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09/19/77 Chem-Haulers, Inc., v. Te Commerce Commission and

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT


September 19, 1977

CHEM-HAULERS, INC., PETITIONER

v.

INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS 1977.CDC.219

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Date Decided: September 19, 1977; As Amended December 16, 1977.

On Petition for Review of an Order of the Interstate Commerce Commission.

APPELLATE PANEL:

Bazelon, Chief Judge, and Leventhal and Robinson, Circuit Judges. Opinion for the Court filed by Circuit Judge Robinson.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE ROBINSON

Petitioner, Chem-Haulers, Inc., operates as a common carrier under a number of certificates of public convenience and necessity, issued by respondent Interstate Commerce Commission, which license the transportation of specified commodities between designated points or areas. In times past, by a process known as "tacking," carriers like petitioner often combined the authority conferred by two certificates relating to the same commodity and sharing a common terminus in order to haul freight between the non-common termini of the respective certificates by way of the common point -- the "gateway" -- even though its movement directly between the non-common points was not specifically franchised. *fn1 The Commission tolerated this practice *fn2 until 1974, when it adopted rules *fn3 designed to outlaw unsanctioned tacking, and to substitute therefor direct operating authority if, but only if, consistent with the public interest. *fn4

To determine whether in particular instances an award of direct authority should accompany the consequent elimination of a gateway, the Commission incorporated, insofar as is pertinent here, *fn5 the standard it had enunciated earlier in Childress -- Elimination of Sanford Gateway :6 the applicant must prove that he "is actually transporting a substantial volume of traffic from and to the points involved by operating in good faith through the gateway and, in so operating, is effectively and efficiently competing with the existing carriers," provided, however, that the grant of direct authority would not "enable [the] applicant to institute a new service or a service so different from that presently provided as to materially improve [the] applicant's competitive position to the detriment of existing carriers."7 The only substantial question before us8 is whether the Commission properly applied that standard to petitioner.9

A gateway elimination application by petitioner sought thirteen separate awards of direct authority.10 Ten of petitioner's supplications were supported only by descriptions of the gateway routes to be abolished, and by the verified statements of its traffic manager that the firm had unsuccessfully solicited but would have transported any shipments over them.11 The Commission denied these requests in their entirety, and petitioner does not challenge their disposition as inconsistent with the Childress doctrine. Instead, it claims that barely a handful of the almost 600 applications of this sort12 previously handled by the Commission pursuant to its gateway elimination rules were granted though equally bereft of substance, and urges that the Commission be made to explain this allegedly inconsistent treatment.13

If it were clear that the instances cited were simply inadvertent departures from a generally uniform course of decision, we would deplore them without permitting them to derange the outcome of other cases. The mere fact that the Commission may have nodded on one occasion does not entitle a litigant to a repetition of its blunder.14 And Commission counsel represented at oral argument that the administrative records in these allegedly maverick cases contained evidence of traffic through the gateways involved, even though that evidence was not mirrored in the applications.15 Still, we have before us neither the Commission's statement that it earlier strayed nor the records adverted to, and we cannot rest on its counsel's unadorned assertion.16 We think it would comport with sound administration to have the Commission set forth just what "substantial traffic" considerations were shown on the record in those cases, or else acknowledge them as decisional mishaps.

For three facets of petitioner's application, however, it did submit an analysis of movements through the gateway. Its request for authority to transport liquid chemicals from Birmingham, Alabama, directly to seventeen other states17 reflected, in part at least, that during a 15-month period it had made from Birmingham through its gateways 205 trips to various parts of Tennessee, 27 to points in South Carolina, 32 to Fayetteville, North Carolina, 26 to Gary, Indiana, 19 to Yorkville, Ohio, nine to Radford, Virginia, and five or fewer to a clutch of other destinations. It received from the Commission direct authority to operate to Tennessee, South Carolina, Fayetteville, Gary and Yorkville, but not to Radford or other places.18

In regard to proposed authority to truck chemicals from a part of Tennessee to 22 states,19 petitioner's traffic study manifested hauling equaling a yearly movement20 of 72 loads to Owensboro, Kentucky, 28 to East Point, Georgia, 20 to Belpre, Ohio, 16 to Mahrt, Alabama, and a smattering of others. It was allowed authority only to Owensboro.21 Lastly, petitioner asked for authority to carry anhydrous ammonia from Memphis to over a dozen states,22 and showed shipments at an annual rate23 of 144 to Mississippi and 18 to Peach Orchard, Missouri. Permission was given solely with respect to Mississippi.24 The basis for the Commission's distinction between the authority granted and that denied was that as to the former petitioner had transported "substantial traffic"25 and as to the rest it had not.

The Childress test for gateway elimination aims for the benefits of a more direct route -- very importantly, the savings resulting from diminished fuel consumption26 -- while preserving the competitive status quo.27 Its rationale is simply that absent a showing of need, new service -- or even such improvements in existing service as would radically alter its attractiveness to shippers28 -- "would dillute [ sic ] the traffic of existing carriers, [and] . . . to that extent would be disruptive of the competitive situation. . . ."29 If an applicant "is actually transporting a substantial volume of traffic"30 through the gateway, the direct service it would provide is viewed as comprehended in the status quo rather than as a potentially disturbing increment in the quantum of service. Not surprisingly, then, the Commission has held that "the measure of the substantiality of [an] applicant's penetration of [the] market is largely taken as its traffic volume therein as compared to protestants' traffic volume, with some adjustment to reflect the relative differences in size of the carriers."31

No one protested the three parts of petitioner's application which it in some wise substantiated. This does not mean, as petitioner intimates, that they should perforce have been granted, for the premise of Childress would seem to preclude certification where no showing of prior movements is made, and even as to these sections of petitioner's proposal that is largely the case. It does mean, however, that where petitioner has demonstrated that it had provided some service, the Commission is no more free to define "substantiality" by whim than it would have been had opposition existed. Its disposition must invariably be predicated upon substantial evidence, and the line it draws must not be arbitrary or capricious.32

The foregoing summary of petitioner's traffic analyses implies that as to each part of its application the Commission's distinction between "substantial" and "insubstantial" traffic bears some relation to the number of shipments transported. A comparison of the Commission's action on one part with that on another indicates, however, that the Commission has not uniformly found an absolute number of trips to be substantial.33 Indeed, the Commission informs us only that in a discrete instance "substantial" is more than "insubstantial," and its orders in this case, couched as they are in conclusory terms, tell us no more. If the record contained evidence of the frequency with which other carriers moved the same commodities between the various points at issue, comparison of that evidence with petitioner's showing might reveal the reasoning behind the Commission's decision.34 But no such evidence appears, and for all we know petitioner alone may have performed the totality of the point-to-point services for which it now seeks direct authority.35

With the record so bare, the only explanation we can conceive of for the Commission's action in this case is that petitioner was indulged direct authority between the points which the more substantial of its own operations had served, but was denied the privilege of traversing roads less travelled by, notwithstanding the possible lack or insubstantiality of service thereover by other carriers.36 We need not now decide whether this rationale could amount to adequate justification, for even if we have correctly surmised the basis on which the Commission has proceeded, it clashes with its previous explications of the Childress doctrine.37 If perchance the decision in the instant case represents a change of policy, the Commission must vouchsafe its whys and wherefores,38 and it has not discharged that burden. So, however viewed, the Commission must give petitioner's case further consideration. Should the Commission then adhere to its previous course, it must provide a reasoned explanation supported by substantial evidence in the record, either "as it presently exists or as supplemented by evidence relevant to the status quo ante."39

The order under review is accordingly vacated, and the case is remanded to the Commission for further proceedings consistent with this opinion.

So ordered.


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