673 F.2d 514 | D.C. Cir. | 1982
Lead Opinion
Opinion for the Court filed by Circuit Judge WILKEY.
By this appeal petitioners seek to set aside an order of the Interstate Commerce Commission (ICC or Commission) granting authority to Greyhound Lines, Inc. (Greyhound) to serve the intermediate point of Little Rock, Arkansas, on an already authorized direct route between Texarkana, Texas, and Memphis, Tennessee. Because the authorization in question was granted without sufficient consideration of important relevant issues, we deem the Commission’s action arbitrary and capricious. We vacate the Commission’s order and remand for further proceedings as appropriate.
I. FACTS
On 16 October 1978 Greyhound applied to the ICC for approval of direct service to Little Rock, Arkansas, between Memphis, Tennessee, to the east and Texarkana, Texas, to the southwest. Prior to applying for this additional authority, Greyhound was serving passengers traveling from Little Rock to Memphis and beyond and from Little Rock to Texarkana and beyond, but could do so only by circuitous routes, off the interstate highway.
Greyhound’s application met opposition from Trailways, Inc. (Trailways), whose wholly-owned bus subsidiary, Arkansas Motor Coaches, Ltd., operates over the subject route. Following the submission of written
Trailways promptly petitioned for administrative review of the board’s decision.
On 17 June 1980 a three-member commission panel (Division 1) issued a final decision granting Greyhound’s application.
Trailways filed a petition for review in this court on 27 June 1980. On 16 September 1980 an interim stay of ICC action granted by Chief Justice Burger was vacated, and an application for stay pending judicial review was denied. A certificate of public convenience and necessity has since been issued by the ICC to Greyhound authorizing commencement of the new service at Little Rock.
II. DISCUSSION
A. Scope of Review
The Administrative Procedure Act requires a reviewing court to “hold unlawful and set aside agency action, findings, and conclusions found to be [inter alia,] arbitrary, capricious, an abuse of discretion, [or] unsupported by substantial evidence.”
Although this case is a close one on the question of substantial evidence,
We are mindful of the broad expert discretion traditionally lodged in the ICC in considering and ruling on common carrier applications for authority to provide a particular service.
B. Public Convenience and Necessity
Specific limits of the ICC’s discretion to grant a carrier’s application to provide service are contained in the language of the Interstate Commerce Act
The Commission itself early described “public convenience and necessity” in motor carrier operations in terms of a three-pronged inquiry:
The question, in substance, is [1] whether the new operation or service will serve a useful public purpose, responsive to a public demand or need; [2] whether this purpose can and will be served as well by existing lines or carriers; and [3] whether it can be served by applicant with the new operation or service proposed without endangering or impairing the operations of existing carriers contrary to the public interest.25
Rather than being a strict formulaic approach, this inquiry is one way of describing the ICC’s duty to identify and balance often competing interests in promoting competition, maintaining healthy economic conditions, preserving an adequate existing service, and providing for future needs,
C. Contentions of Systemwide Harm
An essential element of the decisionmaking process, and one required by the APA, is that the ICC articulate clearly the basis for its action, including its findings on factual issues. Section 8 of the Act provides,
The record shall show the ruling on each finding, conclusion, or exception presented. All decisions, including initial, recommended, and tentative decisions, are a part of the record and shall include a statement of ... findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law, or discretion presented on the record.29
This is not a requirement of an empty process of listing cursory findings and conclusions. Without clear disclosure of the agency’s rationale, the reviewing court cannot fully perform its duty of evaluating the propriety of the Commission’s actions, by whatever standard is appropriate. As stated by the Supreme Court in Atchison, Topeka & Santa Fe Railway Co. v. Wichita Board of Trade,
A reviewing court must be able to discern in the Commission’s actions the policy it*128 is now pursuing so that it may complete the task of judicial review ....
* Hs * * * *
[A] simple examination of the order being received is frequently insufficient to reveal the policies that the Commission is pursuing. Thus, this Court has relied on the “simple but fundamental rule of administrative law,” SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed.2d 1995 (1947), that the agency must set forth clearly the grounds on which it acted. For “[w]e must know what a decision means before the duty becomes ours to say whether it is right or wrong.” United States v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499, 511, 55 S.Ct. 462, 467, 79 L.Ed. 1023 (1935).31
This principle has been the foundation of courts’ analyses on many occasions.
The thrust of Trailways’ position is that the ICC’s decision granting Greyhound authority to “open its doors” at Little Rock on its direct route between Memphis and Texarkana was made on an incomplete balance. Specifically, it argues that the Commission failed to consider the systemwide impact that a grant of Greyhound’s application would have on Trailways, its subsidiaries, and the bus transportation industry in general. This is the issue with which the court is concerned. The record of the ICC’s action in Greyhound’s application does not clearly reveal whether the Commission understood the nature of Trailways’ arguments and considered them in balancing the interests involved.
There is no question that the appropriate focus in Commission considerations of any adverse impact on other carriers, adverse also to public interest, is systemwide. This principle has been recognized by the Commission itself in other cases. In Arrow Transportation Co.,
First, it is not at all clear that the Commission actually did look at systemwide harm to any degree. Second, even if we were to accord the ICC the benefit of our doubt to find that it did consider system-wide impact to some extent, its focus was shallow at best. The review board’s decision evidences no confrontation with Trailways’ principal contention that its evidence of systemwide harm should be considered in the context of the overall structure of the intercity bus market and of Greyhound’s and Trailways’ relative positions in that market.
1. It is not clear that systemwide impact was considered.
Trailways’ protests before the Commission’s review board were based on argu
The review board’s decision acknowledged both Trailways’ and Greyhound’s arguments but made no specific finding.
2. The Commission failed to address Trailways’ principal contentions.
Even if the review board actually did consider a potential systemwide impact of Greyhound’s proposed service, as it contends, its focus was a shallow one, sidestepping the real issues involved. The Commission argues that it considered “all relevant decisional factors,”
The final Commission decision intimates that Trailways’ evidence of revenue diversion was not enough to satisfy its burden of demonstrating adverse consequences, and further states, “Otherwise, petitioner’s representations concerning potential system-wide harm may not be considered, for this issue was not raised prior to the time this proceeding reached the petition [for reconsideration] stage.”
We recognize that the “burden” commonly assigned to the protestant in an application case such as this has traditionally required more than a showing that the protestant will be harmed financially. The Commission itself has adopted a policy that competition is to be given more weight and less emphasis is to be placed on protecting existing carriers in evaluating applications for operating authority.
The Supreme Court has described the Commission’s role in considering an application, not as one which determines whether an applicant has sustained a burden of persuasion in the literal sense, but rather as a function of “weighpng] the competing interests and arrivpng] at a balance that is deemed ‘the public convenience and necessity.’ ”
The product of over forty-five years of government regulation since the enactment of the Motor Carrier Act
The record before us does not give any clear indication of exactly how large a portion of the bus market Greyhound holds. However, it does contain clear contentions by Trailways to the ICC and obviously relevant to the application:
[E]very award of authority that this commission makes to Greyhound — because of Greyhound’s already enormous domestic route system, the impact of single system service, and the like — tends to increase Greyhound’s 70% market share (and reduce the market share of the rest of the industry) and to make it more difficult for existing carriers to compete with Greyhound and for additional competition to develop in the future.
[W]hen one steps back from the application and takes into account the structure of the industry and, in particular, Greyhound’s overwhelming dominance of it, the public interest considerations in a rejection of the Greyhound application are undeniable.55
We do not, of course, rule on the validity of these arguments; that is for the Commission alone to determine in its expert discretion, soundly exercised. We hold only that, whatever Greyhound’s actual statistical position is in the market, whether it is actually monopolistic or not, an argument that it has a real ability to inflict harm
One of the express goals of the national transportation policy is “to encourage sound economic conditions in transportation, including sound economic conditions among carriers.
D. Instructions On Remand
We are aware that the “consideration” lacking in this case and called for on remand may require an in-depth study of the competitive structure of the intercity bus market to which an adjudicatory-type proceeding may not normally be conducive. We also do not ignore the discretion commonly accorded agencies in the ordering of their own proceedings. We are simply concerned that by a combination of circumstances the ICC has been able to evade an important, even if it is also likely to be a difficult, element of a reasoned decision on Greyhound’s application- — the matter of assessing the structure of the bus market and determining if there is any detriment to public interest arising from the incremental impact on Trailways’ competitive position of granting Greyhound an authority which, in all other respects, seems quite reasonable.
The sum and effect of these circumstances is that the Commission, by one way or another, has evaded or otherwise missed a full consideration of the broad question of the long-term effects of incremental increases of Greyhound’s market share on the greater public interest of which the ICC is statutory guardian. We find Trailways’ argument to the Commission persuasive: even in a “small” authority application, an award which eliminates a competitive edge in a carrier other than Greyhound is an effective shift of that edge to Greyhound and a contribution to an already dominant position in the market.
We normally would be reluctant to direct the Commission to take up this issue in any particular proceeding. However, when after several years the issue of an anticompetitive systemwide impact, vital to reasoned decisions in individual certification proceedings involving both Greyhound and Trailways, remains unaddressed, it is time that it be considered in at least some proceeding. We hold here only that the Commission may no longer fail to consider this issue and still engage in reasoned decisionmaking.
The breadth of what on remand should be a careful examination of market structure and impact may prompt the Commission to permit the parties to introduce broad legislative-type evidence relevant to the issue of the overall impact of Greyhound authority over Trailways’ operations. Trailways sought to introduce similar evidence before Division 1 in the form of “comments which it recently had filed in a pending Commission proceeding,”
We are not necessarily satisfied with Trailways’ timing or with the manner by which it attempted to introduce this material into the proceeding under review. The Commission and Greyhound both raise valid points that the admission of this evidence at the time it was offered may have had the effect of cutting out Greyhound’s chance to reply to the material involved. Had the Commission actually exercised its discretion and decided that the circumstances dictated that it not notice the record in the other
The controlling standards on this issue were established over a quarter-century ago in a case which, like this one, involved the power of the ICC in a motor carrier licensing proceeding to take official notice of evidence adduced in another proceeding. In United States v. Pierce Auto Freight Lines, Inc.,
The Commission, of course, may properly take official notice of reports issued in other proceedings before it. It may also properly take official notice of the record in such other proceedings if the parties in the instant and prior proceeding are the same, or there, at least, are no new or different parties in the instant proceeding.66
Greyhound and Trailways are both parties to the proceeding for part of whose record evidence Trailways sought official notice.
We expect, upon remand, that this evidence or any other evidence bearing on the issue will be introduced by both sides, according to the preferred Commission procedures. The final determination of the weights to be accorded such evidence, and its persuasive value in satisfying the “burden” upon Trailways to show material harm sufficient to justify a refusal of the Greyhound authority is of course a matter for the Commission.
III. CONCLUSION
In the examination of applications for new or altered service, the matter of short-term convenience is only one aspect of the public interest which the ICC’s regulatory power was created to protect. We find no issue with Greyhound’s contention that its service to Little Rock on the more direct route, utilizing interstate highways, is more efficient than its existing service, provides a more pleasant passage for users of its system, and that there is some public interest in such convenience. Trailways claims, however, that a broader public interest is served by refusing to grant authority which tends to increase Greyhound’s dominant share of the intercity bus market. Whether this is so in the ultimate analysis is not a question before this court.
It should have been before the Commission; that this contention was not addressed compels the remand. This is not a case involving merely an evaluation of the weight of relevant factors; it involves instead a decision made on an incomplete analysis of the “public convenience and necessity” limiting the Commission’s discretion. We vacate the order under review granting Greyhound’s application, and remand this matter for those proceedings and deliberations which the Commission deems appropriate to a full consideration of market-related issues, and any others pertinent to the action requested.
So ordered.
. Greyhound’s passengers could board at Little Rock, travel to Pine Bluff or Stuttgart, Arkansas, and transfer at one of those points to other Greyhound buses destined for Texarkana or Memphis. Brief for the Interstate Commerce Commission at 5.
. Under this procedure, outlined in 49 C.F.R. 1100.43-1100.52, the parties submit written verified statements in lieu of oral testimony. This modified hearing procedure is intended to lend efficiency to what otherwise might require lengthy oral hearings.
. Joint Appendix (J.A.) at 65-71.
. Id. at 68.
. Id. at 69.
. Id.
. Id.
. Id. at 75-114.
. Id. at 166-67.
. Id. at 159-63. Trailways described the impact in terms of estimates of potential revenue diversions away from Arkansas and Trailways. The original estimate of $634,000 annually was based on 50% of the estimated total of Little Rock inbound and outbound ticket sales. Trailways maintained that, even though the figures were estimates, they were conservative and represented the minimum revenue diversion probable. As it turned out, a more accurate estimate was possible after Greyhound made the required filing of its operations under its temporary service authority over the route in question. Based on the figures of Greyhound’s “G.T.O.-18” filing which offered statistics generated during Greyhound’s temporary authorization to provide the subject service, Trailways maintained that diversions would exceed $725,000 annually.
. Id. at 166-68.
. Id. at 167.
. Id.
. 5 U.S.C. § 706(2)(A), (E) (1976). The “substantial evidence” test applies in cases subject to the adjudicatory procedures of 5 U.S.C. §§ 556 and 557. An application for a certificate of public convenience and necessity has been held by this court to be such a case. C & H Transp. Co. v. ICC, 589 F.2d 565, 571 (D.C. Cir.1978), cert. denied sub nom. Aero Trucking, Inc. v. C & H Transp. Co., 440 U.S. 911, 99 S.Ct. 1222, 59 L.Ed.2d 459 (1979) (involving an application under the original § 207 of part II of the Interstate Commerce Act, now substantially incorporated into 49 U.S.C. § 10922 (Supp. Ill 1979)).
. National Council of American-Soviet Friendship, Inc. v. Subversive Activities Control Bd., 322 F.2d 375 (D.C.Cir.1963).
. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).
. 419 U.S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974).
. Id. at 284, 95 S.Ct. at 441.
. See, e.g., observations in note 42, infra.
. See United States v. Pierce Auto Freight Lines, 327 U.S. 515, 535-36, 66 S.Ct. 687, 697-98, 90 L.Ed. 821 (1946); ICC v. Parker, 326 U.S. 60, 65 S.Ct. 1490, 89 L.Ed. 2051 (1945).
. See Burlington Truck Lines v. United States, 371 U.S. 156, 167-68, 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962).
. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).
. 49 U.S.C. §§ 10101 et seq. (Supp. Ill 1979).
. Id. at § 10922(a)(2) (emphasis added).
. Pan-American Bus Lines Operations, 1 M.C.C. 190, 203 (1936).
. Trans-American Van Serv. v. United States, 421 F.Supp. 308 (N.D.Tex.1976).
. See Union Mechling Corp. v. United States, 566 F.2d 722, 725 (D.C.Cir.1977).
. See Denver & R.G.W.R. Co. v. United States, 387 U.S. 485, 498, 87 S.Ct. 1754, 1762, 18 L.Ed.2d 905 (1967).
. 5 U.S.C. § 557(c)(A) (1976).
. 412 U.S. 800, 93 S.Ct. 2367, 37 L.Ed.2d 350 (1973).
. Id. at 805-07, 93 S.Ct. at 2373-74.
. E.g., Burlington Truck Lines v. United States, 371 U.S. 156, 168-69, 83 S.Ct. 239, 245-46, 9 L.Ed.2d 207 (1962); Argo-Collier Truck Lines v. United States, 611 F.2d 149, 152-53 (6th Cir. 1979); Humboldt Express v. ICC, 567 F.2d 1134 (D.C.Cir.1977); Monumental Motor Tours v. United States, 316 F.Supp. 663, 668-70 (D.Md.1970).
. 131 M.C.C. 941, 942 (1980), appeal pending sub nom., Pacific Intermountain Express Co. v. United States, No. 80-7251 (9th Cir.).
. Id. at 942 (emphasis added).
. Brief for the Interstate Commerce Commission at 23 n.ll.
. Trailways estimate was based on annualized figures from a study over a ten-day period in July 1979 of tickets sold at Little Rock for Memphis and points beyond, and Texarkana and points beyond. No survey was made of inbound traffic, but it was the witness’ opinion that the volume of inbound traffic, over time, would roughly equal outbound traffic. It was offered that 50% of this total, or $633,910 (V2 X $1,267,820) could actually be diverted. J.A. at 56-57.
. Id. at 68.
. Id. at 167.
. Id. at 69.
. Id.
. Id.
. There are other conclusions included in the board’s decision which are unsupported on the record, and which, to the extent they may have influenced the ICC’s conclusions, detract further from the Commission’s contention that it carefully balanced all relevant factors. One conclusion in particular evidences a rather perfunctory approach to the whole matter by the ICC. In what we assume was an attempt to demonstrate a consideration of whether the “useful public purpose” benefitted by authorizing Greyhound’s service to Little Rock “can and will be served as well by existing carriers” (“element” 2 of the Pan-American guidelines, see text accompanying note 25 supra), the board’s decision announced categorically that Arkansas “is unable to provide the entire proposed service.” J.A. at 69. Not only does the board offer no basis for its conclusory statement on this factor, but the conclusion itself is unfounded on the record. Trailways concedes that because of deviations from the limited access highway for “about sixteen miles between Hope and Prescott, Arkansas (and along two minor segments at Little Rock and Memphis),” its existing service between Memphis and Texarkana, via Little Rock, does not match Greyhound’s newly authorized route mile for mile. J.A. at 104-05. It maintains, however, that its transit times are allegedly “within a few minutes” of the transit time under Greyhound’s schedule. This court has observed that “[w]hile we recognize that a finding of inadequacy of existing service is not always indispensible to the conclusion that the proposed service comports with public convenience and necessity, ... it is, nevertheless, an important factor in any section 207 determination.” C&H Transp. Co. v. ICC, 589 F.2d 565, 573 n.16 (D.C.Cir.1978) (emphasis added). It follows that any relevant conclusion concerning this factor must be based on substantial evidence, which is lacking in this case.
.Brief for the Interstate Commerce Commission at 20.
. Id. at 21.
. Id. at 23.
. J.A. at 167.
. Id. at 61.
. Ex Parte No. MC-121, Policy Statement on Motor Carrier Regulation (30 November 1978); see also Liberty Trucking Co., Ext.—General Commodities, 130 M.C.C. 243, 246 (1978), aff'd, 131 M.C.C. 593 (1979), aff'd sub nom., Assure Competitive Transp. v. United States, 629 F.2d 467 (7th Cir. 1980), cert. denied, 449 U.S. 1124, 101 S.Ct. 941, 67 L.Ed.2d 110 (1981).
. Bowman Transp. v. Arkansas-Best Freight Sys., 419 U.S. 281, 293, 95 S.Ct. 438, 445, 42 L.Ed.2d 447 (1974).
. 629 F.2d 467 (7th Cir. 1980), cert. denied, 449 U.S. 1124, 101 S.Ct. 941, 67 L.Ed.2d 110 (1981).
. Id. at 479 (emphasis added).
. Part II of the Interstate Commerce Act, ch. 498, 49 Stat. 543 (1935) (codified as amended at 49 U.S.C. §§ 301-1150 (1976)) (revised in 1978 with the passage of the Revised Interstate Commerce Act, 49 U.S.C. §§ 10101 et seq. (Supp. Ill 1979)).
. 127 M.C.C. 343, 352 (1978).
. Interstate Investors, Inc. v. United States, 287 F.Supp. 374, 391 (S.D.N.Y.1968), aff'd, 393 U.S. 479, 89 S.Ct. 707, 21 L.Ed.2d 687 (1969).
. J.A. at 78, 110.
. This ability has been recognized in other cases, see, e.g., Greyhound Corp. v. Mount Hood Stages, Inc., 437 U.S. 322, 337, 98 S.Ct. 2370, 2378, 57 L.Ed.2d 239 (1978).
. 49 U.S.C. § 10101 (Supp. Ill 1979) (emphasis added). The Supreme Court has observed that “[t]he very fact that Congress has seen fit to enter into comprehensive regulation of [in that case, the communications industry] . . . contradicts the notion that national policy unqualifiedly favors competition.” FCC v. RCA Communications, Inc., 346 U.S. 86, 93, 73 S.Ct. 998, 1003, 97 L.Ed.2d 1470 (1953). Cf. Hawaiian Tel. Co. v. FCC, 498 F.2d 771 (D.C.Cir.1974) (entire theory of government regulation is based on a belief that competition is not the effective regulator in some industries that it is in others).
.May Trucking Co. v. United States, 593 F.2d 1349, 1356 (citing numerous decisions of the Commission) (emphasis added).
. The Fifth Circuit case was disposed of by order without published opinion. Trailways, Inc. v. ICC, 656 F.2d 698 (1981).
. J.A. at 77.
. Brief for Petitioners Trailways, Inc., et al., at 22. These comments are described as containing
an exhaustive analysis of the interdependence of the various segments of the Trailways and NTBS [National Trailways Bus System] route systems, in the “ripple effect” on the entire system of significant traffic diversions on any one route, such as Little Rock. They also addressed the structure of the intercity bus industry and Greyhound’s competitive advantages — such as its superior “feed” traffic, its intrastate monopoly routes, and its dominance of vertically related areas such as bus manufacturing, terminal facilities, bus repair facilities — which intensifies its capacity to accomplish substantial traffic diversions from its weaker competitors such as Trailways.
Id. at 23.
. J.A. at 169 (emphasis added).
. 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821 (1946).
. Id. at 528-30, 66 S.Ct. at 694-95. Accord, NLRB v. Harrahs Club, 403 F.2d 865, 873 (9th Cir. 1968); Moon v. Celebrezze, 340 F.2d 926, 929 (7th Cir. 1965); Blue Bird Coach Lines, Inc. v. United States, 328 F.Supp. 1331, 1336 n.10 (W.D.N.Y.1971) (involving an application for intercity bus authority).
. 121 M.C.C. 765, 778 (1975).
. Id. at 778.
. Ex parte No. MC-133, Petition for Rulemaking on Entry Flexibility for Regular Route Passenger Carrier.
Rehearing
ON PETITION FOR REHEARING ORDER
On consideration of intervenor Greyhound’s petition for rehearing, it is
A statement of the panel is attached.
MEMORANDUM
Per Curiam: We have carefully considered Greyhound’s petition for a rehearing in this case and have reexamined our opinion to eliminate any ambiguities which might be misread as appellate-level fact-finding. Except to the extent that it has enabled us to identify potential ambiguities (two minor changes), we find Greyhound’s arguments unpersuasive. The purpose of the principal opinion in this case was to advise the ICC that it had overlooked or evaded an inquiry necessary to a reasoned decision. The opinion accomplished our purpose. We deny the petition.
In doing so we feel constrained to comment on the tone of Intervenor-Respondent’s petition and to suggest that counsel who drafted it have cause to ponder their choice of words. The petition is cast almost entirely in terms of a personalized attack on the writer of the opinion, ignoring the fact that the court was unanimous and that the decision and opinion reflected the views of all three judges. In one paragraph, for example, it is asserted that the writer’s “decision reflects antipathy toward the ICC,” and that “[t]o cure what at most may be an inartistically written decision” the applicant on remand will be subject to an “unruly proceeding at which it will be the target for further character assassination.” Intervenor-Respondent’s Petition for Rehearing at 13-14. More could be quoted, but these excerpts give flavor enough.
We find such language repugnant to an atmosphere of decorum and civility in the appellate process. It would not be acceptable in referring to the brief of opposing counsel, much less to the opinion of a unanimous court. It is not only ill-mannered, it is ineffective.
In this case, we considered directing the Clerk to return this petition, but since from time to time there have been others couched in tones similar, we thought it more effective to state the court’s reaction to this one and to reserve summary rejection for the next (if any) such petition filed.