Source: https://www.chanrobles.com/usa/us_supremecourt/344/298/case.php
Timestamp: 2020-04-02 21:49:15
Document Index: 325519970

Matched Legal Cases: ['§ 2321', '§ 301', '§ 204', '§ 208', '§ 216', '§ 204', '§ 212', '§ 1', '§ 207', '§ 207', '§ 207', '§ 207', '§ 5', '§ 207', '§ 5', '§ 208', '§ 203', '§ 7', 'arts 192', 'art 191', '§ 203', '§ 203', '§ 207']

(a) Section 7(c) of the Administrative Procedure Act, providing that the proponent of a rule "shall have the burden of proof," is inapplicable, since these rules were promulgated under chanrobles.com-red
Two federal district courts declined to enjoin enforcement of rules promulgated by the Interstate Commerce Commission governing the use by motor carriers of equipment not owned by them. 101 F.Supp. 710; 103 F.Supp. 694. On appeal to this Court, affirmed, p. 344 U. S. 323. chanrobles.com-red
These appeals attack new Interstate Commerce Commission rules governing the use of equipment by authorized motor carriers when the equipment is not owned by the carrier, but is leased from the owner or obtained by interchange with another authorized carrier. They chanrobles.com-red
were prescribed by the Commission and reported Ex Parte No. MC-43, Lease and Interchange of Vehicles by Motor Carriers, 52 M.C.C. 675. As will be seen from the portions we have quoted in the 344 U. S. they principally require carrier inspection; when the equipment is leased, control for a minimum of thirty days, and a method of compensation other than division of revenues between lessor and lessee; and, in the case of use of another carrier's equipment, authorization to the exchange point and actual transfer of control. Thus, the practice of using leased equipment and that obtained by interchange is brought into conformity with the regulation of carrier-owned equipment to avoid evils that had grown up in that practice.
Some six suits were instituted to test the validity of the rules in the district courts under 28 U.S.C. §§ 2321-2325. Three were stayed by orders, and one was not moved pending disposition of the instant cases. [Footnote 1] These came here on direct appeal from two separate judgments denying the injunctive relief prayed for, one in the Southern District of Indiana, Eastern Motor Express, Inc. v. United States, 103 F.Supp. 694, and the other in the Northern District of Alabama, American Trucking Associations, Inc. v. United States, 101 F.Supp. 710. The issues there considered and resolved against the applicants concerned the Commission's authority under the Motor Carrier Act of 1935, Interstate Commerce Act, Part II, 49 Stat. 543, as amended, 54 Stat. 919, 49 U.S.C. § 301 et seq..; the impact of the rules on agricultural trucking and on the guaranteed right of authorized carriers to augment their equipment; the application of the chanrobles.com-red
The Act waives these conditions of agency authorization and service limitations for a sizable portion of the industry, however. Most important of the exempt operations are those involving equipment used in the transportation of agricultural products. By and large, the equipment in this category is owned and operated by the same person. It falls only within the Commission's jurisdiction over drivers' qualifications, hours of service, and safety. [Footnote 3] And so there is no mandate on these exempt owner-operators to provide adequate and nondiscriminatory chanrobles.com-red
The use of nonowned equipment by authorized carriers is not illegal, either under the Act or the rules under chanrobles.com-red
consideration. [Footnote 6] But evidence is overwhelming that a number of satellite practices directly affect the regulatory scheme of the Act, the public interest in necessary service, and the economic stability of the industry, and it is on these that the rules focus. It appears, for instance, that, while many arrangements are reduced to writing, oral leases are common; some were concluded after the trips were made, and, in several cases, exempt operators solicited business themselves with blank authorized carrier forms or other evidence of agency. It is strongly urged that this very informality of the contractual relationship between carrier and exempt operator creates conditions in the industry inconsistent with those which the Act contemplates. Proof was proffered during the proceedings that the informal and tenuous relationships in lease and interchange permit evasions of the limitations on certificated or permitted authority. Since the driver of the exempt equipment is not an employee of the carrier, sanctions for violation of geographical restrictions are clearly difficult to impose, especially in the case of the single trip lessor. Interchange may, as well, become a device to circumvent geographical restrictions in the certificate. The practice of authorized carriers conducting operations beyond the territory they are entitled to serve under cover of a lease from the local carrier was clearly shown in the evidence before the Commission. It appeared, in fact, that some of these operations are entirely fictional, being created ad hoc after the trip is made -- and this at times in the wake of a specific denial by the Commission of an application to serve the area. chanrobles.com-red
Consequences on the economic stability of the industry were also noted. The carrier engaged in leasing practice is at the mercy of the cost and supply of exempt equipment available to him. Hence, he may at times find himself unable to undertake shipping obligations because no trucks are available willing to make a relatively unprofitable trip or to assume the burdens of less than carload service. Certification is granted on a showing that a concern is fit and willing to provide nondiscriminatory service required by the public convenience. To sustain this obligation, the authorized integrated carrier who finds his chanrobles.com-red
II. Commission Proceedings. -- All before us admit the difficulties which have developed. In fact, the Commission has considered them for some years. As early as chanrobles.com-red
1940, following complaints, the Bureau of Motor Carriers held hearings on the subject which culminated in a statistical report in 1943. The necessity of maximum use of transportation resources during the war postponed any action thereafter until 1947. [Footnote 8] In that year, however, the Director of the Bureau reinstituted discussion, had suggested regulations drafted, and drew on his field staff for reports of the use of the exempt vehicles by authorized carriers. The present proceedings were instituted by the Commission on January 9, 1948, when it became apparent that carrier agreement regarding a proper solution was unlikely. Its order, published at 13 Fed.Reg. 369, declared all authorized carriers respondents and set forth the practices to be investigated, four possible schemes of regulation, and suggested rules. A qualified examiner thereafter heard some 80 witnesses in Washington and St. Louis, and issued a report and proposed rules. A full report by the Commission's Division 5 followed on June 26, 1950, confirming the examiner's findings and amending his proposals, [Footnote 9] and, following petitions for reconsideration, the entire Commission reopened proceedings for oral argument. The Commission's report, dated May 8, 1951, in effect adopted the Examiner's proposed rules, after affirming and reiterating the nature and effect of chanrobles.com-red
IV. Commission Authority. -- Appellants focus their principal attack on the lease provisions requiring a thirty-day period of carrier control and a measure of compensation other than revenue splitting. All agree that the rules thus abolish trip leasing. Unfortunate consequences are predicated 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 Commission's position that chanrobles.com-red
Here, appellants have framed their position as a broadside attack on the Commission's asserted power. All urge upon us the fact that nowhere in the Act is there an express delegation of power to control, regulate, or affect leasing practices, [Footnote 10] and it is further insisted that, in each separate provision of the Act granting regulatory authority, there is no direct implication of such power. Our function, however, does not stop with a section by section search for the phrase "regulation of leasing practices" among the literal words of the statutory provisions. As a matter of principle, we might agree with appellants' contentions if we thought it a reasonable canon of interpretation that the draftsmen of acts delegating agency powers, as a practical and realistic matter, can or do include specific chanrobles.com-red
Moreover, we must reject at the outset any conclusion that the rules as a whole represent an attempt by the Commission to expand its power arbitrarily; there is clear and adequate evidence of evils attendant on trip leasing. The purpose of the rules is to protect the industry from practices detrimental to the maintenance of sound transportation services consistent with the regulatory system. Sections 216(b) and 218(a) of the Act, for instance, require the filing of a just and reasonable rate schedule by each common carrier, and the violation of these rates and the demoralization of rate structures generally are a probable concomitant of current leasing practices. Section 204(a)(2) requires the Commission to impose rules relating to safety of 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 § 204(a)(1), of observance of authorized routes and termini under §§ 208(a) and 209(b), and the prohibitions of rebates, §§ 216(d), 217(b), 218(a) and 222(c), also may be ignored through the very practices here proscribed. chanrobles.com-red
We cannot agree with appellants' contention that the rulemaking authority of § 204(a)(6) merely concerns agency procedures, and is solely administrative. It ignores the distinct reference in the section to enforcement. Furthermore, the power of the Commission to make rules applicable to transfers of certificates or permits is recognized by § 212(b). That section permits transfers "pursuant to such rules and regulations as the Commission may prescribe." It does not strain logic or experience to look upon leasing of exempt equipment and interchange as a transfer, temporary in nature, of the carrier's authorized right to serve his specified area; in fact, we think this interpretation is dramatically supported here by 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 non-owned equipment over their authorized routes and under their names. It is an unnatural construction of the Act which would require the Commission to sit idly by and wink at practices that lead to violations of its provisions. chanrobles.com-red
A fair analogy appears between the conditions which brought about the Motor Carrier Act and those sought to be corrected by the present rules, confirming our view of the Commission's jurisdiction. Then, the industry was unstable economically, dominated by ease of competitive entry and a fluid rate picture. And, as a result, it became overcrowded with small economic units which proved unable to satisfy even the most minimal standards of safety or financial responsibility. [Footnote 11] So Congress felt chanrobles.com-red
V. The National Transportation Policy. -- What we have said above answers appellants' companion contention that the rules are invalid because they violate the National Transportation Policy as set out in 49 U.S.C. preceding § 1. Regulation under the Act is there declared to be in the interests of the preservation of the inherent advantages of all modes of transportation, and of an economically sound, safe, and efficient industry. See United States v. Rock Island Motor Transit Co., 340 U. S. 419, and United States v. Texas & Pacific Motor Transportation Co., 340 U. S. 450. But no overly-nice distinction between law and policy is needed to support chanrobles.com-red
We also affirm a reasonable relationship between the aims of the federal regulatory scheme and the exemptions in the rules. That, as to interchange between carriers over routes which both are authorized to serve, Rule § 207.3(a), chanrobles.com-red
is founded on the proposition that unauthorized certificate extensions are here impossible. The exemption extended to trucking equipment used in railway express operations, Rule § 207.3(b), which are largely confined to municipalities and contiguous areas, and short trips, duplicates the similar exemption applicable to contract and common carriers in Rule § 207.3(c). It is alleged that the exclusion of the substituted motor-for-rail transport equipment from the rules' coverage by Rule § 207.3(b) also is based on the fact that the evils of unauthorized service, law observation, of safety regulations, and demoralized competitive conditions are not present in such operations. As the Commission found, the leasing practices in the field are undertaken through long-term contracts with certain established lessors, and the equipment inspected and controlled by the railroads, and identified with its name. In such a context, the exemption is not unreasonable; certainly it is not required that the Commission extend its supervisory activities under the rules into fields where the evidence before it indicates no need, merely to satisfy some standard of paper equality. And this is especially so in the field of substituted motor-for-rail carriage which falls within the Commission's strict regulation by virtue of the restrictions which we approved in United States v. Rock Island Motor Transit Co., 340 U. S. 419, and United States v. Texas & Pacific Motor Transportation Co., 340 U. S. 450. The exemption for plans of operations merged under § 5 of the Act, Rule § 207.3(d), is said to have been directed solely toward Allied Van Lines, whose § 5 proceeding, reported Evanston Fireproof Warehouse -- Control -- Allied Van Lines, 40 M.C.C. 557, involving a unique leasing arrangement by stockholding hauling agents under the company's name, has already been scrutinized by the Commission. Since Allied operates entirely with equipment supplied under this arrangement, chanrobles.com-red
VII. Preservation of the Right to Augment Equipment. -- Appellants further contend, however, that the rules in effect will violate the protections in §§ 208(a) and 209(b) of the Act of the carriers' right to augment their equipment. [Footnote 15] We do not agree. The provisos in question are not to be read as blanket restrictions on the Commission's regulatory powers; they are aimed at the restrictions on the increase in volume of traffic through acquisition of additional vehicles. Clearly, a numerical limitation would be invalid, but the Commission's refusal to permit carriers to secure and use equipment which does not satisfy its safety, loading, and licensing rules would not. As we pointed out in Crescent Express Lines, Inc. v. United States, 320 U. S. 401, 320 U. S. 408, in sustaining a certificate chanrobles.com-red
§ 203(b)(6), [Footnote 16] and appellants, and particularly the intervening Secretary of Agriculture, urge that the rules will drastically reduce the significance of this section in violation of Congress' intent. All admit, of course, that the rules do not directly apply to agricultural equipment; it is merely required that authorized carriers using such trucks comply with certain provisions. But it is contended that the preconditions to such use imposed on those within Commission jurisdiction will wipe out much of the traffic which the agricultural carriers 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 departure, having unloaded the farm produce carried; the authorized carriers have found them prepared to accept a one-trip engagement for the return route. The thirty-day chanrobles.com-red
IX. Agency Procedure. -- We need not pause long over certain procedural objections which appellants have interposed. They object that the rules were the product of proceedings fatally at variance with certain requirements of the Administrative Procedure Act. Appellants In No. 35 point to the requirement of § 7(c), that "the chanrobles.com-red
In short, chanrobles.com-red
X. Right to Introduce Evidence of Confiscation. -- Finally, appellants assign as error the refusal of the District Court in No. 35 to permit introduction of additional oral evidence there. Their offer of proof indicated that it would concern the "value of Plaintiffs' property and rights" and "the effect of the order on said property and rights." This Court has indicated many times, it is true, that those concerned with an order affecting their just compensation for transportation services must be heard; indeed, their right to introduce evidence to support the claim that the order in question will unconstitutionally confiscate their property may be enforced even in the District Court, if the Commission bars an opportunity to do so. Manufacturers R. Co. v. United States, 246 U. S. 457, 246 U. S. 488-490; St. Joseph Stock Yards Co. v. United States, 298 U. S. 38, 298 U. S. 53-54; Baltimore & Ohio R. Co. v. United States, 298 U. S. 349, 298 U. S. 362-369; New York v. United States, 331 U. S. 284, 331 U. S. 334-335. chanrobles.com-red
"Confiscatory" is not a magic word. Whether it should open the door to further proceedings depends on the nature of the order attacked. We think a claim of rate confiscation, which was the concern of the cases just cited, stands on a fundamentally different footing from that made in the instant case. [Footnote 19] Ratemaking represents an order affecting the volume of income; it is said to confiscate property when it prohibits a reasonable return on chanrobles.com-red
It is true that we have admonished the Commission and the courts to permit introduction of evidence on the economic impact of a rate order where the claim that it could not have been proffered during the original proceedings was genuine. But that was because the "constitutional right of compensation," St. Joseph Stock Yards Co. v. United States, 298 U. S. 38, 298 U. S. 54, was drawn in question. Here, appellants can make no comparable claim. They attack an order which is valid even if its effect is to drive some operators out of business. As we have indicated, the rulemaking power is rooted in and supplements Congress' regulatory scheme, which in turn derives from the commerce power. The fact that the value of some going concerns may be affected therefore does not support a claim under the Fifth Amendment if the rules and the Act be related, as we have said they are, to evils in commerce which the federal power may reach. [Footnote 20] This being the case, appellants had no constitutional chanrobles.com-red
(d) To equipment utilized by an authorized carrier in transportation performed pursuant to any plan of operation chanrobles.com-red
(5) Shall specify the compensation to be paid by the lessee for the rental of the leased equipment; provided, however, that such compensation shall not be computed on the basis of any division or percentage of any applicable rate or rates on any commodity or commodities transported in said vehicle or on a division or percentage of any revenue earned by said vehicle during the period for which the lease is effective; chanrobles.com-red
(e) Driver of equipment. -- Before any person other than a regular employee of the authorized carrier is assigned to drive equipment operated under these rules, it shall be the duty of the authorized carrier to make certain that such driver is familiar with, and that his employment as a driver will not result in, violation of any provision of parts 192, 193, 195, and 196 of the Motor Carrier Safety Regulations (Rev.) pertaining to "Driving of Motor Vehicles," "Parts and Accessories Necessary for Safe Operation," "Hours of Service of Drivers," and "Inspection and Maintenance," and to require such driver to furnish a certificate of physical examination in accordance with part 191 of the Motor Carrier Safety Regulations (Rev.) pertaining to "Qualifications of Drivers," or, in lieu thereof, a photostatic copy of the original certificate of physical examination, which shall be retained in the authorized carrier's file. chanrobles.com-red
(b) Authority of carriers participating in interchange. -- The certificates of public convenience and necessity held by the carriers participating in the interchange arrangement must authorize the transportation of the commodities proposed to be transported in the through movement, and service from and to the point where the physical interchange occurs. chanrobles.com-red
I agree with the Court that the Interstate Commerce Act grants the Commission broad implied powers to carry out the general purposes outlined in the law. @See 323 U. S. 616. But the Commission is without power to invoke vague implications to defeat the Act's purpose or to override its clearly expressed provisions. This, I think, is what the Commission has done in most of the Commission rules which the Court upholds. In my view, the rules run counter to the Act in three important respects:
A. Motor vehicle common carriage had reached an advanced stage when Congress passed the Motor Carrier Act in 1935. [Footnote 2/1] Early development of the business was along lines that the carriers found to be advantageous. Some carriers owned their vehicles, while others leased them. The Act did not try to disrupt this system, but left motor carriers free to continue to own or lease equipment in accordance with their best financial judgment. And Congress was content to regulate the common or contract carriers themselves; it made no effort whatever to regulate those who owned the vehicles that were leased to the regulated carriers. Congress was thus talking chanrobles.com-red
The new rules adopted by the full Commission put burdensome restrictions on the power to lease appropriate vehicles, restrictions which, in my view, go beyond the power of the Commission. These burdensome restrictions had been previously rejected by the Commission's Division V, composed of Commissioners particularly responsible for supervision of motor vehicle affairs, as distinguished from supervision of railroad affairs. This record makes plain that enforcement of these burdensome rules will produce violent repercussions in the motor carrier industry; many motor carriers will suffer ruinous losses. The business of leasing vehicles for use by common carriers will be curtailed, or perhaps even destroyed. The tendency of the rules is thus to eliminate many small business ventures. It may be, as the Commission seems to think, that the Nation's motor carrier business can be more efficiently accomplished by a few big companies that own all their equipment than by a large number of small companies that obtain all or part of their equipment by lease. But if that governmental alteration in our business structure is to be ordained, Congress, not the Commission, should do the ordaining. chanrobles.com-red
B. The farmers of the Nation have for a long time been largely dependent upon reasonably priced motor transportation to get their produce to market. [Footnote 2/4] When the Motor Carrier Act was under consideration, there was much apprehension expressed lest regulation deprive farmers of this advantage. [Footnote 2/5] To meet this feeling, the bill was amended several times, and finally was passed with the agricultural exemption set forth in § 203(b). Except as to certain safety requirements § 203(b) exempts from regulation motor vehicles of farmers and farm cooperatives chanrobles.com-red
The reason the Commission has adopted a rule so destructive of the agricultural exemption Congress granted is apparent from a colloquy which took place in the District Court. The attorney for the Commission was asked chanrobles.com-red
C. The Commission has exempted railroads and express companies that carry goods for hire in motor vehicles from all of the regulations except the provisions of § 207.4(c) and (d), which latter two provisions relate to inspection and identification of equipment. It is rather interesting that, while the full Commission granted the railroads this amazing exemption, Division V, the Motor Carrier Division of the Commission, refused to allow it. The Commission at the same time refused to exempt from its new rules motor carriers whose operations were shown to be substantially identical with those performed by railroad and express carriers which the Commission left free from the burdens of the rules. Since the railroads and the 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 in all their vigor to the independent motor carriers. I know of no power which the Commission has to allow railroads which chanrobles.com-red