Opposition — Youngstown Cartage Co. v. United States

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FOR A WRIT OF CBRTIORARI TO THE

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THE DISTRICT OF COLUMBIA

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BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

WADe H. McCresg, Jr.,

Department of Justice,

Washi D.C. 20530.

ju the Supreme Court of the United States

OCTOBER TERM, 1978

No. 77-1651

THE YOUNGSTOWN CARTAGE CO., PETITIONER

Vv.

UNITED STATES OF AMERICA and

INTERSTATE COMMERCE COMMISSION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1la-

6a) is reported at 571 F.2d 1243. The orders of the

Interstate Commerce Commission (Pet. App. 7a-17a)

are unreported.

JURISDICTION

The judgment of the court of appeals was entered

on February 23, 1978. The petition for a writ of

(1)

2

certiorari was filed on May 19, 1978. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

QUESTION PRESENTED

Whether the Interstate Commerce Commission law-

fully denied petitioner’s applications for additional

motor carrier operating authority.

STATEMENT

In early 1974 the Interstate Commerce Commission

adopted regulations designed to create more efficient

interstate trucking services without unduly upsetting

the motor carrier regulatory scheme. Under what was

termed the “gateway elimination” policy, the Com-

mission agreed to consider applications from trucking

companies for direct service authorizations between

points that the companies had previously served only

indirectly.‘ Gateway Elimination Decision, 119 M.C.C.

530. 49 C.F.R. 1065.1.

Under the previous practice, when carriers were

not authorized to provide direct service between two

points they could provide indirect service by “tacking”

their authorized routes together through what were

termed “gateway” points. For example, if a carrier

were authorized to provide service from Pittsburgh

to Cincinnati and from Cincinnati to Indianapolis, it

could provide service from Pittsburgh to Indianapolis

1 This Court upheld the gateway elimination rules in Thomp-

son Van Lines, Inc. V. United States, 399 F. Supp. 1131

(D. D.C.), affirmed, 423 U.S. 1041.

3

by “tacking” the two routes together. But the carrier

would still be required to follow its authorized routes

to and from the “gateway” point—in this example,

Cincinnati—rather than shipping by the most direct

overland route (Pet. App. 2a-3a).

Under the new policy, the Commission permitted

qualifying carriers to eliminate the need to pass

through the “gateway” points. Where the length of

the direct route between two points was more than

80 percent of the length of the indirect route through

the carrier’s gateway, the carrier could eliminate the

gateway simply by filing a notice of intention to do

so. 49 C.F.R. 1065.1(d) (1) (i). Where the gateway

route was more circuitous—and where it was there-

fore less likely that the carrier had previous!y pro-

vided significant service between the two points—the

carrier was required to file a special application for

elimination of the gateway. This application was re-

quired to show that the carrier had been handling

traffic between the two points via the gateway during

the two years preceding November 23, 1973. 49 C.F.R.

1065.1(d) (2) (iii). If the carrier did not elimi-

nate particular gateways by one of these two methods,

the regulations provided that “tacking” would no

longer be permitted, and the carrier would be pro-

hibited from continuing to offer indirect service

through its gateways. 49 C.F.R. 1065.1(b).

Petitioner, an interstate trucking company, filed an

application to eliminate 14 of its gateways that in-

volved circuity of more than 20 percent and therefore

could not be eliminated without the special showing

4

required by the regulations. The Commission denied

petitioner’s application on procedural grounds (Pet.

App. 7a-8a). The Commission stated that petition-

er’s evidence (an exhibit listing some 800 random

shipments from the previous two years) failed to

specify the gateway through which each shipment had

moved. Moreover, the Commission noted that peti-

tioner’s application had failed to distinguish between

shipments on routes having less than 20 percent cir-

cuity (and thus subject to gateway elimination simply

upon filing a letter notice) and those on more circui-

tous routes. In light of petitioner’s “failure to pre-

sent its traffic exhibit in such a way as to enable the

Commission to determine that it has been a substan-

tial competitor through each of the involved gate-

ways” (Pet. Apr. 8a), and because the traffic exhibit

was “unworkable” (ibid.), the Commission denied the

application.

On January 21, 1976, one day before the Commis-

sion’s final decision in the first proceeding became

effective, petitioner filed a second application, substan-

tially identical to the first, in which it attempted to

remedy the evidentiary deficiencies of the prior appli-

cation. Although the second application purported

also to be filed under the Commission’s gateway rules,

the Commission held that it was untimely under those

rules (Pet. App. lla-12a).’ Treating the application

* The gateway regulations required applications for elimi-

nating gateways involving more than 20 percent circuity to be

filed within 60 days of April 5, 1974, the date the order promul-

gating the regulations became effective. 39 Fed. Reg. 7794; 49

5

as a traditional request for new operating authority

under Section 207(a) of the Interstate Commerce

Act, as added, 49 Stat. 551, 49 U.S.C. 307(a), the

Commission denied the application because petitioner

failed to offer proof of shipper support for the re-

quested routes (Pet. App. 13a-15a).

The court of appeals affirmed both of the Commis-

sion’s orders, finding that the Commission had law-

fully exercised its discretion in denying the applica-

tions (Pet. App. la-6a). As to the denial of the 1974

application, the court held that the Commission “was

not unreasonable in requiring that the applicant meet

the minimal procedural burden put on the carriers in

order to help the agency with the formidable adminis-

trative burden of the gateway elimination program,

particularly in view of the benefits that program con-

ferred on the carriers” (Pet. App. 3a). With respect

to the denial of the 1976 application, the court con-

cluded that because that application had been filed at

a time when petitioner’s tacking authority was about

to expire and because the Commission rules barred

duplicate gateway elimination applications, the Com-

mission had not acted in an arbitrary or capricious

manner in treating the application as a request for

new authority and imposing the normal requirement

of proof of shipper support for the requested routes

rather than the more lenient proof requirements ap-

plicable in gateway elimination proceedings.

C.F.R. 1065.1 (d) (2) (iv). All unapproved operations through

gateways were prohibited after that date. 49 C.F.R. 1065.1

(b). The gateway regulations also barred duplicate applica-

tions. 49 C.F.R. 1065.1 (e).

ARGUMENT

The gateway elimination rules involved in this

case governed only applications filed before 1975. The

case therefore does not present any issue of continu-

ing importance requiring this Court’s review. More-

over, the decisions of the Commission and the court

of appeals are correct.

1. The court of appeals properly sustained the

Commission’s denial, on procedural grounds, of peti-

tioner’s failure to indicate which shipments in its

800 shipment sample moved through which gate-

ways made its application almost worthless, because

the Commission could not determine whether peti-

tioner had been a substantial competitor in each of

the markets in question, and thus whether elimination

of the gateway would serve the purpose of curbing

wasteful circuity without allowing a new carrier into

a market that it had not previously served. The re-

quirement that a carrier show that it had been a sub-

stantial competitor between the two points through its

gateway connection was a traditional one, Childress—

Elimination Sanford Gateway, 61 M.C.C. 421, and the

agency’s denial of the application for failure to meet

that standard was entirely reasonable.°

* Chem-Haulers, Inc. v. Interstate Commerce Commission,

565 F.2d 728 (C.A. D.C.), on which petitioner relies, is

inapposite. In that case the Commission granted portions of

a gateway elimination application but denied other portions

on the ground that the applicant had not transported “sub-

stantial” traffic through certain gateways. The court re-

versed because of the Commission’s failure to explain what

constituted “substantial” traffic. Jd. at 732. In the present

7

2. The Commission’s refusal to consider petition-

er’s second application under its gateway rules and

its denial of the application as a request for new

authority also were proper. Because petitioner’s sec-

ond application was filed approximately 18 months

after the published deadline for filing gateway elimi-

nation applications, the Commission was entirely jus-

tified in declining to process it under the special 1974

gateway elimination procedures.‘

Petitioner submitted no shipper support evidence

or any other evidence sufficient to make out a prima

facie case for a grant of new authority, see Novak

Contract Carrier Application, 103 M.C.C. 555, and

the Commission therefore acted within its discretion

in denying the 1976 application. See Ross Express,

case, by contrast, the Commission was precluded from making

. any findings regarding the substantiality of traffic through

petitioner’s gateways because of the inadequacy of petitioner’s

evidentiary presentation. (In any event, any conflict among

decisions of the same court of appeals would be for that

court to resolve. Wisniewski v. United States, 353 U.S. 901,

902.)

‘ There is no basis for petitioner’s assertion that the court

of appeals’ decision is inconsistent with Frozen Food Express,

Inc. Vv. United States, 535 F.2d 877 (C.A. 5). In that case the

Commission refused to reopen a gateway elimination applica-

tion to consider additional evidence submitted by the com-

plaining carrier, although it had accepted late-filed evidence

from other carriers. The court vacated the Commission’s

order on the ground that the carrier whose evidence was not

considered had not received “evenhanded” treatment. /d. at

880. Here, by contrast, petitioner has failed to show that any

similarly-situated carrier has been treated differently by the

agency.

Inc. v. United States, 529 F.2d 679, 682 (C.A. 1);

Artus Trucking Co., Inc. v. Interstate Commerce Com-

mission, 377 F. Supp. 1224, 1228 (E.D. N.Y.). As

the court of appeals pointed out, in view of the fact

that petitioner was no longer conducting operations

through the gateways at issue, “[t]he Commission

was obviously justified in requiring evidence that [the

carrier] would be able to attract shippers—new ones,

old customers regained or both” (Pet. App. 6a n.9).°

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

WADE H. McCREE, JR.,

Solicitor General.

MARK L. EVANS,

General Counsel,

FREDERICK W. READ, Ill,

Associate General Counsel,

L. MARIE GUILLORY,

Attorney,

Interstate Commerce Commission.

JULY 1978.

* Petitioner’s assertion that the gateway elimination rules

reduce competition contrary to the national transportation pol-

icy (Pet. 13) is without merit. Thompson Van Lines, Inc. V.

United States, 399 F. Supp. 1131 (D. D.C.), affirmed, 423

U.S. 1041.

W oc. &. covernmenry paintine orrics; 1978 269000. 61

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