*1 ASSOCIATIONS, INC. AMERICAN TRUCKING STATES UNITED et al. AL. ET 2 NO. 6. January 12,
Argued 17-18, November 1952. Decided *2 argued E. M. Brucker the cause Harry Boot and Wilbur Mr. Boot and for in No. 26. On the brief were appellants Beardsley Trucking T. Associa- Peter for the American for Automobile tions, Inc., George S. Dixon the National Herbert and Noel Transporters al., Association et Baker Trans- George Highway F. Steel Association for Mo- H. for the porters, Inc., Joseph Blackshear Watkins tor for the Lines, al., Wrape Inc. et James W. Gordons Inc. et and John S. Burchmore for the Transports, al., League, appellants. National Industrial Traffic in No. for argued appellants Howell Ellis the cause him Diehl. With 35. on the brief Milton E. With was was John S. them on the Statement as to Jurisdiction Burchmore. argued appellant
Neil Brooks cause for No. him on the brief was Hunter. With W. Carroll argued for the States Ralph Spritzer S. the cause United and the Commission, appellees. Interstate Commerce Stern, Acting him on brief With were Solicitor General Acting Assistant M. Attorney Clapp General Edward Dan- Perlman, General, Solicitor B. then
Beidy. Philip to dismiss motions Reidy Mr. filed iel Knowlton and W. Com- Commerce States and the Interstate the United 26 and 35. mission Nos. Brother- the cause for the argued K.
Burton Wheeler Helpers & hood Teamsters-Chauffeurs-Warehousemen him were Ed- America, appellee. on the brief With Wheeler, Robert Seaks and J. Albert Woll. ward K. G. Intervening Helmetag, for the argued Jr. the cause Carl him on the brief were Charles Railroads, appellees. With Hays. F. on a motion to Joseph With them Clark Gwathmey affirm F. Joseph were Frank W. Johnson in No. 26. *3 Overmyer argued
Franklin R. and filed a brief the cause for et Chicago Suburban Motor Carriers Association appellees. al., Burchmore,
Robert N. D. Belnap Nuel and John S. Burchmore filed a brief for the National Industrial Traffic League, appellant Nos. 26 and 35. supporting appellants
Briefs of amici curiae were filed Adams, by Carraway Edward R. Drew L. and Homer 8. for Carpenter Greyvan Inc.; and Mr. Lines, by and Waples Brucker Harold J. the Movers Conference of America. Troy, Attorney General,
Smith filed a brief for the curiae, of Washington, State as amicus urging affirmance. Mr. opinion delivered the Reed of the Court. Justice These appeals attack new Interstate Commerce Com- governing mission rules use equipment by of author- ized motor carriers when the equipment is not owned by the carrier but is leased from the owner or obtained by interchange with another They authorized carrier. Parte Ex reported by the Commission prescribed were Motor Interchange Vehicles Lease and MC-43, No. por from the be seen As will Carriers, 52 M. C. C. 323, they p. post, Appendix, in the quoted we have tions the equip when inspection; carrier require principally thirty days minimum for a control leased, ment of revenues than division other compensation method an use in the case of and, lessee; lessor between exchange to the authorization equipment, other carrier’s practice Thus transfer of control. and actual point interchange obtained and that equipment using leased regulation of carrier- conformity with into brought up in that grown had to avoid evils that owned practice. validity of the to test the were instituted six suits
Some 2321-2325. §§ under 28 S. C. courts U. in the district rules not moved and one was by orders stayed were Three These came of the instant cases.1 pending disposition judgments deny- separate from two appeal here direct on in the Southern for; one prayed relief ing injunctive Inc. v. Express, Motor Indiana, Eastern District of States, in the F. and the other Supp. United Trucking Asso- American Alabama, District of Northern States, ciations, 710. The Supp. Inc. United 101 F. against appli- there considered and resolved issues authority under concerned the Commission’s cants *4 Act, Commerce 1935, Motor Carrier Act of Interstate 49 C. 919, 54 Stat. U. S. II, amended, Part 49 Stat. as seq.; agricultural et of the rules on impact 301§ car- guaranteed right and on the of authorized trucking augment equipment; application riers to their (D. v. C. Freight Corp. Oklahoma-Louisiana Motor United States (D. Okla.); v. W. D. C. Movers’ America United States Conference Mich.); Grey (D. Ill.), D. v. C. N. D. Lines, E. van Inc. United States (D. Ohio), respectively. and D. Apger C. N. United States 237, S. C. Act, Procedure 60 Stat. U. Administrative seq.; 1001 et protestants of the to intro- right and the evidence the district courts. Since duce additional only minor differences the content of the there were appealed, they may together. two be treated cases existing I. at the Introduction. —We consider outset the motor industry regulation conditions of the truck and its during hearings the Commission's because developed background only against meaningful. such are the rules authorization in form of permits or cer- Commission necessity and a precondition tificates convenience interstate service virtue of the Motor Carrier Act. authorization, except “grandfather” Such under clause, granted only showing after a ability fitness and to perform public and a need for proffered service. And it specifically scope limits the per- business of the operations in mitted the case of a contract carrier, and the routes and termini may served a certificated common carrier.2
The Act waives these conditions of agency authoriza- tion and service limitations for a portion sizable industry, important however. Most of the exempt op- erations are those involving equipment used the trans- portation agricultural products. By and large, category is owned operated by the person. same only It falls within the ju- Commission’s risdiction over drivers’ qualifications, hours of service and safety.3 And so there is no mandate on exempt these owner-operators to provide adequate and nondiscrimina- Act, Interstate 206-209, Commerce 49 Stat. 551-553. §§ 3The safety regulations Commission’s published CFR, are at 49 (b) (1) Parts 190-196. exempts Section 203 also transporta school (2) tion, (3) taxicabs, (4) service, park transportation, hotel national (4a) (5) farmers, (7) cooperatives, (7a) newspapers, airlines, (8) local service, (9) transportation. “casual”
303 comply with rates, published adhere to tory service, on carriers imposed requirements insurance the strict carriage.4 general authorized for regulatory sys- of the limiting character Because a of developed practice have wide tem, authorized carriers have moved two di- equipment. They using nonowned interchange. This includes those rections. The first is arrangements whereby two or more certificated carriers merge a load in order provide through for travel of areas. advantages of certification serve different fashion, wholly partially may In a or loaded trailer interchange point, or exchanged at the established interruption, an without even entire truck travel line under a guise of shift control. The second is leas- This of ing. exempt equipment relates to the use operations. subject authorized Carriers to Commission jurisdiction owner-operator have turned to increasingly truckers to their their satisfy need serv- ice demands. author- By variety arrangements, operations ized carriers hire them to conduct under the former’s permit operators certificate. Such thus travel routes with approved nonexempt property, great majority instances sever connections with their lessee carrier at the end the trip.5
The use of equipment by nonowned authorized carriers illegal, is not either under the Act or the rules under Act, (b), (e), (b), Interstate 4 See Commerce §§209 553, 558, 561, CFR, Stat. and 49 Part 174. apparently generalize signifi 5 It is.difficult to about the economic leasing interchange. survey cance of A made the Bureau in only 1947 disclosed that about two-thirds of the carriers did not desirability by many lease. The to each carrier would be affected variables, course, including owned, the number trucks he stability carrying volume and of local demand and the extent of his authority. *6 a that overwhelming But evidence is
consideration.6 regula- affect the directly practices number of satellite necessary in interest the Act, public the tory scheme of and it industry, of the stability and the economic service instance, for appears, It that the rules focus. is on these writing, are reduced many arrangements that while the after were concluded oral some common; leases are exempt operators in cases trips were made and several car- with blank authorized solicited business themselves strongly It agency. rier forms or other evidence rela- urged very informality that the contractual creates tionship exempt operator between carrier industry in with those which conditions the inconsistent during the contemplates. proffered the Act Proof was relationships proceedings that the informal and tenuous in interchange permit lease and evasions of the limitations on permitted authority. certificated or Since the driver exempt carrier, of the an equipment employee is not the geographical sanctions violation of restrictions are clearly difficult to of the impose, especially the case single-trip lessor. Interchange may, well, become geographical device to circumvent restrictions the cer- practice tificate. The conducting authorized carriers operations beyond territory the they are entitled to serve under cover of a lease from the local carrier clearly was shown the evidence before the ap- Commission. It peared, fact, that some of operations these entirely are fictional, being created ad hoc after trip is made —and this at times in the specific wake of a denial by Com- application mission of an to serve the area.
6 appears, however, It that a number of practice states control the already. Washington, which has filed an urg intervenor brief here ing affirmance, is limiting trip leases, notable in requiring and in that employee the driver be an of the carrier and that the latter control provision the vehicle. The relevant “Leasing is cited to us as Rule by Attorney 40” the Brief of the General of that State. of some evidence by and shown alleged, also It was requirements safety Commission’s incidents, Because exempt lessors. observed were not only cover arrangements bulk of great fact desire opportunity little have leasing carriers trip, one where in cases especially used, inspect appear- operator’s without is made agreement sanctions Enforcement terminal. at the carrier’s ance difficult clearly as violations would the carriers for not may the carrier Hence, as route standards. impose certificates, doctors’ periods, of rest supervision extend the *7 nor- loading, steering equipment brakes, lights, tires, equip- to vehicles, employees and his own mally accorded And the owner- through lease. secured ment and drivers and his himself push to upon is called operator himself spent off of time impact of the economic truck because profit his slim repairs on and investment the road has agreements written the absence of Further, margin.7 for accidents responsibility of the lessee’s fixing made the highly difficult. stability industry on the economic
Consequences leasing practice engaged noted. The carrier also were exempt equip- of supply of the cost mercy at the is find him- may him. at times Hence, to he ment available no shipping obligations because to undertake self unable relatively unprofit- willing to make a available trucks are the burdens of less-than-carload or to assume trip able that a granted showing is on a con- Certification service. nondiscriminatory willing provide service is fit and cern ob- convenience. To sustain this public required by finds his integrated authorized carrier who ligation, safety may impaired highway rests ad be conclusion certainty. mittedly speculation statistical on informed rather than did not indicate A road check examination conducted the Bureau any significant safety between difference in the number of violations leased and owned vehicles. more only willing to undertake the
leasing competitor may obliged rely on miscel- profitable ventures compensating long without economic car- freight laneous profit margins. load to sustain estimated hauls authorized carriers also exempt equipment by Use regulation. obstruct normal rate Schedules are tends to traditionally picture in costs. But the cost grounded a on far depends largely equipment carrier who leased owning from that his own different carrier trucks. only operations Not is the former able to undertake relatively slight with well, investment. As his cur- rent overhead involved in operating equipment leased solely administrative, exempt the owner of the bearing expense of gas, oil, tires, wages deprecia- tion out of his exempt share the fee. And to refer owner’s own expenses as determinative of what ais “rea- manifestly sonable” rate would be impossible long as the relationships between lessor and lessee are too tenu- ous, short-termed and informal compensation and the each based on a division of revenue.
It is practice claimed in fact has had a demor- alizing industry. effect on the Authorized carriers find it advantageous to expand their operations by leased equip- *8 ment because of the fact that no investment is required, nor is the risk of empty return trips and other overhead Hence, incurred. owning carriers their own trucks face a fluid rate in competition structure with those specializing in use of exempt equipment, especially where equip- such ment is offered for a trip, as it is, expenses. often for There is pressure thus a on the operator certificated enter leasing expand field and hence the effect of these practices conditions and on efficient, safe and nondiscrim- inatory truck service which the designed Act is promote.
II. Commission Proceedings. before us admit the —All difficulties which have In developed. fact, the Commis- sion has considered them for some years. As early as
307 Motor Carriers Bureau of following 1940, complaints, in a statis- culminated subject on the hearings held use maximum necessity The in 1943. report tical any postponed war during the resources transportation however, the year, In that 1947.8 until thereafter action sug- discussion, had reinstituted Bureau of the Director for on his field staff and drew drafted, regulations gested by authorized vehicles exempt use of reports by the were instituted proceedings present The carriers. apparent when it became January 9,1948, on Commission was a proper solution regarding agreement carrier 369, de- Reg. at 13 Fed. order, published Its unlikely. and forth set respondents carriers all authorized clared four schemes investigated, possible be practices A examiner qualified rules. suggested and regulation, and Washington 80 witnesses some heard thereafter A full rules. proposed report a Louis, and issued St. on June 5 followed Division the Commission’s report and amend- findings the examiner’s confirming 26, 1950, for reconsider- following petitions and, ing proposals,9 his proceedings reopened ation, the entire Commission May 8, dated report, Commission’s argument. The oral rules, proposed the examiner’s adopted effect 1951, and effect of reiterating the nature affirming after 8 (d), 501.9, 501.10, Revised, 3, 501.5 D. T. Order O. See General §§ leasing, seq., requiring Reg. et full 501.13, July 14, 1942, 5445 7 Fed. Emergency revenues; Order I. C. C. interchange and division 4429; Reg. 215.105, 1942, 7 Fed. 11, §§215.101, M-l, No. June (a), 1945, 176.10 M-6, Emergency November C. C. Order I. Reg. Fed. Interchange Motor MC-43, Vehicles Lease and Ex Parte No. Carriers, 51 M. C. C. 461. problem. The examiner had change heart of the went to the days’ duration rental be of at least suggested requirement of revenues. division compensation on a basis other than a and that they recognizing that would rejected provisions, both Division *9 trip-leasing. effect abolish interchange practices industry on the
leasing regulation under the Act. form,
III. The Rules. —In this final the rules establish equipment by to the use nonowned au- conditions thorized carriers the reduction of the contracts to writing. (a) 207.4 52 M. It (2), required § Rule C. C. 744. possession of, such contracts vest exclusive and responsi- bility for, equipment the authorized during carrier rental, (a) (4), § Rule 207.4 life which must thirty days exceed when the driver is the owner or his employee. (a) (3). Rule 207.4 Finally, § the contract fix compensation must of the lessor, may not be measured percentage gross revenue. Rule 207.4 (a) (5). § Interchange agreements between two authorized carriers must also be in writing and equip- ment must be driven an employee of the certificated carrier over whose authorized it route travels. Rule 207.5 (a), (c). §
The rules also require inspection of equip- nonowned ment when the lessee carrier takes possession, Rule § 207.4 (c), as well as the identification of the trucks as within its responsibility, Rule 207.4 (d), § and the testing of the driver’s familiarity with Motor Carrier Safety Regulations. (e). Rule 207.4 Records of the use of rented and interchanged are mandatory. Rule (f). § 207.4
IV. Commission Authority. Appellants focus their — principal attack on the provisions lease requiring a thirty- day period of carrier control and a measure compensa- tion other than revenue splitting. agree All that the rules thus abolish trip-leasing. Unfortunate consequences are predicted for the public interest because the exempt owner-operator will no longer be able to hire himself out at will—in sum, that the industry’s ability to serve a fluctuating demand will suffer and transportation costs accordingly go up. It is the position Commission’s
309 of because directly benefit will public the and industry the rate and competition of of conditions stabilization the of effectiveness continued in fact schedules, and Act Carrier Motor under functions Commission’s interchange. leasing regulation of on dependent is predic- weigh such to ill equipped we are say, to Needless function it our isNor future. economic of the tions legal con- we turn So super-commission. as a act on us. urged strongly so siderations a broad- as position their framed have Here, appellants urge All power. asserted the Commission’s on attack side ex- there an Act is in the nowhere the fact us upon leas- affect or regulate control, power of delegation press sepa- each that in insisted further it is ing practices,10 authority regulatory granting Act of provision rate func- Our power. such of implication no direct there section-by-section a stop with not does however, tion, leasing practices” of “regulation phrase for the search As a provisions. statutory words literal among the con- appellants’ with agree might we principle, matter interpreta- canon it a reasonable thought if we tentions powers, agency delegating of acts the draftsmen tion that spe- do include or matter, can realistic practical aas 10 carriers, included, definition aas originally drafted Act as The 203 directly lease.” “whether transportation engaged in all language “added 544, [was] The 545. (15), Stat. (a)(14), 49 such its terms by bringing within act of the evasion to check intended leasing of through the performed are operations as transportation may constitute arrangements which similar or other motor vehicles particular according to the carriage, or contract common either will enable language inserted arrangements. The nature facts warrant where through such evasions to strike Commission by the stricken terminology was Cong. 5651. Rec. it.” however, which, intro 920, 898, 1940, 54 Stat. Transportation Act merely indicated, was which, we have qualification and no duced 19, States, S. 321 U. v. United clarity.” Thomson purposes of “[f]or Cong. 11546. Rec. See 86 every sought
cific consideration of
evil
to be corrected.
great
But no
acquaintance
practical
with
required
affairs is
to know
prescience,
that such
either in
fact or
the minds
of Congress,
Broadcasting
does not exist. National
Co. v.
States,
190,
United
219-220;
Dodge
U. S.
Phelps
Board,
Corp. v. Labor
S.
193-194.
very
U.
Its
absence,
moreover,
precisely one of the
why
reasons
*11
regulatory agencies
such
the Commission are created,
for it
hope
is the fond
of their
they
authors that
bring
to their work
expert's
familiarity with industry condi
tions which members of the delegating legislatures cannot
expected
to possess. United
Pennsylvania
States v.
Co.,
R.
Moreover, reject we must at any the outset conclusion that the rules as a represent whole an attempt by the Com- mission expand power its arbitrarily; there is clear and adequate evidence of evils attendant trip-leasing. on The purpose of protect the rules is to the industry from practices detrimental to the maintenance of sound trans- portation services consistent with the regulatory system. (b) Sections 216 (a) and 218 of the Act, instance, re- quire filing a just and reasonable rate schedule each common carrier, and the violation of these rates and the demoralization of rate structures generally are a probable concomitant of current leasing practices. Sec- tion (a) (2) 204 requires the impose Commission to rules relating to safety operation for vehicles and drivers. These are likewise threatened by the unrestricted use of nonowned equipment by the common carriers. And the requirements of continuous service in (a)(1), § 204 of observance of authorized routes and termini under (a) §§ 208 and 209 (b), and prohibitions of rebates, (d), §§ 216 217 (b), (a) and (c), also may be ignored through very practices proscribed. here in So the rules aimed at conditions which question are may directly frustrate the of the under- regulation success in by Congress. duty taken Included the Act as a administer, Commission is that execute, enforce “[t]o all provisions of this all part, necessary make orders therewith, prescribe connection and to rules, regulations, procedure for such (a)(6). §204 administration.” And necessary rule-making power, coterminous with scope of agency regulation itself, must extend to the “transportation of passengers property by motor car- engaged riers foreign interstate or commerce and to the procurement provision of and the of facilities for such transportation,” regulation of which is vested the Com- mission 202 (a). § See also (a) (19). § 203 We cannot agree with appellants’ contention that rule-making authority (a) (6) merely concerns agency procedures solely It administrative. ignores the distinct reference the section to enforce- ment. Furthermore, power of the Commission to *12 make applicable rules to transfers of per- certificates or mits is recognized by (b). §212 That permits section “pursuant transfers to such regulations rules and the as Commission may prescribe.” It does not strain logic experience upon to look leasing of exempt equipment and interchange a transfer, in temporary of nature, the right carrier’s authorized to specified serve his area; fact think we this interpretation is dramatically supported by here the evidence that owner-operators themselves take the initiative in securing cargoes, while the carriers accept only the administrative function of approving the use of the nonowned equipment over their authorized routes and under their names. It is an unnatural con- struction of the Act which would require the Commission to sit idly by and wink practices at that lead to violations of provisions. its rules these of promulgation then
holdWe power, Commission’s within falls carriers authorized leasing prac to reference specific of absence despite Terminal Corp. v. Tank Car General Act. See tices rule-making general of grant Co., 422, 432. S. 308 U. It result. compels necessary for enforcement power Pennsyl v. States course, by United of foreshadowed, order an validated That case Co., S. 612. vania R. 323 U. by carrier competing ato to lease cars railroads requiring ground to of the Commission inability spite sea, S., 323 U. the Act. of specific provision on some its action “unques that the the fact to pointed This Court at 616. establishment require the Commission power tioned without fruitless, wholly would [through] routes rule abrogate Association’s power the correlative at S., interchange.” U. prohibits which regu us that here that convinces is evidence There necessary power; likewise a leasing practices lation in United than more crucial think its exercise fact, we only R. The enforcement Pennsylvania Co. States here, endangered; there of the Act was phase one by is affected regulatory scheme the entire practically trip-leasing. appears between conditions analogy
A fair sought to Motor Act those Carrier brought about our view rules, confirming the present be corrected industry was Then the jurisdiction. the Commission’s competitive ease of economically, dominated unstable result, And as a it be- entry picture. and a fluid rate units which with small economic overcrowded came the most minimal standards satisfy even proved unable *13 Congress felt responsibility.11 So safety or financial 11 152, Agencies, No. Regulation Transportation S. Doc. 73d 12209; 22-35, 226; Cong. 12196, Hear Cong., 14-15, 79 Rec. 2d Sess. 1632, Commerce, 1629, on S. ings, on Interstate S. Senate Committee 78-80, 404-405, Sess., I, 410-411. 1635, Cong., Part 74th 1st and S.
313 oper- authorization for all interstate compelled require from transportation system the motor preserve ations to at exist- over-competition, protecting while the same time through “grandfather” clause.12 The Com- ing routes rule-making here considered is based on condi- mission’s similarly threaten, though perhaps a lesser tions industry degree, operation today. the efficient exercised, power (a) (6) And as under 204 is § geared regulatory to and bounded the limits of the system supplements. of the Act which it It is thus as clearly purposes speci- defined for constitutional as the fied on Commission, functions of the and so reliance Poultry States, Schechter Corp. United v. 495, 295 U. S. 529, and Panama Refining Ryan, Co. v. 388, 293 U. S. 421, misplaced. reject We similar reasons the con- tention that Federal Power Commission v. Panhandle Co., Pipe Eastern Line controlling U. S. here. Our holding that the Federal Power au- Commission’s thority did not extend to production gathering natural gas was specifically grounded provision the Natural Gas Act that effect. 337 atS.,U. 504-505.
V. The National Transportation Policy.
we
—What
have said
appellants’
above answers
companion conten
tion that
the rules are invalid
they
because
violate the
National Transportation
Policy
C.,
set out
S.U.
preceding
Regulation
under the Act
de
is there
clared to be in the interests of the preservation
advantages
inherent
of all modes of transportation,
of an economically sound, safe,
industry.
and efficient
See United States Co.,
Rock Island Motor Transit
U. S. 419, and United States v. Texas &
Motor
Pacific
Co.,
Transport
12 Cong. 12207-12211; Rec. 12222-12225. *14 courts; for the one hardly question that
the view compromise a best, at represent, rules that the it is clear conditions, industry flexibility and stability between can interest, and we national in the to alleged each its famili- applied has Commission if the to look see only conflicting these problems to transportation arity with position contrary that mere fact The considerations. interchange when active years war during the taken was has the Commission required,13 were leasing ap- in fact and has trip-leasing before restricted never our change not time,14 to does time from it proved function. There- Exemptions Rules Reasonableness
VI.
regulatory
rules to the
these
relationship
from. —The
a basis for
forms
protect
designed
are
they
scheme
are
rules
that certain
allegations
various
to the
answer
must
argument
an
such
purposes,
our
For
arbitrary.
for
ground
had no reasonable
the Commission
mean
not
case, such
In the instant
of judgment.
the exercise
the Com-
before
marshalled
evidence
situation;
that the continued
conclusion
supports the
plainly
mission
prescribed.
rules
requires the
regulation
itsof
effectiveness
relationship between
a reasonable
affirm
alsoWe
exemptions
and the
scheme
regulatory
aims of the federal
over
carriers
interchange between
as to
That
rules.
207.3
Rule
serve,
authorized
both are
which
routes
supra.
8,
footnote
See
C. C.
Application, 17 M.
Express
Carrier
Common
Dixie
Co.
Ohio
Application,
C. C.
32 M.
Grey
Lines, Inc.,
Carrier
735;
Common
van
4, August
Ruling No.
See, however, C. C. Administrative
I.
719.
part of
Com
early
effort on the
1936,
represents an
19,
of the carriers
under
control
bring
leased
mission
after
apparently abandoned
This
Act.
was
purposes of the
Inc.,
Lines,
Truck
v. Rosenblum
States
United
decisions in
Court’s
States,
321 U. S.
Thomson United
S.
315 U.
(a),
proposition
is founded on the
that unauthorized cer
impossible.
tificate extensions are here
exemption
trucking equipment
extended to
in railway express
used
*15
operations,
(b),
§
Rule 207.3
largely
which are
confined to
municipalities
contiguous
areas,
trips, dupli
short
cates the similar exemption applicable to contract and
in
common carriers
(c).
§
Rule 207.3
It is alleged that the
exclusion of the substituted motor-for-rail
transport
equipment from the rules’ coverage by Rule
(b)
207.3
§
also is based on the fact that
the evils of unauthorized
service, lax observation of safety regulations, and demor
alized competitive conditions are not
in
present
oper
such
ations. As the Commission found, the leasing practices in
the field are
through
undertaken
long-term contracts with
certain established lessors, and the equipment
inspected
and controlled by the railroads, and identified with its
In
a context,
name.
such
exemption
is not unreason
able; certainly it is
required
not
that the Commission ex
tend its supervisory activities under the rules into fields
where the evidence before it indicates no need, merely to
satisfy some
paper
standard of
equality. And this is espe
in
cially so
the field of substituted motor-for-rail carriage
falls
within the Commission’s
regulation
strict
virtue of the restrictions which we approved in United
States v. Rock
Co.,
Island Motor Transit
rangement, exemption that the has rea seems to us it, it approved coverage, finan of insurance guarantees basis; sonable control and lessee route responsibility, cial 551, 40 M. 563- operations, Allied’s C. C. identification against the evils the rules seek promise protection correct. Right Augment Equip- Preservation
VII. contend, however, Appellants further ment. — (a) protections §§ will violate the rules effect their right augment of the carriers’ (b) of the Act agree. provisos question do not We equipment.15 the Commis- as blanket restrictions on are not to be read aimed at the restrictions they are regulatory powers; sion’s through acquisi- in volume of traffic on the increase *16 limita- Clearly, vehicles. numerical tion of additional but Commission’s refusal invalid, tion would be the and use which does equipment carriers to secure permit licensing rules would safety, loading, satisfy not its Lines, Express Inc. pointed As out Crescent not. we sustaining a certifi- States, 401, 408, S. United U. (a) Any 206 or 207 certificate issued under section “Sec. 208. Provided, however, . . specify service to be rendered . : shall the right terms, conditions, shall restrict of the That no or limitations the routes, equipment and facilities over the carrier to add to his or its certificate, territory termini, specified or within the in the between the public development of the the of the business and the demands as require.” shall “(b) specify permit . . . The Commission shall in the
Sec. 209. thereby scope of the contract carrier covered the business however, terms, conditions, Provided, or limita- thereof . . . That no add right of carrier to substitute or tions shall restrict scope permit, or his or its contracts of the to add to within facilities, scope permit, within the of the may development public and the demands of the business require.”
cate limited to seven-passenger vehicles, since § 208 “re- quires the Commission to specify the service to ren- dered, this could not be done without also to power specify general type of vehicle to be used.” We think it equally apparent that regulation of the conditions and circumstances of the use of nonowned vehicles is not a “limitation on the addition of more vehicles of the author- type.” ized 320 U. atS.,
VIII. Preservation Agricultural Exemption. —As indicated above, the Act exempts also from Commis- jurisdiction sion “motor vehicles used carrying prop- erty consisting of ordinary livestock, fish (including shell fish), agricultural commodities (not including products manufactured if thereof), such motor vehicles are not used carrying any other property, or passengers, for compensation,” (b) § 203 (6),16 and appellants, and particularly the intervening Secretary Agriculture, urge that the rules will drastically reduce the significance of this section in violation of Congress’ intent. All admit, course, the rules do not directly apply to agricul- tural equipment; it merely required authorized carriers using such comply trucks with certain provisions. But it is contended that preconditions to such use imposed on those within jurisdiction Commission will wipe out much of the trafile which agricultural car- riers have heretofore engaged in. It appears, for instance, that a substantial leasing is built on agricultural haulers who would otherwise return empty to their place of depar- *17 ture, having unloaded the farm produce carried; the au- thorized carriers have found them prepared to accept a one-trip engagement for the return route. The thirty- 16 exempted Likewise are “motor operated vehicles controlled and by any farmer when transportation used in the agricultural of his products commodities and thereof, transportation or in the supplies of to (b) his (4a). farm.” 203§ arrangements make such will provision lease
day impossible. the economic that however, to conclude unable,
areWe rules con- from these truckers agricultural to the danger that The mere fact (b) (6). of 203§ stitutes violation will hereafter agricultural products of carriers commercial an basis of charges on the their to establish required within. bringing them the same as trip is not return empty ex- exemption generally. jurisdiction Commission agricultural prod- of carriage to words, by its own tends, to is used where operations not to ucts, not say, to the statute Needless property. other carry with author- compete to farm truckers allow designed to non- carriage carriers motor ized certificated off- products manufactured products agricultural exemption when they have because use, merely the-farm can therefore products. We agricultural carrying only agricultural implies protection in which nothing it find from though property, other even to haul right truckers’ protect to important right that standpoint an economic must also receive truckers Regulated profit margins. and limited car- routes their restricted upon protection competing factors, car- between these A balance riage. does congressional purpose,17 with out accordance ried or invalid. to us unreasonable not seem long over pause need not Procedure. —We Agency IX. have inter- appellants objections procedural certain product were the the rules They object posed. requirements with certain fatally at variance proceedings in No. Appellants Act. Procedure of the Administrative “the (c), § the requirement point Policy, C., preceding Transportation 49 U. S. The National regulation of all modes impartial specifically refers “fair and Act, so administered subject provisions of this transportation to the advantages of each.” recognize preserve the inherent *18 319 of burden have the a rule or order shall of proponent Motor Commission, or its the and insist proof,” published rules up suggested Bureau which drew Carriers Reg. 13 Fed. hearing order, to the supplement as a evidence. by preponderating burden satisfy did not this statutory was a assuming But that the Commission even actively and that it did not regulation of the “proponent” in of its degree proof support of requisite introduce the inap- is requirement think it plain we position, Ad- proceedings. For of the § to the instant plicable by its own terms Procedure Act is limited ministrative 4 or 5 to be conducted “hearings requires to which section Turning sections, to this section.” those pursuant they only specified it found that invoke when § to be required by statute: “Where rules are statute opportunity agency made on the record after for an apply 7 and 8 shall hearing, requirements sections In place provisions short, this subsection.”18 only 4 of the Administrative Procedure Act sets out Section requirements: following applicable
“(a) proposed making Notice.—General notice of rule shall Register (unless subject published persons in the Federal all thereto personally have are named and either served or otherwise actual law) (1) notice thereof accordance with shall include a state- time, public making proceed- place, rule ment and nature ings; (2) authority proposed; reference to the under which the rule is (3) proposed either the terms or substance of the rule or a description subjects issues involved. . . .
“(b) required section, agency Procedures. —After notice persons opportunity participate shall afford interested an in the making through data, views, arguments rule submission of written opportunity present orally any with or without the same manner; and, presented, after consideration of all relevant matter agency incorporate any general adopted shall rules a concise purpose.” 237, 239, statement of their basis and 60 Stat. 5 U. S. C. question Register par- There no but that Federal notice and ticipation requirements 307, supra. p. were satisfied. See *19 by the stat- required were hearings only when applies
7§ the made on to be were conducted they under which ute have As we hearing. for oral opportunity and with record case in the instant rule-making authority out, the pointed noth- Act; Motor Carrier of the (a)(6) 204 from § stems with in contrast hearing, direct record ing requires there (e) 216 and §§ of provisions rate-making procedure substantiality our view of the whatever Hence, (b). 218 fall the rules must not think that we do evidence, a satisfy and failed to assume the Commission because proof.” “burden (b) that 8 supports our conclusion reasoning
Similar that requires Act, Procedure of the Administrative (1) findings and statement decisions shall “include 26, in No. is likewise by appellants conclusions,” invoked . . “hearing . limited to a it, turn, in For inapplicable. 7.” conformity in with section to be conducted required Introduce Evidence Right X. of Confiscation.— refusal of as error assign Finally, appellants of addi- permit in No. 35 to introduction District Court proof indicated there. Their offer tional oral evidence property of Plaintiffs’ would the “value that it concern property on said “the effect of the order rights” it is many times, rights.” This Court has indicated affecting with an order their true, that those concerned must be just compensation transportation services right sup- to introduce evidence to heard; indeed, their the order in will unconstitu- port question the claim in tionally property may confiscate their be enforced even if Court, opportunity the District the Commission bars an States, R. Co. v. United to do so. Manufacturers St. Yards Joseph Stock Co. United 457, 488-490; S. v. U. States, Baltimore Ohio R. & Co. 38, 53-54; 298 U. S. v. States, United York New 349, S. 362-369; U. States, United U. S. 334-335. right
But the is not to be construed as an avenue toward delay. substantial, claim confiscation must be import proffered clear, inability evidence and the question test before the Commission patent, order to an justify oral on the hearing question In courts. at bar, appellants case seek substance show that the outlawing of will trip-leasing affect their business; perhaps they might prove even be able to some concerns fail if they would were unable the future to resort to nonowned In periods. for short this context, however, we think right do not that a to trial *20 de novo is automatically merely established because Commission denied a petition for in- rehearing which voked principles. constitutional In place, the first there was in truth a multitude of evidence before the Commis- sion on importance trip-leasing some concerns. Moreover, we are appellants clear that an opportu- had nity to introduce very agency pro- evidence ceedings, for it required no great prescience, view of the notice of the hearings published by the Commis- sion, to know that they would importance concern the and desirability of the very practices appellants seek to protect.
“Confiscatory” is not magic a word. Whether it should open the door to further proceedings depends on the nature of the order attacked. think a We claim of rate confiscation, which was the concern of just the cases cited, stands on a fundamentally different from footing that made in the instant case.19 Rate-making represents an order affecting the volume of income; it is said to con- fiscate property when prohibits it a reasonable return on already We have noted the distinguishes Motor Carrier itself Act scope between the hearing required proceedings a in rate those held in general relation to rule-making (a)(6). under §204 But the initial costs. operating beyond
investment trip-leasing abolishment significance economic merely has de- The Commission direct. nearly so not is to be income carrier’s method what termined charge. may it how much not produced, the Commission admonished have that we It is true on the of evidence introduction permit and the courts it the claim order where a rate impact of economic original pro- during the proffered have been not could the “con- because But that was genuine. ceedings was Stock Joseph St. compensation,” right stitutional drawn in States, 54, was S. 298 U. Co. v. United Yards comparable no make can appellants Here, question. if its is valid even an order which They attack claim. As we out of business. operators drive is to some effect in and is rooted rule-making power indicated, have which turn scheme, regulatory Congress’ supplements fact power. from the commerce derives therefore, affected, may be concerns going of some value if Amendment, under the Fifth claim support not does are, they related, as we have said Act be the rules and the may reach.20 power the federal to evils commerce no constitutional case, appellants had being the This *21 rate-making applicable to with what we Compare principles wage related field Amendment in said about the Fifth have Darby, power, v. United States hour laws under the commerce many pointed times that 100, This Court has out 312 U. S. dependent power is on its commerce not exercise of the federal quo; status Fifth Amendment of the economic maintenance regulation congressional against scheme of business protection no profitability or meth valid, merely because it disturbs the otherwise v. & Labor Board Jones ods of the interstate concerns affected. 43-45; Wallace, S. Laughlin Corp., v. 306 U. S. 301 U. S. Currin Royal Co-operative, Inc., S. 1, 13-15; 307 U. v. Rock United States Comm’n, Exchange 533, 572-573; v. Securities &. North American Co. Light & 686, 707-710; American Power & Co. Securities 327 U. S. Exchange Comm’n, 90, 106-108. S.U.
claim in support of which they are entitled to introduce novo, evidence de and the court did not err in sustaining the objection thereto.
Affirmed. APPENDIX TO OPINION OF THE COURT. Rules -prescribed governing practices authorized
carriers property by motor vehicle in Interstate or Foreign Commerce in (1) augmenting (#) equipment, interchanging equipment, and (3) renting vehicles or equipment private carriers or shippers § 207.3 Exemptions. than 207.4 (c) (d), —Other relative to inspection and identification of equipment, these rules shall not apply—
(a) To equipment leased one by authorized carrier op- erating over regular routes to another authorized carrier operating regular over operated routes and between points and over routes which both lessor and lessee are authorized to serve, and to equipment leased one au- thorized carrier operating over irregular routes to another such carrier and operated points between and within ter- ritory which both the lessor and lessee are authorized to serve;
(b) To equipment wholly utilized or in part in the transportation of railway express traffic, or in substituted motor-for-rail transportation of railroad freight moving between points that are railroad stations on railroad billing;
(c) To utilized in transportation performed solely and exclusively within any contigu- municipality, ous municipalities, or commercial zone, as defined by the Commission;
(d) To equipment utilized an carrier in authorized transportation performed pursuant to any plan of opera- *22 arising in proceeding the Commission by approved
tion Act .... Commerce of the Interstate under section equip- than equipment. Augmenting § 207.4 —Other inter- carriers motor common exchanged between ment author- rules, 207.5 of these in § as defined change service in or transportation authorized may perform ized carriers only under not own they do which equipment with following conditions: for the arrangement contract, lease, or other
(a) equipment— use of such carrier the authorized made between
(1) be Shall equipment; the owner thereto, signed by parties writing be in (2) Shall authorized agents duly or employees regular or their contracts, leases, or other execution of for them the act arrangements; applies, for it which specify period
(3) Shall days when the be not less than shall the owner or by authorized carrier for the operated . owner; employees of control possession, for the exclusive (4) provide Shall complete assump- and for the equipment, and use of the thereto, the authorized respect responsibility tion of carrier, .... compensation paid by to be
(5) specify the Shall provided, equipment; the leased for the rental of lessee computed shall not be however, compensation that such any applica- or any percentage on division the basis or trans- commodity ble or on commodities any rate rates percentage ported in vehicle or on a division said any during period vehicle revenue earned said effective; which the lease
(6) Shall specify the time and date or the circumstance on contract, which the lease, arrangement begins, or other and the time or the circumstance which it ends. The on of contract, duration lease, arrangement or other shall coincide with the time for the giving receipts of for as equipment, required by paragraph (b) of this section ....
(c) Inspection equipment. duty shall be the of —It of the authorized carrier, before taking possession of equipment, to inspect the same or to have the. same inspected ....
(d) equipment. authorized car- Identification of —The acquiring rier the use of equipment under this rule shall properly and correctly identify equipment such op- erated by it ... .
(e) Driver equipment. any person other of —Before than a regular employee of the authorized carrier is as- signed to drive operated under these rules, it shall duty be the of the authorized carrier to make certain that such driver is familiar with, and that employ- his ment as a driver will not result in, violation of any pro- of parts 192, vision 193, 195, and 196 of the Motor Carrier Safety Regulations (Rev.) pertaining to “Driving of Mo- tor Vehicles,” “Parts and Accessories Necessary for Safe Operation,” “Hours of Service of and Drivers,” “Inspec- tion and Maintenance,” and require such driver to furnish a certificate of physical examination in accord- ance with part 191 of the Motor Carrier Safety Regula- (Rev.) tions pertaining “Qualifications of Drivers,” or, in lieu thereof, photostatic a of copy the original certif- icate of physical examination, which shall be retained in the authorized carrier’s file. car- authorized equipment. use Record (f) of —The of rules shall these under operated utilizing equipment
rier trip covering each manifest keep prepare name containing service, in its used the equipment make, equipment, such the owner and address registration the State number, serial year, model, and address name equipment, number origin, point equipment, operating the driver *24 destination, final of point the departure, of date time and identi- any of number serial carrier’s authorized and the . . . equipment. the affixed to device fication carriers Interchange equipment. § 207.5 of —Common arrangement, or lease, other contract, bymay property of of these 207.2 §in defined equipment interchange any property, of carriers common more other one or rules with such another from may receive of or one such carriers any with in connection equipment, of such carrier, any following the under traffic, of through movement conditions: interchange. con- Agreement providing
(a) —The for inter- for providing arrangement tract, lease, or other in- be the equipment specifically describe shall change interchange; use of the points specific the terchanged; for such the consideration the and equipment be of made contract, to the parties signed by be shall use; and or employees regular or their arrangement, lease, or other in the execution them, to act duly authorized agents arrangements. leases, or other contracts, of such in inter- participating Authority (b) carriers of ne- and public of convenience change. certificates —The in inter- participating by held the carriers cessity transportation must authorize the arrangement change in the transported to be proposed of the commodities point from and to the movement, and service through interchange occurs. physical where interchanged carrier equipment. (c) Driver of —Each operate equipment its own driver to assign must point points from and to the or operated to be proposed or routes or within the interchange of and over the route respec- territory participating authorized carriers’ necessity. public tive certificates of convenience Through lading. (d) transported bills traffic —The of on interchange through service must move bills lading issued rates originating carrier, charged and revenues must be for in collected accounted if interchange the same manner as there had been no equipment. Charges for the use of the shall equipment kept separate joint be and distinct from of the divisions rates or the proportions accruing thereof to the carriers application proportional of local or rates.
(e) Inspection equipment. duty shall be the —It acquiring the carrier the use of in interchange inspect such equipment, inspected to have it in the manner provided (c) 207.4 rules; equip- these ment which does not meet the requirements safety regulations not operated shall respective *25 services interchange of the carriers until the defects have been corrected.
(f) equipment. authorized car- Identification of —The riers operating equipment in interchange service under this section shall carry with each operated vehicle so copy of contract, or lease, arrangement other while being operated interchange service. Douglas Black,
Mr. Justice with whom Mr. Justice concurs, dissenting.
I agree with the Court that the Interstate Commerce Act grants the Commission broad implied powers carry to out general purposes outlined in the law. See United Co., 616. But Pennsylvania R. S. States U. impli- vague to invoke power without the Commission is or override its purpose to to defeat the Act’s cations This, think, I is what the clearly expressed provisions. rules in most of the Commission has done Commission In run upholds. my view the rules which the Court respects: important to the Act three counter granted right of motor car- congressionally A. The they would for themselves whether riers to choose de- purchased equipment practically or use leased of burdensome restrictions. stroyed by imposition regulation granted B. from carriers exemption Part II'of agricultural products by (b) the Act is burdened restrictive rules that substan- tially advantages Congress take intended away exemption. to confer operate part C. Railroads that motor vehicles as a carriage granted of the business of common are advantages express policy special violation method of requires transporta- of the Act which each with advantages. tion to be left its inherent an carriage A. Motor common had reached ad- vehicle the Motor Carrier stage Congress passed vanced when development in 1935.1 of the business was Early Act advantageous. to along lines the carriers found vehicles, Some owned their while others leased carriers try disrupt system, them. The Act did not but equip- left motor carriers free to continue to own or lease judgment. ment accordance with their best financial Congress regulate And was content the common themselves; contract carriers it made no effort whatever regulate who owned the those vehicles that were leased *26 regulated Congress to the carriers. talking was thus 543, amended, 919, 49 1 49 54 Stat. as Stat. U. S. C. 301.
329 well as by lease as of acquisition equipment about the should that the Commission provided when it by purchase add of carriers to right to restrict power be without of development as the or facilities to their required.2 the public and the demands of their business to forbid patently designed not provision While from of limiting type the Commission vehicles does safety,3 provision just patently of as interest power to forbid the lease and deprive the Commission meet the test of safety. of vehicles which purchase by put the full Commission adopted The new rules power appropriate restrictions on lease burdensome which, my view, go beyond restrictions vehicles, These burdensome restric- power of the Commission. rejected by previously tions had been the Commission’s composed particularly of Commissioners re- Y, Division supervision for of motor vehicle affairs as dis- sponsible supervision from of railroad affairs. This tinguished that burden- plain record makes enforcement these produce repercussions some rules will violent industry; many motor carriers will suffer motor carrier leasing ruinous losses. The business vehicles perhaps will be use common carriers curtailed destroyed. tendency even of the rules is thus may It many be, eliminate small business ventures. motor think, the Commission seems the Nation’s a efficiently accomplished by carrier business can be more than big companies equipment, few that own all their large companies part number of small that obtain all or of their But if equipment by governmental lease. alteration in our ordained, business structure is to be Con- not gress, Commission, ordaining. should do the 2 (a) power appears This denial of to the Commission 208 §§ (b) (a) (b). Part II the Act. 49 U. S. C. §§ Express States, Crescent Lines United 320 U. S. 408-409. *27 330
B. The farmers of the Nation for a long have time been largely dependent upon reasonably priced motor trans- portation get produce their to market.4 When the Motor Carrier Act was under was consideration, there much apprehension expressed regulation lest deprive farmers of this To advantage.5 feeling, meet this the bill was amended several times and finally passed was with the agricultural exemption set forth 203 (b). Except safety requirements to certain (b) § 203 exempts from regulation motor vehicles of farmers and farm coopera-
4 example, For in 1950:
Percentages op Transported Selected Farm Products Principal Markets in Trucks. Percent Percent Hogs Grapefruit . 79 .43 Cattle Oranges . 76 . 33 Apples. Calves. 78 64 Sheep and 44 Lambs. Tomatoes 60 . Eggs. Shell 93 Potatoes . 37 Poultry. Dressed 76 Lettuce. 41 Poultry. Live 99 Milk . Transportation Agricultural Leading Selected Commodities to Markets Motortruck, 1939-50, Rail and Depart- United States Agriculture, Agricultural ment of Bureau of (June 1951), Economics 1, p. Table illustration, For Congressman Oregon said, Walter Pierce of “Mr. Chairman, very I have closely. watched the why debate I wonder bill? farmer, living I am a 300 miles from tidewater. I raise wheat only and stock. The my relief I years have ever seen in on that confiscatory farm from the freight terrific railroad rates was when trucks came. certainly getting
“The camel is tent, his nose into the and this means the transportation death of the motor which the farmer has had only and which has been the relief that has come to him from the previous Cong. excessive 12216, 12217; railroad rates.” 79 Rec. see also 12197-12198. also exemption the same purposes; for farm used
tives carry- used to being while motor vehicles to all granted no doubt that There can be commodities. agricultural many of these car- rules will drive new the Commission’s oth- many and that farm out business products riers of *28 their rates. Section compelled to increase will be ers make obviously designed rather to the new is 207.4 of rules It forbids authorized much less valuable. exemption this for terms of at least except to lease motor trucks carriers by owners or operated if the trucks are to be days, reported Commission that of owners. The employees A trip-leasing.6 very completely prohibit would rule regulated between trip-leasing place of all takes large part they because exempt and truckers who are carriers in An be found products. farm illustration can carry fruit in delivering Florida fruits. On carriage of citrus has practice exempt these truckers northern states the for regulated motor to carriers been to lease their vehicles goods to Florida. Unless vehicles transportation arrangements make citrus fruits north can such bring partially to Florida they go empty. “Empty must back enterprise trips may on return well drive the loaded trucks Corp., Carriers to the wall.” United States Carolina impos- it The Commission’s rules make U. S. to exempt agricultural products for sible these carriers haul. The result get advantage of a lease for a return large part is destruction for a of that business. a rule so de- adopted
The reason the Commission has granted agricultural exemption Congress structive in place from a took the Dis- apparent colloquy was asked attorney trict Court. The for the Commission exempted Trip specifically be made motor carriers leases can carriers, express from the rules the Commission—railroad motor carriers, company and the Allied Van Lines. motor go if to to empty. it was wasteful for truck back Florida commendable candor he said: “It does seem uneco- With go it to but requiring empty, they nomical back can— I difficulty comes, think, letting up it come In words the be- place.” “difficulty first other comes” Congress agreed exempt cause these farm products. congressionally “difficulty” This is being created cleared up by against Its new rules trip-leasing Commission. will agricultural force these carriers raise their rates high enough purposes to frustrate underlying agricul- tural exemption.7
C. The Commission exempted has railroads and express companies goods carry hire motor vehicles from all of the regulations except provisions (c) 207.4 (d), which latter provisions two relate inspection and identification of equipment. It rather interesting that while the full granted Commission *29 amazing railroads this exemption, Division V, the Motor Carrier Division the Commission, refused to allow it. The Commission at the same time refused to exempt from its new rules motor carriers opera- whose tions were shown to be substantially identical with those performed by railroad express carriers which the Commission left free from the burdens of the rules. Since the railroads and independent motor carriers are in competition, it is not strange to find the railroads arguing here that while the railroads’ exemption should be sustained, the new rules should be applied all their vigor to independent motor carriers. I know of no power which the Commission has to allow railroads which statutory This agricultural exemption congressional reflects a belief that . . it would be Congress better for the decide what exempted should be rather than to leave it in the hands of the Com might nullify mission that Congress entire intentions of Cong. Rec. 12225. exemptions pref- in the motor carrier business engage completely motor carriers not erences which are denied railroads. owned broad new rules as a whole fashion
The Commission’s from and in con- transportation policies national different adopted with after mature considera- Congress flict those I judgments would reverse the District Courts tion. beyond the rules be set aside as direct authority. Commission’s