Source: https://law.justia.com/cases/federal/appellate-courts/F2/873/395/432336/
Timestamp: 2020-03-29 06:49:23
Document Index: 320657687

Matched Legal Cases: ['§ 10544', '§ 10928', '§ 10922', '§ 10922', '§ 10544', '§ 10922', '§ 10544', '§ 10101', '§ 1456', '§ 4332', '§ 10544', '§ 10544']

Cross-sound Ferry Services, Inc., Petitioner, v. Interstate Commerce Commission and United States of America,respondents,viking Starship, Inc., Intervenor, 873 F.2d 395 (D.C. Cir. 1989) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › D.C. Circuit › 1989 › Cross-sound Ferry Services, Inc., Petitioner, v. Interstate Commerce Commission and United States of...
Cross-sound Ferry Services, Inc., Petitioner, v. Interstate Commerce Commission and United States of America,respondents,viking Starship, Inc., Intervenor, 873 F.2d 395 (D.C. Cir. 1989)
U.S. Court of Appeals for the District of Columbia Circuit - 873 F.2d 395 (D.C. Cir. 1989) Argued Feb. 28, 1989. Decided April 28, 1989
This petition for review concerns a decision by the Interstate Commerce Commission ("ICC" or "Commission") that certain water carriage services provided by Viking Starship, Inc. ("Viking") were ferry services exempt from ICC regulation by statute, 49 U.S.C. § 10544(a) (4). See Viking Starship, Inc.--Common Carrier Application (Montauk, NY), 4 I.C.C.2d 634 (1988) ("Viking Starship "). One of Viking's competitors, Cross-Sound Ferry Services, Inc. ("Cross-Sound"), challenges both the exemption granted by the ICC to Viking and earlier Commission decisions finding Viking fit and authorizing temporary operations. We hold that the Commission failed to explain adequately its change in policy with respect to the ferry exemption, and we remand for a fuller exegesis of the Commission's views. We find, however, that the Commission's grant of temporary operating authority to Viking was lawful and premised on an adequate record, so that Viking may continue to provide service while the Commission revisits this proceeding.
The ICC, in a series of unpublished decisions in 1987 and early 1988, granted Viking emergency temporary authority ("ETA") and later temporary authority ("TA") to provide water carrier operations transporting passengers and their baggage between: (1) Montauk, New York, and Block Island, Rhode Island; and (2) Montauk and a point between Groton and New London, Connecticut ("Groton/New London"). See 49 U.S.C. § 10928(a); 49 C.F.R. Secs. 1162, 1163 (1987) (providing the basis of authority to grant ETA and TA). In this appeal, Cross-Sound contests Viking's service only between Montauk and Groton/New London. In the ETA and TA proceedings, Cross-Sound had protested the grant of operating authority to Viking, principally on three grounds: (1) there was no public need for Viking's operations, as required by 49 U.S.C. § 10922(a) (2); (2) Viking was "unfit" within the meaning of 49 U.S.C. § 10922(a) (1), because it had provided service for several years without applying to the ICC for required operating authority; and (3) Viking was "unfit" because it was using docking facilities in violation of Groton zoning ordinances.
The Commission next rejected Cross-Sound's suggestion that Viking was unfit because it had conducted water carrier operations without ICC approval for several years. Viking admitted that it previously had operated without an ICC certificate, but maintained that it had believed that its service was a ferry exempt from Commission regulation under 49 U.S.C. § 10544(a) (4), and in support of its position cited North Rip Fish Harvest, Ltd., No. W-1325 (May 13, 1980) ("North Rip ") (finding transportation of passengers between Montauk and Block Island to be exempt ferry service). The Commission accepted this explanation and noted that Viking had cooperated with the ICC's Office of Compliance and Consumer Assistance when a question arose as to Viking's operating authority.
In addition, the Commission rejected Cross-Sound's argument that Viking's ETA and TA applications should be denied because Groton's zoning laws rendered it "unable" to offer Montauk-Groton/New London service, see 49 U.S.C. § 10922(a) (1). The ICC found that the ruling against Mr. Scheetz precluded Viking's service only temporarily because Mr. Scheetz might eventually be able to obtain zoning permission for Viking's use of his docks, and because Viking might be able to find alternate docking facilities. The Commission concluded that Viking was fit, willing, and able to provide Montauk-Groton/New London service, and it granted emergency, and later temporary, operating authority.
Viking then sought a permanent certificate to operate as a water carrier transporting passengers and their baggage along both the Montauk-Groton/New London and the Montauk-Block Island routes. By a decision dated June 1, 1988, the ICC found that the proposed service was a ferry service under 49 U.S.C. § 10544(a) (4), see Viking Starship, 4 I.C.C.2d at 635. Ferry operations are exempt from ICC jurisdiction except to the extent that the Commission finds regulation necessary to carry out the national transportation policy of 49 U.S.C. § 10101. The Commission rejected Cross-Sound's arguments that the operations were not ferriage because the distances between the points involved (30 miles for Groton/New London and 15 miles for Block Island) were too great; the routings, although direct, involved nominally different bodies of water (the Long Island and Block Island Sounds); and the seasonal nature of the service, twice-daily during the summer, was not frequent or regular enough. The Commission found that "the involved route is simply a substitute for a bridge between Montauk and the Connecticut mainland, and, thus, within the scope of the ferry exemption." Viking Starship, 4 I.C.C.2d at 637. The Commission then analyzed the requirements of national transportation policy and concluded that " [b]y delaying [Viking's] entry into this local market we would only harm the affected public," 4 I.C.C.2d at 638, because there was a clearly demonstrated need for Viking's services.
Cross-Sound petitions for review of the ICC's decisions both to exempt Viking's operations as a ferry service, and to grant Viking ETA and TA. Cross-Sound argues that the Commission misconstrued the ferry exemption; that it erred in denying Cross-Sound an opportunity for additional discovery and a hearing; that its decision to apply the ferry exemption violated the Coastal Zone Management Act, 16 U.S.C. § 1456, and the National Environmental Policy Act, 42 U.S.C. § 4332; and that it failed to consider relevant evidence and statutory requirements in granting Viking ETA and TA.
We first examine the Commission's decision that Viking's service between Montauk and Groton/New London constituted "ferry" service exempt from ICC regulation under the Interstate Commerce Act, 49 U.S.C. § 10544(a) (4). The statute does not define the term "ferry," and there is no legislative history on the point, so that this case is governed by the familiar "second prong" of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). Because "the statute is silent or ambiguous with respect to the specific issue," the question is whether the Commission's interpretation is a "reasonable" one, Chevron, 467 U.S. at 843, 845, 104 S. Ct. at 2782, 2783, i.e., one that is "rational and consistent with the statute." NLRB v. United Food & Commercial Workers Union, Local 23, 484 U.S. 112, 108 S. Ct. 413, 421, 98 L. Ed. 2d 429 (1987); see also Mobil Oil Corp. v. EPA, 871 F.2d 149, 151-152 (D.C. Cir. 1989) (per curiam) .
The Commission has great latitude in determining the scope of the ferry exemption and in modifying it from time to time as the Commission sees fit. See Chevron, 467 U.S. at 863-64, 104 S. Ct. at 2792 ("An initial agency interpretation is not instantly carved in stone. On the contrary, the agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom of its policy on a continuing basis."); see also General American Transportation Corp. v. ICC, 872 F.2d 1048, 1053-1054 (D.C. Cir. 1989). The Commission may also announce changes in the construction of its enabling statute on a case-by-case basis through adjudications, see ANR Pipeline Co. v. FERC, 870 F.2d 717, 722 (D.C. Cir. 1989). This, of course, does not mean that the ICC may "casually ignore its own past decisions"; it is well known that " [d]ivergence from agency precedent demands an explanation." Hall v. McLaughlin, 864 F.2d 868, 872 (D.C. Cir. 1989); see also United Food & Commercial Workers Union, 108 S. Ct. at 421 n. 20; Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 41-42, 103 S. Ct. 2856, 2866, 77 L. Ed. 2d 443 (1983).
We find in this case that the Commission has changed its view of the ferry exemption without explaining what its new interpretation is, and we conclude that this is not a permissible exercise of the Commission's power under Chevron. For over 40 years, the Commission has exercised regulatory authority over water carrier operations in the Long Island Sound. The Commission has traditionally described "ferries" as providing "transportation for a short distance, almost invariably between two points only, and unrelated to other transportation." Ann Arbor Railroad Co.--Common Carrier Application, 250 I.C.C. 490, 491 (1942) (quoting Port Richmond and Bergen Point Ferry Co. v. Board of Chosen Freeholders of Hudson County, 234 U.S. 317, 332, 34 S. Ct. 821, 826, 58 L. Ed. 1330 (1914)); see also Peninsula Truck Lines, Inc. v. Puget Sound Navigation Co., 292 I.C.C. 157, 161 (1954) ("The term 'ferry' implies transportation for a short distance and unrelated to other transportation."); Application of Part III to Transportation by Delaware-New Jersey Ferry Co., 265 I.C.C. 337, 344 (1948) (ferries provide "local short-distance transportation"). In the not too distant past, in fact, the ICC has asserted jurisdiction over point-to-point, regularly scheduled operations over routes shorter than--and in one case identical to--Viking's Montauk-Groton/New London route. See Mascony Transport and Ferry Service, Inc., Initial Operations, 353 I.C.C. 60 (1976), aff'd, 573 F.2d 725 (2d Cir. 1978) (New London, CT to Greenport, NY); Cross-Sound Ferry Services, Inc., Extension--Montauk, NY, ICC Docket W-1290 (Sub-No. 4) (Sept. 23, 1983) (New London, CT to Montauk, NY); Shoreline Boating Service, Inc., ICC Docket No. W-1294 (May 29, 1984) (Norwalk, CT to Northport, NY); B.I. Marine Express, Inc., ICC Docket No. W-1450 (Sub-No. 1TA) (Oct. 14, 1986), petition for review dismissed, No. 86-1711 (D.C. Cir. 1987) (Westerly, RI to Block Island, RI). The discrepancy between these cases and the Commission's decision before us is prima facie evidence of a change in ICC policy.
Viking Starship, 4 I.C.C.2d at 636 (footnote omitted). The Commission later described its decision in Viking Starship as "evaluat [ing] the ferry service exemption * * * in light of contemporary transportation practices and regulatory policy." The Bridgeport and Port Jefferson Steamboat Co., Extension--Connecticut and New York Points, No. W-271 (Sub-No. 4) (Dec. 16, 1988), at 2.
We also note that the Commission in its decision below omitted reference to frequency of service as an important criterion. Again, we are uncertain what role this factor now plays in the Commission's calculations. Compare 49 C.F.R. Sec. 171.8 (1988) (Department of Transportation regulations defining "ferry vessel" as, in part, "operat [ing] on a short run on a frequent schedule between two points").
In sum, because we are not sure what the ICC's new view of the ferry exemption is, we cannot uphold its decision. As we have recently opined in a related context, " [w]e cannot defer to what we cannot perceive." International Longshoremen's Association v. National Mediation Board, 870 F.2d 733, 736 (D.C. Cir. 1989). "The basis for an administrative decision, of course, must be clear enough to permit effective judicial review. 'It will not do for a court to be compelled to guess at the theory underlying the agency's action.' " Id. (quoting Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194, 196-97, 67 S. Ct. 1575, 1577-78, 91 L. Ed. 1995 (1947)).
Decisions of the ICC may be reversed only if they are arbitrary and capricious or unsupported by substantial evidence, see Cross-Sound Ferry Services, Inc. v. ICC, 738 F.2d 481, 484 (D.C. Cir. 1984). Many of the arguments made by Cross-Sound challenging the grant of ETA and TA to Viking were raised before the Commission below and rejected. We find no basis to upset the Commission's determinations that there was sufficient need for Viking's services; that the Groton zoning dispute did not impugn Viking's fitness; and that Viking did not act improperly in operating without a certificate because it believed that it was exempt from regulation under North Rip and because it cooperated with the Commission enforcement staff.
On appeal, Cross-Sound has refined its objections. It now contends that the Commission failed to apply the correct standard of "fitness" in making the ETA and TA decisions, because it overlooked evidence that Viking defied two separate cease and desist orders and misrepresented material facts to the Commission. Cross-Sound alleges that even if Viking were reasonable in operating without a certificate, during August and September 1986 Viking ignored a letter from the Commission's Office of Compliance and Consumer Assistance, dated August 5, 1986, ordering Viking to cease its Montauk-Groton/New London and its Montauk-Block Island routes. Viking, according to Cross-Sound, also operated in violation of a cease and desist order issued by the City of Groton on July 15, 1986 and upheld by the Groton Zoning Board of Appeals on August 26, 1986, that forbade the discharge of passengers at the city's docks. Viking, moreover, told the Commission on July 17, 1987, that its "past difficulties" with Groton had been "resolved" and that it had "discontinued its operations until the issue was resolved." This was not in fact true--Mr. Scheetz was later held in civil contempt by the New London Superior Court on August 17, 1987 because he "continue [d] to permit a ferry boat to dock at his property and continue [d] to allow the picking up and discharging of passengers from said ferry boat, without any approval by the Planning and Zoning Commission for said activity." Scheetz v. City of Groton, No. CV 86-0502034-S, slip op. at 3 (Conn.Super.Ct.1987).
These arguments, however, are insufficient to invalidate the Commission's decision. As an initial matter, we note that the ICC enjoys considerable discretion in deciding how it will administer its own regulations, see Tallahassee Branch of the NAACP v. FCC, 870 F.2d 704, 706, 710 (D.C. Cir. 1989); cf. Heckler v. Chaney, 470 U.S. 821, 831-32, 105 S. Ct. 1649, 1656, 84 L. Ed. 2d 714 (1985). How the ICC chooses to enforce its own cease and desist orders, and how it responds to alleged misrepresentations in proceedings before it, are topics primarily for the Commission's considered judgment. In this case, the ICC found that after receiving the ICC's cease and desist order, Viking's attorney met with the Commission's Office of Compliance and Consumer Assistance to discuss the matter in light of the ICC's prior decision in North Rip. When the controversy was not resolved before the beginning of the next summer season, Viking filed for ETA and TA in order to ensure that its service was legal until the dispute over operating authority was settled. The Commission found that Viking made honest efforts to comply with the ICC's regulations and did not attempt to evade the cease and desist order.
We remand the case to the Commission, so that it may further develop and articulate its interpretation of the ferry exemption, 49 U.S.C. § 10544(a) (4). We affirm the Commission's award of ETA and TA to Viking.