Source: https://casetext.com/case/ligon-specialized-hauler-inc-v-i-c-c
Timestamp: 2019-09-21 03:26:49
Document Index: 524105959

Matched Legal Cases: ['§ 306', 'arte 55', '§ 556', '§ 2321', '§ 2342', '§ 701', '§ 706', 'art.\n412', '§ 706', '§ 706', '§ 706', '§ 554', '§ 554', '§ 554', '§ 554', '§ 556', 'arte 55', 'arte 55', '§ 70', '§ 556', '§ 706', '§ 706', '§ 556', '§ 1109', '§ 1109', '§ 557', '§ 558', '§ 706', '§ 706']

Ligon Specialized Hauler, Inc. v. I.C.C, 587 F.2d 304 | Casetext
Ligon Specialized Hauler, Inc. v. I.C.C.
587 F.2d 304 (6th Cir. 1978)
Ligon Specialized Hauler, Inc.v.I.C.C.
United States Court of Appeals, Sixth CircuitNov 14, 1978
William E. Scent, Tarrant, Combs Bullitt, Lexington, Ky., Bert T. Combs, Louisville, Ky., Carl U. Hurst, Jr., Madisonville, Ky., for petitioner in 77-3202.
Griffin B. Bell, Atty. Gen. of U.S., Dept. of Justice, and Kenneth G. Caplan, I. C. C., Washington, D.C., for respondents in both cases.
Joen Grant, Atty. Gen., U.S. Dept. of Justice, Washington, D.C., Robert B. Nicholson, Mark L. Evans, Raymond M. Ripple, Interstate Commerce Commission, Washington, D.C., for respondents in 77-3202.
Thomas E. Reiss, McClintock, Donovan, Carson Roach, Detroit, Mich., James W. Hagar, William A. Chesnutt, McNees, Wallace Nurick, Washington, D.C., for petitioner in 77-3253.
Barry Grossman, Wm. D. Coston, Gen. Counsel, Interstate Commerce Commission, Washington, D.C., for respondents in 77-3253.
Petition from the Interstate Commerce Commission.
Before EDWARDS, Circuit Judge, PECK, Senior Circuit Judge, and BALLANTINE, District Judge.
Honorable Thomas A. Ballantine, Jr., United States District Judge for the Western District of Kentucky, sitting by designation.
Respondent Interstate Commerce Commission (ICC) has the responsibility under 49 U.S.C. § 306-07 of issuing certificates of convenience and necessity to carriers of goods in interstate commerce. Without such a certificate of convenience and necessity, a carrier cannot lawfully transport goods in interstate commerce. Before the ICC approves an application, however, it must determine that (1) the carrier is fit, willing, and able to perform the service proposed ("operational fitness"), (2) the carrier is fit, willing, and able to conform to the provisions of the Interstate Commerce Act and the requirements of the ICC ("compliance fitness"), and (3) the proposed service is warranted by the public convenience and necessity.
Petitioner Ligon Specialized Hauler, Inc. (Ligon), a Kentucky corporation, has had, as of the filing of its main brief, fifty-seven applications for operating authority stayed under this "flagging" procedure. Petitioner Transamerican Freight Lines, Inc. (Transamerican), a Michigan corporation, has had, as of the filing of its main brief, six applications for operating authority stayed under the flagging procedure. Both Ligon and Transamerican have filed petitions seeking relief in this Court from the flagging procedures employed in their cases and to have their applications for operating authority promptly considered. This relief we grant.
Case No. 77-3202 and Case No. 77-3253 were separately briefed and argued in this Court; however, the same legal questions were presented in the two cases. Hence, this opinion consolidated treatment of the two cases.
Petitioners Ligon and Transamerican transport goods in interstate commerce as authorized under the ICC certificates of convenience and necessity. The ICC issues precise, limited certificates, listing both the exact goods to be carried and the original destination of the transportation. Because the ICC issues only product-specific and route-specific certificates, virtually all new business secured by a carrier must be approved by the ICC. A carrier's business will thus stagnate unless it obtains new certificates of convenience and necessity in order to meet the transportation needs of new customers and the new shipping demands of old customers. See North American Van Lines, Inc. v. United States, 412 F. Supp. 782, 785 (N.D.Ind. 1976) ( NAVL II); R. Fellmeth, The Interstate Commerce Omission 120-21 (1970). This effect of the ICC flagging procedure must be kept in mind as we review the factual background of Ligon's and Transamerican's petitions to this Court.
By this time, the ICC was following a new flagging procedure. On July 28, 1976, the ICC had issued an order in Ex Parte No. 55 (Sub-No. 23), setting forth fitness flagging procedures, which were proposed rules governing flagging. The order was issued as a result of the decision in NAVL II, supra, 412 F. Supp. 782. In that case, a three-judge district court held that the ICC's ex parte practice of automatically flagging all applications of a carrier for operating authority wherever the carrier's fitness was in question in any one application was unlawful because it was arbitrary under the Administrative Procedure Act and because it was in excess of statutory authority under the Interstate Commerce Act. The ICC did not appeal that decision but instead instituted rules to govern flagging in an apparent effort to make the practice of flagging lawful under the NAVL II decision.
Subsequent to that order, the opinion of NAVL II, supra, 412 F. Supp. 782, was rendered and the ICC published its proposed fitness flagging procedures in Ex Parte 55. On September 23, 1976, the ICC served a show cause order on Transamerican, in accordance with the proposed flagging procedures, directing Transamerican to inform the ICC whether good cause existed for withholding issuance of certificates in Transamerican's applications to the ICC for operating authority. Transamerican and the ICC's Bureau of Enforcement made the submissions as called for in the show cause order. The Bureau cited numerous instances of Transamerican violations of the Interstate Commerce Act and the regulations thereunder. The Bureau noted that Transamerican paid four civil forfeiture settlements, during the period from 1967 to 1972, each pursuant to discovery of transportation performed beyond the territorial scope of its certificates and thus in violation of the Interstate Commerce Act. Transamerican in verified written representations contended that the Bureau had failed to discharge its burden of showing a nexus between the violations charged and the operations proposed in the application proceedings.
The earliest published explanation of flagging by the ICC or an ICC member is contained in the dissent of Commissioner Bush in John L. Kerr and C. O. Kerr, Jr. Extension-Mississippi, No. MC 66746 (Sub-No. 10), 1970 Federal Carrier Cases ¶ 36,376 (December 1969):
A general example would develop when a licensed interstate motor carrier files an application to increase or extend its authority and the ICC's Bureau of Enforcement decides (because of a competitor carrier's complaint, or for any reason) to enter the case to investigate the possibility that the application should be denied on the grounds of "fitness". The Director of the Bureau of Enforcement may then, and usually does, order that all pending or subsequent applications of the carrier — pertaining to any area of its operations in the United States — be "flagged" in the Commission's office.
An extensive explanation of the flagging practice prior to NAVL II was finally given by the ICC in an ICC order, dated September 23, 1975, in North American Van Lines, Inc., MC-C-7901, 386 F. Supp. 665.
"[T]he issue of a carrier's fitness involves two separate considerations, (1) the applicant's fitness, willingness and ability to perform a particular operation (operation fitness), and (2) its fitness, willingness, and ability to conform to the Act and the Commission's rules and regulations thereunder. . . . [W]hile the issue in (1) may involve matters related only to a specific proceeding, those in (2) constitute a general issue which can be resolved by consideration of its status as revealed through the records in all its pending proceedings. . . . [I]n the instance where this second overriding aspect of a carrier's fitness has been raised as an issue in a particular case . . . the question of a carrier's fitness, willingness, and ability to conform its operations to lawful requirements is a matter that relates to all its pending proceedings and this issue, by statute, must be resolved before any certificate may be issued. . . [I]t is a long-established Commission policy . . . to withhold issuance of new authority . . . to any applicant while such carrier's fitness is under investigation in a formal proceeding. . ."
NAVL II, supra, 412 F. Supp. at 791-92.
This flagging practice was first challenged in NAVL I, supra, 386 F. Supp. 665. In that case, North American Van Lines, Inc. had twenty-four applications for operating authority flagged and brought an action seeking mandamus relief. The NAVL I court
. . . ruled that while a carrier's "fitness" is clearly an appropriate criterion to be considered in determining new products applications, and while the ICC may consider the record of parallel proceedings in reaching its determination, the Interstate Commerce Act does not delegate to the ICC "the power to institute a rule withholding all certificate applications any time and every time there is a carrier investigation pending, regardless of [the] facts concerning the individual [new products] application[s] and the nature of the complaint at issue in the [fitness] investigation." 386 F. Supp. at 676 (emphasis in original). "`[F]itness' in respect to new certificate applications is a case-by-case determination (so long as there is no consolidation of cases)." Id. at 677. The court therefore held that NAVL was entitled to a hearing and determination under 5 U.S.C. § 556-58 (Administrative Procedure Act) as to whether it was appropriate to stay the new products applications in light of the 7901 proceedings. ICC was mandated either to issue the certificates in question, or to provide NAVL with a meaningful hearing at which facts relevant to the propriety of issuing the stays could be considered in advance of the decision to stay proceedings (footnotes omitted).
NAVL II, supra, 412 F. Supp. at 788.
Supposing that a disreputable carrier committed such serious violations of the Interstate Commerce Act and the ICC's regulations thereunder that the carrier's very willingness to conform its behavior to lawful requirements was placed in issue: would the ICC be required to routinely process the carrier's applications for new operating authority during the pendency of a formal fitness or revocation proceeding? Plainly not. North American Van Lines v. ICC, supra, 386 F. Supp. at 676. A rule allowing withholding of decision, in appropriate cases, surrounded with procedural safeguards required by the Administrative Procedure Act, would be fully in harmony with the purposes of the Interstate Commerce Act.
NAVL II, supra, 412 F. Supp. at 795-96. The ICC had argued to the NAVL II Court that the flagging procedure was such a permissible rule applied only after a consideration between the individual application proceeding and the outstanding fitness inspection, and was therefore lawful, but that contention was emphatically rejected.
[T]he ICC stays all of a carrier's pending license application proceedings upon the filing of an investigation by the Bureau of Enforcement against the carrier. The stays are imposed immediately upon the filing of the investigation, whether or not the investigation is truly a fitness investigation, and are not lifted until the investigation has been fully terminated or dismissed. The stays are automatically imposed whether or not the charges in the investigation are proved, unproved, or disproved. The decision to impose the stay is made ex parte, without the formal taking or recording of evidence relevant to the decision, and without furnishing factual findings upon which a reviewing court could determine that the ICC had in fact exercised its discretion within permissible limits.
NAVL II, supra, 412 F. Supp. at 798-99.
In response to the holding in NAVL II, the ICC published in the Federal Register, 41 Fed.Reg. 33309-33311 (August 9, 1976), a notice of proposed rulemaking, Ex Parte No. 55, designed to conform the ICC flagging procedures to the legal requirements set forth in NAVL II. Under those rules, "fitness flagging" is considered by the ICC when there is a threshold occurrence signaling possible flagging issues; the threshold occurrence might be either the institution of a formal ICC investigation into alleged carrier violations of law or the participation by the ICC's Bureau of Enforcement or the Department of Transportation in an application proceeding. If these occur, a "show cause" procedure is set in motion by an order stating the law purportedly violated and the substance of the allegations made against the applicant carrier and identifying the pending applications in which fitness flagging is to be considered. The order also requires the Bureau of Enforcement or Department of Transportation to advise the applicant carrier of "all matters of fact and law to be asserted with sufficient particularity to make clear the violations alleged and the nexus alleged to exist between those violations and the application proceeding in which the fitness flagging is being considered" within ten days. The applicant carrier is then given twenty days to submit verified written representations to show cause why all or any of its applications should not be flagged for fitness. The Bureau of Enforcement or Department of Transportation has fifteen days to reply.
When the ICC announces its decision to flag or not to flag, the ICC is to set forth "at least in general terms, its findings with respect to the publicly announced standard and specify the particular applications to which those findings and the fitness flag, if any, apply." The flagging regulations also provide that the ICC action on flagging is not to be construed as a decision on the question of an applicant's fitness, that fitness flagging procedures may be initiated at any stage of any application proceeding, that any new application for operating authority will be automatically added to the list of designated flagged proceedings, that all pending applications affected by flagging considerations or designated as flagged will have findings of fitness withheld, that any flagging order by the ICC will be subject to petitions for reconsideration under the ICC's Rules of Practice, and that a final finding on the fitness issue adverse to an applicant carrier will result in all flagged proceedings being denied. The standard set for flagging a carrier's applications for operating authority is the existence of allegations challenging the fitness of the carrier to conform to the law, or allegations establishing that there is probable cause to believe that ultimately the applicant will not be able to meet the statutory requirements for the issuance of certificates for granting authority.
Petitioners Ligon and Transamerican invoked this Court's jurisdiction pursuant to the provisions of 28 U.S.C. § 2321(a) and 28 U.S.C. § 2342(5). These statutory sections provide that the Courts of Appeals shall have jurisdiction of proceedings instituted to enjoin or suspend rules, regulations, and final orders of the ICC. The question here is whether the ICC's flagging orders are final orders for the purposes of the relevant jurisdictional statutes so as to give this Court jurisdiction. We hold that we do have jurisdiction.
The ICC argues that flagging orders are not final orders, but are entirely procedural and interlocutory in nature. The ICC acknowledges the fact that courts are not bound by descriptive titles placed upon orders of an administrative agency, see Rochester Telephone Corp. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147 (1939), but insists that there must be a showing that legal consequences will flow from the order from which judicial review is sought. See Pennsylvania R. R. Co. v. United States, 363 U.S. 202, 80 S.Ct. 1131, 4 L.Ed.2d 1165 (1960). The ICC asserts that flagging is a procedural order that does not directly and immediately affect a carrier's rights.
The ICC does not argue here, as it did in NAVL II, that the flagging practice is a matter "committed to agency discretion by law." 5 U.S.C. § 701(a). That argument was properly rejected in NAVL II, supra, 412 F. Supp. at 793.
Although a stay order is not a final adjudication of the merits, but rather is in the form of an interlocutory order, the "finality" requirement . . . is met, and the order is reviewable, if the order is "final" in its general sense — "sufficiently final to be appropriate for judicial review." North American Van Lines v. ICC, supra, 386 F. Supp. at 681, and cases there cited. And since 5 U.S.C. § 706(1) provides a remedy for administrative action unlawfully withheld or unreasonably delayed, the withholding of certificates and the purposeful delay in processing applications must at some point be judicially reviewable if Section 706(1) is to have effect. That point is reached, as here, where the decision to delay or withhold action has become concrete, and where the agency's firm commitment to the decision is evidenced by affirmative actions on its part.
412 F. Supp. at 793. Administrative action would, of course, be unlawfully withheld by the agency if it is found that the action is taken without observance of procedures required by law. 5 U.S.C. § 706(2)(D).
At oral argument, Government counsel frankly admitted the weakness of the ICC's position on this jurisdiction issue.
We do not agree. The ICC fails to consider the relevant provisions of the Administrative Procedure Act concerning agency action that is withheld or delayed, which would apply to fitness flagging — or assumes that those provisions are satisfied by the show-cause flagging procedures. The NAVL II court succinctly described the operation of the applicable provisions of the Administrative Procedure Act.
Under 5 U.S.C. § 706(1) the reviewing court may "compel agency action unlawfully withheld or unreasonably delayed." The "agency action" involved in this suit which has been withheld or delayed is the final determination of NAVL's applications. "Unlawful," as the term is used in Section 706(1), includes but is not limited to the meaning given in Section 706(2):
"(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . . (D) without observance of procedure required by law." If some or all of the applications have been unlawfully subjected to flagging, then the delay suffered by NAVL would be unreasonable as well.
412 F. Supp. at 794.
We must therefore determine whether the ICC actions have been consistent with the Administrative Procedure Act. Under that Act, two main issues are raised. First, do the ICC's show-cause procedures, which were embodied in the interim flagging regulations applied to Ligon and Transamerican, meet the requirements of the Act? If not, then 5 U.S.C. § 706(1) and 706(2)(D) have been violated. Second, did the ICC abuse its discretion in flagging Ligon's and Transamerican's applications for operating authority? If so, this Court may order appropriate relief.
When the ICC announced the interim flagging regulations it properly conceded that the section in the Administrative Procedure Act governing adjudications, 5 U.S.C. § 554, was applicable to fitness flagging proceedings. "It has long been held that an application of a motor carrier for a certificate of public convenience is such an adjudication and therefore covered by those requirements [of the Act, 5 U.S.C. § 554 556-57, the adjudicatory provisions of the Administrative Procedure Act.]" NAVL I, supra, 386 F. Supp. at 679, quoted in NAVL II, supra, 412 F. Supp. at 803, citing United States v. C. A. Tucker Truck Lines, 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952), and Riss Co. v. United States, 341 U.S. 907, 71 S.Ct. 620, 95 L.Ed. 1345 (1951); Pinkett v. United States, 105 F. Supp. 67 (D.Md. 1952). See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962); 5 U.S.C. § 554(a) and 558(c). An examination of the application of 5 U.S.C. § 554 to this case is thus in order.
This section applies, according to the provisions thereof, in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing, except to the extent that there is involved —
The agency shall give all interested parties opportunity for —
This section thus incorporates the formal hearing requirements of 5 U.S.C. § 556 and 557 absent a settlement of the controversy. Sections 556(a) and 557(a) of Title 5 of the United States Code make this incorporation clear. Section 556(a) provides the following:
Before a recommended, initial, or tentative decision, or a decision on agency review of the decision of subordinate employees, the parties are entitled to a reasonable opportunity to submit for the consideration of the employees participating in the decisions —
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 —
It should be obvious that the show-cause procedures fail to give carriers the hearing rights under the Administrative Procedure Act to which they are entitled in fitness flagging proceedings. Under the show-cause procedures, the Bureau of Enforcement or Department of Transportation files a statement that contains the allegations against the carrier and the asserted relationship of the allegations and the application proceeding, and all a carrier can do is to submit to the ICC verified written representations to show why flagging should not occur, to which the Bureau of Enforcement or Department of Transportation may respond in rebuttal. Solely on this basis, the ICC may flag — and did in this case — all applications for certificates of operating authority that a carrier has pending before the ICC. The Bureau of Enforcement or Department of Transportation does not truly bear the burden of proof. All that the Bureau of Enforcement or Department of Transportation submits are allegations as to violations by carriers, not proof, and on the basis of those allegations the ICC may order fitness flagging. Nor does the carrier have the opportunity to submit evidence other than through verified written representations, to conduct cross-examination, to submit rebuttal evidence, or to submit proposed findings and conclusions.
This failure of the show-cause procedures to conform to the hearing provisions of the Administrative Procedure Act stems from the ICC's erroneous view of the applicability of the Act to fitness flagging proceedings, a view contained in the ICC's order in Ex Parte 55:
It must be stressed that in the show cause hearing (which concerns the withholding of issuance of authority pending a determination of applicant's fitness in the selected application) the issue to be determined is nexus not fitness (which is determined in the selected application). Consequently, efforts by applicants to "try" fitness issues in the show cause hearing (E. G., the violations alleged never occurred) will not be entertained. A show cause hearing may occur before the hearing in the selected application. To attempt to have the Bureau or DOT present detailed evidence of the violations, including evidence contained in notes, memoranda, reports, interviews, etc., in the show cause hearing would, therefore, be inappropriate as a trial of nexus. An allegation is the statement of a party to an action setting out what he expects to prove, whereas evidence is a species of probative matter, legally presented at the trial of an issue, by the act of the parties and through the medium of witnesses, records, documents, concrete objects, etc., for the purpose of inducting belief in the minds of the court or jury as to the contention sought to be proved (fitness). Consequently, a show cause hearing contains only allegations, not evidence. The Court in NA 2 ( NAVL II) recognized this distinction when it stated as to a nexus determination:
Within the limits of its discretion, [the ICC] may find that the fitness investigation is indeed relevant to the determination of pending applications; it may determine that the potential harm discernable from the yet unproven charges in the fitness investigation outweigh the public's need for immediate service.
Contrary to the ICC's position on this matter, however, the conclusion that the ICC's fitness flagging show-cause procedures satisfy the procedural requirements of the Administrative Procedure Act does not follow from the fact that unproven charges in fitness investigation of a carrier are the relevant concerns of a fitness flagging proceeding. Not every allegation of carrier misconduct made by the Bureau of Enforcement or Department of Transportation can serve to justify fitness flagging by providing the necessary connection between the fitness investigation of a carrier and the carrier's pending applications for operating authority. Otherwise, there would still be in effect the automatic flagging rule that was declared unlawful in NAVL I, supra, 386 F. Supp. 665, and NAVL II, supra, 412 F. Supp. 782. Only certain kinds of allegations of carrier misconduct in certain circumstances may justify the ICC's use of fitness flagging. The establishment of the nexus between the fitness investigation and a carrier's applications for operating authority, required before flagging is permissible, is a complex matter. As was stated by the NAVL I court,
386 F. Supp. at 677-78. In Ex Parte 55 the ICC showed that it too was sensitive to the complex nature of the issues involved in establishing the required nexus.
But the fact that there are complex issues involved in a fitness flagging proceeding does not excuse compliance with the formal hearing requirements of the Administrative Procedure Act — quite the contrary. The fact that there are complex issues involved only reinforces the wisdom of having a hearing at which the Bureau of Enforcement or Department of Transportation bears the burden of justifying the flagging of a carrier's applications for operating authority and at which the carrier has the opportunity to submit oral and documentary evidence, to conduct cross-examination, to submit rebuttal evidence, and to submit proposed findings and conclusions. While it is true that the ICC must apply its expertise in this field, the operation of the Administrative Procedure Act in the area of fitness flagging insures that there are procedures to enable the carrier to be heard in a meaningful manner. "The decision whether to follow the Administrative Procedure Act is not a matter `committed to agency discretion,' 5 U.S.C. § 70(a)(2)." NAVL II, supra, 412 F. Supp. at 803. Agency expertise and procedural requirements in the Administrative Procedure Act are complementary elements in a fair and effective system of administrative action and are not substitutes for each other.
We therefore hold that the fitness flagging show-cause procedures are invalid insofar as they do not incorporate the formal hearing requirements of 5 U.S.C. § 556 and 557. See Buckeye Cablevision, Inc. v. United States, 438 F.2d 948, 951 (6th Cir. 1971) (the issue of the validity of regulations may be raised in an enforcement proceeding when the validity of the regulations are directly involved in the case). The ICC's actions flagging Ligon's and Transamerican's applications for operating authority constituted agency action "unlawfully withheld" under 5 U.S.C. § 706(1), because it was agency action that was effected "without observance of procedure required by law." 5 U.S.C. § 706(2)(D).
This holding would also apply to the final flagging regulations adopted insofar as they do not incorporate the formal hearing requirements of 5 U.S.C. § 556-57. It will be remembered that the final regulations substantially conformed to the interim regulations that were applied to Ligon and Transamerican.
We conclude, however, that the ICC did abuse its discretion in flagging Ligon's and Transamerican's applications. The problem is that we do not know how the ICC employed its expertise; the flagging orders give "no indication of the basis on which the Commission [the ICC] exercised its expert discretion." Burlington Truck Lines, Inc. v. United States, supra, 371 U.S. at 167, 83 S.Ct. at 245. See NAVL II, supra, 412 F. Supp. at 803. Rather, they speak in conclusory terms of allegations of "the widespread and significant violations" committed by the carriers which constitute the nexus between the fitness investigations and the pending applications of those carriers. The orders do not disclose why there is such a nexus between the pending applications and alleged violations of law by the carrier, nor do they establish probable cause to believe that the allegations concerning violations by Ligon and Transamerican are serious in relation to their pending applications for operating authority.
The problem here is not that interim flagging regulations § 1109.2 and § 1109.9 are per se invalid but that the ICC has not complied with its own regulations so as to meet the requirements of the Administrative Procedure Act in 5 U.S.C. § 557(c).
In cases of fitness flagging, an administrative record that clearly reveals the agency's reasoning and analysis is especially important. Fitness flagging is a deliberate policy of institutionalized delay with respect to applications for certificates of operating authority and as such must be carefully justified by the ICC because of the legal limitations on that kind of delay. 5 U.S.C. § 558(c) requires that "[w]hen application is made for a license required by law, the agency, with due regard for the rights and privileges of all the interested parties or adversely affected persons and within a reasonable time, shall set and complete proceedings . . .." (Emphasis added.)
Furthermore, "there is great potential for abuse where a criterion for receiving a public license is an applicant's willingness to obey the agency's directives." NAVL II, supra, 412 F. Supp. at 792. The orders under review in the present case, by not complying with the Administrative Procedure Act, do not adequately safeguard against the potential for abuse of agency power in the context of fitness flagging.
Finally, without an administrative record that reveals the agency's reasoning and analysis, there is a danger that the ICC could continue to employ the automatic flagging rule that was declared unlawful in NAVL I, supra, 386 F. Supp. 665, and NAVL II, supra, 412 F. Supp. 782. Ligon and Transamerican do charge that in their cases the ICC used the fitness flagging procedures merely as a smokescreen for the continued use of an automatic flagging rule. Again we cannot dismiss the charge made by the carriers. In point of fact, despite the purported use of fitness flagging regulations by the ICC in this case, the ICC issued orders that flagged all the pending applications of those carriers, much in the same fashion as orders did before the institution of the fitness flagging procedures.
We therefore hold that the application of fitness flagging to Ligon and Transamerican constituted an abuse of discretion due to the failure of the ICC to issue decisions and provide administrative records that indicate the basis on which the ICC exercised its discretion to flag Ligon's and Transamerican's applications for operating authority. By so failing, the ICC "unlawfully withheld" action on Ligon's and Transamerican's applications under 5 U.S.C. § 706(1), because the manner in which the ICC withheld action constituted an abuse of discretion under 5 U.S.C. § 706(2)(A).
This Court made a special request to counsel to brief the question of the applicability of the Supreme Court's decision in Vermont Yankee Nuclear Power Corporation v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978), because of our concern that the case would affect our conclusions in this case. After careful consideration of the views of counsel, however, we conclude that the Yankee Power decision has no impact in the present case.