Opinion ID: 362297
Heading Depth: 2
Heading Rank: 3

Heading: The Childress Criteria

Text: 28 The plain language of the first Childress criterion requires, at a minimum, that prior traffic have traveled Through the pertinent gateway. 61 M.C.C. at 428. 29 Of the two traffic studies offered by Aero, the first, and most important, consisted of an abstract of 2,224 shipments 18 which moved from some of the nineteen origin areas to some of the thirty-nine destination states by means of joint-line motor carrier services in which Aero was a participant during 1969-75. J.A. I at 68-131. Of these 2,224 shipments, over one-half moved between origin and destination points for which Aero already held direct single-line authority, See note 9 Supra ; and, therefore are not significant. 30 There is no evidence that Any of the shipments abstracted in the first study were interchanged at York, Pennsylvania, the only gateway relevant in these proceedings. 19 The ALJ, although quoting extensively from the Childress case, J.A. II at 867-68, and relying primarily on this study in determining that those criteria were satisfied, Id. at 868, failed to find that use was made of the gateway. The ALJ concluded only that there was substantial interline activity on the part of (Aero) in the involved area and . . . that there was considerable demand for joint-line service into the area. Id. This will not satisfy the clear requirements of the first Childress test which demands actual utilization of the gateway. See Incorporated Carriers, Ltd. Gateway Elimination, 128 M.C.C. 810, 816 (1978); Interstate Motor Freight System Extension Moline, Ill., 125 M.C.C. 754, 761 (1976). To the extent that the Commission's orders rest on this study, they cannot be upheld. 31 The second traffic study considered by the ALJ abstracted 587 shipments transported by Aero from November 25, 1974, to June 30, 1975, under a temporary lease of Miller's authority. 49 U.S.C. § 310a(b) (1970); J.A. I at 144-73. Although most of these shipments passed through the York gateway, J.A. II at 850, they represent only some fifty of the over 600 new direct authorities awarded in this case. The study is thus manifestly deficient. As the Commission has explained, it is not enough to show that between selected points applicant has transported substantial traffic, rather the proposing carrier must show that it is an effective competitor as to substantially all points encompassed within the scope of its pertinent outstanding authority. Maryland Transportation Co. Extension Specified Commodities, 83 M.C.C. 451, 455 (1960). Traffic related to only some fifty pairs of origin and destination states cannot rationally support a finding of transportation between Substantially all of the over 600 new pairs encompassed within the scope of Aero's application. 32 Two further inadequacies preclude our finding this study sufficient justification for the Commission's orders either in whole or in part. First, the ALJ failed to determine whether the shipments made between designated points constituted a substantial volume of traffic through the gateway within the meaning of Childress. 61 M.C.C. at 428. About 400, or approximately sixty-eight percent, of the shipments abstracted moved from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia. We have already held the public testimony sufficient to justify elimination of the gateway with respect to these pairs of states. Only one or two shipments, however, were made between most of the remaining pairs of states. The finding of substantiality, crucial to any determination of compliance with Childress, becomes even more important when single and double shipments are involved. We therefore remand to the Commission for an explication of its substantiality criteria and a specific determination of whether the shipments abstracted in the second study meet those tests. See Burlington Truck Lines, Inc. v. United States, 371 U.S. at 167-68, 83 S.Ct. 239. 33 Second, the ALJ failed to analyze the effects of eliminating the gateway on Aero's competitive position. The second test set out in Childress requires proof that elimination of the gateway will not enable applicant to institute a new service or a service so different from that presently provided as to materially improve applicant's competitive position to the detriment of existing carriers. 61 M.C.C. at 428. Mileage distances under present operations as compared with those proposed are to be considered in evaluating the effect on the competitive status quo. Id. In Childress, the Commission found that a mileage saving of twenty-three to twenty-nine percent where a one way movement was 300 miles or more constituted a new service. Id. Similarly, in Hermann Forwarding Co. Extension Pomona, N.J., 99 M.C.C. 476, 479-80 (1965), the Commission denied a gateway elimination application on the ground that a ninety-one mile reduction that enabled the carrier to provide same day service constituted a new service and altered the competitive balance. See, e. g., Overnite Transportation Co. Elimination of Gateway Monroe, N.C., 103 M.C.C. 135, 149-51 (1966); Chicago Express, Inc., Extension Tuscola, Ill., 79 M.C.C. 384, 385-86 (1959). 34 Enormous time and mileage savings will result from a complete grant of Aero's application. 20 Yet, the ALJ neglected even to address this issue. The ALJ's conclusory statement that the elimination of the gateway will not give rise to new service, J.A. II at 868, does not comport with the Commission's interpretation of the demands of the second Childress requirement. 21 On remand, the mileage savings encompassed within the grant of Aero's application must be reconciled with the criteria and analytic methods established in prior Commission decisions. Unfortunately, this court is again called upon to admonish the Commission that it must conform to its own precedents or explain its departure from them. See Greyhound Corp. v. ICC,179 U.S.App.D.C. 228, 230, 551 F.2d 414, 416 (1977) (per curiam). 35 Viewing the record as a whole, we are able to uphold the Commission's orders only insofar as they award direct-route authority from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia. The remaining direct-route authorizations sought by Aero are not supported by substantial evidence. Indeed, our analysis reveals that there is no mention anywhere in the record either in the traffic studies or in the witnesses' testimony of approximately 200 of the jurisdictional pairings authorized by the Commission. 22 Before concluding, however, a note concerning methodology is in order.Methodology 36 Respondents vigorously challenge the validity of an analysis based upon all possible origin and destination permutations and combinations encompassed within an award. See Joint Brief for the Commission and the United States of America at 21-22; Brief of Intervening Respondent Aero at 13-14. They argue that the sporadic nature of call-on-demand shipments of size and weight commodities renders unrealistic the requirement that evidence be offered pertinent to all states within a grant of authority. In effect, they contend that evidence supplied with respect to some of the states justifies elimination of the gateway and direct-route authorization as to all. Given the broad authority sought in this case, we cannot agree. 37 We are unpersuaded by the numerous cases cited by respondents in support of their proposition. These cases deal exclusively with proceedings under section 5(2) of the Act, 49 U.S.C.A. § 5(2) (1978), and are not dispositive in a section 207 inquiry. Section 5 requires that a carrier seeking to acquire the rights of another satisfy a public interest standard. 23 38 A showing that adequately meets section 5(2), however, may not necessarily meet the more stringent requirements of section 207. Whereas section 5(2) only demands demonstration of public interest, section 207 requires a showing of public convenience and necessity. As this court has previously noted, the standard of public convenience and necessity is higher than that of public interest. Common Carrier Conference Irregular Route v. United States, 175 U.S.App.D.C. 244, 246, 534 F.2d 981, 983, Cert. denied,429 U.S. 921, 97 S.Ct. 317, 50 L.Ed.2d 288 (1976). See J. V. McNicholas Transfer Co. Control Tom's Express, 122 M.C.C. 786, 792 (1977); Baggett Transportation Co. Purchase W. A. Bishop, 36 M.C.C. 659, 663-64 (1941); See also Refrigerated Transport, Co. v. ICC, 552 F.2d 1162, 1169 n.6 (5th Cir. 1977). Although atomization may be contrary to well-established precedent in motor carrier acquisition cases that is not to say the same applies in gateway elimination actions. The Commission has in the past uniformly applied, at the least, a state by state analysis of each proposed authority in gateway elimination cases, See, e. g., Central Transport, Inc. Purchase (Portion) Piedmont Petroleum Products, Inc., 127 M.C.C. 1, 22-23 (1977); Service Trucking Co., Extension Frozen Pies & Pastries, 88 M.C.C. 697, 701 (1962); Maryland Transportation Co., Extension Specified Commodities, 83 M.C.C. at 455, as we have recognized, See Youngstown Cartage Co. v. ICC, 187 U.S.App.D.C. 294, 295, 571 F.2d 1243, 1244, Cert. denied, --- U.S. ----, 99 S.Ct. 97, 58 L.Ed.2d 19 (1978) (No. 77-1651); Chem-Haulers, Inc. v. ICC, 184 U.S.App.D.C. 153, 156, 565 F.2d 728, 731 (1977). See also Squaw Transit Co. v. United States, 574 F.2d at 495; C. A. White Trucking Co. v. United States, 555 F.2d at 1264. 39 The Commission's recent decision in Groendyke Transport, Inc., Extension Gateway Elimination, 126 M.C.C. 571 (1977), fully supports our analysis. The Groendyke case is analogous to that presently before us. The application filed in that case, as in this, was overbroad in terms of the territories sought. Id. at 575. The Commission employed an analytic method identical to ours and reached a similar result, ruling that the entire gateway elimination was improper because applicant ha(d) not shown that it ha(d) moved any traffic from and to many of the points sought. Id. at 575. In concluding that a full grant of territorial authority was not warranted, particularly with respect to operations from (various states) from which . . . applicant handled only sporadic movements, Id. at 576, the Commission's decision is fully consistent with our conclusion here. 40 We are inclined to view the lack of evidence in this case, not as the result of the sporadic nature of the size and weight shipments, as respondents suggest, but rather as the manifestation of the operational and economic disabilities involved in gateway observance which have prevented Aero from effectively competing with petitioners. A grant of direct authority between points for which Aero has not actually transported traffic through the gateway and for which there is no public testimony demonstrating public convenience and necessity may result in an unjustified windfall to Aero, inconsistent with both the explicit standard of section 207 as well as the purpose of the gateway elimination rules. See text Supra at --- of 191 U.S.App.D.C., at 568 of 589 F.2d.