Court Opinion

ID: 5165346
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:28:29.813613+00
Date Added: 2024-06-11T08:25:48.406684
License: Public Domain

Chief Justice ROVIRA,
dissenting.
The majority concludes that the Public Utilities Commission of Colorado (PUC) did not announce “a new evidentiary standard that forecloses the testimony of a single shipper to establish public need” and therefore, it reasons that “the sole issue is whether substantial evidence in the record supports the ALJ’s findings.” Maj. op. at 356. In so doing, the majority refuses to come to grips with Trans-Western Express, Ltd’s (TWX) argument that the decisions of the ALJ and PUC are arbitrary and capricious. Maj. op. at 355 n. 9.
I agree with the majority that the PUC did not announce a new evidentiary standard to govern this case. I conclude, however, that the legal standard applied by the ALJ, the PUC, the district court, and the majority is fundamentally flawed. Applying the legal standard which is appropriate under the facts of this case leads unequivocally to the conclusion that TWX’s application for expanded common-carrier certification should have been granted based on the evidence presented. Therefore, I dissent.
I
There are four facts which are, in my opinion, all but dispositive of the issue presented: (1) TWX’s common-carrier authority pursuant to Certificate of Public Convenience and Necessity No. 205 & I allows it to transport goods only for Target, and not for any other customer;1 (2) the PUC adopted the finding of the ALJ that TWX’s “application should not be denied because HVH and Star will most likely lose Target’s backhaul traffic if this application is granted”; (3) the PUC *359adopted the finding of the ALJ “that the public will not be subjected to destructive or excessive competition if this application is granted”; and, (4) Target has made the business judgment that securing a single, dedicated, statewide carrier capable of providing “just-in-time” delivery services is in its best interest.
II
The legal doctrine governing when, and under what circumstances a common-carrier should be granted a certificate of public necessity and convenience is that of regulated competition. § 40-10-105(2), 17 C.R.S. (1984); Miller Bros., Inc. v. Public Util. Comm’n, 185 Colo. 414, 525 P.2d 443 (1974). Under that doctrine, the “ ‘public interest’ or ‘public need’ is the paramount consideration governing the issuance or denial of a certificate of public convenience and necessity.” Morey v. Public Util. Comm’n, 629 P.2d 1061, 1065 (Colo.1981). The ALJ, PUC, and majority all recognize that the central question here is whether TWX has met its burden of showing a “public need” for granting its application. The ALJ and PUC concluded that TWX failed to meet this burden because it offered only evidence of Target’s “private need” for the application, as opposed to a broader public need for the requested certificate:
Target presented evidence of its preference for a tailored, dedicated, and specialized “just in time” transportation service. However, no evidence of the broader public need for the proposed service was here offered.... The public need in issue in this proceeding is the broad public need for transportation service, rather than Target’s preference for a dedicated, tailored, specialized transportation service, which may provide transportation costs savings to Target. (Emphasis added).
The majority affirms this conclusion on the grounds that the need of a single shipper, while relevant, need not be dispositive in assessing the public need. In support of that conclusion, the majority relies on Morey v. Public Util. Comm’n, 196 Colo. 153, 582 P.2d 685 (Colo.1978) (Morey I), and Morey v. Public Util. Comm’n, 629 P.2d 1061 (Colo. 1981) (Morey II). In Morey II, we observed that our prior cases have never,
suggested that “public need” under the doctrine of “regulated competition” is to be measured solely or exclusively by the needs or preferences of an applicant’s customers. That their needs and preferences are probative of a, “public need” for competitive services is indisputable. They are not, however, conclusive evidence of a “public need.”
Id. at 1066. Rather, we noted that “the Commission may consider the impact additional competition may have, not only on the conflicting economic interests of competing carriers, but also on the ability of existing carriers to provide their customers and the public generally with safe, efficient and economical transportation services.” Id.
While the majority is quite correct in concluding that Morey II stands for the general proposition that testimony of a single shipper need not be dispositive to a determination of “public need,” that principle has no application under the facts of this case. The certificate at issue in Morey I and Morey II, would have enabled the carrier to transport commodities between Denver, Pueblo, and Lamar, Colorado to potentially thousands of customers. Morey II, 629 P.2d at 1062. As such, it made sense, both good and common, to conclude that among the thousands of potential customers who could be provided services if the certificate were granted, the testimony of a single customer regarding the individual benefits that would flow from granting the certificate should not be disposi-tive on the question of public need. In contrast, the sought after certificate here seeks only to provide expanded territorial service to Target. No other customers can be provided services by TWX if its application is granted.2 Under such circumstances, Target *360is the public, and its needs are equivalent to the needs of the public.
Given that TWX’s common-carrier certificate permits it to provide services only to Target, TWX is operating more like a contract-carrier than a common carrier. See Carl H. Fulda, Competition in the Regulated Industries: Transportation § 4.1, 70 (1961) (the principle feature of the distinction between a contract and a common earner is the “general holding out to the public by the common carrier and the rendering of specialized services pursuant to contracts with one customer or a limited number of customers by the contract carrier”). TWX’s status as a common-carrier, however, is not at issue in this proceeding. Moreover, substantial evidence was presented which indicates that the PUC regularly grants common-carrier status to carriers providing services to only one customer3 and there is no indication that the PUC has or will in the future cease granting common-carrier certificates to single-shipper carriers.
Recognizing that TWX holds a valid common-carrier certificate although it is in fact operating more like a contract carrier than anything else, it is important to remember that with contract carriers, the PUC considers the “specialized needs” of the shipper, and gives considerable deference to the shipper’s choice of a carrier, even when there are competing carriers. See Pollard Contracting Co. v. Public Util. Comm’n, 644 P.2d 7, 11 (Colo.1982); § 40-11-103, 17 C.R.S. (1993). Why is so much significance placed on the specialized needs of the shipper when certification as a contract carrier is sought, whereas a broader showing of public need is required for common carrier certification? The answer is obvious:
[T]he contract carrier, whose authority is limited in nature, restricted to specific commodities, specific shippers and designed to meet the special needs of the shipping public, has less effect upon the equilibrium of the market place than a common carrier. The difference is re-fleeted in the disparate statutory requirements that a contract carrier need only show issuance of a permit is “in the public interest”; whereas a common carrier must show public necessity and convenience requires the issuance of the certificate.
Dupre Transport, Inc. v. Public Serv. Comm’n, 556 So.2d 588, 591 (La.1990).
I can conceive of no reason to depart from the standard of “specialized need” in this case, even though here we are dealing with a common carrier, because TWX is for all practical purposes operating as a contract carrier. To ignore this fact, and rigidly apply the requirements properly imposed on “true” common carriers such as those in Morey I and Morey II, is not only to elevate form over substance, but entails the application of legal requirements that are devoid of any reasonable justification in this context.
Requiring a showing of “broad public need for transportation service” in the context of a single-shipper certificate is unjustifiable. How, for example, is Target supposed to show a broad public need for TWX’s application? Counsel for the PUC argued before this court that the only way he could foresee Target establishing such a need would be for it to round up members of the public, explain its enterprise to them, explain why it sought a single, dedicated, just-in-time carrier, and attempt to persuade them that such transportation services are in their interest. If Target could accomplish this, then it would simply have to persuade those persons to appear before the ALJ and PUC to testify as to how the sought after application was in their interest. In my judgment, imposing such a burden on a carrier and its sole customer is unjustifiably onerous at best, at worst, it is flatly absurd.
More importantly, however, is the fact that under the circumstances presented here, I cannot imagine any reasonable or justifiable governmental interest in denying this application on the grounds that public need has *361not been demonstrated.4 The majority correctly notes that in granting a common-carrier certifícate, the public need is the primary consideration, though a showing of destructive or excessive competition may require the denial of an application. Maj. op. at 357. The ALJ and PUC specifically found that there was no showing of destructive or excessive competition if TWX’s application were granted. Furthermore, both found that the harm caused to competing carriers if the application were granted did not justify denying the application. The sole reason for its denial was the lack of a showing of broad public need for transportation services. If Target and TWX testify to the benefits each would enjoy as a result of granting the application, no evidence of harm to the public is introduced, and harm to TWX’s competitors is deemed irrelevant, what interest is benefit-ted by a denial of the application? One need not reach far to conclude that the government has no justifiable interest in refusing to grant such an application.5 In fact, the General Assembly has recognized the point by expressing its intention not to require a showing of broad public need in the context of contract carrier certification. Because the common carrier certification held by TWX is the functional equivalent of a contract carrier certificate, the legislature’s intention with respect to contract carriers is equally applicable here.
In Kuboske v. Public Util. Comm’n, 187 Colo. 38, 528 P.2d 248 (1974), we held that the PUC may not arbitrarily limit the basis upon which public need is established. Because the government has no interest in denying a common-carrier application when no harm is caused to the public or the applicant’s competitors, and the carrier and its sole customer testify as to their need for the application, denying the application on the grounds that a broad public need has not been established is, in my judgment, arbitrary and capricious.
Ill
Though I conclude the majority has applied the wrong legal standard, and that based on the appropriate legal standard TWX’s application should have been granted, I am compelled to address the evidence relied on by the majority in support of its conclusion that the application should have been denied because public need was not established. The majority relies on four facts in support of that conclusion. First, the majority places considerable emphasis on the question of whether Target’s customer’s will receive the benefits of any transportation savings that may result from granting the application. In this regard, it should be noted that the ALJ and PUC did not, as the majority contends, find that if TWX’s application were granted, “the claimed public need for lower prices would not be met by granting TWX’s application” because there are no costs savings to be had by Target as a result of granting the application. Maj. op. at 357. The ALJ and PUC never concluded that granting the application would have no bearing on the cost to consumers of Target’s goods nor that Target would not enjoy any savings as result of the proposed carrier services. Rather, both tribunals simply concluded that any eventual cost-savings which Target could pass on to its customers did not “equate! ] with a public need for the service *362here proposed” because the “public need in issue in this proceeding is the broad public need for transportation services, rather than Target’s preference for a dedicated, tailored, specialized transportation service, which may provide transportation costs savings to Target.” (Emphasis added).
More importantly, however, is that in my judgment, if Target concludes that its enterprise will be more economically efficient and its business more competitive as a result of the proposed services, this goes a long way to establish public need. Indeed, if Target would have testified that any savings enjoyed as a result of granting the application will not impact the prices of its products, but will be paid to its shareholders, used for additional advertising, for remodeling its stores, or for any other business outlay, I would conclude that such is in the public interest. In the broadest economic sense, any action which enhances Target’s competitiveness and efficiency is commensurate with the public need.
Second, the majority states that .the denial of TWX’s application is justified, in part, based on the PUC’s finding that denying this application is in the broad public interest because doing so would result in fuel conservation and pollution savings. The record does not support this conclusion. The only testimony bearing on the question of fuel efficiency and pollution levels is the statement of Harley Morey, president of Star, who said that if TWX’s application were granted and TWX awarded sole carrier authority for Target’s goods leaving Pueblo, then “we’re going to see more trucks on the road, more fossil fuel used to carry more empty miles with trucks.”
However Morey presented no empirical evidence to support this claim. He did not explain how much backhaul traffic would be lost if TWX’s application was granted, whether the lost backhaul traffic could be replaced with the business of other shippers, how much actual traffic there is among the shippers involved in this proceeding, and the extent to which that traffic would be increased were TWX’s application granted. As such, I conclude that the PUC’s statement relating to fuel efficiency and pollution levels is simply not supported by substantial evidence in the record.
Moreover, the unsupported testimony of Morey seems at odds with the testimony of Target and TWX that if a single, dedicated carrier could be had, transportation savings would accrue to Target in part because multiple trailers could be hauled by a single truck, and dropped off at different locations. Thus, if TWX could haul two trailers at once, one which would be dropped off at one of TWX’s existing Target locations and the other at a location served by a different earner, it is possible that even accounting for lost back-haul traffic, in the aggregate fuel would be conserved and pollution decreased because only one truck would be needed to ship to two locations. The record is, however, inadequate to either support or contradict such speculation.
Third, the majority correctly notes that the “adequacy, availability, and competitive character of existing services are proper factors to consider in concluding that TWX’s service is ‘not required’....” Maj. op. at 357. In noting that the ALJ found that all of Target’s existing carriers provided services that exceeded Target’s on-time delivery requirements however, the majority fails to recognize that the ALJ deemed this fact insufficient to warrant a denial of TWX’s application.6
Finally, the majority attempts to bolster its conclusion that TWX’s application was properly denied on the grounds that the ALJ “considered the harm to the existing carriers when determining whether there was a pub-*363lie need to grant TWX’s application. The ALJ found that HVH and Star Motor would lose ‘backhaul’ traffic if the application were granted.” Maj. op. at 357. The majority correctly notes that the impact of granting a common-carrier certificate on competing carriers may be relevant in deciding whether to grant an application. Id. What the majority fails to acknowledge is that the loss of HVH’s and Star’s backhaul traffic was regarded as irrelevant by both the PUC and the ALJ. As such, the potential impact on those carriers lends no support to the conclusion that this application was properly denied.
In short, the “evidence” relied on by the majority in support of its conclusion either is not evidence at all, was not found as a matter of fact by either the ALJ or the PUC, or was deemed irrelevant by those tribunals.
IV
I would hold that an incorrect legal standard has been applied to the resolution of this matter. The application of an appropriate and justifiable standard leads to the conclusion that TWX’s application' should be granted based on the evidence that was presented. Thus, I would reverse the district court’s judgment and remand the case to the PUC with orders to grant TWX’s application.
I am authorized to say that Justice VOL-LACK joins in this dissent.

. A common-carrier certificate which enables a carrier to transport the goods of only one shipper will be referred to as a "single-shipper certificate.”

. The PUC's conclusions regarding the scope of TWX’s authority is clear: "although TWX's authority is a 'common carrier’ authority, the authority pertains to only one customer, Target Stores, Inc., for trucking only between Target’s Pueblo Distribution Center and Target’s retail outlets in Colorado.”

. The intervenors hold common-carrier certificates although they are permitted to serve only Target with those certificates and TWX holds no less than eleven common-carrier certificates, all of which permit it to provide services only to specified individual shippers.

. In his dissenting opinion to the PUC's order, Commissioner Nakarado made the point cogently:
[W]ho is the commission "protecting” from the ravages of competition? The answer is, if anyone (note, that the Administrative Law Judge held that no one would be harmed) TWX’s competitors, Intervenors Star, Platte Valley, and HVH, not Target Stores, TWX, or the consuming public. The result in this case will force Target Stores to abandon the "just in time” inventory system due to Colorado’s intrastate trucking regulation by this commission, or to escape the Colorado PUC entirely by establishing its own fleet of trucks as Wal-Mart has done. I do not believe this result could be shown to "benefit” the public nor should be how we identify "regulated competition.”

. Again, Commissioner Nakarado makes the point forcefully:
I would let the marketplace work. Under true "regulated competition,” if this application were granted, Target would be able to choose among the services of Intervenors and TWX, and the trucking companies would compete among themselves. TWX would not necessarily win all of Target's business. The market, not this commission, would determine the winner.

. Based on the ALJ’s finding regarding the adequacy of the existing carriers' on-time delivery service, the majority erroneously extrapolates the fact that "[bjecause TWX could not provide more efficient service to Target as a single shipper than the other carriers, there would be no cost-savings to pass along to Target’s customers.” Maj. op. at 357. The ALJ and PUC never concluded that no cost-savings would result from the application. See supra p. 360-361. Moreover, it is oversimplistic to conclude, as the majority apparently does, that the only way Target could save on its shipping costs would be to increase its on-time delivery percentages. The record is replete with testimony concerning the numerous benefits of a single, dedicated, just-in-time delivery system — only one facet of which concerned on-time delivery requirements.