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Star Delivery & Transfer v. United States and Interstate Commerce Commission

decided: September 14, 1981.


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

Before Bauer, Circuit Judge, PECK, Senior Circuit Judge,*fn* and Cudahy, Circuit Judge.

Author: PECK

Tennant Truck Lines, Inc. applied to the Interstate Commerce Commission (ICC) for a certificate of public convenience and necessity that would grant Tennant permanent authority to act as a common carrier between facilities of the International Harvester Company in Illinois and points in Indiana and Iowa. Tennant's application was referred to Review Board Number 3 of the ICC and was processed under a "modified procedure" that permitted those opposing and supporting the application to do so by affidavit. 49 C.F.R. 1100.43-1100.52.

Tennant's application was supported by Harvester. Harvester's affidavit detailed reasons that Harvester expected its demand for motor carrier service to increase in the future. Furthermore, Harvester stated that its past demands for motor carrier service had exceeded the capabilities of existing carriers "in many instances." In support of this contention, Harvester supplied documents intended to illustrate Harvester's annually recurring problems in obtaining adequate transportation as a result of "agricultural seasonal peaks, resumed production after strikes, and similar circumstances." Harvester concluded that its support of Tennant's application, as well as its support of the similar applications of various other carriers, was not intended or expected to divert traffic from existing carriers, but was solely to provide Harvester with flexibility and efficiency in the use of motor carrier services.

Tennant's application was opposed by Star Delivery & Transfer, Inc., a common carrier with existing authority to transport Harvester's goods over the routes covered by Tennant's application. Star's affidavit asserted that Star had the capability and willingness to serve Harvester's present needs, and that Harvester had never fully utilized Star's full capacity to serve the Indiana and Iowa destinations. Star further stated that the specific instances cited by Harvester of Star's inability to move Harvester's shipments occurred under highly unusual circumstances involving record snowfall and a strike that had disrupted shipments. Star asserted that there was no necessity for additional permanent authority to service Harvester's needs, and that a grant of such authority would endanger Star's ability to continue its operations by diverting business from Star.

The ICC's Review Board issued a decision dated May 12, 1980, that granted Tennant's application. That decision first recited the "pertinent facts" alleged in Harvester's and Star's affidavits, and then stated:

We conclude that the public convenience and necessity require the proposed operations. Because of the lack of sufficient available equipment, the supporting shipper has shown a need for applicant's service in addition to that available from protestant and other existing carriers.

The decision then noted Star's evidence of the potential for harm to Star by diversion of traffic and stated that this evidence failed to show that Star's operations would be jeopardized by the grant of authority to Tennant. Finally, the decision announced the Review Board's conclusion that:

We believe the addition of applicant's service will provide a positive competitive force and help alleviate recurring equipment shortage problems. The grant of authority will not materially impair protestant's operations. We conclude that the benefits to the supporting shipper and the public from having applicant's service available far outweigh any detriment, real or potential, that may befall protestant as a result of the authority granted here.

Based on these conclusions, the Review Board ordered Tennant's application be granted. Star's petition for administrative review of that order was denied, and the Review Board's decision became the final order of the ICC. Star has petitioned this Court, pursuant to 28 U.S.C. §§ 2321 & 2341 et seq., for review of the ICC decision. On review, Star challenges the ICC decision on the grounds that it was arbitrary and that it is unsupported by substantial evidence. Administrative Procedure Act, 5 U.S.C. § 706(2)(A) and (E).

Our review to determine whether the ICC's findings are supported by substantial evidence is made difficult by the cursory nature of the Review Board's decision. That decision provides so little indication of the evidence relied on by the Board as the bases for its fact-finding that the decision comes perilously close to being unreviewable. See, Argo-Collier Truck Lines Corp. v. United States, 611 F.2d 149, 152 (6th Cir. 1979). At a minimum, the ICC must articulate its findings on the factual issues forming the bases of its decisions. Id. It is not enough that the ICC merely recite the ultimate conclusions of fact mandated by statute as prerequisites for the ICC to issue certificates of convenience and necessity. The Commission's decisions must also apprise a party "of the factual material on which the agency relies for decision so that he may rebut it." Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 288 n.4, 95 S. Ct. 438, 443 n.4, 42 L. Ed. 2d 447 (1974).

In the present case, the Review Board made the findings of ultimate facts required by 49 U.S.C. § 10922(a)(1) & (2) as the bases for the grant of the certificate sought by Tennant (that is, that Tennant was fit, willing, and able to provide the service described by the applicant, and that the present and future public convenience and necessity required that service). In a nearly cryptic manner, the Board also made fact findings on which these ultimate facts are based. The Board found that there was a recurring shortage of equipment available for Harvester's needs, that Star had not shown that granting the application would harm Star, and that granting authority to Tennant would provide a positive competitive force. There is no dispute in this case that these findings, if supported by substantial evidence, provide a rational basis for the conclusion that public convenience and necessity required the grant of authority.

Star challenges the finding of a shortage of available equipment as unsupported by substantial evidence. In announcing its findings of fact, the Board's decision failed utterly to explain how it determined, in the face of conflicting evidence, that there existed a shortage of available equipment. Certainly, as the finder of fact, the Board was required to weigh the conflicting information and determine whether a shortage existed. Ideally, in order to facilitate a meaningful review of that determination by this Court, the Board would have provided some explanation for its resolution of the conflicting evidence. Without that explanation, this Court's review under the substantial evidence standard becomes a search of the record for evidence which, in the Court's opinion, would support the finding made by the Board rather than an evaluation of the evidence actually relied on by the Board in deciding that a shortage existed.

Having noted the ICC's failure to explain how it determined that a shortage existed, we nonetheless believe that no purpose would be served in the present case by a remand to the ICC for such an explanation. The validity of the ICC's decision does not turn solely on the finding that existing services were inadequate. That finding is but one factor that the ICC may consider in determining whether a grant of additional authority was required by public convenience and necessity. A certificate may be granted even though no specific findings of inadequacy of existing service are made. United States v. Dixie Highway Express, Inc., 389 U.S. 409, 411, 88 S. Ct. 539, 540, 19 L. Ed. 2d 639 (1967); Chem-Haulers, Inc. v. United States, 536 F.2d 610, 623 (5th Cir. 1976). Furthermore, our review of the record shows that the factual assertions regarding the existence of a shortage of equipment are brief, direct, and nontechnical. It is therefore likely that our "search" of the evidence in this case leads us to consider the same evidence considered by the Board, and the possibility that this Court will substitute its estimation of what facts are relevant for the Board's is ...

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