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CHICAGO AND NORTH WESTERN RAILWAY v. UNITED STATES

March 31, 1970

CHICAGO AND NORTH WESTERN RAILWAY COMPANY, CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, AND ILLINOIS CENTRAL RAILROAD COMPANY, PLAINTIFFS, AND RINGLE EXPRESS, INC. AND HOME TRANSPORTATION COMPANY, INC., PLAINTIFFS-INTERVENORS,
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS, AND WALTER POOLE TRUCK LINE, INC. AND WALTER POOLE, DOING BUSINESS AS POOLE TRUCK LINE, INTERVENING DEFENDANTS.



Before Swygert, Chief Circuit Judge, and Parsons and Marovitz, District Judges.

The opinion of the court was delivered by: Swygert, Chief Judge.

MEMORANDUM OPINION

Plaintiffs, Chicago and North Western Railway Company, Chicago, Milwaukee, St. Paul and Pacific Railroad Company, Chicago, Rock Island and Pacific Railroad Company and Illinois Central Railroad Company bring this action to set aside an order of the Interstate Commerce Commission. The Commission's order granted authority to Walter Poole, doing business as Poole Truck Line of Evergreen, Alabama, to operate as a common carrier over irregular routes carrying traffic composed of tractors and related agricultural machinery and implements from John Deere Company plant sites located at Waterloo, Dubuque, and Des Moines, Iowa, Horicon, Wisconsin, and Moline, Illinois, to points in Alabama and in Georgia on and south of U.S. Highway 280. Motor carriers, Ringle Express and Home Transportation Company, have intervened as plaintiffs and Walter Poole has intervened as a defendant. We hold that the ICC's action was correct and refuse to set aside its order granting a certificate of public convenience and necessity to Walter Poole to operate as a common carrier over the routes in question.

Poole's application, filed on November 27, 1964, was designed to permit Poole to institute a direct single-line operation to replace the circuitous interline arrangement with Cooper Transfer under which the involved traffic had previously been moving. At the time the application was filed, Poole held authority to transport Deere products from the Deere origin points to Mobile and Monroe Counties, Alabama. Traffic interchanged at points in these counties was transported under the authority of Cooper to the points in Alabama and Georgia. Cooper, who no longer wished to participate in this service, testified on behalf of Poole at the application hearing. Poole's application was also supported by twenty-three Deere dealers in Alabama and the areas of Georgia covered by the application. John Deere Company did not support Poole's application. Poole's application was opposed by various railroads including plaintiff railroads and by the intervening plaintiff motor carriers.

The examiner conducted a hearing in March and July of 1965 and, thereafter, issued a recommended report and order granting the application in its entirety. Protestants filed exceptions to this report. Subsequently the Operating Rights Review Board Number 2 refused to adopt the examiner's recommendation and denied the application in its entirety. Poole filed a petition for reconsideration which was denied by Division 1 of the Commission acting as an Appellate Division. Poole then filed a petition to the full Commission seeking a determination that the proceeding involved an issue of general transportation importance. This petition was denied by order of the Commission in November 1966. Thereafter, in January 1967, Poole instituted an action in the District Court for the Southern District of Alabama to set aside the Review Board's order denying his application. On its own motion, the Commission, on May 2, 1967, vacated the order of the Review Board and reopened the proceeding for reconsideration on the existing record. The district court stayed its own proceedings and on August 23, 1967 the Commission issued its report on reconsideration, adopting the statement of facts and conclusions of the examiner and granting Poole's application.*fn1 Plaintiff railroads and motor carriers filed petitions for reconsideration which were subsequently denied by the Commission in May 1968. In June 1968 Poole was issued a certificate of public convenience and necessity and in July 1968 the Alabama district court dismissed the action before it. The instant proceeding was instituted in November 1968.

Three issues are presented for decision: whether the Commission may reconsider and reverse a prior decision by an Appellate Division which is administratively final; whether the Commission erred as a matter of law in failing to explain why the prior decision was incorrect and to disclose by adequate findings the basis for its reversal; and whether the Commission's decision granting the certificate is supported by substantial evidence.

I

The plaintiffs maintain that, since the order of Division 1 denying Poole's application is a final administrative action,*fn2 the Commission is precluded from reopening Poole's application and granting Poole a certificate. This argument misconceives the scope of the Commission's power to remedy its own errors. Section 17(7) of the Interstate Commerce Act gives the Commission continuing jurisdiction over its orders and empowers it to reconsider and to rescind or modify its orders at any time for the purpose of correcting an error or injustice.*fn3 Baldwin v. Scott County Milling Co., 307 U.S. 478, 59 S.Ct. 943, 83 L.Ed. 1409 (1939); Sprague v. Woll, 122 F.2d 128 (7th Cir.), cert. denied, 314 U.S. 669, 62 S.Ct. 131, 86 L.Ed. 535 (1941); Alamo Express, Inc. v. United States, 239 F. Supp. 694 (W.D.Tex. 1965). Administrative finality does not terminate this continuing jurisdiction but merely determines the ripeness of Commission action for judicial review. In contrast to certain other regulatory statutes,*fn4 the Interstate Commerce Act provides no definite cutoff after which the Commission is precluded from reconsidering its orders.*fn5 In re National Labor Relations Board, 304 U.S. 486, 58 S.Ct. 1001, 82 L.Ed. 1482 (1938).

Plaintiffs attempt to distinguish the instant case by arguing that previous cases have permitted the Commission's jurisdiction to continue only where the Commission has decided to grant authority and where jurisdiction is retained "to shape the form and content of the certificate in light of the applicable statutory directions." In such cases the affirmative step of delivery of the certificate to the applicant estops the Commission from reconsidering its action. Watson Bros. Transportation Co. v. United States, 132 F. Supp. 905 (D.C.Neb.), aff'd per curiam, 350 U.S. 927, 76 S.Ct. 302, 100 L.Ed. 810 (1955). Plaintiffs argue by analogy that the decision to deny an application should be treated in the same way as the affirmative act of delivery of the certificate to the applicant.

Plaintiffs' position in unsupported by case law or by sound policy. In Resort Bus Lines, Inc. v. ICC, 264 F. Supp. 742 (S.D.N.Y. 1967), the examiner recommended the grant of a certificate, the Review Board reversed the examiner and denied the application and this denial was affirmed on petition for reconsideration [appeal] by an Appellate Division. On petition for reconsideration by the applicant the Appellate Division reopened on the existing record and granted the application. In the Resort case, which, in all relevant respects, is identical to the instant case, the court held that the power of the Appellate Division to reconsider its own action extends "at least prior to the time that an actual certificate of convenience and necessity has been issued." The rationale for its decision, which is equally applicable here, was stated by the court as follows:

    Moreover, it is in the best interests of judicial
  economy and agency responsibility to allow the
  Appellate Division to reconsider its orders, rather
  than to compel the losing party to seek immediate
  review in the courts. Resort Bus Lines, Inc. v. ICC,
  264 F. Supp. 742, 745 (1967).

The position of the court in the Resort case has also been followed by the Commission in Eazor Express, Inc.-Purchase-Fleet Highway Freight Lines, Inc., 101 M.C.C. 719 (1967).

The plaintiffs, relying upon Transamerican Freight Lines, Inc. v. United States, 258 F. Supp. 910 (D.C.Del. 1966), argue that, regardless of the continuing jurisdiction theory, the Commission is without statutory authority to reconsider the action of one of its Appellate Divisions. Reliance upon the Transamerican case is misplaced. The interpretation of the provisions of the Interstate Commerce Act offered by the court in Transamerican was expressed sua sponte and was totally unnecessary to the holding of the case. The Commission has rejected the court's obiter dictum, stating that, although the statute and rules limit the right of a party to seek reconsideration by the Commission, they in no way limit the power of the Commission to reconsider on its own motion. Eazor Express, Inc.-Purchase-Fleet Highway Freight Lines, Inc., 101 M.C.C. 719 (1967). The Commission explained its reasoning as follows:

    The right of an administrative body to reconsider
  at any time is inherent in the power to decide and is
  a necessary procedure in order to permit an
  administrative agency to carry out properly its
  functions under the enabling statutes. If we were
  precluded from correcting the error that * * * we
  find was promulgated in the prior report, justice
  would be thwarted and would only result in imposing a
  totally unnecessary burden on a reviewing court to
  remand the proceeding to us for reconsideration.
  Eazor Express, Inc.-Purchase-Fleet Highway Freight
  Lines, Inc., 101 M.C.C. 719, 720 (1967).

The Eazor case was cited with apparent approval in Resort Bus Lines, Inc. v. ICC, 264 F. Supp. 742 (1967).

  We hold, therefore, that the Commission was empowered to
reconsider and set aside the Appellate Division's order denying
Poole's application. Although the apparently unlimited power
given to the Commission to reconsider its orders may be limited
in cases where the objecting party demonstrates detrimental
reliance or the passage of a long period of time, cf. Upjohn
Company v. Pennsylvania R.R., 381 F.2d 4 (6th Cir. 1967);
Atchison, Topeka & Santa Fe Ry. Co. v. United States, 231 F. Supp. 422
 (N.D.Ill. 1964); Watson Bros. Transportation Co. v. United
States, 132 F. Supp. 905 (D.C.Neb.), aff'd per curiam,
350 U.S. 927, 76 S.Ct. 302, 100 L.Ed. 810 (1955), there is nothing in the
record to indicate that the plaintiffs in the instant case were
prejudiced by the Commission's reopening of Poole's
application.*fn6

II

The plaintiffs argue that the Commission is required to give reasons for reconsidering and reversing the Appellate Division's order denying Poole's application. Reliance is placed upon section 8(b) of the Administrative Procedure Act which provides that decisions shall include "findings and conclusions, as well as the reasons or basis therefor, upon all material issues of fact, law or discretion presented on the record." We have found no case holding that the Commission is required to give an apologia for its previous error in addition to making the required findings and conclusions along with accompanying reasons. The question is not why the Commission changed its mind but whether its decision is supported by adequate findings and conclusions.

In its opinion of August 27, 1967, reported in 105 M.C.C. 511, the Commission made sufficient findings for compliance with 8(b) and the Interstate Commerce Act. Contrary to the assertion of plaintiffs, the Commission found that existing services were inadequate. We think the entire thrust of the Commission's decision supports such a finding and hold that a finding of inadequacy of existing services need not be set out in the precise verbal formula proposed by plaintiffs. Although the Commission's discussion of some matters is brief, its adoption of the statement of facts and conclusions of law prepared by the examiner sufficiently informs the parties of the basis of its action and fully complies with the requirements of Section 8(b). Key v. United States, 263 F. Supp. 544, 549 (S.D.Ind. 1966).

III

We hold that the Commission's decision granting Poole's application is supported by substantial evidence and refuse to set aside its decision to grant a certificate of public convenience and necessity. In reviewing that decision we recognize the great deference afforded to Commission determinations of public convenience and necessity. In Midwest Emery Freight System, Inc. v. United States, 293 F. Supp. 403, 405 (1968), this court explained its limited function in this respect as follows:

    Our scope of review of that order is limited to
  determining only whether the findings made by the
  Commission are supported by substantial evidence on
  the entire record and whether its conclusion as to
  public convenience and necessity has a rational basis
  in the facts found. Administrative Procedure Act, 5
  U.S.C.A. § 1009. We are mindful that the criteria by
  which the Commission makes its determination of
  public convenience and necessity are not subject to
  review. No delineation of factors to support such a
  determination has been expressed in the statute. 49
  U.S.C.A. § 307. Congress has entrusted the Commission
  with a "wide range of discretional authority" to draw
  that conclusion from "the infinite variety of
  circumstances which may occur in specific
  instances."

With this standard in mind we proceed to examine the plaintiffs' specific allegations of insufficiency of the evidence ...


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