Petition — Jones Transfer Co. v. United States

Supreme Court, U. S.

FILED

FEB 16 1978

PL nena JR., CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1977

———- @——- >

4162

No. 77-

—_ e ——_

JONES TRANSFER COMPANY,

CENTRAL TRANSPORT, INC.

AND U.S. TRUCK COMPANY, INC.,

Petitioners,

v.

UNITED STATES OF AMERICA, ET AL.,

Respondents.

—e——_

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

——-- -@—-——_

JOHN W. BRYANT

REX EAMES

Eames, Petrillo and Wilcox

900 Guardian Building

Detroit, Michigan 48226

Attorneys for Petitioners

interstate Brief & Record Co., Wurlitzer Bidg., 1509 Broadway, Detroit, Mi 48226

962-8745 962-8746

TABLE OF CONTENTS

Page

DHE Ee POPE GEE bo cc cascceneusesscescceses i

ORDERS AND OPINIONS BELOW .................. 2

ind chek cdnen acthcncéetgeekdenneten 2

See PUENTE oo cccscccecvcccccvevececees 2

STATUTORY PROVISIONS INVOLVED ............. 3

STATEMENT OF THE CASE ...............-.. a 6

REASONS FOR GRANTING THE WRIT ............. 16

CER oc cccenesiccencnsanescesvcncccesecces 24

TABLE OF AUTHORITIES

Page

Court Cases:

Alabama Association of Insurance Agents v. Board of

Govemors. 533 F. 2d 224 (Sth Cir.. 1976) .......... 18

Allegheny-Ludlum Steel Corporation v. United States.

Sao ©. Bam. FS CUD. Fe... THI) oc cvcccsccesccss 19

Ann Arbor Railroad Co. v. United States. 358 F. Supp.

ey i bs undsnscnsevissKssadubersne 18

Ann Arbor Railrcad Co. v. United States. 368 F. Supp.

Se EN es ED os vrsedesbenkenuneyredeneeess 18

Atchison T. & S.F.R. Co. v. Board of Trade. 412 U.S.

I a a a a i as ta al 23.24

ii

Page

B.F. Goodrich Company v. Department of

Transportation, 541 F. 2d 1178 (6th Cir., 1976), cert.

Ce, Gr a COUNTED éwecdaddkenbtnwkssecenesss 18

Bowman Trans. v. Arkansas-Best Freight, 419 U.S. 281

GEE 0-66.66 2 0006 006064660556 000604 gee seRsteses 16

Burlington Truck Lines v. United States. 371 U.S. 156

CEE cv Kcnnnbenes vce wadsucdbdg evade deebeotedess 21

Chemical Leaman Tank Lines, Inc. v. United States,

368 F. Supp. 925 (D. Del. 1973) ........ececcecee 18

Citizens to Preserve Overton Park v. Volpe, 401 U.S.

SE has bnnde6005e0s enone deeotoneesenness 16,22

Consolidated Flower Shipments, Inc. v. CAB, 213

PF, ee is GE Scecccec dens cecvcoceendes 20

Dallas City Packing. Inc. v. Butz, 411 F. Supp. 1338

RE, Pg HE V4 d 6 SU Neb ceescecsdcansqednesodes 18

Florida East Coast Railway Co. v. United States, 368

F. Supp. 1009 (M.D. Fla., 1973) ..........--2-508- 18

F.P.C. v. Texaco, 417 U.S. 380 (1974) ....... 16,18,20,22

F.P.C. v. Transcontinental Gas Pipe Line Corp., 423

a SEED 6sd0n0s se es0doedkeenasnn sunabecans 16

Freight Consolidators Cooperative. Inc. v. United

States, 230 F. Supp. 692 (S.D. N.Y., 1964) ........ 20

Hooker Chemicals & Plastics Corp. v. Train, 537 F. 2d

SP Gg GOUED chedtndancceveccccesscscasvess 22

Page

National Association of Food Chains, Inc. v. I.C.C..

Se Ws mee . Gag GD cdccccccccccccevas 22

Norton v. McShane, 332 F. 2d 855 (Sth Cir.. 1964),

CR Gs Be as Oe GD cn cececccccbecicecss 19

S.E.C. v. Chenery Corp., 318 U.S. 80 (1943) ......... 21

Secretary of Agriculture v. United States. 347 U.S. 645

a ER EE, Se ne a es 23

South Terminal v. E.P.A., 504 F. 2d 646 (ist Cir., 1974)

Lean oeie adel ase nhbbe cs cenda ces snenene ee 18

Tanners’ Council of America v. Train, 540 F. 2d 1188

RES ee ar gale a ee 22

United States v. Allegheny-Ludlum Steel Corp., 406

EE cee ee 2.15,16.17,18.19

Wilkinson v. United States, 365 U.S. 399 (1961) ...... 16

Interstate Commerce Commission Case ;:

Carrier Switching at Industrial Plants in the East. 294

tf = 0 a Ree eee 14.15.16.23

Detention of Motor Vechicles — Nationwide. 124

ARES 8 iy Oe ee oe oe 2

Detention of Motor Vehicles — Nationwide. 126

GR RG Et Ee Et ee 2

Hygrade Food Products Corp. Terminal Allowance. 306

Cee el bebe ckeces 23

Medusa Portland Cement Co. Terminal Services. 287

EER A I Eye eae 23

iV

Page

Statutes:

$ UBC. GB5D ..cvccvetccees0dséeeesnneseeneee 6

§$U.BL. FFEB .ncccccdcscdccabedeudbesetuseneeneee 3

U.S.C. GIFS ow cc cccdcécsustscceeeuns ene 2

49 U.S.C. preceding §1, 301, 901, 1001 (National

Trennepevtation Policy) ....ccccsesicesiecsssoseses 4

Other Authorities:

Coile of Federal Regulations

@ C.F.R. SISB7 SIMA) . ccccccccccsvssecsecpeusseus 5

IN THE

Supreme Court of the United States

OCTOBER TERM, 1977

JONES TRANSFER COMPANY,

CENTRAL TRANSPORT, INC.

AND U.S. TRUCK COMPANY, INC.,

Petitioners,

Vv.

UNITED STATES OF AMERICA, ET AL.,

Respondents. '

——— © ——

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Petitioners. Jones Transfer Company. Central

Transport. Inc., and U.S. Truck Company, Inc..

respectfully pray that a writ of certiorari issue to review

the judgment and opinion of the United States Court of

Appeals for the Third Circuit entered in this proceeding

on December 29. 1977.

Respondents to this petition are: United States of America and

Interstate Commerce Commission: Rocky Mountain Motor Tariff

Bureau. Inc.. Southem Motor Carriers Rate Conference. Inc.. and

Middle Atlanti: Conference. intervenors in support of respondents

below. and Ford Motor Company and the National Industrial Traffic

League. petitioners below. “

ORDERS AND OPINIONS BELOW

The judgment and opinion of the Court of Appeals, not

yet reported, appears in the appendix hereto. (3a)? The

initial report and order of the Interstate Commerce

Commission, Detention of Motor Vehicles — Nationwide,

124 M.C.C. 680 (15a), was decided May 12, 1976. A

second report and order of the Commission on

reconsideration, Detention of Motor Vehicles -

Nationwide, 126 M.C.C. 803 (135a), was decided June 3.

1977. A third order of the Commission, as yet

unpublished, was issued September 14, 1977 (165a). All

of said orders are included in the appendix hereto.

JURISDICTION

The judgment of the Court of Appeals was entered

December 29. 1977, and this petition for a writ of

certiorari has been filed within 90 days of that date. This

court’s jurisdiction is invoked pursuant to 28 U.S.C.

§1254(1).

QUESTIONS PRESENTED

1. Did the Court of Appeals err ia construing this

Court's opinion in United States v. Allegheny-Ludlum

Steel Corp., 406 U.S. 742 (1972). as precluding any

meaningful inquiry by a reviewing court into the

existence of a stated reasoned basis for agency action or

the absence of a rational connection between agency

findings and the ultimate remedies adopted?

2 References to the consolidated appendix which has been

submitted by these petitioners and other petitioners seeking review of

the proceedings below are given as “a”.

3

2. Did the Interstate Commerce Commission act

arbitrarily and capriciously in promulgating rules that

constructively bar common motor carriers from delivering

freight to the consignees in those circumstances where

the motor carriers make use of temporary parking areas

at the facilities of the consignees. where the agency failed

to articulate a reasoned basis for its decision and. where

in particular the basis articulated by the agency is

demonstrably erroneous on the record below?

STATUTORY PROVISIONS iNVOLVED

United States Code, Title 5

Section 706 — Scope of Review

To the extent necessary to decision and when

presented. the reviewing court shall decide all

relevant questions of law. interpret constitutional

and statutory provisions. and determine the

meaning or applicability of the terms of an agency

action. The reviewing court shall —

(2) Hold unlawful and set aside agency action.

findings and conclusions found to be —

(A) Arbitrary. capricious. an abuse of

discretion. or otherwise not in

accordance with law;

United States Code, Title 49

National Transportation Policy (49 U.S.C.

preceding Sections |. 301, 901, 1001)

it is hereby declared to be the national

transportation policy of the Congress to provide

for fair and impartial regulation of all modes of

transportation subject to the provisions of this

Act. so administered as to recognize and preserve

the inherent advantages of each; to promote safe,

adequate, economical, and efficient service and

foster sound economic conditions in transportation

and among the several carriers; to encourage the

establishment and maintenance of reasonable

charges for transportation services. without unjust

discriminations, undue preferences or advantages.

or unfair or destructive competitive practices; to

cooperate with the several States and the duly

authorized officials thereof; and to encourage fair

wages and equitable working conditions; — ali to

the end of developing. coordinating, and

preserving a national transportation system by

water, highway. and rail. as well as other means.

adequate to meet the needs of the commerce of

the United States. of the Postal Service. and of

the national defense. All of the provisions of this

Act shall be administered and enforced with a

view to carrying out the above declaration of

policy.

Code of Federal Regulations, Title 49

Section 1307.35(e) (2) (Proposed)

Section 2. Definitions

(f) ‘‘Spotting’’ means the placing of a trailer at

a specific site designated by consignor. consignee.

or other party designated by them, detaching the

trailer. and leaving the trailer in full possession of

consignor. consignee. or other designated party

unattended by carrier's employee and un-

accompanied by power unit. Carrier will not move

the trailer until such time as it has received

notification pursuant to Section 3. that the trailer

is ready for pickup at any site on premises.

Consignor. consignee. or other designated party

may shift the spotted trailer with its own power

units at its own expense and risk for the purpose

of loading or unloading. Empty trailers placed at

the premises of consignor without specific request

are not spotted until the carrier receives a

consignor’s request and places a trailer for

spotting. Movement of the trailer from the

consignor’s premises to the specific site for

spotting shall be the obligation of the carrier. and

free time shall accrue as provided in section 3.

STATEMENT OF THE CASE

Under notice and comment rulemaking procedures

pursuant to Section 553 of the Administrative Procedure

Act, 5 U.S.C. §553, the Interstate Commerce

Commission promulgated uniform rules to regulate

detention of motor common carrier vehicles by shippers

and receivers (consignees) of freight. One of these rules,

Section 2(f), defined circumstances under which a motor

carrier trailer will be deemed ‘‘spotted’’ at the facilities of

a consignee. Under Section 2(f), a trailer is spotted when

it is detached from its power unit and left in the full

possession of the consignee. The impact of such spotting

is that the carrier’s line haul transportation service is

deemed to be at an end, and its delivery is deemed

completed.

In its decision adopting these rules, the Commission

took the position that any detachment of a trailer on the

property of a consignee would cause a trailer to be

‘*spotted’’. (73a, 139a, 168a) Such a construction would

apply even in a situation where a carrier was merely

using a consignee-owned parking area to detach trailers

from its over-the-road tractors, for subsequent delivery

by other tractors under its control. Under the

Commission's interpretation of Section 2(f), any such

temporarily detached trailer would be considered spotted,

even where the carrier retained possession of the trailer,

and the carrier’s transportation service would terminate.

A consignee would thus be required to secure its own

carrier service to have such a trailer moved to the desired

point of unloading, or else pay an additional delivery

charge to the delivering carrier.

:

Such a rule will result in needless and wasteful

conversion of motor carrier operations to a so-called

‘‘live’’ delivery system. At present, petitioners and many

other carriers temporarily detach their trailers in

consignee parking areas (‘‘holding yards’’) to allow their

locally-based equipment to make actual deliveries. Such

detachment frees over-the-road equipment to perform

other highway operations while actual delivery of

detached trailers is performed by one switching tractor.

The alternative, use of road equipment to make actual

deliveries, unnecessarily causes skilled drivers with

costly highway equipment to sit idle at consignee

facilities waiting for their vehicles to be unloaded. By

imposing added delivery costs on consignees when

trailers are temporarily detached, Section 2(f)

economically compels consignees to require live

deliveries. Evidence adduced before the Commission

indicated that a substantial shift to such inefficient live

deliveries will occur if the proposed rule becomes

effective.

The holding yards presently used by motor carriers at

consignee facilities are parking areas controlled by the

carriers themselves or their agents. (J.A. 29)* Consignee

involvement in these facilities is limited to providing

security services. (J.A. 30) When a carrier brings a

loaded trailer into a holding yard for delivery, it notifies

the consignee of the availability of the trailer for delivery

and unloading and leaves the trailer in the possession of

its agent. (J.A. 30) When the consignee advises that it

can accept delivery, the agent then moves the trailer from

References to the administrative record in the Joint Appendix

before the Court of Appeals below are given as “J.A.””.

8

the holding yard to the actual point of unloading. To

avoid having trailers unduly detained while awaiting

consignee unloading, carriers publish provisions charging

the consignee for the length of time the trailer is

detained. (J.A. 29) As soon as notice of arrival is given,

the consignee is allowed a stated free time period for

unloading and then is charged on an hourly or daily basis

for additional detention time. Trailers parked in holding

yards are always subject to the running of such detention

charge provisions; no free storage is provided to the

consignee. (J.A. 31)

Section 2(f) arose from the Commission rulemaking

proceeding in Ex Parte No. MC-88, Detention of Motor

Vehicles -— Nationwide. The central focus of this

proceeding was the detention of all types of motor carrier

vehicles by shippers and consignees for the purpose of

loading or unloading. (117a) In addition to the detention

provisions applicable in holding yards, carriers generally

assess charges against shippers or consignees for any

detention of trailers or power units delayed in loading or

unloading. The Commission’s primary concern in initiating

its rulemaking proceeding was the need for promulgating

uniform rules for the assessment of such charges, with

the attendant elimination of discrimination between

shippers in the assessment of such charges. (17a-18a) A

related concern was whether all carriers should be

required to publish “‘pre-arranged scheduling’’ provisions

in their detention rules, whereby shippers or receivers

could make appointments for the arrival of carrier

vehicles and not be charged for detention if such vehicles

arrived ahead of schedule.

9

Section 2(f), and the Commission’s interpretation of

that section, further none of the Commission’s stated

goals in promulgating detention rules. Rather, the

Commission has used Section 2(f) to require the

imposition of extra transportation charges on consignees

receiving freight through holding yards, by ruling that

such trailers have been spotted and thus finally delivered

when they are parked at the carrier holding yard.

However, after three Commission reports and a

voluminous underlying record, there is still a complete

absence of any basis, factual or legal, to justify this

ruling. This is a case in which

——the Commission’s own language in Section 2(f)

fails to support the conclusion in the Commission

reports that trailers in carrier holding yards must be

deemed spotted,

——each of the Commission reports states that trailers

in carrier holding yards should not be considered

spotted, in juxtaposition to contrary statements in the

same reports,

——Commission counsel on appellate brief below

advanced a position directly opposite to statements of

the Commission itself that trailers in holding yards are

not spotted, and

——ihe only rationale supporting the Commission's

constructive ban on holding yards is founded on

totally baseless factual premises.

It is difficult to fathom an administrative record that

could be less supportive of an agency’s ultimate

conclusions.

As noted. Section 2(f). on its face. does not consider a

trailer spotted and thus terminate line haul service unless

10

the trailer is left ‘‘in the full possession of the * * *

consignee * * * unattended by carrier's employee.’

(Emphasis added) However, in its reports adopting

Section 2(f), the Commission has specifically stated that

all trailers left in holding yards are deemed spotted. The

Commission states:

The definition of ‘‘spotting’’ contained in

Section 2(f) and item 33 on page 737 [73a] of the

prior report and order make it clear that the

carriers’ line-haul obligation ends when a loaded

trailer is dropped in the consignee’s holding yard.

The cost of moving the trailer from the holding

yard to the unloading dock is the responsibility of

the consignee. (!68a)

As noted, holding yards are attended by carrier

employees, and trailers in holding yards remain in the

carriers’ possession. Accordingly, the finding that all

trailers in holding yards are ‘‘spotted’’ is inconsistent

with the plain language of Section 2(f). Indeed, the

Commission’s interpretation takes the unusual step of

holding that a carrier’s service is deemed completed even

before the carrier has given up possession of its freight.

Nevertheless, the Commission has continued to adhere to

the view that Section 2(f) makes all trailers left in holding

yards spotted and thus subject to no further carrier

movement.

Even the adopting reports of the Commission itself

contain statements that trailers left in carrier-supervised

holding yards should not be considered spotted. Under

the proposed rules, trailers which are not spotted are

subject to delivery under the terms of the so-cailed

‘detention with power’ rules. (154a-158a) (as opposed

to the “‘detention without power’ rules which apply to

spotted trailers. 1!58a-l6la) Such rules apply to the

»

delivery and holding of trailers which remain in the

possession of a carrier or its agent. At numerous points,

the Commission reports state that, as holding yards are

operated by carriers, trailers left in holding yards are still

in the carrier’s possession and thus are subject to the

rules for detention with power. For instance, in its first

report, the Commission stated:

If the carrier must leave the vehicle in a holding

yard arrangement with either itself or its agent

moving the trailers, then any accrued detention is

subject to the charges for vehicles with power

units, * * *. (73a)

Similarly, the Commission stated in its second report

that:

Lower charges for detention without power are

based on the economies which carriers realize by

not having drivers and power units tied up in

unproductive waiting time. These economies are

lost when a carrier must either return a tractor to

the yard to shuttle a trailer, or pay an agent to do

so. (139a)

These statements are in direct contradiction to the

Commission's concurrent statements that trailers in

holding yards are deemed spotted. If trailers are spotted,

they are subject to charges for detention without power.

There is no indication in the Commission reports

themselves as to which category of charges should

actually be applicable.*

4 In its third report. the Commission also stated that a trailer left

in an origin holding yard could not be deemed to be left in the full

possession of a consignor. and thus spotted “because the carrier is

free to move or even remove the trailer altogether”. (166a) A carrer

maintaining a destination holding yard would similarly be free to move

trailers within the holding yard. Accordingly. by the Commission's

logic. such trailers should similarly be considered not to be spotted.

12

Before the Court of Appeals, petitioners argued that

even if the detention with power provisions were those

applicable to trailers left in holding yards, the

Commission had failed to justify the high !evel of charges

called for by such provisions.” However, the Commission

brief in no way responded to this argument. Rather,

Commission counsel on brief chose to completely

abandon any statements below suggesting detention with

power provisions applied. The Commission brief stated:

Contrary to Jones’ assertion, spotted trailers

which are shifted [from holding yards to unloading

docks] wili not be subject to charges for detention

of motor vehicles with power * * *. (Joint Brief

for the Interstate Commerce Commission and the

United States, p. 27) (Emphasis added)

This statement completely contradicted the statement in

the Commission’s first report that:

If the carrier must leave the vehicle in a holding

yard arrangement with either itself or its agent

The level of detention charges for vehicles with power was

prescribed by the Commission based on a combination of Commission

average cost figures and comparisons with existing levels of detention

with power charges. The result of applying detention with power

charges would be to assess virtually confiscatory detention charges for

trailers spotted at holding yards. Detention with power charges are

$432.00 per trailer per day. over 17 times as high as the initial charge

for trailers without power. The cost figures used to develop the

charges for detention with power are full labor and investment costs

for a continuously-present tractor. trailer. and driver. (58a) Such

charges bear no relation to the holding of upwards of 40 trailers in a

holding yard manned by only one employee and one small yard tractor

unit. The Commission clearly did not have holding yard operations in

mind when it formulated the level of charges for detention with power.

Indeed. such charges would be confiscatory. and no shipper or

receiver of freight would utilize holding yards with such charges in

being.

13

moving the trailers, then any accrued detention is

subject to the charges for vehicles with power

units. (73a-74a) (Emphasis added)

Neither of the Commission’s first two reports advanced

any explanation of what public interest would be served

by a policy that would treat parking of a trailer in a

carrier controlled holding yard as a spotting and final

delivery, so as to force a consignee to pay an added

charge to obtain an actual delivery of its freight. Only in

the Commission’s third report is a policy justification

advanced to support the Commission’s position.

According to the third report, holding yards are

discriminatory devices, aimed at allowing large shippers

to avoid the payment of detention charges on parked

trailers. (168a) The Commission stated that loaded and

empty trailers ‘‘should not have to wait hours and days in

limbo before free time toll’’ (169a) and that petitioners

proposed a ‘‘convenient holding yard arrangement’ with

‘little or no likelihood of incurring detention charges’’.

(168a) Such a finding ignored the fact that both shippers

and carriers had repeatedly stated that detention charges

begin to run as soon as a trailer has been placed in the

holding yard. (J.A. 31, 61, 1230, 882, 906) Indeed,

petitioners urge assessment of the same level of detention

charges against the consignee as proposed by the

Commission, covering the same detention period.

Petitioners oppose only the termination of carrier line

haul service at the point of temporary holding. Thus, the

Commission's justification is based on a completely

erroneous factual premise. Further, a Commission

comment that large shippers served from holding yards

had greater control over deliveries than smaller shippers

served by live deliveries (168a) ignored the fact that

such advantage had been specifically eliminated

14

by the Commission’s first report requiring that all

consignees be provided with deliveries on pre-arranged

schedules. (46a) The discrimination found to exist had

already been eliminated by another provision of the

detention rules. Thus, the only justifications advanced by

the Commission for a policy against service through

holding yards were completely lacking in any factual

basis.

Accordingly, the adoption of Section 2(f) as construed

by the Commission is based solely on the bare conclusion

that an added cost burden should be imposed on

consignees who receive freight through a holding yard

delivery system. The Commission made no study of

whether the cost of such a delivery system was any

greater than the cost of making live deliveries. Indeed,

the only evidence of record showed that carrier costs

were /ess when a holding yard system was used. (J.A.

887-890) Rather, the Commission concluded that added

charges must be imposed on consignees served through

holding yards even if it were established that holding

yards offered a positive benefit in carrier convenience.

(73a) Again, no justification was advanced for an

argument that would require consignees to pay more for a

service which would cost the carriers /ess.

The requirement of an extra charge for delivery of a

trailer after placement in a holding yard is directly

contrary to established Commission precedent. As urged

before the Commission, in Carrier Switching at Industrial

Plants in the East, 294 1.C.C. 159 (1955), the Commission

permitted the nation’s rail carriers to move cars from

temporary holding sites to delivery locations as a part of

their line haul service. The specific justification for this

ruling was the Commission’s finding that motor carrier

15

line haul service included such deliveries from temporary

holding yard areas. (294 1.C.C. at 167) However, the

Commission below disclaimed this precedent without

explanation, stating merely that the Carrier Switching

case was ‘“‘ncot analogous’’. (73a)

Following exhaustion of their administrative remedies.

petitioners sought judicial review of the Commission's

adoption of Section 2(f). In a per curiam opinion filed

December 29, 1977, the Court of Appeals denied the

petition for review. (3a) The sole basis for the court's

denial was its interpretation of this Court's opinion in

United States v. Allegheny-Ludlum Steel Corp., 406 U.S.

742 (1972). The Court of Appeals stated that

Allegheny-Ludlum ‘‘severely limits the extent of judicial

review’. (9a) It noted that the Commission's treatment of

the issues had been ‘‘laconic’’, and that the

Commission's conclusions bore little relation to the

rulemaking record developed in these proceedings. (10a)

At no point did the court indicate where the Commission

had articulated a reasoned basis for its actions, or specify

what rational connection existed between the

Commission's findings and its ultimate conclusions.

However, relying solely on Allegheny-Ludium, the court

concluded that ‘‘the Commission's findings and

conclusions ‘are rationally supported’.’* (lla) The words

‘rationally supported’’ were placed in quotation marks in

the court’s opinion, indicating the degree to which the

court felt its powers circumscribed by _ the

Allegheny-Ludlum decision.

16

REASONS FOR GRANTING THE WRIT

The decision of the Third Circuit below has improperly

read Allegheny-Ludlum as barring any meaningful inquiry

by a reviewing court into the existence of an articulated

and reasoned basis for an administrative agency decision.

Allegheny-Ludlum is not a ‘‘severe limitation’’ on the

standard of judicial review, as found by the Third Circuit.

Rather, Allegheny-Ludlum itself, subsequent decisions of

this Court. and subsequent decisions of the Courts of

Appeals. require a full inquiry by reviewing courts as to

whether an agency decision was based on a thorough

consideration of relevant factors, whether an agency has

genuinely engaged in reasoned decision making, and

whether there has been a clear error in agency judgment.

Citizens to Preserve Overton Park v. Volpe, 401 U.S.

402, 415-416 (1971); F.P.C. v. Texaco. 417 U.S. 380,

395-96 (1974); Bowman Trans. v. Arkansas-Best Freight,

419 U.S. 281, 285 (1974); F.P.C. v. Transcontinental Gas

Pipe Line Corp., 423 U.S. 326, 331 (1976). In failing to

find adoption of Section 2(f) arbitrary and capricious, the

opinion of the Third Circuit is squarely in conflict with

these decisions, and with many decisions of other

circuits. The Third Circuit has clearly misconceived and

misapplied the precedent set forth in Allegheny-Ludlum.

Compare. Wilkinson v. United States. 365 U.S. 399. 401

(1961). In holding that placement of trailers in a carrier

holding yard constitutes a final delivery. and requires the

payment of an additional charge in order to effect the

actual delivery. the Commission reports below prescribe

a policy which is

(1) contrary to the plain meaning of the actual rule

being adopted.

——

17

(2) contrary to statements contained in the reports

themselves,

(3) so inconsistent that certain portions of the reports

were directly contradicted in the Commission's brief

to the Court of Appeals.

(4) based on a completely erroneous understanding of

present detention charge assessment in holding

yards, and

(5) at odds with prior decisions of the Commission

and this Court.

Accordingly. the Third Circuit failed to apply a proper

judicial standard in affirming this decision of the

Commission.

1. There is no basis for the conclusion of the Court

below that Allegheny-Ludlum constitutes a severe

limitation on the extent of judicial review. While the

quoted language in the opinion below (9a-10a) may

suggest such a limitation, a complete reading of

Allegheny-Ludlum shows a clear reaffirmance by this

Court of established judicial functions in the review of

administrative agency decisions. The portion of the

Allegheny-Ludlum opinion at 406 U.S. 749-755 contains a

detailed analysis of the underlying facts. findings. and

conclusions of the agency below. Allegheny-Ludlum

specifically adopts the well established requirement of a

rational relationship between the agency's ultimate

conclusions and the factual bases in the record upon

which the agency relied. (406 U.S. at 755-756)

Allegheny-Ludlum affirms the established precept of

judicial review that an agency must adequately explain its

departure from prior norms and sufficiently spell out the

basis of its legal decision. (406 U.S. at 756) Further.

18

Allegheny-Ludlum reviews the rationality of agency

action in light of the underlying conditions determined in

the course of agency rulemaking proceedings. (406 U.S.

at 753)

Neither the subsequent decisions of this Court nor the

subsequent decisions of Courts of Appeals have

interpreted Allegheny-Ludlum as requiring a narrowed

scope of judicial review. The subsequent decision of this

Court in F.P.C. v. Texaco, 417 U.S. 380 (1974),

specifically reiterates that courts must make positive

determinations as to whether agencies have exercised

their statutory discretion in rulemaking, and that agency

decisions may not be sustained merely on the basis of

post-hoc rationalizations of counsel. (417 U.S. at 396,

397) District courts and courts of three circuits have cited

Allegheny-Ludlum as an appropriate standard for judicial

review and remanded agency rulemaking proceedings for

lack of adequate explanation of agency findings or lack of

rational basis for agency action. B.F. Goodrich Company

v. Department of Transportation, 541 F. 2d 1178 (6th

Cir., 1976); cert den. 430 U.S. 930 (1977); Alabama

Association of Insurance Agents v. Board of Governors,

533 F. 2d 224 (Sth Cir.. 1976); South Terminal v. E.P.A..

504 F. 2d 646 (ist Cir.. 1974); Chemical Leaman Tank

Lines, Inc. v. United States. 368 F. Supp. 925 (D. Del..

1973); Ann Arbor Railroad Co. v. United States. 358 F.

Supp. 933 (E.D. Pa., 1973). Other courts. while affirming

agency actions. have cited Allegheny-Ludlum as

mandating a broad standard of judicial review of agency

action. Dallas City Packing, Inc. v. Butz, 411 F. Supp.

1338 (N.D. Tex.. 1976); Florida East Coast Railway Co.

v. United States. 368 F. Supp. 1009 M.D. Fla.. 1973):

Ann Arbor Railroad Co. v. United States. 368 F. Supp.

19

101 (E.D. Pa.. 1973). The severely limited view of judicial

review set forth by the Third Circuit in the proceeding

below is directly in conflict with the standards of review

applied in these cases.

The only basis for the divergent standard applied by

the Third Circuit would appear to be that judges of that

circuit were those reversed by this Court's opinion in

Allegheny-Ludlum. Allegheny-Ludlum Steel Corporation

v. United States, 325 F. Supp. 352 (W.D. Pa., 1971).

Indeed. such reversal is noted in the opinion below. (10a)

However, the mere fact of specific reversal imposes no

different standard on a court below than that applicable

to all inferior courts. Cf. Norton v. McShane. 332 F.2d

855 (Sth Cir., 1964), cert. denied 380 U.S. 981 (1965). The

Third Circuit was obliged only to observe the general

precedent of Allegheny-Ludlum, rather than imposing any

unduly narrow standard as a result of the prior reversal

by this court.

2. The decision of the Commission should be found to

be arbitrary and capricious, within the meaning of

5 U.S.C. §706. The position taken in the Commission

reports is one which is inconsistent with the actual rule

adopted in such reports. directly contrary to specific

statements in these reports. founded on totally

non-existent factual premises. and completely contrary to

prior Commission precedents. Further. on brief before

the Court of Appeals. Commission counsel took a

position directly opposite to that stated in the reports of

the Commission below. Any proper application of the

standards of judicial review should find the Commission's

action to be arbitrary and capricious.

Initially. the policy announced in the Commission's

decision does not comport with the plain meaning of the

pertinent rule being adopted. The Commission's policy.

20

as announced in its three reports, is that placement of a

loaded trailer in a temporary holding yard constitutes a

““‘spotting’’ of the trailer which brings the carrier’s line

haul obligation to an end. (73a, 139a, 168a) However, the

adopted rule itself, Section 2(f), states that spotting may

only be deemed to occur when a trailer is left ‘‘in fu!l

possession of the * * * consignee * * * unattended by

carrier's employee.’ As holding yards are operated by

carrier employees or agenis, trailers placed in holding

yards can in no way be deemed spotted within the plain

meaning of Section 2(f). It is clear that the statements of

the Commission in its adopting report are binding on

parties to this proceeding, even though such statements

do not appear on the face of the adopted rule itself.

Consolidated Flower Shipments, Inc. v. CAB, 213 F. 2d

814, 818 (9th Cir., 1954); Freight Consolidators

Cooperative, Inc. v. United States, 230 F. Supp. 692

(S.D. N.Y., 1964). However, where an agency urges a

Strained and unnatural construction of a promulgated

rule, considerations of notice and clarity place a heavy

burden on the agency to justify the inconsistencies

between the rule and accompanying explanation. F.P.C.

v. Texaco, 417 U.S. 380, at 395 (1974). At very minimum,

the Commission's proposed rule and its adopting order

are sO inconsistent as to be patently ambiguous and

lacking in the standard of clarity which administrative

orders must exhibit. /d. at 396.

Secondly, the Commission reports themselves are

patently inconsistent in their varying statements as to the

provisions applicable to the detention of trailers in

holding yards. The Commission reports variously state

that trailers are considered spotted and the carriers’ line

haul delivery obligation is considered ended when trailers

are parked in holding yards. (73a. !39a. 168a) At other

ee .

21

points, the Commission reports state that trailers left in

holding yards will not be considered spotted, but rather.

that the Commission’s detention with power provisions

would apply to allow for a full delivery under line haul

rates. (73a, 139a, 166a) Again, it is impossible to tell what

result is intended by the Commission, or upon what

basis, if any, the Commission has chosen one alternative

construction over the other. It is not the function of a

reviewing court to resolve inconsistencies in an agency

decision. S.E.C. v. Chenery Corp., 318 U.S. 80, 94-95

(1943); Burlington Truck Lines v. United States. 371 U.S.

156, 167-68 (1962). With such patent inconsistencies as to

what the Commission actually intended in this

proceeding, the Commission decisions clearly may not be

sustained.

Thirdly, rather than dealing with potential defects in

the record which would be occasioned by a conclusion

that the Commission’s detention with power rules applied

to trailers placed in holding yards. the Commission

counsel on appellate brief made a determination to

abandon those statements in the Commission reports

suggesting that detention with power provisions apply.

Such an abandonment was never indicated in any of the

Commission reports. but rather. was a completely

unsupported action by counsel. Post-hoc attempts to

rationalize agency decisions cannot be accepted where a

rational basis is not provided in the decision of the

agency itself. Burlington Truck Lines v. United States,

supra at 371 U.S. 156. 168-69 (1962). Even a reviewing

court is without power to sustain an agency action based

on findings or reinterpretations which an agency might

have made. S.E.C. v. Chenery Corp.. supra 318 U.S. 80.

at 94. Obviously. agency counsel are similarly not

empowered to make such determinations for the agency

itself.

22

The Commission's only explanation of its policy

reasons for its interpretation of Section 2(f) is based on

completely erroneous factual premises. The Commission

was completely in error in stating that present holding

yard practices allow trailers to remain *‘in limbo’’ without

the tolling of detention charge provisions. (169a) There is

no support in the record for such a conclusion. To the

contrary, petitioners and many other parties indicated

that detention charges do apply to trailers placed in

temporary holding yards. To the extent that an agency

relies on record matter in informal rulemaking, it is

obliged to relate its ultimate conclusions to the matter

developed on the record. Citizens to Preserve Overton

Park v. Volpe, 401 U.S. 402, 416 (1971): F.P.C. v.

Texaco, 417 U.S. 380, 396 (1974); National Association

of Food Chains, Inc. v. 1.C.C., 535 F. 2d 1308 (D.C.

Cir., 1976); Tanners’ Council of America v. Train, 540 F.

2d 1188, 1193 (4th Cir., 1976); Hooker Chemicals &

Plastics Corp. v. Train, 537 F. 2d 620 (2nd Cir., 1976).

There is no basis in this record for rationalizing Section

2(f) as an anti-discriminatory device.

The Commission’s decision essentially reduces to a

mere general conclusion that consignees whose freight is

being delivered through the temporary parking of trailers

in holding yards should pay an extra transportation

charge. There are no underlying findings of fact to

Support such a conclusion, and no discussions as to why

such a conclusion is warranted. To the extent that cost

evidence was submitted pertaining to holding yard

delivery service, the evidence showed that such service

was less expensive than live delivery service. rather than

representing any sort of “‘extra’’ operation. (J.A. 887-890)

In any event. costs apparently did not play a part in the

Commission’s decision to impose an extra charge. as it

<n Re etna oc

23

stated that such charges would be imposed even where

holding yards served the convenience of the carriers.

(73a) Further. the Commission completely brushed aside

motor carrier concerns that the Commission's policies

would compel consignees to require inefficient live

deliveries. The Commission’s only response was that

holding yards could continue if consignees were willing to

pay extra charges. (168a) Accordingly. the Com-

mission's decision to impose such a charge is a mere

conclusion. unsupported by any record justification or

analysis.

Lack of such justification is particularly significant

where. as here. Commission precedent holds that

deliveries from temporary holding yards are included

within motor carrier line haul service. The Commission's

1955 Carrier Switching decision unequivocally stated that

motor carrier line haul service included movement of

trailers to unloading sites after temporary placement in

parking areas. Carrier Switching at Industrial Plants in

the East, supra. 294 1.C.C. 159. at 167 (1955). This rule is

also contained in numerous other Commission decisions.

including Hygrade Food Products Corp. Terminal

Allowance. 306 1.C.C. 557. 559 (1959) and Medusa

Portland Cement Co. Terminal Services. 287 1.C.C. 57. 62

(1952). It is a sharp departure from past decisions to

reverse such a conclusion and hold that temporary

parking effects a termination of line haul service.

Compare Atchison T. & S.F.R. Co. v. Board of Trade.

412 U.S. 800. 807-8 (1973); Secretary of Agriculture

v. United States. 347 U.S. 645. 653 (1954)*. The

“ Indeed. the Commission's rule has always been that it will not

allow a separate charge for what had formerly been a part of line haul

service absent a finding of the reasonableness of charges for both the

separated service and the remaining line haul service. Afchison T. &

§.F.R. Co. v. Board of Trade, supra. at 412 U.S. 800. 809 (n. 6). and

cases cited therein.

24

Commission's bare finding that the Carrier Switching

case was “not analogous” falls far short of this Court's

requirement that *‘the ground for departure from prior

norms * * * must be clearly set forth so that the

reviewing Court may understand the basis of the agency's

action.”” Atchison T. & S.F.R. Co. v. Board of Trade,

supra. at 412 U.S. 800. 808 (1973).

CONCLUSION

For these reasons. a writ of certiorari should issue to

review the judgment and opinion of the United States

Court of Appeals for the Third Circuit.

Respectfully submitted.

JOHN W. BRYANT

REX EAMES

Eames. Petrillo and Wilcox

900 Guardian Building

Detroit. Michigan 48226

Telephone (313) 963-3750

Attorneys for Petitioners

Dated: February 16. 1978