On Petition for Review of Orders of the Interstate Commerce Commission.
Before Fairchild, Chief Judge, and Sprecher and Tone, Circuit Judges.
Before us is a petition to set aside an order of the Interstate Commerce Commission denying a motor carrier a certificate of public convenience and necessity to carry goods in interstate and foreign commerce. We set aside the order because of errors of law committed by the Commission and remand the case for further proceedings.
Petitioner's Operations and Application for Authority
Since 1925 petitioner Niedert Motor Service, Inc. has operated as an intrastate motor carrier serving Illinois and, through interlining with other carriers, northwestern Indiana. Niedert's operations have been conducted pursuant to authority from the State of Illinois and a certificate of registration based thereon issued under § 206(a)(7) of the Interstate Commerce Act, 49 U.S.C. § 306(a)(7). The Illinois authority allowed Niedert to transport
General freight and household goods within a fifty-mile (50) radius of 1300 Oakwood Avenue, Des Plaines, Illinois, and to transport such property to or from any point outside of such authorized area of operation for a shipper or shippers within such area.
Almost all the freight handled by Niedert has been in less-than-carload (LTL) lots. Almost 60 percent of its total volume has been interlined with other carriers.
In recent years, through efficient use of its large terminal in Des Plaines, Illinois, Niedert has specialized in the consolidation and distribution of small shipments, providing many Chicago area shippers with a complete transportation service for movement of their LTL shipments through the Greater Chicago Area. Niedert would receive from the shipper a quantity of goods in packages consigned to various destinations, break the shipment down according to destination, consolidate the packages with others from different origins consigned to the same destination, and deliver them either to the destination or to an interliner's terminal. Niedert would either set up routings for the various shipments or follow routings prescribed by the shippers. Approximately 1,000,000 pounds of freight moved through the Des Plaines terminal daily. All freight was moved through the terminal and delivered to the consignee or interliner within 24 hours after receipt by Niedert. A handling charge would be paid by the shipper to Niedert for the services performed at the terminal.
In addition, Niedert would move some shipments directly from the shipper's dock to another Illinois destination without going through the Des Plaines terminal. Niedert's fleet at the time the evidence was taken consisted of 90 tractors and 340 trailers.
In the early seventies it became increasingly difficult for Niedert to find other carriers willing to participate in interlined service into northwestern Indiana. Its agreement with one other carrier was cancelled in 1972 when that carrier refused to agree to permit Niedert to recoup its expenses by sharing in the line-haul revenues. During the same year the Commission informed Niedert that its interline arrangement with another carrier was improper. In 1972 and 1973 surveys by Niedert disclosed that no carrier was willing to provide interlined service for the short distance between Chicago and Lake and Porter Counties, Indiana.
In January 1973, Niedert filed the instant application for temporary and permanent authority. The Commission granted temporary authority to serve the two Indiana counties in March 1973.
Niedert's application sought motor common carrier authority to carry general commodities in interstate commerce over irregular routes between
(1) Chicago and ten northern Illinois counties;
(2) points in those counties and other points in Illinois; and
(3) Lake and Porter Counties, Indiana, and points in Illinois.
Because of the request for multistate authority, Niedert was required also to request permission to convert its certificate of registration, which permitted it as an intrastate carrier to handle interstate traffic, into a certificate of public convenience and necessity. See § 206(a)(7) of the Interstate Commerce Act, 49 U.S.C. § 306(a)(7).
Proceedings Before the Commission
After publication of the application in the Federal Register, protests were received from a number of other carriers alleging conflicting operations. The matter was assigned to a joint board of the Commission, which consisted of a single member. Niedert presented evidence describing its operations, and 17 shippers testified as to their needs for an extension of Niedert's unique, prompt LTL service into the two Indiana counties. Twenty four protesting carriers appeared. Seventeen of the protestants presented evidence against the application, ten of them opposing the Indiana extension and seven the conversion of the Illinois authority. When the sole member of the board, an employee of the State of Illinois, terminated his employment without writing a decision, the Commission assigned the preparation of an initial decision to an administrative law judge, who reviewed the record and issued an initial decision concluding that the grant of authority was warranted in part.
The Administrative Law Judge's Decision
The administrative law judge granted the proposed extension of authority into the two Indiana counties, based on findings which were accepted on review by Division 1 of the Commission. He found,
the shipper evidence clearly shows that applicant performs an unusual and substantial service within the 50-mile radius, that Lake and Porter Counties are sufficiently part of the Greater Chicago Area, that traffic to such points from producers and from distribution sources in the Chicago Area should be handled like traffic to Illinois points within the radius . . . .
He further found as follows:
1. Because the two involved Indiana counties are a part of the Greater Chicago Area, it is "unreasonable to expect shippers to tender the Indiana traffic to a carrier other than the one handling the Illinois traffic . . . ." 125 M.C.C. at 210.
2. Existing carriers with sufficient authority to serve the two Indiana counties lack facilities similar to Niedert's. The ALJ said,
that few carriers were willing to perform a service similar to applicant's and that those carriers having authority into Indiana lacked the capacity or ...