INTERSTATE COMMERCE COMMISSION v. J-T TRANSPORT CO., INC., ET AL.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF MISSOURI. No. 17.
Argued October 17-18, 1961.
Decided December 4, 1961. *
[ Footnote * ] Together with No. 18, U.S. A. C. Transport, Inc., et al. v. J-T Transport Co., Inc., et al., on appeal from the same Court, argued October 17-18, 1961; No. 49, Atchison, Topeka & Santa Fe Railway Co. et al. v. Reddish et al., No. 53, Interstate Commerce Commission v. Reddish et al., and No. 54, Arkansas-Best Freight System, Inc., et al. v. Reddish et al., on appeal from the United States District Court for the Western District of Arkansas, argued October 18, 1961.
Under 209 (b) of the Interstate Commerce Act, as amended in 1957, the Commission denied applications for operating permits filed by contract motor carriers, supported by shippers and opposed by common carriers. In one case the shipper claimed that a contract carrier's operations could be better integrated with its production of parts for airplanes. In the other case the shippers claimed that the services of common carriers were unsatisfactory and that their rates were prohibitive on less-than-truckload shipments of canned goods. Three-judge district courts held that the Commission had incorrectly applied the Act, as amended, set aside the Commission's orders and remanded the cases for further consideration. Held: The judgments are affirmed. Pp. 83-93.
B. Franklin Taylor, Jr. argued the cause for appellant in No. 17. With him on the briefs were Robert W. Ginnane and James Y. Piper.
Roland Rice argued the cause for appellants in No. 18 With him on the briefs were John C. Bradley and James E. Wilson.
Richard A. Solomon argued the cause for the United States in all five cases. With him on the briefs were Solicitor General Cox and Assistant Attorney General Loevinger. [368 U.S. 81, 83]
James W. Wrape argued the cause for J-T Transport Co., Inc., appellee in Nos. 17 and 18. With him on the briefs was Glen M. Elliott.
Clarence D. Todd filed a brief for Contract Carrier Conference of American Trucking Assns., Inc., appellee in Nos. 17 and 18.
A brief, urging affirmance, was filed in No. 17 by John S. Burchmore and Robert N. Burchmore for the National Industrial Traffic League, as amicus curiae.
Robert W. Ginnane argued the cause for appellant in No. 53. With him on the brief were B. Franklin Taylor, Jr. and Arthur J. Cerra.
Roland Rice argued the cause for appellants in Nos. 49 and 54. With him on the briefs were Rollo E. Kidwell, Amos M. Mathews and Ed White.
A. Alvis Layne argued the cause for appellees other than the United States in Nos. 49, 53 and 54. With him on the briefs for Elvin L. Reddish was John H. Joyce.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
These are appeals from judgments of three-judge district courts, 28 U.S.C. 1253, which set aside orders of the Interstate Commerce Commission denying applications for permits as contract carriers. 185 F. Supp. 838; 188 F. Supp. 160.
Appellee J-T Transport Company asked to extend its present operations as an irregular-route contract carrier of airplane parts to include carriage of aircraft landing gear bulkheads for Boeing Airplane Co. Boeing supported the application. Common carriers opposed the application, as did another carrier, U.S. A. C. Transport, Inc., appellant in No. 18. Boeing indicated it preferred [368 U.S. 81, 84] the applicant over the other because of its unsatisfactory experience with the latter in other operations. Boeing indicated that contract carriage was more practicable in its experience than common carriage, as a contract carrier's operations could be better integrated with a manufacturer's production. Though the examiner recommended a grant of the permit, the Commission denied it (74 M. C. C. 324, 79 M. C. C. 695) saying that no attempt had been made to ascertain if the existing services were capable of meeting the needs of the shipper. It ruled that "There is, in effect, a presumption that the services of existing carriers will be adversely affected by a loss of `potential' traffic, even if they may not have handled it before." 79 M. C. C. 695, 705. It held that the applicant had not established a need for this contract service and that the applicant had not shown "the existing service" of the other carrier to be "inadequate." Id., 709. It indicated that a service "not needed" cannot be found consistent with the public interest or the National Transportation Policy, as those terms are used in 209 (b) of the Interstate Commerce Act as amended, 71 Stat. 411, 49 U.S.C. 309 (b). It said that the shippers did not require a distinct type of service that could not be provided by the protesting carrier, which was indeed in a position to provide any service needed and which would be adversely affected by a grant of this application, even though it never had had the business in question.
Appellee Reddish made application to carry canned goods as a contract carrier from three points in Arkansas and one in Oklahoma to various points in thirty-three States and to carry other goods on return. His application was supported by his prospective shippers and opposed by motor common carriers, appellants in No. 54. and by rail common carriers, appellants in No. 49.
Reddish showed that he delivered to customers who ordered goods in less-than-truckload amounts. These [368 U.S. 81, 85] customers maintained low inventories and needed expedited deliveries in small quantities and on short notice. Some accepted deliveries only on certain days, a requirement calling for integration and coordination between shipper and customer. The shippers said that common carriage was an inadequate service for these shipments, as they were in such small lots that they often had to be carried in consolidated loads which caused delays in shipments. Moreover, it was shown that not all points would be served by one common carrier, making it necessary to unload the shipments and reload them on another carrier causing delays, misconsignment, and damage to goods. The shippers also testified that the cost of common carriage was prohibitive for less-than-truckload shipments and that if the Reddish application were denied they would use private carriage. The protesting motor common carriers testified they could render adequate service for these shipments and provide multiple pick-up and delivery services to most of the points by transferring the shipments to other carriers. The Examiner recommended that the application be granted. The Commission denied it, saying, inter alia, that the services needed by the shippers could be performed by existing common carriers, that they would be injured by the loss of potential traffic, and that the shippers' desire to obtain lower rates for less-than-truckload shipments was the primary reason for their support of the application, but was not a sufficient basis to justify a grant of authority to this contract carrier. 81 M. C. C. 35.
The cases turn on the meaning of language added to the Act in 1957.
Our decision in United States v. Contract Steel Carriers, 350 U.S. 409 , held that a contract carrier, rendering a specialized service in the sense that it hauled only a limited group of commodities over irregular routes, did not become a common carrier because it reached for [368 U.S. 81, 86] new business within the limits of its license. That decision caused concern to the Commission which proposed amendments to the Act. 1 It proposed that 203 (a) (15) be amended so as to define a contract carrier as one who engages in transportation by motor vehicle "under continuing contracts with one person or a limited number of persons for the furnishing of transportation services of a special and individual nature required by the customer and not provided by common carriers." It also proposed that 209 (b) be amended by adding an additional requirement for issuance of a contract carrier permit, viz., "that existing common carriers are unwilling or unable to provide the type of service for which a need has been shown."
These amendments were vigorously opposed in some quarters. 2 The addition to 203 (a) (15) was objected to on the ground that many contract carriers would be driven out of business because they could not meet the test of performing a service "not provided by common carriers." The change in 209 (b) was opposed because it would be impossible for a contract carrier to prove that competing common carriers were "unwilling" to render the service and very difficult for it to prove that common [368 U.S. 81, 87] carriers were "unable" to render the service, as the applicant would have no intimate knowledge of the business of the opposing carriers.
The Commission bowed to these objections; 3 and the bill as it passed eliminated the proposed changes except the ones that changed the result of our decision in United States v. Contract Steel Carriers, supra. 4 Section 203 (a) (15), however, was amended, so far as material here, by adding to the description of the term "contract carrier by motor vehicle" one who furnishes "transportation services designed to meet the distinct need of each individual customer." 5 And 209 (b) was amended by adding a sentence which sets forth five factors the Commission shall consider in determining whether the permit should issue:
We cannot assume that Congress, in amending the statute. intended to adopt the administrative construction which prevailed prior to the amendment.
By adding the five criteria which it directed the Commission to consider, Congress expressed its will that the Commission should not manifest special solicitude for that criterion which directs attention to the situation of protesting carriers, at the expense of that which directs attention to the situation of supporting shippers, when those criteria have contrary implications. Such a situation doubtless exists in these cases, for granting the permits might well have produced some consequences adverse to the protesting carriers, while denying them may just as certainly prove burdensome to the supporting shippers. Had the Commission, having drawn out and crystallized these competing interests, attempted to judge them with as much delicacy as the prospective nature of the inquiry permits, we should have been cautious about disturbing its conclusion.
But while such a determination is primarily a responsibility of the Commission, we are under no compulsion to accept its reading where, as here, we are convinced that it [368 U.S. 81, 90] has loaded one of the scales. By indulging in a presumption "that the services of existing carriers will be adversely affected by a loss of `potential' traffic, even if they may not have handled it before," and by assigning to the applicants the burden of proving the inadequacy of existing services, the Commission favored the protestants' interests at the expense of the shippers' in a manner not countenanced by anything discoverable in Congress' delegation to it of responsibility.
It is argued that the Commission, in holding that U.S. A. C. is willing and able to render the service, did not rely on the presumption. We are, however, not convinced. The Commission seems to have placed the burden of proving inadequacy of existing services on the applicant, for it said that the applicant had not shown that the service of U.S. A. C. was "inadequate." 79 M. C. C. 695, 709. Such a burden is improperly placed on the applicant, as the rejection of the proposed amendment to 209 (b) suggests. The capabilities of protesting carriers are matters peculiarly within their knowledge. In the Reddish case the Commission made the same error, as is evident from its statement that the "shippers have failed to show that they have been unable to obtain reasonably adequate service upon request." 81 M. C. C. 35, 42.
The proper procedure, we conclude, is for the applicant first to demonstrate that the undertaking it proposes is specialized and tailored to a shipper's distinct need. The protestants then may present evidence to show they have the ability as well as the willingness to meet that specialized need. If that is done, then the burden shifts to the applicant to demonstrate that it is better equipped to meet the distinct needs of the shipper than the protestants.
Moreover, as we read the Act, as amended in 1957, the standard is not whether existing services are "reasonably adequate." It is whether a shipper has a "distinct need" [368 U.S. 81, 91] for a different or a more select or a more specialized service. The protesting carriers must show they can fill that "distinct need," not that they can provide a "reasonably adequate service."
In the Reddish case the Commission ruled that the desire for lower rates offered by the applicant was irrelevant to a shipper's needs, that if the rates of existing carriers were too high, shippers should seek relief for their reduction. 81 M. C. C. 35, 42-43. We think the matter of rates is one factor to be weighed in determining the need for the new service. In a contest between carriers by motor vehicles and carriers by rail, we held in Schaffer Transportation Co. v. United States, 355 U.S. 83 , that the ability of a particular mode of transportation to operate with a lower rate is one of the "inherent advantages" that one type may have over another within the meaning of the Act. 54 Stat. 899. By analogy, contract carriage may be more "economical" than common carriage by motor or rail within the framework of the national transportation policy, as it is defined in the Act 6 - "the Commission's [368 U.S. 81, 92] guide" to the public interest. McLean Trucking Co. v. United States, 321 U.S. 67, 82 . It would seem hardly contestable that if denial of the application meant, for example, that a shipper's costs of transportation would be prohibitive, the shipper had established a "need" for the more "economical" service. See Herman R. Ewell Extension - Philadelphia, 72 M. C. C. 645. This does not mean that the lawfulness of rates would be injected into certificate proceedings. The issue of whether or not the proposed service offers a rate advantage and if so whether such advantage establishes a "need" for the service that overrides counterbalancing considerations presents issues that fall far short of a rate proceeding.
We agree with the court in the J-T Transport Co. case that, while the 1957 amendments changed the result of our decision in United States v. Contract Steel Carriers, supra, by giving the Commission power to limit the number of contracts which a contract carrier can maintain, the amendments in other respects put the contract carrier on a firmer footing. That court said, "Under the statute a shipper is entitled to have his distinct needs met." 185 F. Supp. 838, 849. We agree. We also agree that though common carrier service is reasonably adequate and though another carrier is willing and able to furnish the service, a permit to a contract carrier to furnish this particular service still might be wholly consistent with the national transportation policy defined in the Act. For it is "the distinct need of each individual customer" that the contract carrier is designed to fill. 203 (a) (15). And "the changing character" of the shipper's "requirements" is a factor to be weighed before denying the application. 209 (b). Hence the adequacy of existing services for normal needs and the willingness and ability of an existing carrier to render the service are not the end of the matter. The "distinct need" of the shipper may nonetheless not be served by existing [368 U.S. 81, 93] services, if the new service is better tailored to fit the special requirements of a shipper's business, the length of its purse, or the select nature of the delivery service that is desired. The fact that the protesting carriers do not presently perform the service being tendered and that the grant of the application would not divert business from them does not necessarily mean that the grant would have no effect "upon the services" of the protesting carriers within the meaning of 209 (b). But where the protesting carriers do not presently have the business, it would seem that the grant of it to a newcomer would have an adverse effect on them only in the unusual case.
We intimate no opinion on the merits, for it is the Commission, not the courts, that brings an expertise to bear on the problem, that makes the findings, and that grants or denies the applications. Yet that expertise is not sufficient by itself. Findings supported by substantial evidence are required. Public Service Comm'n v. United States, 356 U.S. 421, 427 ; United States v. United States Smelting Co., 339 U.S. 186, 193 .
Since the standards and criteria employed by the Commission were not the proper ones, the causes must be remanded for further consideration and for new findings. American Trucking Assns. v. United States, 364 U.S. 1, 15 -17. Accordingly the judgments below are
[ Footnote 2 ] The proposed amendments were objected to by the Department of Justice as being "unduly restrictive" (S. Hearings, Subcommittee of Committee on Interstate and Foreign Commerce, 85th Cong., 1st Sess., p. 11) and in part by the Department of Commerce. Id., 200-203. They were also opposed by the Contract Carrier Conference that stated, inter alia, "Since the state of mind of the common carriers concerning their willingness is a matter peculiarly within their own knowledge, it would be absolutely impossible for a contract carrier to ever prove to the contrary. Furthermore, it would be very difficult for a contract carrier or its supporting shipper, having no intimate knowledge of the business of opposing common carriers, to prove that such carriers were unable to perform a given service." Id., p. 303.
[ Footnote 3 ] The change in the Commission's attitude is summarized as follows in S. Rep. No. 703, 85th Cong., 1st Sess., p. 4: ". . . the Commission, upon reflection, on the objections of contract and private carriers to the bill, concluded that in some respects S. 1384 would provide too rigid a pattern. It decided that the proposed requirement in section 209 (b) that additional permits could be issued only upon a showing that existing common carriers are unwilling or unable to render the required types of service should be withdrawn."
[ Footnote 4 ] That this change was made is clear. See S. Rep. No. 703, 85th Cong., 1st Sess., pp. 2-3, 6, 7; H. Rep. No. 970, 85th Cong., 1st Sess., p. 3.
[ Footnote 5 ] Sec. 203 (a) (15) as amended reads as follows:
[ Footnote 6 ] Congress in 1940 described the national transportation policy:
These are related appeals from a decree of a District Court setting aside an order of the Interstate Commerce Commission denying an application for a contract-carrier permit under the 1957 amendments to 203 (a) (15) and [368 U.S. 81, 94] 209 (b) of the Interstate Commerce Act, 49 U.S.C. 303 (a) (15), 309 (b). At issue are the District Court's determinations that the Commission exceeded its authority under those provisions in four particulars. First, by considering the adequacy of existing carriage for the transportation service proposed, the Commission is said to have injected an inadmissible "sixth criterion" into the five factors designated by Congress in the revised 209 (b). Second, the Commission was held to have imposed on the applicant a burden of proving the inadequacy of existing services that Congress had specifically refused to approve. Third, the court concluded that the Commission's reliance on the capacity of existing carriers to meet the "reasonable transportation needs" of the shipper did not meet the standard of specific needs in amended 203 (a) (15). Fourth, the Commission is charged with invoking an impermissible presumption that an existing carrier willing and able to perform a transportation service it has not previously undertaken will be adversely affected by the loss of potential traffic.
Disposition of these conclusions turns first on a construction of the 1957 amendments in the context of the Motor Carrier Act of 1935, apart from which they are unintelligible; next upon due consideration of what the Commission has here undertaken to do, as disclosed in a fair reading of its final report denying the application; and, most importantly, on appropriate regard for the limits on judicial review of such Commission action as is now before us.
The Motor Carrier Act, this Court has noted, was passed at a time when "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 [368 U.S. 81, 95] or financial responsibility. So Congress felt compelled to require authorization for all interstate operations to preserve the motor transportation system from over-competition . . . ." American Trucking Assns. v. United States, 344 U.S. 298, 312 -313.
These were indeed the conditions that prompted legislative recommendations by the greatly esteemed Federal Coordinator of Transportation, Joseph B. Eastman. See S. Doc. No. 152, 73d Cong., 2d Sess. (1934). One of the prime purposes of the measure he proposed was to control the number and scope of contract-carrier operations in order to preserve and protect common-carrier service:
As originally enacted, 49 Stat. 543, 544 (1935), 203 (a) (15) provided:
In acting upon applications for contract-carrier permits, the Commission has from the beginning regarded the adequacy of existing common-carrier facilities to be of crucial importance in determining consistency with the public interest as defined by the history and purposes of the Act. In C. & D. Oil Co. Contract Carrier Application, 1 M. C. C. 329, 332 (1936), it early stated a guiding principle that has been reaffirmed many times since:
Having anticipated explicit congressional purpose in this manner, the Commission continued to adhere to its earlier rulings as consistent with that purpose.
The law and practice governing contract-carrier applications, as it emerged from the language, history, and purposes of the Motor Carrier Act and from consistent administrative construction between 1935 and 1957, may be summarized as follows. Strictly regulated common carriage [368 U.S. 81, 105] was considered the backbone of the motor transport industry. Contract carriers might be able to perform certain specialized transportation tasks more easily than common carriers, and when this was so they should be allowed to enter the field. In order to preserve the financial and operational capacity of common carriers to perform the variety of tasks required by the public, however, applicants for a contract-carrier permit must not be awarded business that existing common carriers are equipped and obliged in their certificates to handle. Accordingly, the applicant must first demonstrate that he proposes a specialized undertaking. Protestants may then present evidence that they have the capacity and the desire to carry the particular traffic proposed. If that is done, the burden shifts back to the applicant to demonstrate that the protestants are not so well equipped as he to meet the needs of the shipper. Shipper preference is not sufficient. Unless the applicant can show that its service will be substantially superior to that offered by the protestants, the issuance of a permit must be refused, and this although the protestant may never have carried the traffic before and may have no assurance that it will be offered him once the application is denied. Only thus, the Commission had concluded, could the policy of Congress to preserve a viable system of common carriage be satisfied.
It is this body of precedent, conscientiously developed over a period of years to effectuate the policies formulated in the Motor Carrier Act for Commission enforcement, that we are told was overturned by congressional amendment in 1957. And so we must turn to the terms, origin, and purpose of those amendments.
As now amended by 71 Stat. 411 (1957), 203 (a) (15), 49 U.S.C. 303 (a) (15) reads as follows:
If the issue before us were only whether the language of the amendments could bear this construction, there would be little argument. But even if the suggested interpretation were supported by the plain meaning of the words, this would not advance our inquiry very far. For the "plain meaning" rule as an automatic canon of statutory construction is mischievous and misleading and has been long ago rejected. See Boston Sand Co. v. United States, 278 U.S. 41, 48 ; United States v. American Trucking Assns., 310 U.S. 534, 542 -550. Words are seldom so plain that their context cannot shape them. Once the "tyranny of literalness" is rejected, United States v. Witkovich, 353 U.S. 194, 199 , the real meaning of seemingly plain words must be supplied by a consideration of the statute as a whole as well as by an inquiry into relevant legislative history. Indeed when there is need for aid, we may turn to "all the light relevantly shed upon the words and the clause and the statute that express the purpose of Congress," United States v. Universal Corp., 344 U.S. 218, 221 .
The starting point for determining legislative purpose is plainly an appreciation of the "mischief" that Congress was seeking to alleviate. In this instance, fortunately, it is not hard to find, for the Court itself exposed it in United States v. Contract Steel Carriers, 350 U.S. 409 . The Commission had there determined that a contract carrier had, through active solicitation of some 69 transportation contracts, so expanded its business as to become indistinguishable in operation from a common carrier, and ordered it to cease and desist. This Court affirmed reversal of that order, relying on 209 (b) as it was then written 6 to declare that "A contract carrier is free to [368 U.S. 81, 108] aggressively search for new business within the limits of his license." 350 U.S., at 412 .
The latitude thus authoritatively recognized in contract carriers to engage essentially in common carriage without at the same time subjecting themselves to regulation as common carriers, was the mischief that prompted the Commission to seek a restrictive rewriting of 203 (a) (15) and 209 (b). 70 I. C. C. Ann. Rep. 162 (1956). Chairman Clarke of the Commission testified in the Senate hearings on the Commission's proposed bill that, as matters then stood, contract-carrier expansion could impair the ability of common carriers to offer service to the general public, particularly to the small shipper who could not afford the services of a contract carrier. The Commission feared that the inherent advantages of contract carriers would permit them to "encroach upon the operations of the common carriers and skim off the cream of the traffic upon which they depend to support their overall service to the public." 7
This clearly was the apprehended evil that prompted a favorable report of the amendments. S. Rep. No. 703, 85th Cong., 1st Sess. 1, 3, 7 (1957). As phrased in the House Report, the freedom accorded contract carriers in the Contract Steel decision "obliterates the distinction which Congress intended to make between common and contract carriers, and opens the door to unjust discrimination among shippers." H. R. Rep. No. 970, 85th Cong., 1st Sess. 3 (1957). In presenting the bill that was [368 U.S. 81, 109] adopted by Congress, Senator Smathers, the Senate Subcommittee Chairman, thus stated the need it was designed to fulfill:
To be sure, the addition of the five criteria for Commission consideration in the amendment to 209 (b) was not explicitly responsive to the Contract Steel decision. Neither the House nor the Senate Report makes any mention of the meaning or purpose of the addition. The criteria were not contained in the bills, S. 1384 and H. R. 5123, 85th Cong., 1st Sess. (1957), as initially proposed by the Commission. They emanated instead from a suggestion by the Contract Carrier Conference, an appellee in this case; and there is language in the testimony of its General Counsel, Clarence D. Todd, before the Senate Subcommittee, from which support is now drawn for the appellees' position:
These particularized indications are confirmed and reinforced by the legislative history as a whole for precluding the view, underlying the District Court's decision, that the 1957 amendments introduced a radical departure in regulatory policy. As we have seen, the Commission had, in advance of the amendments, developed and applied the criteria at issue in this case, and had struck the same balance there as here. B & F Bus Service, Inc., Contract Carrier Application, supra. Neither this leading Commission disposition, nor any other to the same effect, was criticized or even mentioned to the subcommittee that drafted the amended bill. Had the Commission, which maintained a representative throughout the Senate hearings, suspected that its practice in this regard was being overturned, it would scarcely have given the unqualified approval that it did to the final bill. See H. R. Rep. No. 970, 85th Cong., 1st Sess. 2 (1957); S. Rep. No. 703, 85th Cong., 1st Sess. 6 (1957); 103 Cong. Rec. 14035 (1957) (remarks of Sen. Smathers). On the contrary, it had good reason for assuming that its practice was being approved. The report that issued from the hearings contained the following endorsement:
The foregoing distillation of statutory purpose from the legislative history of the amendments is not affected by the deletion from the bill of language initially submitted by the Commission. In its original form, S. 1384 would have amended the definition of a contract carrier in 203 (a) (15) to make it one engaging in transportation under contracts for the furnishing of special and individual services required by the customer "and not provided by common carriers." The Commission bill would have also amended 209 (b) to require a showing by a [368 U.S. 81, 113] contract-carrier applicant "that existing common carriers are unwilling or unable to provide the type of service for which a need has been shown." 8 The quoted language was objected to by the Justice Department, Senate Hearings 10-11, and deleted by the Senate Subcommittee, S. Rep. No. 703, 85th Cong., 1st Sess. 3 (1957), as "unduly restrictive" of contract carriage. This does not affect construction of the amendments as they emerged in final form, so far as they are relevant to our problem. The fact that the Commission withdrew its initial suggestion for increased restrictions on contract carriage hardly affords the basis for a conclusion that existing restrictions were legislatively disapproved or narrowed.
In truth, the Commission's language was deleted because it was thought to place an impossible burden of proof on an applicant, of demonstrating a state of mind ("unwilling"), or of facilities ("unable"), entirely within the knowledge of the protestant. Thus, very early in the Senate hearings, before any other witness had been heard from, Chairman Clarke withdrew the "unwilling" language from the suggested amendment to 209 (b) "because of the very difficult burden of proof that would be imposed on applicants . . . ." Senate Hearings 22. Later on, the representative of the Contract Carrier Conference asked for deletion of the "not provided" language, supra, from the amendment to 203 (a) (15) because it presented the very same burden of proof problem. Senate Hearings 294-295. The Commission subsequently recommended this deletion because the language was "not necessary to carry out the purpose of the bill . . . ." Senate Hearings 43-44. See also S. Rep. No. 703, 85th Cong., 1st Sess. 5 (1957). 9 [368 U.S. 81, 114]
An amendment is not to be read in isolation but as an organic part of the statute it affects. An amendment is not a repeal. Even when plain words are suggestive of a change in policy, they are not to be construed as such if there has been a history of consistent contrary legislative policy. Boston Sand Co. v. United States, 278 U.S. 41 ; Guessefeldt v. McGrath, 342 U.S. 308, 313 -315.
The Interstate Commerce Committees that considered these amendments were addressing themselves to a limited problem laid bare by the Contract Steel decision. It would be heedless of the practicalities of legislative procedure to assume that these experienced committees chose to use the occasion to overturn a consistent pattern of statutory regulation without inviting the views of the [368 U.S. 81, 115] Commission, without undertaking any review of Commission precedents, and without selecting language plainly evincing a purpose to change the law in this respect. To the contrary, it seems clear that these careful architects of motor-carrier regulation fashioned amendments that fit harmoniously into the prior law. They did not inadvertently add a colonial wing to a gothic cathedral.
What has been said disposes of the contention that the Commission erroneously imported a "sixth criterion" of the adequacy of existing common-carrier services into its consideration of this application. It did not. That criterion is implicit in the third factor enunciated in amended 209 (b): "the effect which granting the permit would have upon the services of the protesting carriers." This has always been a crucial consideration in contract-carrier proceedings, and nothing in the amendments intimates a change. The fundamental difficulty with the District Court's judgment in this case is that it rests upon a mistaken apprehension that the 1957 amendments had eliminated preference for existing common-carrier service as a permissible determinant of Commission action. Thus it characterized the criteria in 209 (b) as designed "to insure that their [applicant's and shipper's] interests would receive the same consideration and be weighed in the same balance as those of opposing carriers." 185 F. Supp. 838, 848 (W. D. Mo. 1960). This was a destructive error.
There remain three further grounds on which the District Court invalidated the Commission's order.
(1) The court held that the Commission had imposed on the applicant the precise burden of proof proposed in the rejected language of its bill, that existing carriers were unable or unwilling to provide the transportation service applied for. Had the Commission done this it would have been in clear error. It did not do so. [368 U.S. 81, 116]
The trial examiner's findings and recommended order were first reviewed by Division 1 of the Commission. It held in part that "the burden is upon an applicant seeking contract-carrier authority, as well as one seeking common-carrier authority, to establish, among other things, that there is a need for the service proposed which existing carriers cannot or will not meet. . . . A service not needed cannot be found consistent with the public interest or the national transportation policy." 74 M. C. C. 324, 328 (1958). This statement is perfectly consistent with placing the burden of proving its willingness and ability on the protestant, leaving the applicant to go forward with a demonstration of its superior capacity to meet the transportation needs of the shipper. 10 On reconsideration by the full Commission, a statement of like purport was made: "[W]e cannot find that existing service has been shown to be inadequate." 79 M. C. C. 695, 709 (1959).
The court seems to have feared that the Commission was in fact placing a fuller and impermissible burden on applicants, and turned to later Commission dispositions to confirm its suspicions. In Roy D. Yiengst Common Carrier Application, 79 M. C. C. 265, 268 (1959), it found a statement that there had been no "showing that the existing carriers are unwilling or unable" to provide the service. But a possibly careless phrase is not conclusive of what the phraser is deciding. If it were, our own opinions might at times be used to bind our hands in later decisions. Had the District Court looked behind [368 U.S. 81, 117] the words employed in the Yiengst decision, supra, it would have discovered that they were used as a shorthand description of a more complicated allocation of the burden of proof; for the protestants there had come forward and shown their experience and capacity to handle the traffic, and it was the applicant's subsequent assertion of its superiority that was considered insufficient to overcome this showing. The same thing was true in Carolina Haulers, Inc., Contract Carrier Application, 76 M. C. C. 254, 256 (1958), likewise improperly relied on by the District Court.
We should judge a challenged order of the Commission by "the report, read as a whole," United States v. Louisiana, 290 U.S. 70, 80 , and by the record as a whole out of which the report arose. When that is done in this case, it becomes apparent that the Commission did not assign a statutorily impermissible burden of proof to the applicant.
The Commission's final report found from the whole record that the protesting carrier was in fact able and willing to perform the proposed transportation service in the following respects, each of which is set forth explicitly in the report. (1) U.S. A. C., the protestant, is a specialized common carrier in the aircraft field, with approximately 60 percent of its present traffic consisting of fragile parts, like the landing-gear bulkheads whose transportation is needed for Boeing Airplane Company, the shipper. (2) U.S. A. C. is accustomed to modifying its equipment to meet specific needs, and can fashion its services to meet the shipper's production schedules. (3) Specifically, as concerns this traffic, 79 M. C. C., at 708,
(2) The District Court was persuaded, however, that the Commission had imposed too lenient a burden of production on the protestant, to show merely that "available common-carrier service was reasonably adequate to meet the transportation needs involved." 79 M. C. C., at 701. It concluded that the proper standard was the one enunciated by Congress in amended 203 (a) (15), of meeting the "distinct need" of each shipper. And it determined that the Commission had not employed that standard: "No consideration was given to the special services which in fact could not be supplied by a common carrier." 185 F. Supp., at 850. A review of the report and the record, judged by the statute's requirements, does not sustain this holding.
In the first place, the Commission made the precise finding required by the court under 203 (a) (15): "Plainly, there is no warrant on these records for a finding that the supporting shippers require a distinct type [368 U.S. 81, 119] of service that cannot be provided by U.S. A. C. To the contrary, the very business of U.S. A. C. is the transportation of the type of traffic involved." 79 M. C. C., at 709. This finding was itself a conclusion from the detailed enumeration of U.S. A. C. capabilities quoted previously. And there was substantial evidence in the record to support the conclusion that the shipper would be as well served by U.S. A. C. as by the applicant J-T.
The service proposed by J-T was specialized in the following particulars. It had designed a trailer exclusively for Boeing's landing-gear bulkheads at a cost of $3,360 within about two weeks. The trailer was underslung with an adjustable floor and roof in order to permit rear-end loading, a fully enclosed carrier, and the height clearance required by state law on the roads it traveled. The trailer was spotted at Boeing's Wichita plant, available at all times on short notice to leave for the supplier's plant in Indianapolis to pick up another load of bulkheads.
The Traffic Manager for Boeing's Wichita plant testified that the shipper had enjoyed particularly the close coordination with J-T made possible through its nearby Wichita terminal. The bulkheads had to be scheduled into the assembly operation at a predetermined time; constant engineering changes necessitated supply of particular bulkheads for particular planes, and a delay in transportation could prove very expensive. The shipper was disinclined to use U.S. A. C. because it had no Wichita terminal, because its tariffs gave it authority to decide on the type of equipment it would use, and because of an experience of carelessness in 1953, although it was uncertain whether this had been the fault of U.S. A. C. or of the shipper.
U.S. A. C. offered evidence that it maintained a terminal in Indianapolis and one in Topeka, Kansas, which could cover shipments from Wichita. U.S. A. C. would be willing to modify its canvas-topped trailer to install [368 U.S. 81, 120] necessary fixtures and a removable or elevatable roof as needed. The roof would take three days to install, the necessary fixtures ten days to two weeks. Its tariff power to control equipment was used only to prevent overloading. 11 It was willing to dedicate the necessary equipment exclusively to the shipper.
From this evidence it was certainly open to the Commission to find, as it did, that U.S. A. C. could meet the "distinct need" of the shipper. The tariff power was no obstacle. An ambiguous and ancient complaint about service need not control. The absence of a Wichita terminal could be offset, if need be, by the presence of an Indianapolis terminal: The traffic had thus far been entirely one way, from Indianapolis to Wichita, and no reason was given why telephonic consultation with Indianapolis, reaching the supplier and the carrier in the same place, might not be as efficient or more so. Moreover, the shipper on three occasions gave evidence that its preference for J-T was in actuality based on a misunderstanding of common-carrier authority that the Commission was under no obligation to credit. 12 [368 U.S. 81, 121]
But this does not mean that, as a statutory matter, the Commission was required to find that the protestant could meet the "distinct need" of the shipper. That phrase was inserted in 203 (a) (15) to restrict the definition of a contract carrier, not to limit the opportunities of a common carrier. It should be noted that a contract carrier may so qualify under that section either by meeting the distinct need of a particular customer or by meeting very ordinary needs through the assignment of vehicles to the shipper's exclusive use. If the latter qualification were controlling in a given case, the consideration of "distinct need" would be irrelevant.
Beyond this parsing of 203 (a) (15), moreover, there is reason in policy for the Commission to deny an application when the protestant is able to furnish "reasonably adequate" services. The Motor Carrier Act expresses a policy, as we have seen, of preserving existing common carriage against the inroads of contract carriage. One way of putting that policy into effect is to deny a contract-carrier application, as the Commission has always done, unless the applicant can demonstrate that its service will be substantially superior to that afforded by existing carriers. Another way of describing this practice, which the 1957 amendments have in no way affected, is that no permit will issue for traffic that can be handled with reasonable adequacy by a protestant.
(3) The District Court was most emphatic in its conclusion that the Commission had erred in its resolution of the third factor in 209 (b) - "the effect which granting the permit would have upon the services of the protesting [368 U.S. 81, 122] carriers" - by the aid of an unwarranted presumption. The relevant language of the final report is as follows:
The court went further, however, and determined that evidence of the protestant's willingness and ability was by itself insufficient to support the requisite finding of an adverse effect. "Where . . . the protesting carrier is not participating in the traffic involved, there can be no diversion of traffic and hence ordinarily there would be no [368 U.S. 81, 123] adverse effect on the services of the protesting carrier." 185 F. Supp., at 848. It is somewhat difficult to know by what expert insight the District Court achieved this conclusion, at variance with the Commission's deliberate and considered contrary resolution of the same issue. Apparently the court thought that the shipper's expressed preference for the applicant had to be taken into consideration in determining whether the protestant would be injured by a grant of the permit. Even if this were a proper reading of the statute, it would not justify the District Court's conclusion. For the record shows that when the shipper was asked whose services it would use if the permit were denied, it replied that it did not know.
But it is plainly an improper reading of the statute. The Commission has invariably held that the preference of a shipper for a particular carrier, even though based on sound business reasons, is not enough to warrant issuance of a permit. This practice is unaffected by the 1957 amendments. We have ourselves unanimously held, since those amendments went into effect, that legally cognizable injury might accrue to an existing carrier denied potential traffic.
There is persuasive legislative history to the same effect. The amendments to S. 1384 proposed in the Senate hearings by the Contract Carrier Conference, which were substantially adopted as the criteria in 209 (b), would have erected a presumption in favor of a contract-carrier applicant when the shipper had previously been using private carriage. Senate Hearings 305. This provision was supported on the ground that no adverse effect would normally be visited on a protestant when the shipper had so demonstrated its antipathy to common carriage. It was deleted by the Subcommittee. Thus, if we are to place emphasis on congressional rejections, we must take this deletion as significant that shippers' desires are not to be controlling.
But we need not rely on this episode to prove the point. The whole scheme of statutory regulation points the same way. For we must remember that Congress has chosen in the Motor Carrier Act to regulate motor transportation not by the forces of competition but by impartial administration through an expert body. No doubt contract carriage is frequently preferred by shippers for the advantages, chiefly in flexibility of operations, that it may hold over available common carriage. But the national interest to be safeguarded under the National Transportation Policy is entrusted to the I. C. C. and not to the self-interest of shippers. So long as the Commission does not behave arbitrarily, does not reject the offer of relevant testimony or refuse to "consider" some factor that Congress has commanded to be taken into account, the [368 U.S. 81, 125] weight or value accorded the various factors and the Commission's evaluation of the comparative needs of shipper, applicant, and protestant in a particular situation are conclusive.
A careful reading of the report and record demonstrates the unwisdom of overturning the Commission's exercise of its regulatory functions upon merely apparent surface improprieties. For the Commission found as a fact that the protestant needed the proposed traffic; that U.S. A. C.'s
Surely it would have been permissible for the Commission, charged as it is with preserving transportation for the national defense, to conclude that the national interest lay in seeking to keep U.S. A. C.'s excess capacity profitably [368 U.S. 81, 126] employed and available for future defense needs. The fact that the Commission did not advert expressly to defense needs in its report does not affect the illustration this evidence affords of the way in which a presumption of adversity may reasonably be drawn from evidence of a protestant's desire and capacity for traffic.
The appropriate relation between the Commission and the courts was delineated in our treatment of the closely parallel problem in Secretary of Agriculture v. Central Roig Ref. Co., 338 U.S. 604 . The Sugar Act of 1948, 205 (a), authorized the Secretary to allocate marketing quotas among particular refineries "in such amounts as to provide a fair, efficient, and equitable distribution" (compare "consistent with the public interest and the national transportation policy"), and directed him to do so "by taking into consideration" three factors - one related to processing of raw sugar from sugar cane, which the Secretary decided was inapplicable, and the other two past marketings and future marketing capacity. The Secretary applied these two by giving them equal weight and referring them to a pre-World War II base period selected as one unaffected by special wartime demands. The resulting allocation order was attacked as exceeding statutory authority and was set aside by the Court of Appeals. This Court reversed, holding that the Secretary had not exceeded the discretion necessarily vested in him by the sugar-quota scheme. We noted that a direction to "consider" certain factors did not control the Secretary's judgment as to what weight should be assigned to each or whether to give weight to all three in each situation. We concluded that so long as the Secretary was not arbitrary in his choice of means to reach an equitable distribution, his decision should stand. [368 U.S. 81, 127]
It is a commonplace of administrative law that the evaluation to be given criterial findings, if adequately supported, is left essentially to the administrative agency charged with primary responsibility for interpreting the will of Congress. The extent to which this is so will be misconceived if drawn from abstract conceptions of "fact," "law," or "law-application." For one thing, the permissible scope of administrative discretion may vary from section to section within a single statute. For another, the task of exercising an informed discretion in administrative proceedings extends from testimonial submissions through considerations of regulatory policy to obedience of a statutory command. It is a question of policy, derived from due regard for, and based on understanding of, the regulatory scheme enacted by Congress, at which point a reviewing court should intervene. A conclusion that the agency's determination, resting on findings (where, as is normally true, they are required) appropriately supported by evidence, is within its power to make is a conclusion that the factors calling for intervention are absent. Compare Interstate Commerce Commission v. Union Pacific R. Co., 222 U.S. 541, 547 -548.
Administrative agencies are not only vested with discretion in sifting evidence and in making findings but may also draw on their specialized competence for ascertaining the reach and meaning of statutory language. Compare Social Security Board v. Nierotko, 327 U.S. 358, 368 -371, with Labor Board v. Hearst Publications, 322 U.S. 111, 128 -131. The factors to be considered on judicial review of such an administrative determination include the precision of the statutory language, the technical complexity of the relevant issues, the need for certainty as against experimentation, and the likelihood that Congress foresaw the precise question at issue and desired to express a foreclosing judgment on it. In assessing these factors, we are guided primarily by an investigation [368 U.S. 81, 128] of the prior law as it sheds light on the "mischief" Congress sought to alleviate, and of the statute itself to see how closely Congress sought to define the balance of competing considerations it addressed.
That investigation here reveals that Congress conferred the power on the Commission to decide as it has done in this case. None of the precedents is to the contrary; each points to this conclusion. See United States v. Pierce Auto Lines, 327 U.S. 515, 535 -536 (not for courts to gauge public interest; so long as requisite findings are made and supported by evidence, the resolution of relevant factors is for the Commission); Bass v. United States, 163 F. Supp. 1, 4 (W. D. Va. 1958), aff'd per curiam, 358 U.S. 333 (same); cf. United States v. Detroit & Cleveland Nav. Co., 326 U.S. 236, 240 -241. In Schaffer Transp. Co. v. United States, 355 U.S. 83, 86 n. 3, 90, the Court deliberately refrained from guiding the Commission's discretion in evaluating the relative advantages of competing carriers. 13 [368 U.S. 81, 129]
Determinations by the Commission which Congress has committed to its judgment must be judicially respected because such exercises of administrative discretion are beyond the competence or jurisdiction of courts. Their power of review is confined to correction of Commission action that transcends the authority given it by Congress, including of course disregard by the Commission of procedural proprieties resulting in arbitrary use of its powers.
In the present case, no claim can be made that the Commission's findings are unsupported by substantial evidence. United States v. Pan American Corp., 304 U.S. 156, 158 ; cf. Universal Camera Corp. v. Labor Board, 340 U.S. 474 ; see Administrative Procedure Act, 10 (e), 60 Stat. 237, 243 (1946), 5 U.S.C. 1009 (e). The Commission's detailed report negatives this, as it would a claim that the Commission neglected to make requisite findings.
Of course the provisions of the National Transportation Policy must be applied by the Commission to each application, see Schaffer Transp. Co. v. United States, 355 U.S. 83, 88 , but they "represent, at best, a compromise between stability and flexibility of industry conditions, each alleged to be in the national interest, and we can only look to see if the Commission has applied its familiarity with transportation problems to these conflicting considerations." American Trucking Assns. v. United States, 344 U.S. 298, 314 ; see Interstate Commerce Commission v. Parker, 326 U.S. 60, 66 . The Commission's action here certainly does not fall short of that standard. See 79 M. C. C., at 705-706.
An order of the Commission cannot stand, it is true, if we cannot tell what has been decided or if it leaves unclear the basis for its conclusions. United States v. Chicago, M., St. P. & P. R. Co., 294 U.S. 499, 510 -511. Findings are no doubt judicially more persuasive the more felicitously they are formulated and the less they require [368 U.S. 81, 130] extraction from a diffuse report. But the Commission is not under statutory duty to set forth its findings in serried array. It is the Court's duty to sustain the Commission's findings if, as here, there is no real difficulty in determining what was decided and on what grounds.
It is not the Court's function to impose our standards of lucidity or elegance in exposition upon the Commission. And we should take due warning from the consequences of our decision in City of Yonkers v. United States, 320 U.S. 685 , of what may follow from exacting overnice requirements of the I. C. C. There the Commission had made no explicit finding that an electric inter-urban railway was an integral part of a steam railroad system as it had to be before the Commission could allow it to suspend its operations. The facts were so clearly spread upon the record that the point was not argued until one of the parties raised it on appeal. This Court remanded the case for an express finding. The Commission took some more evidence and in due course it entered the inevitable finding. The order was attacked again in the District Court, affirmed again after another lengthy opinion, and eventually affirmed per curiam, 323 U.S. 675 . That wasteful charade ought not to be repeated here.
I would reverse and allow the Commission's order to stand.
[ Footnote * ] [This opinion applies to No. 17, Interstate Commerce Commission v. J-T Transport Co., Inc., and No. 18, U.S. A. C. Transport, Inc., v. J-T Transport Co., Inc.]
[ Footnote 1 ] The Commission has classified motor carriage by 17 types of commodities, and each one admits of common or contract carriage, 49 CFR 165.2 (1961).
[ Footnote 2 ] 54 Stat. 898, 920 (1940).
[ Footnote 3 ] The National Transportation Policy, added by 54 Stat. 898, 899 (1940), 49 U.S.C. preceding 301, provides in relevant part: "It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges . . . without . . . unfair or destructive competitive practices . . . - all to the end of developing . . . a national transportation system . . . adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy."
[ Footnote 4 ] Senator Truman, a Senate conferee, said in presenting the bill:
[ Footnote 5 ] Bracketed numbers added for convenient reference. Only the third factor and so much of the fourth as is italicized are in issue here. The Commission considered the others, and no challenge is made to its disposition of them.
[ Footnote 6 ] Section 209 (b) then excluded from the limitations the Commission could impose, "the right of the carrier to substitute or add contracts within the scope of the permit." As amended after Contract Steel, 71 Stat. 411, 412 (1957), the section empowers the Commission to attach "terms, conditions and limitations respecting the person or [368 U.S. 81, 108] persons and the number or class thereof for which the contract carrier may perform transportation service, as may be necessary to assure that the business is that of a contract carrier and within the scope of the permit . . . ."
[ Footnote 7 ] Surface Transportation - Scope of Authority of I. C. C. - Hearings before the Subcommittee on Surface Transportation of the Senate Committee on Interstate and Foreign Commerce, 85th Cong., 1st Sess. 23 (1957) (hereinafter cited as Senate Hearings).
[ Footnote 8 ] S. 1384 is printed at Senate Hearings 6.
[ Footnote 9 ] The only other light shed on the significance of the deletions is furnished in a colloquy in the course of the hearings:
[ Footnote 10 ] The statement may be deemed lacking in detail in not explicitly considering the five criteria in 209 (b), which became effective in its amended form on August 22, 1957, after the application had been heard but before Division 1's order was issued. See Ziffrin, Inc., v. United States, 318 U.S. 73, 78 . The final order of the full Commission made the detailed findings, however, so that the question need not detain us.
[ Footnote 11 ] The evidence showed that the total weight of the haul was about 5,500 pounds (R. 92), and the trailer proposed by U.S. A. C. had a capacity of 24,000 pounds. (Protestant's exhibit No. 15, R. 147; R. 112.)
[ Footnote 12 ] J-T's application was supported because ". . . we recognized that the contract carrier can dedicate equipment to our service, the type of equipment that we want, and we feel that on this type of a transportation it is the best thing to have the equipment solely dedicated to our use." (R. 89.)
It did not choose a common carrier "because the common carrier cannot dedicate his equipment exclusively to our service as a contract carrier can." (R. 97.)
Again: "It is my understanding that a common carrier cannot dedicate equipment to a particular shipper, that he holds himself out to furnish that equipment to any shipper that wants it." (R. 103.)
This was of course an erroneous understanding, as Commission precedents demonstrate. A common carrier must hold itself out through [368 U.S. 81, 121] its tariffs to serve any shipper who desires the same class of traffic, but it may specialize as much as a contract carrier does and may dedicate equipment to the use of any one such shipper. When U.S. A. C. offered to do so, it was a reasonable conclusion that the shipper's particular needs had been met.
[ Footnote 13 ] Nor is the holding in the Schaffer case of any aid to the appellees. The Court held that a common-carrier applicant could not be denied a certificate on the grounds of existing rail service, without a finding whether the "inherent advantages" of motor transport should warrant the grant. Such a finding was thought necessary to conform to the dictates of the National Transportation Policy, the Court declaring that:
MR. JUSTICE FRANKFURTER, whom MR. JUSTICE HARLAN and MR. JUSTICE STEWART join, concurring in part. *
These are appeals from the judgment of a District Court setting aside an order of the Interstate Commerce Commission denying an application for a contract-carrier permit. The application sought authority to transport canned goods under continuing contracts with three [368 U.S. 81, 131] Arkansas canning companies to points in 33 States and to return from those points with canned goods and canning materials such as cans, lids, and corrugated boxes. It was opposed by two groups of railroads, one motor contract carrier and 25 motor common carriers, authorized to undertake transportation in the territory proposed.
The trial examiner's recitation of facts, as adopted by the Commission, may be briefly summarized. Each of the supporting shippers does a substantial volume of business with small-lot purchasers. These customers maintain low inventories, necessitating a transportation service capable of effecting multiple pickups and deliveries on short notice. Each shipper has engaged in private carriage for this purpose, sending only single-lot full truckloads by common carrier. The Steele Canning Company's private equipment was furnished in part through a lease of the applicant's trucks. When a strike of its drivers occurred, it sought to contract with the applicant for its independent services. The other shippers, who before the strike sold much of their goods through Steele, now wish to expand their sales to individual customers and desire the same type of service from the applicant.
Under its temporary authority, the applicant has been offering several stops in transit at the truckload rate, and assessing no stop-in-transit charge, thus rendering in effect a less-than-truckload service at truckload rates.
Existing motor carriers possess the authority and equipment to provide service to a substantial number of the points involved, either directly or by joint-line operations. Although few have previously participated in this particular transportation, each displays a desire to obtain the traffic; so do the protesting railroads, which have recently experienced a sharp decline in canned-goods tonnage. The motor carriers are willing and able to provide multiple pickups and deliveries where authorized. [368 U.S. 81, 132]
The shippers asserted a preference for the applicant's services on two specific grounds. First, they contended that existing carriers were unable to furnish multiple pickup and delivery service with sufficient expedition. Second, they maintained that the less-than-truckload rates charged by common carriers were prohibitive in light of the small profit from a canned-goods shipment allowed by competitive conditions. Accordingly, they asserted that, if the permit were denied, they would resort to private carriage.
On the first point, the Commission concluded that the type of service required by the shippers was not substantially different from that offered by available motor common carriers. Its treatment of the third and fourth criteria in 209 (b) of Part II of the Interstate Commerce Act, added by 71 Stat. 411 (1957), 49 U.S.C. 309 (b), a treatment attacked and invalidated in the District Court, was animated by the same policy preference for preserving available common carriage that characterized its disposition of the J-T Transport application, reviewed here today, ante, p. 81. The pertinent portion of its report is as follows:
There is, however, an additional issue in this case that differentiates it from J-T Transport, supra. It is whether the Commission is required in an application proceeding to consider evidence that the rates of available common carriers are so high as to make transportation costs prohibitive for a supporting shipper.
Before reaching that issue, it is necessary to dispose of a contention that prevailed in the District Court and is pressed here, that the Commission must consider in every [368 U.S. 81, 134] application evidence of mere rate advantages resulting from economies inherent in contract-carrier operations. Section 209 (b) makes no such requirement.
In Schaffer Transp. Co. v. United States, 355 U.S. 83, 91 -92, we recognized and impliedly approved the longstanding Commission practice of ignoring rate advantages offered by an applicant over available motor carriers. The Commission has consistently ruled that a shipper dissatisfied with existing common-carrier rates cannot on that ground alone successfully support an application for a contract-carrier permit, and that its remedy lies in attacking the rates under 216 of the Act. See, e. g., Dixon & Koster Contract Carrier Application, 32 M. C. C. 1, 4 (1942); James F. Black Extension of Operations - Prefabricated Houses, 48 M. C. C. 695, 708-709 (1948); Joseph Pomprowitz Extension - Packing House Products, 51 M. C. C. 343, 350 (1950). That is what it ruled in this case, see 81 M. C. C., at 42-43.
This consistent Commission practice rests on relevant transportation policy considerations. If rate advantages resulting from inherent economies were made a determining factor, the Commission would have to permit protestants to challenge the cost justification of an applicant's proposed rates. This the Commission has never permitted, see Omaha & C. B. R. & Bridge Co. Common Carrier Application, 52 M. C. C. 207, 234-235 (1950), largely because at the application stage there is as yet no revealing record of profit or loss derived from the proposed transportation service, 2 and its refusal has been judicially approved. Railway Express Agency v. United States, 153 F. Supp. 738, 741 (S. D. N. Y. 1957), aff'd per curiam, 355 U.S. 270 ; see American Trucking Assns. v. United States, 326 U.S. 77 . 86-87. [368 U.S. 81, 135]
More fundamentally, it misconceives the object of congressional motor-carrier regulation to maintain that the Commission must in application proceedings respect inherent cost advantages of contract as against common carriers. They are not different "modes" of transportation within the meaning of the National Transportation Policy, and Congress has not been concerned with maintaining competition between them as it has been, for example, between railroad and motor carriers. Compare Schaffer Transp. Co. v. United States, 355 U.S. 83 . The Commission is specifically admonished, in 218 (b) of the Act, not to prescribe minimum rates that give contract carriers an undue competitive advantage over common carriers.
In rate proceedings, however, the Commission has construed this section as not authorizing it to invalidate cost-justified rates of existing, previously authorized contract carriers even though they may draw away a large volume of traffic from common carriers. New England Motor Rate Bureau v. Lewers, 30 M. C. C. 651 (1941). Once granted a permit, therefore, a contract carrier may exploit its inherent cost advantages to the great detriment of existing common carriers. In determining to ignore those cost advantages in an application proceeding, the Commission acts well within its authority to effectuate the congressional policy of limiting entrance to contract carriage as a means of preserving the capacity of available common carriers to meet the Nation's transportation needs.
That policy is unaffected by the 1957 amendments to 203 (a) (15) and 209 (b). There is not one reference to rates in the legislative history of those amendments. If anything, the action of the 1957 Congress looks the other way; 218 (a) was amended, by 71 Stat. 343, 49 U.S.C. 318 (a), to require the filing of actual rather [368 U.S. 81, 136] than minimum contract-carrier rates, so as to eliminate a competitive disadvantage of common carriers.
The right of the Commission to disregard rate advantages as such in application proceedings does not, however, dispose of this case. For the testimony and arguments presented to the Commission fairly raised the claim that the available common carrier rates, whether or not just and reasonable in relation to transportation costs, were prohibitive for the shippers. If this claim were sustained by the Commission, it is difficult to see how it could avoid the conclusion that a denial of the permit would hobble the shipper without benefiting protestants by potentially augmenting their traffic.
The Commission has in fact recognized what it styles an "embargo" exception to its usual practice of disregarding the level of rates charged by existing carriers. See H. L. & F. McBride Extension - Ohio, 62 M. C. C. 779, 790 (1954). In Herman R. Ewell Extension - Philadelphia, 72 M. C. C. 645, 648 (1957), the Commission treated a shipper's claim similar to the present one in a manner relevant to our problem.
I would vacate the judgment of the District Court and remand the case to the Commission for a considered determination whether the rates of protestant motor carriers are prohibitive. The scope of inquiry should be strictly limited. The Commission need not engage in a full-dress rate proceeding to determine whether present motor-carrier rates are unjust or unreasonable. It need only find, from the evidence of record or additional evidence that it deems necessary, whether those rates impose an embargo on the shippers' goods.
[ Footnote * ] [This opinion applies only to No. 49, Atchison, Topeka & Santa Fe R. Co. v. Reddish, No. 53, Interstate Commerce Commission v. Reddish, and No. 54, Arkansas-Best Freight System, Inc., v. Reddish.]
[ Footnote 1 ] The Commission has consistently ruled that a joint-line transportation service is not inadequate to meet a shipper's needs. See cases collected in Hale & Hale, Competition or Control III: Motor Carriers, 108 U. Pa. L. Rev. 775, 783 n. 24 (1960).