir. 1973), cert. den. 411 U.S. 917 (1973). The

Court of Appeals failed to recognize these principles of

statutory construction when it stated in its opinion that

had it addressed the issue in the first instance “we might

not choose the interpretation of Section 402 proposed by

the Commission.” (Appendix B, page 2).

It was the responsibility of the ICC and the Court of

Appeals to apply the Interstate Commerce Act on the

basis of what Congress had written, not what Congress

might have written. United States v. Great Northern

Ry., 343 U.S. 562 (1952). Since the statutory language

in question defines a shippers’ association as an “associa-

tion of shippers,” and since a shippers’ association is rec-

ognized to be a shipper, the language of Section 402(c)

(1) must be taken literally and a shippers’ association

must be declared eligible for membership in an asso-

ciation of shippers.” Commissioner of Immigration v.

Gottlieb, 265 U.S. 310 (1924). The ICC decision below

represents nothing less than an unlawful attempt to re-

write the Interstate Commerce Act, and to give effect to

Commission ideas of policy. Busse v. Commissioner, 479

F.2d 1147 (7th Cir. 1973).

The intent of Congress is clearly expressed in the broad

language of Section 402(c)(1) of the Interstate Com-

merce Act. The ICC declared in 1964 that Section 402

(e) (1) “clearly safeguards the right of all shippers to

combine their goods, on a nonprofit basis, for the purpose

of obtaining the transportation savings flowing from

their collective ability to utilize volume rates.” Atlanta

Shippers Association, Inc.—Investigation, 322 J. C. C. 273,

277 (1964). In its decision below the Commission refused

to recognize that its holding of law violated both the

letter and the spirit of Section 402(c)(1). Section 402

(e) (1) is a direct recognition by Congress that small

shippers, faced with increasing transportation costs for

less-than-truckload and less-than-carload shipments, must

turn to nonprofit cooperative shippers associations in or-

der to take advantage of volume rates. The impact of the

holding below will have its greatest impact on these

small shippers. It is not an exaggeration to state that

the inability of shippers’ associations to hold member-

ships in other shippers’ associations will place the smaller

industries of this nation at an economic disadvantage

with their larger competitors who can ship their products

at volume rates. In Interstate Commerce Commission v.

Delaware, Lackawanna, and Western Railroad Co., 220

10

U.S. 235 (1911). this Court was faced with a railroad

tariff provision which would have precluded shippers’

associations from taking advantage of volume carload

rates. In striking down the provision, this Court favor-

ably cited the following language from an earlier ICC

decision in California Commercial Association v. Wells

Fargo & Co., 14 LC.C. 422 (1908), which struck down

a similar tariff provision:

It is not an exaggeration to say that the enforcement

of such a rule by the carriers of the United States

would bring disaster upon thousands of the smaller

industries, and more surely establish the dominance

of the greater industrial and commercial institu-

tions. (14 J. C. C. 434, cited at 220 U.S. 244).

The decisions below will have an impact identical to that

of the tariff provision chastised by this Court in the

Delaware, Lackawanna decision. Thus the issues in this

case are of paramount importance to the continued vital-

ity and growth of the nonprofit cooperative shipping

movement in this country and warrant review by this

Court.

In Baltimore Shippers and Receivers Association v.

Public Utilities Commission of California, 268 F. Supp.

836 (N. D. Calif. 1967), aff'd per curiam, 389 U.S. 583

(1968), the State of California attempted to subject to

state regulation interstate motor carriers serving non-

profit cooperative shippers’ associations within commer-

cial zones. In resolving the issue in favor of the associa-

tions, the district court noted that Section 402 (e) (1) of

the Interstate Commerce Act “indicates that nonprofit

shippers’ associations enjoy a preferred status within the

scheme of national transportation.” This Congressionally

mandated preference accorded to shippers’ associations is

destroyed by the rulings below which prevent shippers’

associations from enjoying the inherent advantages of

11

membership in other shippers’ associations. The task of

overturning the rulings below and preserving Congress’

mandate is now left to this Court.

The Court of Appeals below justified its rubberstamp

of the ICC decision by protecting the right of the indi-

vidual members of Sunshine’s member shippers’ associa-

tions to become members of Sunshine and appoint a rep-

resentative as their agent to oversee their interests in

Sunshine. Such measures, however, do not eliminate the

unambiguous provisions of Section 402 (e) (1) which

clearly open membership in a shippers’ association to

other shippers’ associations. Nor do such measures elimi-

nate the fact that the Congressional mandate expressed

in Section 402(c)(1) has been violated. In addition,

such measures impose economic and administrative bar-

riers such as membership fees, additional paperwork,

duplicity of operation, and the necessity for proxy solici-

tations, all of which have no place in a nonprofit co-

operative shippers’ association which returns each dollar

of savings to its members.

By providing for dual membership the Court of Ap-

peals decision recognizes the need for one shippers’ asso-

ciation to join another shippers’ association. Yet the

Court of Appeals refuses to satisfy that need. The Court

of Appeals in effect does everything but answer the mem-

bership issue in the affirmative. Its failure to take that

last necessary step and to enforce the expressed intent

of Congress mandates review and reversal by this Court.

12

B. The Decisions Below Contravene The Principles

Enunciated In Columbia Shippers And Receivers,

Inc. v. United States, And Create Serious Anomalies

In the Proper Interpretation And Administration

Of the Interstate Commerce Act In That the De-

cisions Below Permit A NonProfit Cooperative

Shippers’ Association To Utilize The Services Of

Another Shippers’ Association But At The Same

Time Prohibit A Shippers’ Association From Be-

coming A Member Of Another Shippers’ Association

Prior to the formation of Sunshine, New Jersey

Shippers Pooling Association, Inc., had encountered op-

erational difficulties in moving the freight of its mem-

bers into the Florida market. The pre-Sunshine proce-

dure followed by New Jersey Shippers was to ship

freight into Florida, consolidate the freight in Florida

with the freight of another shippers’ association, and

finally distribute the consolidated shipment to the ulti-

mate consignees.

The consolidating of freight from one shippers’ associ-

ation with the freight of another shippers’ association

is an industry practice commonly referred to as “co-

loading.“ The practice of co-loading has been considered

lawful for many years. Almost thirty years ago the

Commission sanctioned co-loading in Pacific Coast Whole-

salers Association, Investigation of Status, 264 I.C.C.

134 (1945), aff'd Pacific Coast Wholesalers’ Association

v. United States, 81 F. Supp. 991 (S.D. Calif. 1949), aff'd

338 U.S. 689 (1950). One finding made by the Commis-

gion in Pacific Coast was that “no freight is handled for

nonmembers, but one similar association is permitted to

ship its freight in cars consigned to the respondent as-

sociation.” (264 I. C. C. 138). Thus, finding that as-

sociations shipped their freight together in the same

rail car, the Commission also found that the “respondent

corporation is an association of shippers engaged in con-

solidating and distributing freight for its inembers, on

13

a nonprofit basis, for the purpose of securing the bene-

fits of carload, truckload, or other volume rates

and that no violation of Part IV of the act has been

shown.” (264 I. C. C. 142).

More recently in Columbia Shippers and Receivers As-

sociation, Inc. v. United States, 301 F. Supp. 310 (D.

Del. 1969), the Court considered the issue of whether

one association’s “practice of co-loading with other non-

profit shippers’ associations” contravenes the Interstate

Commerce Act. The Court affirmed the ICC’s ruling that

shippers’ associations may indeed combine their freight

in order to take advantage of volume rates. The Court

cited with approval the language employed by the ICC

in defending its position that one shippers’ association

could co-load with another shippers’ association:

. . . when (Columbia Shippers and Receivers) co-

loads with another shippers’ association, both are

engaged in furtherance of their nonprofit activities

pursuant to the statutory objective of Section 402

(e). 105 M. C. C. at 856. (301 F. Supp. 320).

This same rationale is applicable to the membership is-

sue. When one shippers’ association joins another ship-

pers’ association both are engaged in furtherance of their

nonprofit activities pursuant to the statutory objective

of Section 402(c).

It is clear that for thirty years the ICC has permitted

shippers’ associations to enjoy the most obvious physical

benefit of membership in other associations: co-loading.

Yet the decisions below bar shippers’ associations from

enjoying the other inherent advantages of membership.

The most obvious advantage of membership is the right

to control the shippers’ association by voting and sitting

on the board of directors. Membership also eliminates

the necessity of costly duplicative services and additional

paperwork. The effect of the decision below, therefore,

is to create the anomalous situation whereby a shippers’

association may enjoy the physical benefits of member-

14

ship in other shippers’ associations but at the same time

may not enjoy the other benefits of membership. The

anomalies thus created by the decisions below warrant

review by this Court.

Section 402 (e) (1) clearly expresses the intent of Con-

gress that small shippers should be permitted to join

together in a nonprofit cooperative effort in order to

market their products at inexpensive volume rates. Co-

lumbia Shippers recognizes this intent of Congress by

providing that shippers’ associations shall be permitted

to avail themselves of the services offered by all regu-

lated and unregulated transportation entities. The deci-

sions below contravene the clear intent of Section 402

(e) (1) and the principles enunciated in Columbia Ship-

pers by denying membership in a shippers’ association to

other shippers’ associations even though such membership

is necessary for the proper marketing of small shipments.

The radical differences in approach taken by the ICC

and the Court of Appeals below and by the court in

Columbia Shippers, in interpreting Section 402(c) (1)

of the Interstate Commerce Act, warrant review by this

Court in order to insure a uniform approach in the

administration of the Interstate Commerce Act and in

order to insure that nonprofit cooperative shippers’ as-

sociations maintain their proper role in this nati6n’s

transportation industry.

II. THE FAILURE OF THE COURT OF APPEALS TO

ADDRESS THE ISSUE OF WHETHER THE ICC IS

BOUND TO COMPLY WITH THE PROCEDURAL

SAFEGUARDS OF 5 U.S.C. §558(C) IN A PRO-

CEEDING LOOKING TOWARD THE WITHDRAW.

AL OF A STATUTORY EXEMPTION OR PERMIS-

SION LEAVES UNANSWERED A FUNDAMENTAL

AND VITAL ISSUE OF NATIONAL IMPORTANCE

IN THE APPLICATION OF THE ADMINISTRA-

TIVE PROCEDURE ACT

One of the overriding and fundamental principles of

transportation regulation is the principle that carriers

be permitted stability of operation; that is, that

investment in operations be protected. Carriers,

t forwarders, and shippers’ associations, whether

by rail, water, motor or air, expend many

year so that they may better serve the ship-

and traveling public. These entities would be re-

conduct their operations if they were not as-

t their investment would be protected against

intervention. One of the tools used by Congress

these entities with stable operations has been

t of the Administrative Procedure Act, and

‘specifically 5 U.S.C. § 558(c), which provides that prior

to the revocation of a license the licensee must be given

notice of the facts or conduct and opportunity to demon-

strate or achieve compliance.

Once a regulated carrier is issued a certificate and

1

J kk

f

long recognized this fundamental principle that the out-

standing operating certificates of carriers are endowed

with a special status in order to promote stable and

15 f eu? THESE

1 1 if ii Hae 71 1

fa 145 iff rp 1211 5 :

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128 ale

ln,

thal

, 454 F.2d 928 (D.C. Cir. 1971); Nuclear Data Ine.

tomic Energy Commission, 344 F. Supp. 719, 724

N.D. III. 1972).

Likewise, the protection afforded by the Administra-

tive Procedure Act has been extended to unregulated

entities. Title 5, United States Code, §551(8) defines a

“license” as including “statutory exemption or other form

Interstate Commerce Act, clearly the type of “statutory

exemption or other permission” contemplated by the defi-

nition of license contained in the Administrative ?roce-

duce Act. Blackwell College of Business v. Attorney Gen-

of permission.” The operations of a shippers’ associa-

tion are conducted pursuant to Section 402(c) (1) of the

(i

*

18

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

Of Counsel: RONALD N. COBERT

Grove, Jaskiewicz,Gnium Roux L. Core

AND COBERT — M ~y ty

1730 M Street, N.W. ashington, D.C. 20036

Washington, D.C. 20036 Counsel for Petitioners

May 25, 1977

APPENDICES

la

APPENDIX A

Judgment of the United States Court of Appeals, for the

District of Columbia Circuit in American Institute For

Shippers’ Associations, Inc., et. al., v. United States of Amer-

ica et. al., No. 76-1005, entered February 24, 1977.

Nor TO BE PUBLISHED—SEE LOCAL RULE 8(f)

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

SEPTEMBER TERM, 1976

No. 76-1005

Filed Feb. 24, 1977, George A. Fisher Clerk]

AMERICAN INSTITUTE FOR SHIPPERS’

ASSOCIATIONS, INC., et al.,

a Petitioners

INTERSTATE COMMERCE COMMISSION

and UNITED STATES OF AMERICA,

Respondents

FREIGHT FORWARDERS INSTITUTE,

Intervenor

Petition for Review of an Order of the

Interstate Commerce Commission

Before: WRIGHT, LEVENTHAL, and WILKEY, Circuit

Judges.

2a

JUDGMENT

This cause came on to be heard on the record from the

Interstate Commerce Commission and was argued by

counsel.

For the reasons stated in the attached memorandum,

it is

ORDERED and ADJUDGED by this court that the

order of the Interstate Commerce Commission sought to

be reviewed herein is hereby affirmed.

Per Curiam

For the Court

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

1b

APPENDIX B

Memorandum Opinion of the United States Court of Ap-

peals for the District of Co umbia Circuit in American In-

stitute for Shippers’ Association, Inc., et. al. v. United States,

et. al. No. 76-1005, entered February 24, 1977.

MEMORANDUM

We think this is an appropriate case to defer to the

Commission’s understanding of the act which it admin-

isters. The position it has taken here—that bona fide

shippers’ association may not have other shippers’ asso-

ciations as members—is consistent with Section 402 (e)

of the Interstate Commerce Act, 49 U.S.C. § 1002(c)

(1970), which states that the freight forwarder provi-

sions of the Act shall not apply to “the operations of a

shipper, or a group or association of shippers.” Nothing

in this language suggests that Congress contemplated as-

sociations of associations of shippers. This is not itself

dispositive, however, because Section 402(c) only clarifies

the definition of freight forwarder set out in Section 402

(a) of the Act, 49 U.S.C. § 1002(a) (1970). Nonethe-

less, we think the Commission’s interpretation is reason-

able given the following factors: (1) the Commission’s

representation that administration of the freight for-

warder provisions of the Act wil be hampered if shippers’

associations are allowed to have other associations as mem-

bers; (2) its further representation that petitioner Sun-

shine State can bring itself into compliance with the out-

standing cease-and-desist order simply by enrolling the

members of its member associations as members of Sun-

shine itself; (3) its assurance at oral argument that noth-

ing would prevent members of, e. g., petitioner New Jer-

sey Shippers Polling Association, from appointing the di-

rector of New Jersey Shippers as their agent to oversee

their interesis in Sunshine State once those members were

also direct members of Sunshine; and (4) a line between

freight forwarders and shippers associations must be

drawn somewhere, and the function of line-drawing is

normally one left to the sound discretion and expertise

of the agency.

Thus, although we might not choose the interpretation

of Section 402 proposed by the Commission were we to

address the matter in the first instance, we cannot say

that the Commission has acted unreasonably in interpret-

ing its statutory mandate, given the limited impact of

the interpretation chosen on the right of shippers and the

consistency of that interpretation with the language of

Section 402. See Bayside Enterprises, Inc. v. NLRB, ——

US. . , 45 US. L. Week 4086, 4087 (Jan. 11,

1977). For this reason, the order of the Commission is

Affirmed.

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APPENDIX C

Statutes Involved

49 U.S.C. § 1002(a) (5)

The term “freight forwarder” means any person

which (otherwise than as a carrier subject to chap-

ters 1, 8, or 12 of this title) holds itself out to the

general public as a common carrier to transport or

provide transportation of property, or any class or

classes of property, for compensation, in interstate

commerce, and which, in the ordinary and usual

course of its undertaking, A) assembles and consoli-

dates or provides for assembling and consolidating

shipments of such property, and performs or provides

for the performance of break-bulk and distributing

operations with respect to such consolidated ship-

ments, and (B) assumes responsibility for the trans-

portation of such property from point of receipt to

point of destination, and (C) utilizes, for the whole

or any part of the transportation of such shipments,

the services of a carrier or carrier subject to chap-

ters 1, 8, or 12 of this title.

49 U.S.C. § 1002 (e) (1)

The provisions of this chapter shall not be construed

to apply (1) to the operations of a shipper, or a

group or association of shippers, in consolidating or

distributing freight for themselves or for the mem-

bers thereof, on a nonprofit basis, for the purpose

of securing the benefits of carload, truckload, or other

volume rates

5 U.S.C. § 558(c)

... the withdrawal, suspension, revocation, or annul-

ment of a license is lawful only if, before the institu-

2c

tion of agency proceedings therefoi, the licensee has

been given—

(1) notice vy the agency in writing of the facts or

conduct which may warrant the action; and

(2) opportunity to demonstrate or achieve compli-

ance with all lawful requirements

5 U.S.C. § 551(8)

“license” includes the whole or a part of an agency

permit, certificate, approval, registration, charter,

membership, statutory exemption or other form of

permission.

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