THE INTERSTATE COMMERCE
COMMISSION-DISINTEGRATION OF
AN AMERICAN LEGAL
INSTITUTION
PAUL STEPHEN DEMPSEY*
TABLE OF CONTENTS
Introduction ................................................
I. De Facto Deregulation During the 1970's ..............
II. The Motor Carrier Act of 1980 ........................
III. Judicial Reversal of ICC Decisions .....................
A. Commodity and Territorial Interpretations .........
B. Sale of Dormant Authority .........................
C. Master Licensing ..................................
D. Issuance of Passenger Authority ...................
E. Standing Findings .................................
F. Fuel Surcharge Rules ..............................
G. Intercorporate Hauling Rules ......................
IV. The ICC's Methodical Destruction of the Common
Carrier System .........................................
A. Demise of the Common Carrier Obligation ........
B. Blurring the Distinctions Between Private and ForH ire Carriage .....................................
C. Blurring the Distinctions Between Common and
Contract Carriage .................................
D. Disintegration of Regulated Ratemaking ...........
2
3
5
10
13
21
23
24
26
28
29
30
31
32
36
38
*
Professor of Transportation Law and Director of the Transportation Law Program,
University of Denver College of Law; A.BJ. (1972),J.D. (1975), University of Georgia; LL.M.
summa cur laude (1978), National Law Center, George Washington University. Attorney-Advisor, Interstate Commerce Commission (1975-1977), and Civil Aeronautics Board (19771979); Legal Advisor to the Chairman, Interstate Commerce Commission (1981-1982); Chairman, Board of Governors, Certified Claims Professional Accreditation Council, Inc. (198183); President, Citizens for Responsible Transportation, Inc. (1984-present). Member of the
Bars of the State of Georgia and the District of Columbia. The author would like to thank
Esther Feld and Steve Klausing, J.D. candidates, University of Denver, for their assistance in
the preparation of this Article.
THE AMERICAN UNIVERsYrY LAW REVIEW
[Vol. 34:1
E. Merger, Consolidation, and Acquisition Abdication.
F. The Railroading of Motor Carriers .................
Conclusion .................................................
43
45
46
INTRODUCTION
Our nation's first independent regulatory agency, the Interstate
Commerce Commission (ICC or Commission), will celebrate its
centennial anniversary in 1987.1 Throughout much of its history,
the ICC has been regarded as among the most competent and
highly respected governmental agencies. Presidents traditionally
have selected Commissioners for the ICC almost as carefully as they
have chosen justices of the United States Supreme Court, emphasizing their competence, integrity, and ability to apply the law with skill
2
and reason.
On the ICC's fiftieth anniversary, one contemporary commentator commended the agency for its vigorous and spirited administration of the lawY The Commission also received high praise for its
fidelity to congressional mandate and for its prudent, nonpartisan
protection of the public interest. 4 Supreme Court Justice Felix
Frankfurter heralded the seventy-fifth anniversary of the ICC in
even more glowing terms. He lauded the ICC as an institution of
unblemished character, with "a fastidious regard for responsibility,
a complete divorcement between public and private interest, and all
other concomitants of a true and worthy conception of public
duty." 5
Contemporary observations about the Commission, however,
suggest that it has lost the abundance of character, competence, and
independence that Justice Frankfurter recognized. Recent statements suggest that many observers view the Commission with contempt.6 What has happened to this venerable and highly respected
1. President Grover Cleveland established the Interstate Commerce Commission in
1887 when he signed into law the Act to Regulate Commerce, ch. 104, 24 Stat. 379 (1887)
(codified as amended in scattered sections of 49 U.S.C. (1982)).
2. See Aitchison, The Evolution of the Interstate Commerce Act: 1887-1937, 5 GEO. WAsH. L.
REV. 289 (1937) (concluding that ICC has promoted equal justice and improvement of general welfare); Harris, The Commissioners, 31 GEO. WASH. L. REV. 309 (1962) (lauding excellent
work of ICC commissioners over 75-year period).
3. Aitchison, supra note 2, at 321.
4. See Esch, The Interstate Commerce Commission and Congress-Its Influence on Legislation, 5
GEO. WASH. L. REV. 462, 463 (1937) (describing ICC as faithful creature of Congress responsible to no other entity).
5. F. FRANKFURTER, OF LAW AND LIFE & OTHER THINGS THAT MATrER 236 (1965). Justice Frankfurter called the ICC "a laboratory demonstration of how economic problems may
be worked out by trial and error," id. at 241, and commended the agency for its success at
remaining independent from external pressures. Id. at 244.
6. See Motor CarrierAct of 1980: Hearings on Oversight of Motor CarrierAct of 1980 Before the
1984]
INTERSTATE COMMERCE COMMISSION
legal institution of the American Government? How could an
agency on the pinnacle of integrity, competence, and independence
fall to the depths of irresponsibility in so short a period of time?
This Article focuses on the recent and unfortunate demise of the
ICC. In particular, it reviews the activities that have stimulated
much of the contemporary criticism of the ICC-its ultra vires and
arbitrary and capricious actions in the area of interstate motor carrier regulation that have greatly exceeded the authority that Congress delegated to the ICC pursuant to article 1, section 8 of the
7
Constitution.
I.
DE FACTO DEREGULATION DURING THE
1970's
Although Congress designated the ICC to be an eleven member
body," by the mid-1970's presidents were appointing no more than
seven members. The large size of the Commission traditionally had
contributed to its conservatism; policy change within the Commission rarely had been radical. By appointing individuals dedicated to
radical change and by keeping the Commission's membership small,
however, the White House quickly and dynamically shifted the Commission's internal policy to one enthusiastically dedicated to
deregulation. 9
Congress first empowered the President to designate which Commissioner shall serve as chairperson during the Nixon administration. 10 This authority sharply increased presidential influence over
the Commission and its chief officer, and undermined the ICC's
traditional autonomy from the executive branch as an arm of
Congress.
Alleging political patronage in the appointment process, one
commentator criticized the quality of presidential appointments to
the ICC."I Recently, however, there has been a deliberate attempt
Senate Comm. on Commerce, Science, and Transportation, 98th Cong., 1st Sess. 117 (1983) (statement of Marshall Siegal, Executive Director, Independent Owner-Operator Ass'n) (describing
ICC's implementation of Motor Carrier Act of 1980 as "miserable" and observing that Commission's enforcement of the Act was scandalous by its absence); see also Butler, ICC's Interpretation of Truck Act Draws Wrath of Key House Chairman, TRAFFIC WORLD, Oct. 10, 1983, at 7
(criticizing ICC's excessive deregulation); Congress and Unclear Oversight of ICC, TRAFFIC
WORLD, Oct. 17, 1983, at I (discussing ICC's failure to heed congressional intent).
7. See U.S. CoNsT. art. I, § 8.
8. 49 U.S.C. § 11 (1982). Commissioners are appointed by the President with the advice and consent of the Senate. No more than six commissioners may be members of a single
political party. Id.
9. See in/ra notes 12-15 and accompanying text (discussing ICC appointees of Presidents Ford, Carter, and Reagan who favored deregulation).
10. Reorg. Plan No. 1 of 1969, 83 Stat. 859 (1969).
11. See R. FELLMETH, THE INTERSTATE COMMERCE OMISSION 1 (1970) (political connections and political party are two important qualifications for commissioner); see also Study of
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
by the executive branch to give this quasi-judicial agency a philosophical mission by means of the appointment process. President
Carter filled vacant seats on the Commission with individuals fervently dedicated to deregulation.' 2 Although the Ford appointees' 3
had moved moderately in the direction of liberalized entry and
ratemaking, their deregulatory efforts pale in comparison to the vigorous efforts of the Carter economists. 14 Despite campaign
promises to appoint only qualified and experienced individuals to
the regulatory agencies, President Reagan has continued this unfortunate trend with the appointment of his own deregulation
ideologues.' 5
By the late 1970's the ICC had moved resolutely toward deregulation. By 1979 the ICC was granting ninety-eight percent of the applications filed for motor carrier operating authority.' 6 The
Commission supplemented its efforts to open the floodgates of entry and to deregulate ratemaking with numerous liberal decisions
7
and rulemakings.'
One court recognized that the Commission's actions were de
facto deregulation despite the absence of statutory authority.' 8 Noting the ICC's tendency to ignore the burden of proof by resolving
FederalRegulation, Pursuant to S. Res. 71, Senate Comm. on Gov't Operations, 95th Cong., 1st Sess.
xxxi (1977) (neither White House nor Senate has demonstrated sustained commitment to
high quality regulatory appointments).
12. One prominent Washington, D.C. attorney observed that the Commission became
highly politicized during the Carter Administration. See Lawyer Blames Political Ideologues for
Commission's Regulatory Failures,TRAFFIC WORLD, May 24, 1982, at 34-35.
13. Commissioners that President Ford appointed include, among others, Chairman A.
Daniel O'Neal and Commissioner BettyJo Christian.
14. President Carter appointed Chairman Darius Gaskins, Jr., and Commissioners Marcus Alexis and Tad Trantum, who are affectionately referred to by many as the "Three
Marketeers."
15. President Reagan has appointed deregulation zealots Frederic N. Andre, Malcolm
M.B. Sterrett, and HeatherJ. Gradison to the ICC. See "Newcomers" Now Dominantas New ICC
Members, TRAFFIC WORLD, Jan. 10, 1983, at 17.
16. See Freeman & Gerson, Aotor CarrierOperating Rights Proceedings-HowDo I Lose Thee?,
11 TRANsP. L.J. 13, 15 n.3 (1979) (providing statistics of percentage of applications for operating authority that ICC approved from 1975 until 1979); see also Dempsey, CongressionalIntent
and Agency Discretion-Neverthe Twain Shall Meet: The Motor Carrier lct
of 1980, 58 CuI.-KEvr L.
REV. 1, 17 (1981) (discussing liberal regulatory policies of ICC during late 1970's) [hereinafter cited as CongressionalIntent and Agency Discretion].
17. See, e.g., Arrow Transp. Co. v. Extension-Boise, Idaho, 131 M.C.C. 941 (1980) (increasing burden of party opposing grant of new entry to show that such entry would have
deleterious effect on opposing party's overall operations); Change of Policy Consideration of
Rates in Operating Rights Application Proceedings, 359 I.C.C. 613 (1979) (easing ICC policy
by suggesting acceptance of applications that promised lower rates to shippers); Policy Statement on Motor Carrier Regulation, 44 Fed. Reg. 60,296, 60,298 (1979) (emphasizing need
for new competition and not protection of existing carriers); see also Congressional Intent and
Agency Discretion,supra note 16, at 14-21 (discussing ICC's deregulatory decisions); Freeman &
Gerson, supra note 16, at 63-64 (questioning whether ICC's relaxed standards are better,
cheaper, or more efficient than previous standards).
18. Argo-Collier Truck Lines v. United States, 611 F.2d 149 (6th Cir. 1979).
1984]
INTERSTATE COMMERCE COMMISSION
5
doubts in favor of an applicant for common carrier status, the
United States Court of Appeals for the Sixth Circuit announced its
suspicion that the ICC was disregarding congressional intent by
making decisions solely for the purpose of increasing competition. 19
The court's observation was correct. The ICC in the late 1970's
was abdicating its responsibility to engage in meaningful rate and
entry regulation. 20 In doing so, the Commission largely ignored the
objections of previously licensed common carriers that such actions
were causing them economic injury. Reviewing the Commission's
actions, courts found the ICC's decisions to be without an apparent
legal or factual basis. 2 ' They found it necessary to remind the ICC
that Congress' decision to enter into comprehensive regulation contravenes the ICC's apparent belief that national policy unqualifiedly
22
favors competition.
II.
THE MOTOR CARRIER ACT OF
1980
The Motor Carrier Act of 1980 (Act or 1980 Act) 23 is among the
most significant legislative enactments generated during the past
half century of surface transport regulation. 24 Dissatisfaction with
the ICC's deregulatory initiatives was among the major factors motivating Congress to take into its own hands the reins of regulatory
reform and to carve out specific areas for liberalization. The Constitution confers on Congress, not the ICC, the power to regulate interstate and foreign commerce. 2 5 Congress originally created the
19. Id. at 155 (ICC's conclusions not supported by substantial evidence or legislative
intent).
20. See Dempsey, The Experience of Deregulation: Erosion of the Common Carrier System, 13
TRANSP. L. INST. 121, 137 (1980) [hereinafter cited as Erosion of the Common CarrierSystem].
21. See, e.g., Campbell Sixty-Six Express, Inc. v. ICC, 603 F.2d 1012, 1014 (D.C. Cir.
1979) (remanding decision to ICC because of lack of rational connection between findings
and decision); Pitre Bros. Transfer, Inc. v. United States, 580 F.2d 140, 143-44 (5th Cir. 1978)
(remanded because of ICC's failure to address petitioner's arguments); Hanboldt Express,
Inc. v. ICC, 567 F.2d 1134, 1137 (D.C. Cir. 1977) (remanding decision to ICC after finding no
information in administrative record that indicated basis of decision to transfer operating authority from one carrier to another).
22. See Trans-American Van Serv. v. United States, 421 F. Supp. 308, 323 (N.D. Tex.
1976) (congressional mandate that ICC must determine those cases in which grant of operating authority will serve public convenience and necessity) (citing FCC v. RCA Communications, 346 U.S. 86, 91 (1953)).
23. Pub. L. No. 96-296, 94 Stat. 793 (1980) (codified as amended in scattered sections of
49 U.S.C. (1982)).
24. See CongressionalIntent and Agency Discretion,supra note 16, at 1.
25. U.S. CONsT. art. I, § 8 (commerce clause). Congress can delegate the power to regulate commerce in a manner that enhances or diminishes presidential influence. There are at
least four models for such delegation: delegation directly to the president, see Field v. Clark,
143 U.S. 649, 690-97 (1892); delegation to an executive branch agency, see United States v.
Grimaud, 220 U.S. 506, 521-23 (1911); delegation to an independent regulatory commission
subject to presidential review, see B. SCHwARTz, ADMINISTRATIVE LAw 9-15 (1984); and delegation to an independent regulatory commission without presidential review, see id. By choosing
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
ICC to effectuate its legislative will. In drafting the 1980 Act, Congress reasserted its constitutional primacy by delineating the parameters of regulatory reform as clearly as statutorily possible.
Congress did not intend the Act to constitute only a liberalization of
entry regulation. The Act's other principal purpose is to put a halt
to the actions of an agency that had become obsessed with deregulation and had exceeded the statutory limitations on its discretion.2 6
The 1980 Act represents the culmination of a process of legislative compromise. 2 7 The Senate bill was a more liberal regulatory
reform effort than its House counterpart. 28 In the waning days of
the ninety-sixth Congress and the last summer of the Carter Presidency, the White House recognized the strong possibility that Congress would adjourn without having passed any legislation at all.
Hoping that Congress would approve the legislation before the
presidential election, President Carter persuaded the Senate to capitulate to the more conservative House bill.2 9 The House bill became law without any changes. 3 0 Thus, the revised House Report is
31
the most authoritative source of legislative history of the 1980 Act.
the latter approach in creating the ICC, Congress intended to minimize presidential influence
over the agency. See Humphrey's Ex'r v. United States, 295 U.S. 602, 624-26 (1935) (Congress' purpose in creating regulatory agencies independent of executive authority was to free
agencies to exercise theirjudgment without hindrance); see also Freedman, Crisis and Legitimacy
in the Administrative Process, 27 STAN. L. REv. 1041, 1060-61 (1975) (insulation of administrative
agencies from executive branch ensures integrity of administrative process); Verkuil,Jawbon.
ing Administrative Agencies: Ex Parte Contacts by the White House, 80 COLUM. L. REv. 943, 963-70
(1980) (Congress has power to restrain executive control over agency policymaking). But see
Cutter &Johnson, Regulation and the PoliticalProcess, 84 YALE L.J. 1395, 1410-11 (1975) (noting
redeeming reasons to justify presidential intervention in regulatory process); Verkuil, supra, at
956-58 (arguing that presidential power to control, coordinate, and guide policymaking is
means of holding agencies accountable).
26. See Motor Carrier Act of 1980, Pub. L. No. 96-296, § 3(a), 94 Stat. 793, 793 (codified
at 49 U.S.C. § 10101 note (1982) (Congressional Findings and Declaration of Policy)) (ICC
should not attempt to go beyond powers vested in it by Interstate Commerce Act and other
legislation enacted by Congress).
27. See Kretsinger, The Motor CarrierAct of 1980: Report and Analysis, 50 UMKC L. REv. 21,
21 (1981). The 1980 Act represents a compromise between shippers, trucking firms, and labor, who favor the regulatory status quo, and consumer advocates, who desire complete deregulation. Id. "[T]he media characterization of the Act as 'trucking deregulation' is actually
a misnomer. More precisely, the Act should be termed 'trucking reregulation.'" Id.; see also
Flexner, The Effects of Deregulation in the Motor Carrier Industry, ANTiTRusT BULL. 185 (1983)
(noting that Act reduced but did not eliminate regulation of trucking industry).
28. Compare S. 2245, 96th Cong., 2d Sess. (1980) (stating motor carrier legislation will
substantially streamline ICC administrative procedures) with H.R. 6418, 96th Cong., 2d Sess.
(1980) (stating goal of ICC is to serve public interest by increasing competition and reducing
unnecessary federal regulation).
29. Cf.H.R. Res. 714, 96th Cong., 2d Sess. 126 CONG. REC. 15,579 (1980) (providing for
elimination of Senate bill by incorporating identical provisions into House bill).
30. Compare Motor Carrier Act of 1980, Pub. L. No. 96-296, 94 Stat. 793 (codified as
amended in scattered sections of 49 U.S.C. (1982)) with H.R. 6418, 96th Cong., 2d Sess.
(1980).
31. See H.R. REP. No. 1069, 96th Cong., 2d Sess., reprinted in 1980 U.S. CODE CONG. &
AD. NEws 2283.
1984]
INTERSTATE COMMERCE COMMISSION
Desiring to end the ICC's monumental strides toward de facto deregulation, the motor carrier industry supported the 1980 Act as a
32
compromise that would halt the erosion of economic regulation.
Some of the principal objectives of the 1980 Act are promoting
greater competition by allowing easier carrier entry, simplifying and
expediting the certification process, and lessening restrictions on
motor carrier operations. 3 3 The Act also recognizes that the previous regulatory structure had tended, in certain circumstances, to inhibit market entry, carrier growth, efficient utilization of equipment
and energy resources, and opportunities for minorities and others
to enter the trucking industry. 34 The 1980 Act delegates to the
Commission the task of promoting competition and efficiency in the
transportation services. 3 5 By listing numerous public interest objectives other than promoting competition, the Act suggests that economic regulation should continue as a vehicle for achieving
desirable public policy goals that might not receive a high priority in
36
an unregulated environment.
7
Prior to its amendment in 1980, the Motor Carrier Act of 19353
32. See Economic Regulation of the Trucking Industry: Hearings on S. 2245 Before the Senate
Comm. on Commerce, Science, and Transportation, 96th Cong., 2d Sess. 1856 (1980) (report of
Darius Gaskins, Jr., Chairman, ICC).
33. See Motor Carrier Act of 1980, Pub. L. No. 96-296, § 2, 94 Stat. 793, 793 (codified at
49 U.S.C. § 10101 note (1982) (Reduction in Unnecessary Regulation)) (discussing purpose
of 1980 Act); H.R. REP. No. 1069, 96th Cong., 2d Sess. 3, reprintedin 1980 U.S. CODE CONG. &
AD. NEws 2283, 2285 (bill overview) (discussing provisions of Act intended to ease entry and
certification requirements); see, e.g., 49 U.S.C. § 10922(b)(6) (1982) (requiring ICC to streamline and simplify certification process); id. § 10922(i)(1)(B) (requiring ICC to implement procedures for expeditious processing of applications for removal of restrictions on operating
authority); id. § 10922(b)(1) (1982) (easing requirements for operating authority by modifying test for public convenience and necessity); see also Central Transp., Inc. v. United States,
694 F.2d 971, 974 (4th Cir. 1982) (legislative intent of 1980 Act is to mitigate excessive regulation and simplify certification); Gamble v. ICC, 636 F.2d 1101, 1103 (5th Cir. 1981) (goals
of Act include simplifying certification process and reducing restrictions on operations).
34. See Motor Carrier Act of 1980, Pub. L. No. 96-296, § 3(a), 94 Stat. 793, 793 (codified
at 49 U.S.C. § 10101 note (1982) (Congressional Findings and Declaration of Policy)); cf. 49
U.S.C. § 10101(a)(2) (1982) (specifying national policies designed to promote competitive
and efficient transportation services).
35. See 49 U.S.C. § 10101(a)(2) (1982) (providing general national transportation policy); id. § 10321 (empowering ICC to carry out provisions of Act).
36. See 49 U.S.C. § 10101(a)(2) (1982). Subsection (a)(2) provides that it is the general
policy of the United States Government to promote competitive and efficient transportation
services in order to meet the needs of shippers, receivers, and consumers, id.
§ 10101(a)(2)(A); to allow a variety of quality and price options to meet changing market
demands and the diverse requirements of the shipping public, id. § 10101(a)(2)(B); to allow
the most productive use of equipment and energy resources, id. § 10101(a)(2)(C); to enable
efficient and well-managed carriers to earn adequate profits, attract capital, and maintain fair
wages and working conditions, id. § 10101(a)(2)(D); to provide and maintain service to small
communities and small shippers, id. § 10101(a)(2)(E); to improve and maintain a sound, safe,
and competitive privately-owned motor carrier system, id. § 10101(a)(2)(G); to promote
greater participation by minorities in the motor carrier system, id. § 10101(a)(2)(H); and to
promote intermodal transportation, id. § 10101(a)(2)(I).
37. Ch. 498,49 Stat. 543 (codified as amended in scattered sections of49 U.S.C. (1982)).
THE AMERICAN UNIVERsITY LAW REVIEW
[Vol. 34:1
required carriers seeking motor common carrier operating authority
to prove that they were fit, willing, and able to perform the proposed operations, and that their proposed operations were required
by present or future public convenience and necessity. 38 For applicants to meet the burden of proof on the latter criterion, the ICC
determined that they had to establish that the proposed operations
would serve a useful public purpose responsive to a public demand
or need. 39 Having established the public purpose, the applicant
then had to show that the purpose could not be served as well by
existing carriers and that the applicant could serve that purpose
without impairing the operations of existing carriers in a manner
40
contrary to the public interest.
The 1980 Act leaves unchanged the applicant's burden of proving
fitness, willingness, and ability by codifying an applicant's obligation
to establish that the proposed service "will serve a useful public purpose, responsive to a public demand or need." 4 ' The Act gives parties opposing an application, however, the burden of proving that
the proposed service would be inconsistent with public convenience
and necessity. 42 By enacting the 1980 Act, Congress diminished the
statutory burden on applicants seeking certificates of public convenience and necessity, and correspondingly increased the burdens on
43
persons objecting to the issuance of a certificate.
The 1980 Act further simplifies entry requirements with a provision that eliminates the public convenience and necessity obligation
for certain specified sectors of the industry. Applicants that seek to
provide transportation to any community not regularly served by a
certificated motor carrier or to a community that has been abandoned by rail carriers need to demonstrate only their fitness, willingness, and ability. 4 4 A showing that the proposed service will serve
a useful public purpose is also not necessary if an applicant seeks to
38. Id § 207(a), 49 Stat. at 551-52 (codified as amended at 49 U.S.C. § 10922(b)(1)
(1982)).
39. See Pan Am. Bus Lines Operations, I M.C.C. 190, 203 (1936).
40. See id. at 201-02 (holding applicants to statutory burden of proof). See generally
Dempsey, Entry Control under the Interstate Commerce Act: A Comparative Analysis of the Statutory
CriteriaGoverning Entry in Transportation, 13 WAKE FOREST L. REV. 729 (1977) (discussing entry
requirements prior to 1980 Act) [hereinafter cited as Entry Control under the Interstate Commerce
Act].
41. See 49 U.S.C. § 10922(b)(1)(B) (1982).
42. See id. § 10922(b)(1).
43. See H.R. REP. No. 1069, 96th Cong., 2d Sess. 3, reprintedin 1980 U.S. CODE CONG. &
AD. NEWS 2283, 2285 (legislation increases entry opportunities by modifying convenience and
necessity test).
44. 49 U.S.C. § 10922(b)(4)(A), (B) (1982); see Harper, Entry Control and the FederalMotor
CarrierAct of 1980, 12 TRANsp. L.J. 51, 59 (1981) (partial exemptions may present enforcement problems).
1984]
INTERSTATE COMMERCE COMMISSION
9
transport certain specified property for the federal government, or
any shipment weighing one hundred pounds or less. 4 5 The Act also
expands existing exemptions for private carriage, air terminal areas,
agricultural products and agricultural cooperatives, and establishes
new statutory exemptions for incidental movements, brokerage
46
services, and the shipment of decorative rock and wood chips.
By carefully balancing provisions easing entry requirements with
provisions retaining the fundamental components of economic regulation, Congress attempted to liberalize entry in certain specified
areas. At the same time, however, Congress imposed specific limits
on further de facto deregulation by the ICC.
In the late 1970's, the ICC had begun to consider issuing "master
certificates" for the transportation of certain commodities. The
Commission would award such certificates if it found through a
rulemaking procedure that applicants seeking authority to transport
the commodities had sustained their pre-1980 Act burden of prov47
ing public convenience and necessity.
During congressional consideration of the 1980 legislation, the
Commission vigorously opposed efforts to circumscribe statutorily
its powers to make such general findings. 48 Nevertheless, the 1980
Act includes a specific prohibition against master certification. 49 In
addition, the 1980 Act reaffirms the Commission's duty to decide
each application on a case-by-case basis, to consider the impact of
the issuance of operating authority on existing carriers, and to articulate precisely its findings and conclusions on all material issues of
fact, law, or discretion presented in the record.5 0
45. 49 U.S.C. § 10922(b)(4)(C), (D) (1982).
46. See id. § 10526(a) (1982); see also Erosion of the Common CarrierSystem, supra note 20, at
153-54.
47. See Harper, supra note 44, at 62.
48. See Economic Regulation of the Trucking Industry: Hearings on S. 2245 Before the Senate
Comm. on Commerce, Science, and Transportation, 96th Cong., 2d Sess. 1856 (1980) (report of
Darius Gaskins, Jr., Chairman, ICC) (opposing elimination of master certificates).
49. Motor Carrier Act of 1980, Pub. L. No. 96-296, § 5(b)(3), 94 Stat. 793, 794 (codified
at 49 U.S.C. § 10922(b)(3) (1982)). In its report the Senate stated that "the Commission may
not issue any certificate based upon general findings regarding public convenience and necessity developed in rulemaking proceedings. . . . Henceforth, the Commission will be obligated to look at each application and decide whether the transportation would be inconsistent
with the public need." S. REP. No. 641, 96th Cong., 2d Sess. 24 (1980). The House Report
used even more specific language: "[T]he Commission may not issue any certificate based
upon general findings regarding public convenience and necessity developed in rulemaking
proceedings. The purpose of this provision is to ban the use of the so-called master certificate
approach to granting certificates." H.R. REP. No. 1069, 96th Cong., 2d Sess. 15 (June 3,
1980), reprinted in 1980 U.S. ConE CONG. & An. NEws 2283, 2297; see also Kretsinger, supra
note 27, at 26 (legislation included specific prohibition on master certification).
50. See 49 U.S.C. § 10322 (1982) (procedures for ICC action and appeal in nonrail proceedings); C&H Transp. Co. v. ICC, 704 F.2d 850 (5th Cir. 1983) (breadth of authority
granted cannot exceed scope of need demonstrated); Central Transp., Inc. v. United States,
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
The Act attempts to give the ICC explicit direction for regulation
of the motor carrier industry and distinct boundaries within which
the Commission may act. 5 1 By enacting the legislation, Congress
demonstrated its intent to prevent the Commission from straying
beyond the powers vested in it by the Interstate Commerce Act and
other legislation. 5 2 To the extent the 1980 Act mandates changes in
the regulatory structure, the ICC should implement such changes
53
with as little disruption as possible.
III.
JUDICIAL REVERSAL OF
ICC
DECISIONS
Having received such a strong congressional admonition in the
Motor Carrier Act of 198054 to stay within its delineated powers,
one would have hoped that the ICC would have acquiesced and relaxed its deregulatory philosophy. But with the support of the
White House, the Commission has not curtailed its ambitious program of comprehensive deregulation. 5 5 Claiming the ICC has exceeded the scope of its power under the Act, many parties in
rulemaking and adjudicatory proceedings have had no alternative
but to ask the judiciary for relief.
Judicial review of agency decisionmaking is an expensive and time
consuming endeavor. Judges with clogged dockets are frequently
reluctant to review unfamiliar and complex issues beyond the realm
of their expertise, particularly in those areas where Congress has
established independent regulatory agencies with quasi-judicial authority to adjudicate such disputes. Thus, courts often defer to the
primary jurisdiction of administrative agencies and their ostensible
expertise in regulating an industry subject to their jurisdiction. As a
result, the federal judiciary often affirms agency decisions on appeal.
Federal courts have held that decisions of the ICC are presumptively valid. 5 6 These courts have found that the Commission's deci694 F.2d 968, 971 (4th Cir. 1982) (Commission must make specific findings on subordinate as
well as ultimate issues); Containerfreight Corp. v. United States, 685 F.2d 329, 331 (9th Cir.
1982) (summarizing Act's requirements for the ICC).
51. See Motor Carrier Act of 1980, § 3, Pub. L. No. 96-296, 94 Stat. 793, 793 (codified at
49 U.S.C. § 10101 note (1982) (Congressional Findings and Declaration of Policy)).
52. Id.; see 126 CONG. REC. 15,579, 15,585-86 (daily ed. June 19, 1980) (statement of
Congressman Harsha) (ICC expected to adhere to new guidelines); Kretsinger, supra note 27,
at 36-37 (ICC should operate within Congress' explicit guidelines).
53. See Kretsinger, supra note 27, at 36-37.
54. See supra notes 23-53 and accompanying text (discussing statutory limitation on ICC
actions).
55. See H.R. REP. No. 1069, 96th Cong., 2d Sess. 97, reprintedin 1980 U.S. CODE CONG. &
AD. NEws 2283, 2332-33. Congressman Elliot Levitas noted, "ihe Interstate Commerce
Commission has ignored [congressional] actions and gone on its own merry arrogant way."
Id.
56. See, e.g., ICC v.Jersey City, 322 U.S. 503, 512-13 (1944) (Commission's order carries
1984]
INTERSTATE COMMERCE COMMISSION
sions warrant reversal only if they are not supported by substantial
evidence, are arbitrary and capricious, constitute an abuse of discretion, or are otherwise not in accordance with the law. 57 Because the
scope of review under these standards is narrow, 58 courts are frequently reluctant to substitute their judgment for that of the
Commission's .59
Even where the jeweler's eye might well have detected a serious
flaw in the stone, courts have sustained the ICC's decisions on many
occasions since promulgation of the 1980 Act. 60 Given the history
presumption of validity); Midwestern Transp., Inc. v. ICC, 635 F.2d 771, 774 (10th Cir. 1980)
(reaffirming narrow scope ofjudicial review of ICC decisions).
57. See, e.g., Bowman Transp., Inc. v. Arkansas-Best Freight Sys., 419 U.S. 281, 284-85
(1974) (judicial review limited to determining whether ICC's decision unsupported by substantial evidence or is arbitrary, capricious, or otherwise an abuse of discretion); American
Transfer & Storage Co. v. ICC, 719 F.2d 1283, 1298 (5th Cir. 1983) (actions of agency authorized with discretion entitled to "more than mere deference") (quoting Batterton v. Frances, 432 U.S. 416, 426 (1965)); Trailways, Inc. v. ICC, 681 F.2d 252, 254 (5th Cir. 1982)
(reasoning of ICC in granting operating authority need only enable court and parties to understand Commission's decision to satisfy arbitrary and capricious test) (citing Central Freight
Lines v. United States, 669 F.2d 1063, 1074 (5th Cir. 1982)); Bagget Transp. Co. v. United
States, 666 F.2d 524, 531 (1 lth Cir. 1982) (courts "may not lightly disregard" special expertise of agencies); Curtis, Inc. v. ICC, 662 F.2d 680, 685 (10th Cir. 1981) (ICC need only
articulate reasoned basis for decision to survive judicial review).
The standards that the courts have applied in reviewing decisions of the ICC are the general standards in the Administrative Procedure Act (APA). See 5 U.S.C. § 706(2) (1982).
58. See J.H. Rose Truck Line v. ICC, 683 F.2d 943, 948 (5th Cir. 1982).
59. See Coastal Tank Lines v. ICC, 690 F.2d 537, 543 (6th Cir. 1982) (courts should not
substitute own judgment for ICC decisions); Port Norris Express Co. v. ICC, 687 F.2d 803,
809 (3d Cir. 1982) (scope of review is narrow, and court may not substitute own substantive
judgment).
60. See, e.g., C&H Transp. Co. v. ICC, 704 F.2d 834, 845-46 (5th Cir. 1983) (affirming
ICC's grant of nationwide operating authority); Port Norris Exp. Co. v. ICC, 697 F.2d 497,
506 (3d Cir. 1982) (affirming ICC's grant of unrestricted operating authority); Trailways, Inc.
v. ICC, 681 F.2d 252, 255 (5th Cir. 1982) (per curiam) (finding ICC's order not arbitrary,
capricious, or improper); Steere Tank Lines v. ICC, 675 F.2d 103, 103 (5th Cir. 1982) (per
curiam) (affirming ICC's grant of license); Alamo Express, Inc. v. ICC, 673 F.2d 852, 861-62
(5th Cir. 1982) (affirming ICC's grant of contract carrier permit); Watkins Motor Lines v. ICC,
641 F.2d 1183, 1191 (5th Cir. 1981) (affirming ICC's grant of contract carrier operating authority).
Under the 1980 Act, an applicant for motor common carrier authority has the initial burden
of establishing a prima facie case of fitness, willingness, and ability to perform a proposed
service. 49 U.S.C. § 10922(b)(1)(A) (1982). The ICC, however, has convinced courts that
because the 1980 Act was designed with the elasticity to prevent rigid application, it is unnecessary for an applicant to satisfy the specific guidelines in effect prior to the enactment of the
1980 Act. See Baggett Transp. Co. v. United States, 666 F.2d 524, 529 (11th Cir. 1982) (discussing congressional intent in enacting Act to prevent application of rigid standards).
Courts have held that the Commission acted within its discretion in eliminating the requirement that an applicant demonstrate its financial fitness. See, e.g., American Transfer & Storage
Co. v. ICC, 719 F.2d 1283, 1304-05 (5th Cir. 1983), and have permitted the ICC to rule that
neither the size nor the financial resources of an applicant at the time it files an application is a
controlling factor of its fitness. See, e.g., C&H Transp. Co. v. ICC, 704 F.2d 834, 842 (5th Cir.
1983).
In C&H TransportationCo. the Fifth Circuit stated that to satisfy the initial burden of proving
fitness, the applicant need only show:
that it has the financial fitness or ability to perform the character of service it seeks to
provide; that it is willing to comply with the Interstate Commerce Act and the rules
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
ofjudicial reluctance to overturn the ICC's decisions, the numerous
occasions on which courts have recently reversed decisions arouse
and regulations promulgated thereunder; and that it has the ability to perform the
proposed service in a proper and safe manner for the protection of the public.
Id. at 843.
In Steere Tank Lines, Inc. v. ICC, 675 F.2d 103 (5th Cir. 1982), however, the court affirmed
the ICC's certification of a trucking company that did not have the requisite terminals or
equipment to perform the certified functions. The court reasoned that although the 1980 Act
requires that nothing authorized by the certificate be outside the fitness, willingness, and ability of the applicant, "there is no requirement that the carrier be able, quantitatively, to perform all or any substantial part of the transportation in all covered areas." Id. at 105. The
court concluded that "a common carrier is free to carve out as large or as small a niche as it
feels appropriate." Id.; accordJ.H. Rose Truck Lines, Inc. v. ICC, 683 F.2d 943, 949 (5th Cir.
1982).
Courts have also demonstrated their unwillingness to interfere with the Commission's dismantlement of a general policy statement requirement that each applicant present evidence of
the operational feasibility of its proposal. See American Transfer & Storage Co. v. ICC, 719
F.2d 1283, 1305 (5th Cir. 1983); Central Freight Lines, Inc. v. United States, 669 F.2d 1063,
1071-72 (5th Cir. 1982); Star Delivery & Transfer v. United States, 659 F.2d 81, 86 (7th Cir.
1981). In Central Freight Lines the Fifth Circuit also held that the Commission need not conduct an antitrust analysis of applications for authority. Central Freight Lines, Inc. v. United
States, 669 F.2d at 1071-72. According to the court, the ICC is only required to consider
anticompetitive consequences of grants of authority. Id.
In addition to establishing its fitness, willingness, and ability, an applicant must make a
prima facie showing that its proposed services will provide a useful public purpose responsive
to a public need. 49 U.S.C. § 10922(b)(1)(B) (1982). The Fifth Circuit has agreed with the
ICC that this showing requires neither the testimony of shippers, J.H. Rose Truck Lines, Inc.
v. ICC, 683 F.2d at 950, nor the testimony of the potential users of the proposed service.
Trailways, Inc. v. ICC, 681 F.2d at 255. The court in Trailways, Inc., found that testimony of
other witnesses, including experts and applicants, may be sufficient to support the Commission's decision that the evidence establishes a need. Id. at 255. By relying on shippers' testimony, the ICC and the reviewing courts seem willing to accept a significant latitude of
imprecision in detail. See C&H Transp. Co. v. ICC, 704 F.2d at 845; Pre-fab Transit Co. v.
Extension-Nationwide General Commodities, 132 M.C.C. 409, 412-13 (1981).
In a further acceptance of ICC rationale, in Refrigerated Transp. Co. v. ICC, 616 F.2d 748
(5th Cir. 1981), the Fifth Circuit held that an applicant need not demonstrate a public need
for each point of origin or destination for which it seeks authority. Id. at 754. Rather, the
applicant must only show such need at numerous representative points, which would raise a
rebuttable presumption of need throughout the area. Id. Judicial scrutiny does not even require that existing services be inadequate. The ICC may grant certification if the proposed
service is "different or better or provides beneficial competition or fills an anticipated need
for additional service." Watkins Motor Lines v. ICC, 641 F.2d 1183, 1190 (5th Cir. 1981),
The 1980 Act provides that diversion of revenues and traffic from existing carriers by itself
will not establish inconsistency with the public convenience and necessity. 49 U.S.C.
§ 10922(b)(2)(B) (1982). The Fifth Circuit, however, has upheld the ICC's view characterizing an application as "essentially unopposed" if it is contested by an opposing party who
presents no evidence of loss of revenue due to the grant of authority. Trailways, Inc. v. ICC,
681 F.2d at 254. Additionally, the Fifth Circuit has observed that the key factor in ascertaining the probability and degree of harmful diversion is the comparable size of the applicant
and opposing party. C&H Transp. Co. v. ICC, 704 F.2d at 846 (quoting Saia Motor Freight
Line, Extension-Dallas, 130 M.C.C. 409, 422 (1978).
Courts have approved of many of the ICC's processing procedures. The Commission has
convinced the courts that oral hearings are only mandated by "extraordinary" cases, Amercan Transfer & Storage Co. v. ICC, 719 F.2d at 1301; Trailways, Inc. v. ICC, 681 F.2d at 25354, and that due process does not always demand cross-examination rights. Central Freight
Lines v. United States, 669 F.2d 1063, 1068 (5th Cir. 1982). It has demonstrated that its
decision to institute interim rules without complying with procedures that require public notice and comment is practical and necessary. See American Transfer & Storage Co. v. ICC, 719
F.2d at 1297. In American Transfer & Storage Co. the court accepted the ICC's format for new
1984]
INTERSTATE COMMERCE COMMISSION
concern over the nature of the ICC's actions. 61
These reversals
demonstrate the extent to which federal courts are appalled by the
Commission's ultra vires behavior, and by its tendency to make decisions that are arbitrary, capricious, and unsupported by substantial
evidence. 6 2 These reversals of the ICC's decisions are the focus of
the following analysis.
A.
Commodity and TerritorialInterpretations
The Motor Carrier Act of 1980 requires the ICC to implement
rules designed to eliminate unreasonable restrictions that are waste-
ful of fuel, inefficient, or contrary to the public interest. 6 3 Shortly
after enactment of the Act, the ICC promulgated rules to comply
with this requirement. 64 The Commission also issued guidelines delineating the proper format for new applications for operating authority. 65
The new rules and guidelines broadened to an
unprecedented extent the commodity and territorial descriptions
applications, id. at 1299, and its revision of the controversial interim rules themselves. Id. at
1303.
The ICC has also persuaded courts to accept in the interest of expediency its incomplete
disclosure of final decisions and reasoning. Although the Act provides transportation policy
factors that the Commission should consider, see 49 U.S.C. § 10101 (1982), courts require
that the Commission only articulate its reasoning clearly enough to show that it is performing
its function. J.H. Rose Truck Lines v. ICC, 683 F.2d at 951; Alamo Express, Inc. v. ICC, 673
F.2d at 860. Although it must explain how it resolved conflicting evidence, Star Delivery &
Transfer v. United States, 659 F.2d 81, 84 (7th Cir. 1981), the Commission does not have to
make express findings on collateral issues it had to consider. Trailways, Inc. v. ICC, 676 F.2d
at 1022 (5th Cir. 1981) (citing Minneapolis & St. Louis Ry. Co. v. United States, 361 U.S. 173,
193-94 (1959)).
61. See infra notes 64-201 and accompanying text (discussing cases in which courts have
reversed ICC decisions).
62. See infra notes 64-201 and accompanying text.
63. 49 U.S.C. § 10922(i)(1)(B)(v) (1982). The 1980 Act requires rules that would "reasonably broaden the categories of property authorized by the carrier's certificate or permit;
authorize transportation or service to intermediate points on the carrier's route; provide
round-trip authority where only one-way authority exists; or eliminate unreasonable or excessively narrow territorial limitations." Id. § 10922(i)(1)(B)(i)-(iv).
64. Removal of Restrictions from Authorities of Motor Carriers of Property, Motor Carriers of Passengers and Freight Forwarders, 49 C.F.R. § 1165 (1984). The Commission's
rules provide for expedited application procedures. The ICC listed among the objectives of
the rules: increasing competition, conserving fuel and other costs, improving efficiency, and
aiding in the provision and maintainenance of service to small rural communities and small
shippers. Id.
65. Acceptable Forms of Requests for Operating Authority (Motor Carriers and Brokers
of Property), 364 I.C.C. 432 (1980). In presenting the guidelines, the ICC observed that
highly restricted authority narrows the range of operational options available to carriers, contributes to the inefficient use of equipment, increases fuel use, prevents carriers from offering
complete services, and prevents compliance with market demands. Id. at 433. Denouncing
such authority as anticompetitive, the Commission noted that a large class of potential entrants would help encourage present carriers to offer responsive service. Id. Describing its
own role, the ICC observed that "direct regulatory intervention should occur only when the
operation of market forces would be inadequate to achieve the performance goals which the
national transportation policy largely assumes will result from competition." Id. at 434.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
for existing certificates and new applications. 66
The United States Court of Appeals for the Fifth Circuit invalidated many of the Commission's rules in American Trucking Associations v. ICC (ATA/)67 by holding that the rules exceeded the scope of
the agency's authority under the 1980 Act. 68 Noting that Congress
intended to circumscribe the ICC's discretion by providing explicit
direction and well-defined parameters for ICC action, 69 the court
admonished the ICC that the Act limits the broadening of commod70
ity and territorial descriptions to reasonable levels.
The court found that the Commission's guidelines, which proposed that applicant carriers employ commodity descriptions at
least as broad as those in the Standard Transportation Commodity
Code (STCC), 7 1 often required applicants to accept grants of operating authority encompassing entire classes of commodities regardless of the applicant's desire or ability to transport all of the
commodities in that class. 72 The court held that the ICC must permit carriers to seek and acquire narrower operating authority.7 3 By
requiring every carrier to seek operating authority greater than that
which it was "fit, willing, and able" to handle, the Commission had
74
exceeded its statutory authority.
66. See Acceptable Forms of Requests for Operating Authority (Motor Carriers and Brokers of Property), 364 I.C.C. 432 (1980). The Commission proposed that applicants use the
broad terms of the Standard Transportation Commodity Code (STCC) when requesting operating authority and when describing routes and territories. Id. at 439. Although the Commission did not prescribe the exact form of commodity descriptions, it stated that applicants
should not use descriptions narrower than those in the STCC. Id. The Commission envisioned that competition, not narrowly limited authority, would define the boundaries of motor carrier service. Id. at 443. Proclaiming its desire to promote the efficient use of equipment
and to provide service to small communities, the ICC proposed to authorize regular route
carriers to serve all intermediate points on their routes in addition to specifically requested
off-route points and to grant two-way authorizations to such carriers. Id. at 446-47. The ICC
announced its intention to eliminate all restrictions except those embodied explicitly or implicitly within the 1980 Act, id. at 448, and rejected as excessively narrow the view that the Act
requires the removal of only obviously unreasonable restrictions. Id.
67. 659 F.2d 452 (5th Cir. 1981), cert. denied, 460 U.S. 1022 (1983).
68. Id. at 465.
69. Id. at 458.
70. Id. at 462.
71.
STANDARD TRANSP. COMMODITY CODE
6001-M (Western R.R. Ass'n, 1985).
72. American Trucking Ass'ns v. ICC, 659 F.2d 452, 462 (5th Cir. 1981), cert. denied, 103
S. Ct. 1272 (1983). Id. at 462. Although the ICC portrayed its guidelines as a policy statement
designed merely to aid carriers in filing their applications, the court found that the guidelines
had "sinews of command beneath [their] velvet words." Id. at 463. The Commission's alleged
policy statement was "decorated with words that appear to be carefully chosen to avert classification as rules," id., but the court expressed its belief that the guidelines led applicants to
use the designated categories for fear that nonconformity would produce both delay and potentially vast litigation expense. Id. at 463-64. The court concluded that the Commission's
guidelines were in fact binding rules. Id. at 471-72.
73. Id. at 464-65.
74. See id. at 464 (holding unreasonable ICC's requirement that all applicants seek broad
operating authority). The court also concluded that the ICC had exceeded its statutory au-
1984]
INTERSTATE COMMERCE COMMISSION
The court also criticized the Commision's manner of implementing its new policies. It noted that although the ICC professed to
allow opportunity for deviation from its commodities' guidelines, in
practice the Commission had created a presumption that carriers
competent to transport particular commodities were competent to
transport an entire class of commodities. 75 Finding untenable the
ICC's conclusion that Congress intended it to implement the policies of the 1980 Act by granting very broad operating authority to
new applicants, 7 6 the court reminded the Commisssion that the Act
77
changed, but did not eliminate, the regulatory structure.
The decision in ATA I is significant because it was the first major
entry rulemaking proceeding following the passage of the 1980 Act
that a court reversed. 78 Giving little weight to the Commission's assurances of compliance with congressional will, the court recognized the true magnitude and direction of the Commission's
deregulatory actions. The decision also represents the most expansive reading of the fit, willing, and able requirement for new applicants. Prior cases had focused largely on an applicant's economic
79
ability, operating safety, and disposition to comply with the law.
Finally, A TA I marked the commencement of a new period of conflict among the ICC, the courts, and applicants for operating
authority.
For several months after the decision in A TA I, the ICC failed to
revise the rules that the Fifth Circuit had remanded, and ignored the
court's decision by continuing to issue broad operating certificates.
In American Trucking Associations v. ICC (ATA II)80 numerous parties
filed claims alleging repeated violations of the court's mandate in
ATA I and seeking a writ of mandamus to compel ICC compliance
with the decision. 8 ' The parties cited sixty-two cases in which the
ICC had granted the authority to transport household goods in conthority by refusing to accept several of the traditional restrictions on the movement of bulk
commodities, id. at 465, the transportation of household goods, id. at 467, and the provision
of service to Alaska and Hawaii. Id. at 474.
75. Id. at 465.
76. Id. at 469.
77. Id. at 459; see Popper, An Administrative Law Perspective on Consensual Decisionmaking,35
AD. L. REv. 255, 295 (1983) (ATA I reflects desire of an administrative agency to reduce and
eliminate regulatory provisions that Congress found necessary).
78. American Trucking Ass'ns v. ICC, 659 F.2d 452, 470 (5th Cir. 1981), cert. denied, 103
S. Ct. 1272 (1983).
79. See Associated Transp., Inc., Extension-TVA Plant, 125 M.C.C. 69 (1976); Carolina
Cartage Co., Extension, 125 M.C.C. 49 (1976); Sammins Trucking, Extension, 124 M.C.C.
373 (1976); see also Entry Control under the Interstate Commerce Act, supra note 40, at 759-61 (discussing judicial interpretation of fitness requirement).
80. 669 F.2d 957 (5th Cir. 1982) (per curiam), cert. denied, 460 U.S. 1022 (1983).
81. Id. at 959.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
travention of the decision in ATA L82 In a per curiam decision, the
court in A TA II issued a writ of mandamus ordering the ICC to meet
its statutory obligations and conform its actions to the court's directives in A TA . 83
After the decision in ATA II, the ICC petitioned for certiorari ask8 s4
ing the Supreme Court to review both Fifth Circuit decisions.
Although Justice White issued a stay of the decisions pending review
of the petition,8 5 the Court ultimately denied certiorari.8 6 Almost
two years after the Fifth Circuit announced its decision in ATA I, the
Commision issued notice of a proposed rulemaking that would purportedly cure the deficiencies in the remanded rules. 8 7 In the rules,
the Commission announced its intention to remove restrictions on
specific commodity authorizations and to allow carriers to apply for
expansion of their operations.8 8 The rules define the standard for
determining whether an applicant is fit, willing, and able to provide
a proposed service. Under the rules, a carrier's allegations of familiarity and compliance with applicable ICC and Department of Transportation regulations are sufficient to serve as proof of fitness.8 9 The
mere application for expanded operating authority demonstrates
willingness under the Commission's rules.9 0 In addition, a presumption of ability arises whenever an applicant states that it has existing
equipment and that its proposed expansion involves the movement
of commodities identical or similar to those it already transports. 9 1
Similar requirements apply to applications for new operating
92
authority.
82. Id. at 961.
83. Id. The writ required that valid parts of the ICC's policy statement be designated as
rules, and that invalid portions be replaced with provisions allowing flexible commodities
descriptions and mandating specific showings of fitness. See id.
84. See Port Norris Express Co. v. ICC, 687 F.2d 803, 804 n.l (3d Cir. 1982) (describing
procedural history of ATA 1).
85. ICC v. American Trucking Ass'ns, No. A-810 (U.S. issued Mar. 29, 1982) (White, J.).
86. ICC v. American Trucking Ass'ns, 460 U.S. 1022 (1983).
87. Removal of Restrictions from Auths. of Motor Carriers of Property, 48 Fed. Reg.
36,290 (1983) (codified at 49 C.F.R. § 1165.10 (1984)); Acceptable Forms of Requests for
Operating Auth., 48 Fed. Reg. 36,285 (1983) (codified at 49 C.F.R. § 1160 (1984)); see also
ICC Proposes Replacement Rulesfor Invalid Truck Entry Policies, TRAFFIC WORLD, Aug. 15, 1983, at
40.
88. Removal of Restrictions from Auths. of Motor Carriers of Property, 48 Fed. Reg.
36,290, 36,293 (1983) (codified at 49 C.F.R. § 1165.10 (1984)). For a discussion of the Commission's policy against bulk restrictions on specific commodity grants, see C.D.B. Inc., Extension-Texas, 133 M.C.C. 114 (1983).
89. Removal of Restrictions from Auths. of Motor Carriers of Property, 49 C.F.R.
§ 1165.10 (1984).
90. Id.
91. Id.
92. Id. The principal difference between the requirements for new requests for authority
and requests for expansion of existing authority is that the standard for establishing "ability"
is slightly more stringent for the former. Id. The ability requirement for new applications
1984]
INTERSTATE COMMERCE COMMISSION
17
The rules no longer require applicants to submit the broad commodity descriptions detailed in the STCC. 93 The ICC requires,
however, that an applicant submitting a narrower description provide an adequate explanation as to why such a description is not
unduly restrictive. 94 An inadequate explanation would cause the
ICC to reject the application. 95 This seems to contradict, however,
the Fifth Circuit's conclusion that it is sensible and not unduly restrictive to allow carriers some choice regarding the nature of the
96
commodities they want to transport.
In a separate rulemaking proceeding, the Commission sought to
97
extend to freight forwarders its rules for removal of restrictions.
In Global Van Lines v. ICC9 8 however, the Fifth Circuit invalidated the
effort as beyond the scope of the Commission's authority.9 9 The
court found the restriction removal provisions of the 1980 Act 0 0 to
be limited to motor carriers because of the Act's silence concerning
necessitates a general showing that an applicant has experience, access to equipment and
facilities, and qualified personnel. Id. The rules do not require that an applicant specifically
establish its ability with respect to each commodity or location potentially involved in the
proposed service. The applicant must show only that it is able to serve representative commodities and territorial points within a reasonably broad service classification. Id.
93. For a discussion of the Commission's suggestion that applicants refer to the STCC's
provisions, see supra note 66 and accompanying text.
94. Acceptable Forms of Requests for Operating Auth., 48 Fed. Reg. 36,285, 36,287,
36,292 (1983) (supplementary information).
95. Id.
96. See American Trucking Ass'ns v. ICC (ATA I), 659 F.2d 452,465 (5th Cir. 1981), cert.
denied, 103 S. Ct. 1272 (1982). For a discussion of ATA I, see supra notes 67-79 and accompanying text. In early 1984 the American Trucking Association (ATA) filed a civil contempt
petition with the Fifth Circuit alleging that the ICC and its individual members repeatedly had
disobeyed the ATA 1I writ. Civil Contempt Petition, American Trucking Ass'ns v. ICC, No.
81-4026 (5th Cir. filed Oct. 6, 1983); see A TA Wants Court to Cite Commissionfor Contempt in Truck
Rights Case, TRAFFIC WORLD,Jan. 9, 1984, at 8. Reminding the court that the decision inATA I
had been effective for over two years, the petitioners identified numerous instances in which
the ICC had failed to comply with the court's orders and requested that the court impose
coercive individual fines. See id. ATA contended that the new proposed rules unlawfully
placed the burden on the applicant to prove that it was not fit, willing, and able to transport an
entire class of commodities, and if the applicant failed to meet this burden, the ICC would not
approve the request for limited operating authority. See id. Cf 49 U.S.C. §§ 10922-10923
(1982) (burden is on applicant to prove that it is fit, willing, and able to complete proposed
operations).
97. Freight Forwarder Restrictions, 132 M.C.C. 832 (1982) (rulemaking enabling freight
forwarders to remove restrictions from their licenses). For a description of the role of freight
forwarders in our nation's system of transportation, see Dempsey, The ContemporaryEvolution of
Intennodaland InternationalTransportRegulation under the Interstate Commerce Act: Land, Sea, and Air
Coordinationof Foreign Commerce Movements, 10 VAND. J. TRANSNAT'L L. 505 (1977), reprintedin 46
I.C.C. PRAc. J. 360 (1979); Dempsey, Foreign Commerce Regulation under the Interstate Commerce
Act: IntennodalCoordinationof InternationalTransportationin the United States, 5 SYRACUSEJ. INT'L
L. & Comm. 53 (1977).
98. 714 F.2d 1290 (5th Cir. 1983).
99. Id. at 1295.
100. 49 U.S.C. § 10922(i) (1982).
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
their applicability to freight forwarding.' 0 ' The court held that the
Act's provisions could not serve as a foundation for the ICC's rules
for removal or restriction on freight forwarders. 10 2 It concluded
that the general rulemaking provisions of the Interstate Commerce
Act confer power on the ICC only to enforce and carry out Congress's specific substantive mandates 0 3 and that the general provisions of the 1980 Act are not an independent source of rulemaking
0 4
power.1
Courts reviewing recent ICC decisions frequently have followed
the Fifth Circuit's lead in finding the ICC's application guidelines to
be unresponsive to the legislative intent underlying the 1980 Act.
For example, in Port Norris Express Co. v. ICC1° 5 the United States
Court of Appeals for the Third Circuit reversed an ICC decision to
grant bulk commodities authority to an applicant that had not expressed a need to obtain such authority. 10 6 Noting that the 1980
Act eased carrier entry, the Third Circuit nevertheless stated that
07
the Act clearly did not completely deregulate motor carrier entry. 1
The court emphasized the Commission's obligation to find that an
applicant is fit, willing, and able to perform the proposed service,
and that a public demand or need exists for the proposed operations.10 8 Furthermore, the court found that the legislative history of
the Act reveals that Congress intended the Commission to make
findings regarding public convenience and necessity in all cases, including unopposed cases.' 0 9
The court noted that the only existing evidence of the applicant's
fitness, willingness, and ability to transport bulk commodities was
the absence of a specific request by the applicant that bulk authority
be excepted from its application for general commodities author101.
amined
102.
103.
Global Van Lines v. ICC, 714 F.2d 1290, 1293-94 (5th Cir. 1983). The court exthe language of 49 U.S.C. § 10922 in light of its legislative history. Id.
Id.
Id. at 1295 (citing Central Forwarding, Inc. v. ICC, 698 F.2d 1266, 1278 (5th Cir.
1983)).
104. Id. at 1295-96.
105. 687 F.2d 803 (3d Cir. 1982).
106. Id. at 809. In Port Norris, 35 shippers had supported an application for general commodities authority. Id. at 806. None had expressed a need for bulk commodities transportation, and the applicant admitted that it had no present intent to engage in such movements.
The ICC nevertheless granted the applicant authority to transport bulk commodities in addition to the authority for which it had appropriately demonstrated a public need. Id. at 809. In
its decision the Commission addressed neither the public need for bulk movements nor the
applicant's fitness or willingness to engage in such transportation. Id. at 810.
107. Id. at 806.
108. Id.; see 49 U.S.C. § 10922(b)(1)(A), (B) (1982) (requirements for application for
authority).
109. Port Norris Express Co. v. ICC, 687 F.2d 803, 810 (3d Cir. 1982).
19841
INTERSTATE COMMERCE COMMISSION
.ity." 0 The applicant had requested nonspecific broad authority,
however, pursuant to the rules that the Fifth Circuit invalidated in
A TA L.I1 In Port Norris the court concluded that the applicant probably had not requested an exception for bulk commodities because
it felt compelled by the ICC's prevailing rules to apply for broad
authority that included bulk commodities even if it did not want
such authority. 1 2 Because there was insufficient evidence to establish the applicant's willingness to transport bulk commodities or to
acquire the equipment necessary for bulk movements, the court
113
found that there also was insufficient evidence of fitness.
Inadequate findings of fitness have motivated other courts to reverse the ICC's grants of operating authority. In Coastal Tank Lines
v. ICC,114 for example, the United States Court of Appeals for the
Sixth Circuit found that the Commission had failed to support the
grant with a finding of substantial evidence of the applicant's fitness. 115 The court noted that the 1980 Act altered entry requirements by lowering the standard under which an applicant must
prove a public need for its proposed operations. 1 6 It found, however, that only after the applicant sustains its burden of proving fitness and public need does the burden of proving inconsistency with
public convenience and necessity shift to opponents of the
application.117
110. Ia at 812.
111. For a discussion of ATA I, see supra notes 67-79 and accompanying text.
112. See Port Norris Express Co. v. ICC, 687 F.2d 803, 812 (3d Cir. 1982).
113. Id. at 813. Other courts have found the ICC's application guidelines to have an unjust effect on transport authority applications. In RTC Transp., Inc. v. ICC, 708 F.2d 617
(11th Cir. 1983), the court found arbitrary and capricious the ICC's blanket policies of requiring applicants to use standard commodities descriptions and of disallowing restrictions. Id. at
620 (citing American Trucking Ass'ns v. ICC (ATA I), 659 F.2d 452, 472 (5th Cir. 1981)). In
RTC Transportationthe ICC had issued general commodities authority despite the applicant's
express disclaimer of fitness, willingness, and ability to transport certain commodities. Id. at
618; see also Steere Tank Lines v. ICC, 666 F.2d 255 (5th Cir. 1982) (finding that guidelines
had coerced applicant into seeking authority for which it lacked fitness), cert. denied, 460 U.S.
1038 (1983).
114. 690 F.2d 537 (6th Cir. 1982). In Coastal Tank Lines the petitioner challenged the
grant of bulk carrier authority to Florida Rock and Tank Lines on the grounds that the petitioner would suffer economic harm, that there was no need for the proposed services, and that
the applicant's facilities were inadequate. Id. at 544.
115. Id. at 541. Noting that the Commission's decision contained no discussion of the
fitness requirement other than the statement that the applicant had shown itself to be fit,
willing, and able, the court recognized that Congress intended the ICC to make grants of
authority pursuant to findings of substantial evidence of fitness. Id.
116. Id. at 542.
117. Id.; see also RTC Transp., Inc. v. ICC, 708 F.2d 617 (11 th Cir. 1983) (finding that ICC
decision failed to show basis for declaration of applicant's fitness, especially when applicant
itself had claimed unfitness); Ritter Transp., Inc. v. ICC, 684 F.2d 86 (D.C. Cir. 1982) (finding
ICC decision wholly devoid of consideration of applicant's fitness to handle expanded transport authority), a]J'd on rehearing,697 F.2d 1153 (D.C. Cir.), cert. denied, 460 U.S. 1022 (1983);
Steere Tank Lines v. ICC, 666 F.2d 255 (5th Cir. 1982) (finding no evidence of fitness to
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
In Coastal Tank Lines the court observed that there was sufficient
evidence for the ICC to have concluded that the applicant had
demonstrated a public need for its proposed services. 1 18 Some
courts, however, have noted that the ICC has inadequately considered the public need requirement in granting operating authority.
For example, in Containerfreight Corp. v. United States" 9 the United
States Court of Appeals for the Ninth Circuit found no evidence of a
useful public purpose or need to support the Commission's issuance
of statewide operating authority to the applicant.120 Recognizing
that not all of a state's municipalities must submit evidence of need
to support granting statewide authority,' 2' the court, nevertheless,
held that an application must exhibit a need for support from at
least a representative number of municipalities.' 22 In Containerfreight
Corp. the shippers had demonstrated no more than a need for service between a few specific areas in the state. 2 3 The Commission's
failure to make findings concerning the need for the applicant's service in a greater portion of the state prompted the court to reverse
12 4
and remand the Commission's decision.
In addition, courts have reversed ICC decisions to grant operating authority to applicants who have failed to produce evidence of
fitness sufficient to overcome the stigma of prior unlawful operations. In Curtis, Inc. v. ICC' 2 5 the United States Court of Appeals for
the Tenth Circuit noted that the ICC had not adduced any favorable
evidence to justify granting new operating authority to an applicant
who previously had disregarded applicable statutes and regulations. 12 6 In another case, the Ninth Circuit similarly found no evijustify ICC's grant of general bulk commodities authority to applicant that previously had
carried only one commodity), cert. denied, 460 U.S. 1038 (1983).
118. Coastal Tank Lines v. ICC, 690 F.2d 537, 544 (6th Cir. 1982).
119. 685 F.2d 329 (9th Cir. 1982).
120. Id. at 333.
121. Id. at 332 (citing American Trucking Ass'ns v. ICC (ATA I), 659 F.2d 452, 475 (5th
Cir. 1981), cert. denied, 103 S. Ct. 1272 (1983)).
122. Id.
123. Id.
124. Id.; see also C & H Transp., Inc. v. ICC, 704 F.2d 850 (5th Cir. 1983) (finding no
rational relationship between applicant's evidentiary presentation of need and Commission's
issuance of nationwide transport authority); Refrigerated Transp. Co. v. ICC, 686 F.2d 881
(11th Cir. 1982) (holding that ICC's grant of broad authority to applicant producing only
limited evidence of need conflicted with congressional intent); Refrigerated Transp. Co. v.
ICC, 663 F.2d 528 (5th Cir. 1981) (finding no substantial evidence of public need to justify
ICC's grant of multistate authority to applicant).
125. 662 F.2d 680 (10th Cir. 1980).
126. Id. at 688. The court observed that the ICC had failed to apply its own test for
evaluating an applicant that had engaged in prior illegal activity. Id. Under this test, the ICC
must consider: (1) the nature and extent of the prior violations; (2) mitigating or extenuating
circumstances; (3) whether the conduct demonstrates a flagrant and persistent disregard of
the Commission's rules and regulations; (4) whether the carrier has made sincere efforts to
1984]
INTERSTATE COMMERCE COMMISSION
dence in the record to support issuing operating authority to a
company whose president had engaged in fraud, misrepresentation,
27
and embezzlement.'
In Steere Tank Lines v. ICC1 28 the Fifth Circuit expressed its weari-
ness over the plethora of ICC decisions that it had analyzed on appeal since the enactment of the Motor Carrier Act of 1980.129
Although the court acknowledged that on occasions it had allowed
grants of authority to stand in spite of the Commission's minimal or
cryptic findings, the court stated that it could not countenance cases
in which the ICC made no factual finding whatsoever regarding the
applicant's fitness.' 3 0 Reversing the ICC's grant of operating authority, the Fifth Circuit observed in Steere Tank Lines that the ICC
had completely abdicated to the courts its responsibilities for fact
finding under the Adminstrative Procedure Act (APA)' 3 1 and the
32
1980 Act.1
In another case, the Fourth Circuit echoed the Fifth Circuit's displeasure with the substance of the decisionmaking records that the
ICC had been forwarding to reviewing courts.133 Because the necessity of performing an unguided examination of administrative
records prolongs judicial review, the court found the inadequacies
in the depth and specificity of ICC decisions to be counterproductive to the congressional goal of expediting the carrier licensing
process.134
B.
Sale of DormantAuthority
The ICC's unsubstantiated conclusions and unwarranted departures from its congressional mandate and established policies are
not solely endemic to decisions concerning commodity and territocorrect the mistakes; and (5) the applicant's present willingness and ability to comport with
rules and regulations. Id. (citing Associated Transp., Inc., Extension-TVA Plant, 125 M.C.C.
69 (1976)).
127. See Containerfreight Corp. v. United States, 685 F.2d 329 (9th Cir. 1982).
128. 714 F.2d 1300 (5th Cir. 1983).
129. Id. at 1302-03. The court observed:
With hope, this case will signal the demise of a virulent stream of ICC cases which
has recently plagued the motor carrier industry. Frequent outbreaks have occurred
over the last two years leaving trucking firms languishing with ailing certifications.
Once again, this court faces a possible epidemic of infirm certificates and swollen
transportation authority.
Id. (citations omitted).
130. Id. at 1314-15.
131. See 5 U.S.C. § 557(c) (1982).
132. Steere Tank Lines v. ICC, 714 F.2d 1300, 1314-15 (5th Cir. 1983).
133. Central Transp., Inc. v. United States, 694 F.2d 968, 972 (4th Cir. 1982) (cases are
legion in which ICC has been criticized for making perfunctory, conclusory findings on all but
the ultimate facts).
134. See id. at 973.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
rial descriptions. In Wheaton Van Lines v. ICC13 5 the United States
Court of Appeals for the District of Columbia Circuit addressed
such problems on review of an ICC decision that approved a sale of
dormant operating authority and the elimination of a gateway.' 3 6
Under the Interstate Commerce Act, an applicant wishing to acquire the dormant operating authority of another carrier must prove
that the acquisition is consistent with the public interest. 13 7 A gateway elimination action1 38 requires an applicant to meet the higher
standard of proving that public convenience and necessity warrant
the change. 1 39 In prior decisions, the ICC had delineated tests to
evaluate applicants' eligibility under both of these standards of
140
proof.
In Wheaton Van Lines the court found that the ICC had not adhered
to either of its established tests in approving the sale of operating
authority and the requested elimination of a gateway.' 4 ' The court
observed that the Commission had failed to provide an adequate
explanation for its departure from established policy and that it had
drawn broad evidentiary conclusions unsupported by the evidence.' 4 2 Characterizing the public testimony on which the Commission based its decision as "bland,"' 43 the court stated that the
135. 671 F.2d 520 (D.C. Cir. 1982).
136. Id.
137. See 49 U.S.C. §§ 11343-11344 (1982) (general provision and procedure governing
consolidation, merger, and acquisition of control of carrier authority).
138. A "gateway" exists when a motor carrier holds two or more grants of authority that
have a common point for permitted carriage. In a gateway elimination action, the carrier
requests that the ICC join the separate grants of authority to enable the carrier to provide
through service by using the gateway to cross among authorized areas. See Wheaton Van
Lines v. ICC, 671 F.2d 520, 523 (D.C. Cir. 1982) (discussing nature of gateway elimination
action).
139. See 49 U.S.C. § 10922(i)(1)(A) (1982) (gateway elimination requirements); see also C
& H Transp. Co. v. ICC, 589 F.2d 565, 569 (D.C. Cir. 1978) (finding authorization for gateway elimination subject to stricter standard of proof than that applicable to transfer of authority), cert. denied, 440 U.S. 911 (1979).
140. In Central Transp., Inc.-Purchase (Portion)-Piedmont Petroleum, 127 M.C.C. I
(1977), the ICC established a tripartite test for determining whether the transfer of dormant
operating authority is consistent with the public interest. Id. at 4. Under this test, the applicant must show that the public will benefit from the reactivation of dormant rights. Id If this
showing is sufficient, the burden shifts to protesting carriers to demonstrate that the proposed
transfer could cause significant harm. Id. The applicant then must present evidence that sufficient public need for the proposed service exists to offset the harm to opponents of the transfer. See id. at 5.
The ICC's test for evaluating gateway elimination applications first appeared in ChildressElimination Sanford Gateway, 61 M.C.C. 421 (1952). Under the Childress test, the ICC required an applicant to show that in the past it had engaged in actual and substantial traffic
through the gateway and that elimination of the gateway would not improve materially the
applicant's competitive position to the detriment of existing carriers. See id. at 428.
141. See Wheaton Van Lines v. ICC, 671 F.2d 520, 527 (D.C. Cir. 1982).
142. Id.
143.
Id. at 524.
19841
INTERSTATE COMMERCE COMMISSION
23
agency's evidentiary findings were notable for their inadequacy. 144
Although it recognized that the judiciary has some obligation to
defer to the expertise and primary jurisdiction of administrative
agencies,' 4 5 the court emphasized that judicial restraint should not
deteriorate into judicial inertia, particularly when the agency has
been relaxing its traditional policies. 1 4 6 Under such circumstances,
the court held that the agency must demonstrate that it actually has
engaged in reasoned decisionmaking and has appropriately weighed
1 47
and balanced the conflicting interests with policy considerations.
Repeating an earlier pronouncement,1 48 the court admonished the
Commission that it must either conform to its own precedent or ex49
plain its reason for departure.
C. Master Licensing
Despite the express prohibition in the 1980 Act against master
certification of carriers,' 50 the ICC was slow to heed its legislative
mandate. In Aero Mayflower Transit Co. v. ICC- 5 1 the District of Columbia Circuit invalidated a post-Act master certification by the ICC
and reversed multiple grants of nationwide authority to transport
52
general commodities for the federal government.
In holding that the 136 affected applicants had fulfilled the "public convenience and necessity" criterion of eligibility for authority,
the Commission had relied on one of its decisions issued prior to
the enactment of the 1980 Act that held that any qualified motor
carrier deserved a master certificate for such authority. 5 3 Pursuant
to this earlier decision, the Commission had deemed an applicant
144. Id. at 523. The court noted that the Commission's failure to apply the Childress criteria left the court with no reasoned basis on which to review the gateway elimination proceeding. Id. The Commission failed to show how it reached its determination that the applicant's
actual prior utilization of the gateway was substantial. Id. By not evaluating whether elimination of the gateway would materially improve the applicant's competitive position to the detriment of existing carriers, the ICC also failed to address the second prong of the Childress test.
Id. Its determination was not supported by a discussion of witnesses' testimony and contained
no analysis of shippers' needs. Id. Without this foundation, the court found no support for
the Commission's conclusion that there would be no significant adverse impact upon the competitive structure. Id.
145. Id. at 527.
146. Id. (quoting Volkswagenwerk Aktiengesellschaft v. FMC, 390 U.S. 261, 272 (1968)).
147. Id.
148. See C & H Transp. Co. v. ICC, 589 F.2d 565, 575 (D.C. Cir. 1978) (finding award of
direct route authority unsupported by substantial evidence), cert. denied, 440 U.S. 911 (1979).
149. Wheaton Van Lines v. ICC, 671 F.2d 520, 527 (D.C. Cir. 1982) (quoting C & H
Transp. Co. v. ICC, 589 F.2d 565, 575 (D.C. Cir. 1978), cert. denied, 440 U.S. 911 (1979)).
150. See 49 U.S.C. § 10922(b)(3) (1982) (banning master certification). For a discussion
of master certification, see supra notes 47-50 and accompanying text.
151. 686 F.2d 1 (D.C. Cir. 1982).
152. Id. at 10.
153. See Transportation of Government Traffic, 131 M.C.C. 845, 865 (1979).
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
qualified for master certification if it demonstrated only fitness, willingness, and ability to perform the designated task.' 54 The ICC had
presumed from such a showing that the applicant's proposed operation satisfied the public convenience and necessity.155 In Aero
Mayflower Transit Co. the court found no ambiguity in Congress' ban
on master certification in the 1980 Act. 15 6 The court, therefore, held
that the ICC's issuance of such certificates following the effective
date of the Act was beyond the scope of the Commission's
powers. 157
D. Issuance of PassengerAuthority
Although the 1980 Act did not change the traditional criteria governing entry and ratemaking for passenger carriers, 15 8 Congress
subsequently liberalized these criteria in the Bus Regulatory Reform
Act of 1982.159 In several recent instances, however, courts have reversed the Commission's liberal entry decisions in the passenger
field. 160
In Trailways, Inc. v. ICC16 1 the District of Columbia Circuit addressed a plaintiff's claim that the ICC had ignored a material issue
by granting intermediate point authority to a competing passenger
carrier. 16 2 Trailways argued that in finding that the company had
not met its burden of proving that the grant of authority would result in adverse consequences, the ICC had failed to consider the systemwide impact on the company, its subsidiaries, and the industry in
general.1 63 The court agreed, noting that it was unclear whether the
154. Id.
155. Id.
156. Aero Mayflower Transit Co. v. ICC, 686 F.2d 1, 7 (D.C. Cir. 1982); see H.R. REP. No.
1069, 96th Cong., 2d Sess. 78, reprinted in 1980 U.S. CODE CONG. & AD. NEWS 2283, 2297
(legislative history of Act's prohibition against master certification).
157. Aero Mayflower Transit Co. v. ICC, 686 F.2d 1, 7 (D.C. Cir. 1982).
158. See Motor Carrier Act of 1980, Pub. L. No. 96-296, § 5(a), 94 Stat. 793, 794-96 (codified as amended at 49 U.S.C. § 10922 (1982)) (requirements for issuing operating authority).
159. See Pub. L. No. 97-261, §§ 6(c), 7, 8, 96 Stat. 1102, 1104, 1108-09 (1982) (codified at
49 U.S.C. § 10922 (1982)).
160. See infra notes 161-75 and accompanying text (discussing judicial reversals of ICC
grants of passenger authority).
161. 673 F.2d 514 (D.C. Cir. 1982).
162. Id. at 516. In Trailways, Inc., Greyhound Lines had applied to the ICC for approval of
additional direct service to an intermediate point on an already authorized direct route. Trailways, which operated a subsidiary over the same route, opposed Greyhound's application.
Although it noted that a grant of authority to Greyhound would divert traffic and revenue
from Trailways' subsidiary, the ICC nonetheless issued an interim decision granting the application. Id. at 516. The court noted that it was unclear from the evidence that Trailways had
established whether such diversion would create substantial adverse consequences. Id.
163. Id. at 519.
1984]
INTERSTATE COMMERCE COMMISSION
Commission had even considered systemwide harm. 16 4
The court emphasized the Commission's obligation to identify
and balance competing interests in promoting competition, maintaining healthy economic conditions, preserving an adequate existing service, and providing for future needs.' 6 5 Recognizing that
the burden of proof assigned to the opposing party in a passenger
authority application case traditionally requires more than a showing of financial harm,' 66 the court observed that underlying the
protestant's increased burden is the assumption that an application
for new or expanded route authority generally favors competition. 16 7 Although such an assumption may be valid in the great majority of cases, it is not necessarily valid in all cases.' 68 The court
reminded the Commission not to become "so enamored of procedural rules regarding burden of proof that it overlooks its perceived
mission to preserve competition overall and its ultimate duty to pro69
tect the public interest."'
In Amador Stage Lines v. United States 170 the Ninth Circuit considered an ICC issuance of broad passenger authority to Quality Coach
Lines that appeared unsupported by the evidence presented to show
the public need for the carrier's services. 1 7 1 The Commission ar164. See id. (focus of inquiry into systemwide impact of grant of authority was "shallow at
best").
165. Id. at 518.
The court reemphasized that injury to existing carriers through competition becomes relevant when there is corresponding injury to the public. Id. at 522. Noting that the Interstate
Commerce Act reflects Congress' desire to benefit the people, not to create protected monopolies for those professing to serve the public, the court observed:
If the Commission is to be true to its duty in cases of this sort to balance convenience
to the applicant and any adverse impact or injury to the public as a whole, the harm
inflicted by a monopolist or a near monopolist on a vulnerable competitor, which
Trailways claims to be, deserves especially careful attention. It received none in this
case. We find in this failure alone sufficient reason to declare the Commission's ultimate conclusions and its decision arbitrary and capricious and to order that this matter be remanded for reconsideration.
Id.
166. Id. at 521.
167. Id.
168. See id.
169. Id. The court stated that it would normally be reluctant to direct the Commission to
address the issue of an anticompetitive systemwide impact in any particular proceeding. Id. at
523. The court characterized the issue, however, as vital to reasoned decisions in the individual certification proceedings involving both Greyhound and Trailways and found that the failure of the ICC to consider the issue over the course of several years necessitated judicial
direction in the case. Id.
170. 685 F.2d 333 (9th Cir. 1982).
171. Id. In Amador Stage Lines, Quality Coach Lines, a subsidiary of Frontier Enterprises,
applied to the ICC for a certificate of public convenience and necessity to transport passengers. Id. at 335. To support its application, Quality submitted no evidence of consumer support for the proposed operation. Id. It submitted only a statement from the parent
corporation explaining that Quality sought to provide previously unavailable luxury package
tours. Id. Denying an oral hearing on the objections of Amador Stage Lines, the ICC granted
THE AMERICAN UNIVERSIYY LAW REVIEW
[Vol. 34:1
gued that its nearly unlimited grant of operating authority to the
applicant was commensurate with its policy of favoring broad certificate issuances unless some compelling justification exists for limiting the authority. 172 The court found this reasoning inconsistent
with the Interstate Commerce Act's requirement that the ICC issue
operating authority only when it reasonably can conclude that the
173
public convenience and necessity warrant the proposed service.
The court concluded that the Commission's issuance of a license
that extends significantly beyond the applicant's need was an abuse
of discretion. 174 Thus, the court reprimanded the ICC for presenting it with unenlightening and conclusory findings of fact in general
75
language largely borrowed from the statute.'
E. Standing Findings
Following promulgation of the 1980 Act, the ICC granted standing to hundreds of petitioners protesting contract carrier applications to transport household goods.' 7 6 In a sudden departure from
its standard practice, however, the ICC denied standing to several
motor carriers that sought to protest the issuance of household
goods authority to one shipping company on the grounds that the
protesters had failed to engage in active solicitation of shippers'
traffic.' 77 Although the statutory criteria governing standing to pronationwide charter authority to Quality to transport passengers on tours beginning or ending
in California or Nevada. Id. The Ninth Circuit held that the Commission has discretion to
deny an oral hearing even when material facts are in dispute if the dispute may be resolved
adequately by. written submissions. Id. The Ninth Circuit found, however, that because the
applicant's own statements comprised the only evidence supporting Quality's application,
Quality's submission was inadequate to establish that it was fit, willing, and able to provide the
transportation and that the transportation was required by public convenience and necessity.
Id. at 336.
172. Id.
173. Id.; see 49 U.S.C. § 10922(b) (1982) (requirements for issuance of operating
authority).
174. Amador Stage Lines v. United States, 685 F.2d 333, 336 (9th Cir. 1982).
175. Id. The procedural history ofAmador Stage Lines did not end with the Ninth Circuit's
decision in 1982. Quality effectively ignored the court's conclusions and neither Quality nor
the Commission perceived that the Ninth Circuit decision prohibited a continuation of Quality's operations. Three months after the Ninth Circuit issued its remand, Amador Stage Lines
petitioned the Ninth Circuit to issue an emergency writ of mandamus directing the ICC to
comply with the court's mandate. The court granted the writ of mandamus without qualification and compelled the ICC to vacate immediately Quality's certificate of convenience and
necessity. Amador Stage Lines v. United States, No. 81-7491, writ of mandamus issued (9th
Cir. Jan. 4, 1983). Only after the implicit threat by the court of a contempt citation did the
ICC order the revocation of Quality's certificate. See Quality Coach Lines, Common Carrier
Application, No. MC-153412 F,order vacating certificate of public convenience (ICCJan. 17,
1983) (unpublished). For further discussion of Amador Stage Lines, see Court Language is Focus of
"Polic," on Remanded Truck Authority Grants, TRAFFIC WORLD, Mar. 28, 1983, at 38.
176. See Aero Mayflower Transit Co. v. ICC, 699 F.2d 938, 940 (7th Cir. 1983) (discussing
history of ICC's treatment of standing issue).
177.
See id. at 941.
1984]
INTERSTATE COMMERCE COMMISSION
27
test require that the protesting carrier demonstrate either prior
transportation for or solicitation of shippers,17 8 the Commission has
acknowledged by regulation that direct solicitation of shippers may
be inappropriate for carriers transporting household goods. 17 9
In Aero-Mayflower Transit Co. v. ICC18 ° the United States Court of
Appeals for the Seventh Circuit found that the ICC had abused its
discretion by basing its denial of standing on the opponent carriers'
lack of solicitation.18 ' The court observed that the Commission's
decision not only failed to clarify the type of solicitation that would
be sufficient to warrant standing, 8 2 but also revealed no hint as to
whether the ICC had acted arbitrarily or had repudiated its views on
solicitation by household goods carriers.18 3 Although it noted that a
valid interpretation of the standing provision might have permitted
the ICC to deny standing to the petitioners in the case, the court
declared itself unable to affirm the order under review without
178. See 49 U.S.C. § 10923(b)(4) (1982). The Motor Carrier Act of 1980 allows standing
to protest the issuance of operating authority to a party provided that:
(A) (1) it possesses authority to handle, in whole or in part, the traffic for which
authority is applied;
(2) it is willing and able to provide service that meets the reasonable needs of
the shippers involved; and
(3) it has performed service within the scope of the application during the
previous 12-month period or has, actively in good faith, solicited [such]
service...
(B) it has pending before the Commission an application filed prior to the application being considered for substantially the same traffic; or
(C) the Commission grants leave to intervene upon a showing of other
interests...
Id.
179. See Rules of Practice-Protest Standards in Motor Carrier Application Proceedings;
Special Rules, 43 Fed. Reg. 50,908 (1978) (codified at 49 C.F.R. § 1100.247). These regulations permit carriers to meet standing requirements by engaging in indirect solicitation
through such mediums as newspaper advertisements, brochures, the yellow pages, and television and radio commercials. Id. at 50,909 (1978).
180. 699 F.2d 938 (7th Cir. 1983).
181. Id. at 942.
182. Id.
183. Id. If the Commission's decision in Aero Mayflower Transit Co. represented a sudden
change in the ICC's standing requirements, the lack of notice to the affected parties prevented
them from assembling a case for standing, and, therefore, constituted a further abuse of discretion by the ICC. Courts have commonly held that when an agency wishes to change its
standing requirement in an adjudicatory setting, the parties must be given notice and an opportunity to present evidence on the new standard. See, e.g., Hatch v. Federal Energy Regulatory Comm'n, 654 F.2d 825, 845 (D.C. Cir. 1981) (APA, 5 U.S.C. § 554(b)(3) (1982), requires
agency to give affected party notice and opportunity to introduce evidence on proposed new
standards); American La. Pipe Line Co. v. Federal Power Comm'n, 344 F.2d 525, 528-29
(D.C. Cir. 1965) (fairness requires opportunity to address change); Hill v. Federal Power
Comm'n, 335 F.2d 355, 365 (5th Cir. 1964) (agency must present new standards in manner
that gives affected parties meaningful opportunity to comply). The ICC itself has stated that in
the absence of compelling circumstances a new rule should not be applied without notice. See
General Increase--Transcontinental, 319 I.C.C. 792, 803 (1963) (ICC delayed enforcement
of tariff increase pending publication and evaluation of rule).
THE AMERICAN UNIVERSITY LAW REVIEW
knowing the basis of the ICC's interpretation.18
F.
[Vol. 34:1
4
Fuel Surcharge Rules
Although mostjudicial reversals of ICC decisions since enactment
of the 1980 Act have involved unauthorized deregulatory efforts by
the ICC,185 in at least one instance the Commission has acted in
86
excess of its regulatory authority. In CentralForwarding,Inc. v. ICC
the Fifth Circuit reversed the ICC's ambitious exertion of regulatory
authority that established appropriate levels at which motor carriers
18 7
should compensate owner-operators for increased fuel costs.
The Commission had begun regulating fuel surcharges in the late
1970's as an emergency, and ostensibly temporary, response to
wildly escalating fuel prices and labor unrest. 8 The ICC promulgated its new rules, however, well after the initial emergency-when
89
fuel prices had stabilized and labor unrest had subsided.'
The court recognized that the ICC's regulations asserted enormous power over the motor carrier industry by removing from the
control of individuals the private determination of their leasing arrangements. 90 Because the rules caused tens of thousands of private parties to provide out-of-pocket reimbursements of hundreds
of millions of dollars, the court found that the regulation in effect
rewrote each private agreement to the benefit of one party and the
detriment of the other.' 9 '
After a thorough review of the Interstate Commerce Act and its
numerous amendments, the court found no statutory basis for the
agency's ambitious fuel surcharge program.' 9 2 Although it recog184. Aero Mayflower Transit Co. v. ICC, 699 F.2d 938, 941 (7th Cir. 1983).
185. See supra notes 54-184 and accompanying text (discussing judicial reversals of ICC
deregulatory decisions).
186. 698 F.2d 1266 (5th Cir. 1983).
187. Id. at 1284, vacating, Modification of the Motor Carrier Fuel Surcharge Program, 365
I.C.C. 311 (1981).
188. See Central Forwarding, Inc. v. ICC, 698 F.2d 1266, 1269-71 (5th Cir. 1983) (describing history of ICC regulation of fuel surcharges).
189. Id.; see Modification of the Motor Carrier Fuel Surcharge Program, 365 I.C.C. 311
(1981). The rule that the Fifth Circuit vacated had instituted a mileage based plan that allowed for reimbursement to owner-operators for all costs above 63.5 cents per gallon on a
"miles traveled" basis. Id. The ICC justified the adoption of the rule by citing a perceived
need to help owner-operators increase their bargaining power. Id.
190. See Central Forwarding, Inc. v. ICC, 698 F.2d 1266, 1272 (5th Cir. 1983).
191. Id.
192. Id. at 1278. The ICC had contended that the general rulemaking authority contained
in the 1980 Act, 49 U.S.C. § 10101(a)(2)(6) (1982), empowered it to prescribe any regulations
that it deemed necessary to carry out the general legislative policy. See Central Forwarding,
Inc. v. ICC, 698 F.2d 1266, 1282 (5th Cir. 1982). The Fifth Circuit rejected this argument
after finding that the national transportation policy did not constitute an independent source
of rulemaking power for the ICC. Id. at 1283 (citing American Trucking Ass'ns v. ICC (ATA
I), 659 F.2d 452 (5th Cir. 1981), cert. denied, 460 U.S. 1022 (1983)). The court noted that
1984]
INTERSTATE COMMERCE COMMISSION
nized that Congress had vested in the agency sweeping powers to
regulate matters normally left to market forces, 193 the court nevertheless stated that "Congress has not written a blank check to the
agency, for it has admonished the Commission to stay within its specifically vested powers."' 9 4 The court concluded that the ICC had
exceeded its statutory authority by retaining fuel surcharge regulations in the absence of an emergency situation. 19 5
G. Intercorporate Hauling Rules
The Motor Carrier Act of 1980 exempts from the ICC's jurisdiction for-hire motor carrier transportation of property "by a person
who is a member of a corporate family for other members of such
corporate family."'
9 6
Congress created this exemption to promote
efficiency by allowing corporations to haul, free from regulation,
their own goods in equipment belonging to wholly owned subsidiary corporations.' 9 7 The regulations that the ICC promulgated to
effectuate the provision of the 1980 Act exempted subsidiary corporations established solely for transportation purposes, and individuals, partnerships, and other nonincorporated enterprises engaged in
compensated intercorporate hauling (CIH) operations. 98
In American Trucking Association, Inc. v. ICC 199 the United States
Court of Appeals for the Eleventh Circuit reviewed the ICC's CIH
regulations. The court found the regulations pertaining to subsidiary corporations to be valid under the Act. 200 It held, however, that
unincorpothe ICC had exceeded its statutory mandate by20granting
1
activities.
CIH
for
exemption
an
rated entities
Congress intended the national transportation policy to facilitate the ICC's achievement of
the specific goals and objectives outlined in the 1980 Act and not to serve as justification for
any action that the ICC deemed proper. Id.
193. Id. at 1279.
194. Id. at 1284 (citing Motor Carrier Act of 1980, Pub. L. No. 96-296, § 3(a), 94 Stat.
793, 793 (codified at 49 U.S.C. § 10101 note (1982) (Congressional Findings and Declaration
of Policy)). The court discussed the legislative history of the Act and noted Congress' emphatic intent to give the Commission explicit direction for the regulation of the motor carrier
industry. Id. at 1278 (citing H.R. REP. No. 1069, 96th Cong., 2d Sess. 10-11, reprintedin 1980
U.S. CODE CONG. & AD. NEws 2283, 2292-93).
195. Id. at 1284; see also ICC v. Hemingway Transp., Inc., No. 81-1750-MA (D. Mass. Feb.
18, 1982) (characterizing ICC's fuel surcharge rules as poorly conceived and inequitably
administered).
196. 49 U.S.C. § 10524(b) (1982). The Act defines the term "corporate family" to include a parent corporation and all of its wholly owned subsidiaries. Id. § 10524(c).
197. See H.R. REP. No. 1069, 96th Cong., 2d Sess. 21-22, reprinted in 1980 U.S. CODE
CONG. & AD. NEWS 2283, 2303-04.
198. 49 C.F.R. § 1167.1-.4 (1984).
199. 672 F.2d 850 (11th Cir. 1982).
200. Id. at 853.
201. Id. at 853-54. The court observed: "The [statutory] language clearly precludes an
interpretation that would permit any entity other than a corporate one to receive exemption
THE AMERICAN UNIVERSITY LAW REVIEW
IV.
[Vol. 34:1
THE ICC's METHODICAL DESTRUCTION OF THE COMMON
CARRIER SYSTEM
Despite having received such strong admonition from Congress 20 2 and from almost every federal court of appeals 20 3 to remain
within the well-defined parameters of the 1980 Act, the ICC has refused to moderate its ambitious policies of de facto deregulation.
Instead, the Commission has appeared more determined than ever
to continue its practice of thermonuclear deregulation. Furthermore, despite the opposition of the legislative and judicial branches,
the executive branch has continued to cast a Cheshire cat smile of
approval on the ICC's activities. 20 4 In a carefully orchestrated and
comprehensive series of decisions, the Commission has proceeded
to erode the fundamental concepts of economic regulation and in
several instances has exceeded the limits of its statutory authorization. 20 5 Although the judiciary has repeatedly chastised the Commission, the ICC has continued to ignore the mandates of the courts
20
and to issue decisions as if no judicial reversal had occurred.
By late 1983 the Commission had issued operating authority to
07
more than eighteen thousand new carriers under the 1980 Act,
and had issued over sixty thousand new certificates. 20 8 Most applicant carriers have escaped serious fitness scrutiny. In one instance,
the ICC issued operating authority to a convicted felon.2 0 The
scope of granting authority has been more liberal than ever, from
both a commodity and territorial perspective. In most instances, a
carrier must only present a modicum of evidence of public need and
fitness when filing for a certificate or permit to attain almost immediate operating authority.
The Commission's liberal granting authority has led to a market
overcapacity generating intensive price wars among carriers. During
for CIH activities. Indeed, our assessment of the statute on this point might be best expressed in the words of an old doctrine in tort law: res ipsa loquitor." Id. (emphasis in original).
202. See supra notes 26-53 and accompanying text (discussing legislative history of 1980
Act).
203. See supra notes 54-201 and accompanying text (discussing judicial reversals of ICC
rulings).
204. For a discussion of the role of the president in recent ICC policymaking, see infra
notes 326-28 and accompanying text.
205. See supra notes 54-201 and accompanying text (analyzing instances in which ICC has
exceeded statutory limitations).
206. See supra notes 96 & 175 and accompanying text (discussing Commission's failure to
heed judicial decisions).
207. See Hearings Before the Senate Comm. on Commerce, Science, and Transportation,98th Cong.,
1st Sess. 26 (1983) (statement of Reese H. Taylor, Jr., Chairman, ICC).
208. See id.
209. See Wilkett v. ICC, 710 F.2d 861 (D.C. Cir. 1983); see also ICC Says It Is Following
Mandate to Deregulate Truck, Bus Industries, TRAFFIC WORLD, Nov. 21, 1983, at 11.
1984]
INTERSTATE COMMERCE COMMISSION
the fiscal year 1982, motor carriers initiated 180,829 independent
rate actions. 210 The following year, this figure grew to 230,184.211
The total number of rate filings increased from 725,864 in fiscal
year 1982 to 1,069,782 during fiscal year 1983.212 Clearly, the industry has been responding to rapid and radical deregulation.
This section will examine several of the recent ICC rulemakings
and policy pronouncements that further the deregulatory trend.
Courts willing to defer to the ostensible expertise of administrative
agencies have upheld some of these pronouncements. 21 3 Other
ICC actions on appeal to federal courts are so recent that the courts
have not yet decided their validity. 21 4 Collectively, these ICC actions have eroded much of the foundation of the traditional common carriage system.
A.
Demise of the Common CarrierObligation
Having issued operating authority to thousands of applicants
broader than was warranted either by the public need or by applicants' showings of fitness, willingness, and ability, the Commission
was caught on the horns of a dilemma. The ICC traditionally has
deemed the common carrier's obligation to shippers to provide adequate and nondiscriminatory service on demand as coterminous
2 15
with the carrier's certificate of public convenience and necessity.
Yet, by issuing certificates permitting bulk transportation by carriers
without tank trucks, or by granting statewide authority to applicants
with only a few pieces of equipment, the Commission set the stage
for imposing legal liability on carriers if they failed to serve shippers
requesting such service. In many instances, the overly generous certificates exceeded the scope of authority that the applicant had actu2 16
ally requested.
210. See ICC, Pricing Practices of Motor Common Carriers Since the Motor Carrier Act of
1980, at 4 (Sept. 13, 1984) (unpublished) [hereinafter cited as Pricing Practices].
211. See Truck Industry on Recovery Route but ATA Warns of Some Roadblocks, TRAFFIC WORLD,
Dec. 26, 1983, at 12. In contrast to the recent statistics, independent rate actions totaled
27,141, 60,000, and 115,085 in calendar years 1979, 1980, and 1981 respectively. See Pricing
Practices, supra note 210, at 4.
212. See Hearings Before the Senate Comm. on Commerce, Science, and Transportation,98th Cong.,
ist Sess. 27 (1983) (statement of Reese H. Taylor, Jr., Chairman, ICC).
213. For a discussion of cases in which courts have deferred to the ICC's expertise, see
infra note 289 and accompanying text.
214. See infra notes 236 & 278 and accompanying text.
215. See CongressionalIntent and Agency Discretion, supra note 16, at 48-50 & n.21I (applicant
must prove that proposed service is consistent with public convenience and necessity); see also
Jones, Origins of the Certificate of Public Convenience and Necessity: Developments in the States, 18701920, 79 COLUM. L. REv. 426, 429 (1979) (tracing historical bases for applicant's burden of
proof).
216. See supra notes 54-184 and accompanying text.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
Rather than modify its approach with a more moderate licensing
policy, one corresponding to the applicant's willingness and ability
to provide service within a reasonably defined territory, the Commission assaulted the common carrier obligation. Regardless of the
provisions of the Interstate Commerce Act and its amendments that
codify the traditional common carrier obligation, 2 17 the Commission recently announced a new degenerative policy concerning the
2 18
obligation.
The ICC determined that a common carrier does not violate its
obligations by declining to provide service within the scope of its
operating authority if it does so because such service is economically
or operationally impractical in the circumstances at the time of the
service request. 2 19 The Commission overruled its prior decisions
that held that a carrier had an absolute duty to provide requested
22 0
service within the scope of its operating certificate.
B.
Blurring the Distinctions Between Private and For-Hire Carriage
In several proceedings the Commission has used its powers to
blur the traditional distinctions between private and for-hire transportation. Perhaps the most significant exemption to motor carrier
regulation has been the exemption that Congress granted to private
carriage. 22 1 Private carriers operated all but one million of the more
217. See 49 U.S.C. § 10701 (1982) (establishing standards for rates, classifications, routes,
rules, and practice); id. § 10762 (establishing general tariff requirements); id. § 10922 (delineating certification requirements); id. § 11101 (outlining common carrier's service obligation). Former Secretary of Transportation Drew Lewis, a proponent of deregulation, noted
that the Interstate Commerce Act imposes a common carrier obligation "that requires that
carriers be able to serve all shippers covered by their operating authority." Opening Guns Are
Heard in Fight to Eliminate Transport Regulation, TRAFFIC WORLD, Jan. 24, 1983, at 31.
218. See Elimination of Certificates as the Measure of"Holding Out," 48 Fed. Reg. 11,136
(1983).
219. Id. at 11,137. The Commission cited recent judicial decisions holding that a carrier
that provides service only to the extent of its abilities does not violate the common carrier
obligation if it provides such service without discrimination. Id. (citingJ.H. Rose Truck Line
v. ICC, 683 F.2d 943, 949 (5th Cir. 1982); Steere Tank Lines, Inc. v. ICC, 675 F.2d 103, 104
(5th Cir. 1982)).
Concurring only in the resulting policy, Commissioner Taylor recognized Congress' intent
to retain the common carrier obligation in the 1980 Act and noted that both the courts and
the Commission consistently had interpreted the pre-1980 legislation to require a carrier to
perform to the extent of its authority. See Elimination of Certificates as the Measure of"Holding Out," 48 Fed. Reg. 11,136, 11,318 (1983) (Taylor, Comm'r, concurring). Commissioner
Taylor asserted that the ICC was emasculating the common carrier obligation by allowing
carriers themselves to define the extent of their obligation. Id. For a discussion of the ICC
policy decision, see ICC Limits Obligation of Trucking Companies to Their Capabilities, TRAFFIC
WORLD, Mar. 21, 1983, at 89.
220. Elimination of Certificates as the Measure of "Holding Out," 48 Fed. Reg. 11,136,
11,137 (1983).
221. See 49 U.S.C. § 10521(a) (1982) (exempting from ICCjurisdiction transportation furthering a primary business).
1984]
INTERSTATE COMMERCE COMMISSION
than twenty-four million trucks on the highway in
33
1975.222
Although over sixteen thousand motor carriers were subject to ICC
jurisdiction in 1977, more than one hundred thousand enjoyed the
22 3
benefits of the private carriage exemption.
Traditionally, the Commission has applied the "primary business
test" in determining whether a carrier's operations are for-hire or
proprietary. 2 24 For-hire operations are regulated by the ICC, but
proprietary operations are exempt from regulation. 2 25 Prior to its
1978 decision in Toto Purchasing & Supply Co. 2 26 which allowed private carriers to sell space on partially empty trucks to other shippers, 2 27 the Commission prohibited private carriers from receiving
for-hire operating authority. Few private carriers, however, applied
for the broad authority permissible under the policy established in
Toto Purchasing.
In United States v. Drum228 the Supreme Court addressed the distinctions between for-hire and private carriage. The Court noted
that Congress had established economic regulation of motor carriage to ensure that a healthy system of motor carriage would serve
the shipping public.2 29 It stated that the provisions requiring new
for-hire carriers to obtain an operating certificate and exempting
private carriers from regulation indicated "congressional concerns
over diversions of traffic which may harm existing carriers upon
222. See Borghesani, Motor Carrier Regulatory Reform and Its Impact on Private Carriers, 10
TRANSP. LJ.389, 392 (1978) (discussing remarks prepared for presentation at annual meeting
of Private Carrier Division, Texas Motor Transp. Ass'n, Dallas, Texas, Nov. 3, 1978).
223. See id.
224. The ICC developed the "primary business test" in two application decisions. See
Lenoir Chair Co. Contract Carrier Application, 51 M.C.C. 65, 75 (1949), afd sub nor. Brooks
Transp. Co. v. United States, 93 F. Supp. 517 (E.D. Va. 1950), aff'd per curiam, 340 U.S. 925
(1951); L.A. Woitishek Common Carrier Application, 42 M.C.C. 193, 206 (1943). Congress
codified the test in an amendment to the Interstate Commerce Act. See Act of Aug. 12, 1958,
Pub. L. No. 85-625, § 8, 72 Stat. 568, 574 (codified as amended at 49 U.S.C. § 10524(a)
(1982)). Under the current statute, the ICC has no jurisdiction over transportation of property by motor vehicle when the transporter is not engaged in the transportation business and
when the transportation furthers a primary business of the transporter. 49 U.S.C.
§ 10524(a)(1), (2) (1982). For further discussion of the primary business test, see Erosion of the
Common CarrierSystem, supra note 20, at 124-26; Entry Control under the Interstate Commerce Act,
supra note 40, at 755 n.122.
225. See 49 U.S.C. § 10521(a) (1982) (exemption of private carriers from regulation).
226. 128 M.C.C. 873 (1978); see Grant of Motor Carrier Operating Auth. to an Applicant
Who Intends to Use It Primarily as an Incident to the Carriage of Its Own Goods and Its Own
Non-Transp. Business, 43 Fed. Reg. 55,051 (1978) (implementing holding in Toto Purchasing).
For a discussion of the ICC's decision in Toto Purchasing,see Erosion of the Common CarrierSyslem, supra note 20, at 125.
227. See Toto Purchasing & Supply Co., 128 M.C.C. 873, 885 (1978).
228. 368 U.S. 370 (1961) (holding that ICC possessed jurisdiction to determine that truck
owners operating under leasing arrangement were not private carriers, but contract carriers
subject to regulation).
229. Id. at 374-75.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
whom the bulk of shippers must depend for access to markets." 230
The Commission formerly had insisted that private carriers using
the services of uncertified vehicle operators maintain the same basic
control and direction over the vehicles as if those carriers owned the
vehicles. 2 3' In 1950 the Commission promulgated regulations imposing a minimum thirty-day lease requirement on such equipment
and driver leases to ensure that private carriers using the services of
owner-operators would have a sufficient opportunity to examine
and evaluate properly the equipment and drivers, and thereby pro2 32
tect the safety of their operations.
The 1980 Act liberalized the intercorporate hauling provisions to
the extent necessary to provide services for wholly owned enterprises. 23 3 Although the Act included a strongly worded admonition
not to stray beyond its specific provisions, 234 the Commission in
1982 adopted rules and a policy statement eliminating the thirty-day
lease minimums. 23 5 The elimination of these minimums not only
permits owner-operators to trip lease to private carriers, but also
permits private carriers to trip lease their equipment and drivers to
authorized carriers.23 6 This allows shippers to purchase transporta230. Id. at 375.
231. See Dixie Ohio Express Co. Common Carrier Application, 17 M.C.C. 735, 738 (1939)
(carrier must control setting of routes, time, and place of stops; loading and unloading; and
insurance maintenance). If the carrier maintained complete control over an owner-operator,
the ICC would consider it to be a contract carrier. See Lease and Interchange of Vehicles by
Motor Carriers, 51 M.C.C. 461 (1950).
232. 49 C.F.R. § 1057.12(c) (1983). The general leasing requirements allowed trip leasing between carriers holding operating authority. 49 C.F.R. § 1057.22 (1983).
233. See 49 U.S.C. § 10524(b) (1982); see also Implementation of Intercorporate Hauling
Reform Legislation, 45 Fed. Reg. 86,761, 86,761-65 (1980) (codified at 49 C.F.R. § 1167.1-.4
(1984)) (compensated transportation service by member of corporate family for other family
members is exempt from Commission regulation if participants are members of corporate
family in which parent owns 100% interest in subsidiaries).
234. 49 U.S.C. § 10101 note (1982) (Congressional Findings and Declaration of Policy)
(discussed supra notes 23-53 and accompanying text).
235. See Elimination of Thirty Day Leasing Requirement, 48 Fed. Reg. 39,251, 39,251-52
(1983) (purpose of proposed rulemaking is to eliminate requirement of 49 C.F.R.
§ I057.12(c) that owner-operators lease their services for period not less than 30 days); Leasing Rules Modifications, 132 M.C.C. 927, 928-29 (1982) (permitting leasing of private carrier
equipment to regulated carriers for periods of less than 30 days).
In Elimination of Thirty Day Leasing Requirement, 48 Fed. Reg. 39,251 (1983), the Commission noted that it had promulgated the 30-day rule to preserve highway safety and to allow
regulated carriers the time to qualify lessors' equipment and drivers. Id. at 39,252. The ICC
observed, however, that no evidence has ever shown owner-operators to be less safe than
other segments of the industry. Id. Because much leasing either was exempt from regulation
or fell under one of the numerous exceptions to the 30-day rule, the ICC asserted that the
rule worked a hardship upon those affected without furthering current transportation policy.
Id. at 39,253. The Commission also determined that a public benefit from the increased availability of equipment to regulated carriers would result from elimination of the rule. Id.; see
also Lease of Equipment and Drivers to Private Carriers, 132 M.C.C. 756, 772-82 (1982), miodifying 132 M.C.C. 351, 357 (1980) (providing test for judging leasing arrangements).
236. See Lease of Equipment and Drivers to Private Carriers, 132 M.C.C. 756 (1982), niodi-
1984]
INTERSTATE COMMERCE COMMISSION
35
tion services directly from owner-operators without acquiring operating authority or conforming to other ICC regulatory
requirements. By allowing members of the unregulated sector to
engage in the carriage of regulated freight without having to first
acquire operating authority, these decisions seem to accomplish the
essential objective of master certification, which Congress specifi23 7
cally prohibited in the 1980 Act.
fying 132 M.C.C. 351 (1980). The Commission distinguished private and for-hire carriages in
a radically different manner than it had done previously. Prior to the ICC's determination in
Lease of Equipment and Drivers to Private Carriers,the leading case on the issue was H.B. Church
Truck Serv. Co., Common Carrier Application, 27 M.C.C. 191 (1940). This case established
the principle that in distinguishing between private and for-hire carriage, the ICC's central
inquiry should focus on who controlled the service. Id. at 195-96. When a shipper leased
equipment with drivers, a presumption arose that the service was for-hire and subject to regulation. Id. at 196. The shipper could rebut this presumption by showing that the shipper had
the exclusive right of controlling and directing the service. Id. In a subsequent proceeding,
the Commission further developed its test by including examination of whether the shipper
has assumed significant risks of the transportation service. See Pacific Diesel Rental Co.Investigation of Operations and Practices, 78 M.C.C. 161, 172-73 (1958).
The importance of distinguishing for-hire service from private carriage was to protect the
regulated segment and the shippers that relied on it from the transfer of business to unregulated carriers operating as sham private carriers. In Lease of Equipment and Drivers to Private
Carriersthe Commission concluded that such protection was no longer necessary, and that the
1980 Act does not require it. See Lease of Equipment and Drivers to Private Carriers, 132
M.C.C. 756, 770-71 (1982).
Under the Commission's new test, if a lessor is offering "factor inputs," such as equipment
or labor, but is not performing key management and organizational functions, it is not providing transportation service for hire. Id. at 777.
The Eleventh Circuit recently declined requests to review the ICC decision in Lease ofEquipment and Drivers to Private Carriers, which allows unregulated entities to trip lease their equipment and drivers to private carriers. See Federal Court Backs ICC "Single-Source" Truck Leasing
Policy, TRAFFIC WORLD, Oct. 24, 1983, at 7. The Eleventh Circuit has, however, issued a stay
pending judicial review in the Leasing Rules Modification proceeding. See Major Motor Section
Cases, TRAFFIC WORLD, Dec. 19, 1983, at 14. The court also has withheld its mandate regarding Implementation of Intercorporate Hauling Reform Legislation, 45 Fed. Reg. 86,761 (Dec.
31, 1980) (codified at 49 C.F.R. § 1167.1-.4 (1984)) (discussed supra note 233), pending
Supreme Court action on a petition for review filed by the American Trucking Associations.
See Ryder Truck Lines v. United States, 716 F.2d 1369 (11th Cir. 1983). For a discussion of
Ryder Truck Lines, see Single Source Leasing Rules Delayed by Appeal, TRAFFIC WORLD, Nov. 28,
1983, at 51.
237. See 49 U.S.C. § 10922(a)(3) (1982). For discussions of congressional and judicial
disapproval of master certification by the ICC, see supra notes 47-49 & 151-57.
The Commission also has blurred the distinctions between private and for-hire carriage in
recent decisions that removed its traditional prohibition against common control of a for-hire
motor carrier and a shipper. See Control of Duplicate Operating Rights, 127 M.C.C. 811, 813
(1983); Control of Duplicate Operating Rights, 127 M.C.C. 780, 783 (1981); Atlantic Coast
Express, Inc., Extension-East Coast Ports, 132 M.C.C. 184, 193 (1980). The Commission
originally had imposed the prohibition to protect the public against the possibility of discrimination in transportation services. See Alter Trucking and Terminal Corp. Extension-Scrap
Metals, Machinery, and Supplies, 107 M.C.C. 644 (1967) (description of concern over forms
of discrimination arising when there is common control of applicant and supporting shipper),
afd sub noa. Alter Trucking & Terminal Corp. v. United States, 299 F. Supp. 819 (S.D. Iowa
1969); Avondale Trucking Co., Common Carrier Application, 68 M.C.C. 263 (1956) (large
shipper owning one half of common carrier unable to demonstrate nondiscrimination in carrier's service to all shippers); Cumberland Automobile & Truck Co., Extension-19 States, 52
M.C.C. 772 (1951) (opportunity for favoritism exists when applicant's general manager also
manages corporation using applicant's services).
THE AMERICAN UNIVERSITY LAW REVIEW
C.
[Vol. 34:1
Blurring the Distinctions Between Common and Contract Carriage
Traditionally, there has been a sharp distinction between common carriers, which serve the public generally within the geographic
and territorial scope of their operating authority, and contract carriers, which serve only a small number of specified shippers with
which they maintain contractual relations. Before 1980 the Interstate Commerce Act allowed contract carriers to serve only a limited
number of shippers. 238 The Commission interpreted this provision
as permitting carriers to provide service to no more than eight shippers. 23 9 The ICC considered carriers that served more than this limited number to be engaging in common carriage, and, therefore, to
be subject to regulation as common carriers. The ICC eliminated
this numerical ceiling of shippers one year prior to the enactment of
240
the 1980 Act.
Prior to 1980 the Interstate Commerce Act also prohibited carriers from holding both common and contract carrier authority to
serve the same commodities and territory. 24 1 Congress banned
such dual operations because of the potential for pricing and service
discrimination if carriers were able to serve the same shipper or
shippers under both a common carrier certificate of public convenience and necessity and a contract carrier permit. 24 2 The 1980 Act,
however, eliminated restrictions on carriers operating in both a
243
common and contract carrier capacity.
The 1980 Act circumscribes the Commission's ability to limit the
territorial scope of a contract carrier's authority. 244 The ICC now
issues all contract permits to authorize service "between points in
238. See Act of Aug. 22, 1957, Pub. L. No. 85-163, 71 Stat. 411 (amending Motor Carrier
Act of 1935, ch. 498, §§ 203(a)(15), 209(b), 49 Stat. 543, 544-45, 553-54) (codified as
amended at 49 U.S.C. § 10923 (1982)); see also ICC v.J-T Transp. Co., 368 U.S. 81, 85-86
(1961) (discussing legislative history of amendments to definition of contract carrier).
239. See Umthun Trucking Co., Extension-Phosphatic Feed Supplements, 91 M.C.C,
691, 697 (1962) (Commission will scrutinize contract carriers offering service to more than six
or eight shippers). For a discussion of the ICC's treatment of contract carriers before the
1980 Act, see Entry Control under the Interstate Commerce Act, supra note 40, at 753-59.
240. See Policy Statement Regarding the "Rule of Eight" in Contract Carrier Applications,
44 Fed. Reg. 2470, 2471 (1979) (no arbitrary limit to number of contracts with shippers that a
contract carrier may hold and still be found to be serving limited number of persons),
241. See Motor Carrier Act of 1935, ch. 498, § 210,49 Stat. 543, 554 (codified as amended
at 49 U.S.C. § 10930(a) (1982)).
242. See Entry Control under the Interstate Commerce Act, supra note 40, at 758 n.133 (discussing
congressional concerns regarding dual operations).
243. See Motor Carrier Act of 1980, Pub. L. No. 96-296, § 10(b)(1), 94 Stat. 793, 800
(codified at 49 U.S.C. § 10930(a) (1982)); see also Dual Operations of Motor Carriers, 43 Fed.
Reg. 14,664, 14,665 (1978) (eliminating ban on dual operations of motor carriers).
244. See 49 U.S.C. § 10923(d)(1) (1982) (Commission may not require contract carrier to
limit operations to particular geographic area); see also Acceptable Forms of Requests for Operating Auth., 45 Fed. Reg. 86,798, 86,803 (1980) (contract carrier applications not to be
limited in territorial scope).
1984]
INTERSTATE COMMERCE COMMISSION
the United States. '24 5 The ICC recently liberalized the concept of
contract carriage even further by issuing a policy statement that allows the issuance of contract authority to extend far beyond any limitation to a specified shipper or shippers. The ICC now issues
permits that may authorize a contract carrier to serve a class or
classes of shippers, an industry, or multiple industries. 24 6 The ICC
has not specified, however, the means by which a contract carrier
applicant should satisfy the burden of proving that it is fit, willing,
and able to serve an entire industry of shippers between all points in
the United States. 24 7 Moreover, the ICC diluted a contract carrier
applicant's statutory burden of proving that it will dedicate equipment to the exclusive use of the shippers and will satisfy the ship24 8
pers' distinct transportation needs.
It appears, therefore, that few meaningful differences remain between common and contract carriers. Contract carriers may now
serve an unlimited number of shippers, in a variety of industries,
between all points in the United States. Perhaps the only remaining
distinction between common and contract carriers is the requirement that shippers must actually enter into continuing contracts
2 49
with a contract carrier.
One commentator has noted that the Commission's recent decisions have the effect of removing from contract carriers most of the
restraints that Congress has placed on them. 250 Congress imposed
these restrictions to protect common carriers because contract carriers have inherent advantages over common carriers; such deregulation may, therefore, result in the demise of the motor common
25
carrier of property. '
245. See Removal of Restrictions from Authorities of Motor Carriers of Property, Motor
Carriers of Passengers and Freight Forwarders, 49 C.F.R. § 1165.26 (1984).
246. See Motor Contract Carriers of Property-Proposal to Allow Issuance of Permits Authorizing Indus.-Wide Serv., 133 M.C.C. 298 (1983).
247. See 49 U.S.C. § 10923(a)(1) (1982) (grant ofcontract carrier authority requires showing of applicant's fitness, willingness, and ability to assume such authority).
248. Id. § 10923(a)(1), (2) (1982). The ICC explained that requiring a shipper to dedicate
specific equipment results in inefficient use of equipment. See Motor Contract Carriers of
Property-Proposal to Allow Issuance of Permits Authorizing Indus.-Wide Service, 133
M.C.C. 298, 301 (1983). Other decisions reflect the Commission's liberalized standards regarding contract carriage. See R & R Trucking, Inc., Extension-Lomax Contract Service, 133
M.C.C. 291 (1983) (finding shipper's agent had "practical working control" over transportation of goods to qualify as shipper and granting contract carrier authority); Global Van Lines,
Extension-Merrill Lynch Contract Serv., 133 M.C.C. 181 (1983) (granting contract carrier
authority under distinct needs test, 49 U.S.C. § 10102(13)(B) (1982)).
249. See R & R Trucking, Inc., Extension-Lomax Contract Service, 133 M.C.C. 291, 30102 (1983).
250. See Collins, Contract v. Motor Common Carriage,TRAFFIC WORLD, July 18, 1983, at 78.
251. Id. at 80. Describing the contract carrier's advantages, this commentator observed:
The common carrier holding itself out to carry traffic of a certain description must
serve all who seek its services, and under the [Motor Carrier Act of 1935] it must
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
Another commentator has concluded that "the era of common
carriage is dead." 25 2 Reviewing the ICC's decisions, this commentator characterized the Commission's recent treatment of contract carriers as the most startling innovation in interstate commerce since
the founding of the ICC in 1887.253
D. Disintegrationof Regulated Ratemaking
The Motor Carrier Act of 1980 obligates all carriers to publish
2 54
and file tariffs with the ICC that set forth their rates and charges.
The rates must be reasonable, 255 and cannot be discriminatory, 2 56
or predatory. 25 7 The Act allows the ICC, however, to exempt a
"contract carrier or group of carriers" from the filing requirement. 25 8 Such language suggests that the entire industry of motor
carriers may not invoke the exemption power to relieve itself from
the statutory obligation.
Prior to the 1980 Act, the Commission had applied its exemption
power only to armored car carriers.2 59 The ICC found that such
carriers "are so specialized and multitudinous, and vary with such
wide range between customers . . . that any publication [of tariffs]
would involve the establishment of as many rates for transportation
and as many charges for ancillary services as there are customers." 260 Since the 1980 Act, the Commission has granted just one
petition for a contract carrier exemption. 26 ' In granting this petition, however, the Commission has furthered its deregulatory policy
by exempting all contract carriers of property from their statutory
2 62
obligation to file tariffs.
serve them without unjust discrimination and adhere to published rates. The contract carrier, on the other hand, is free to pick and choose among shippers, and
under the act, it may discriminate in its service to them and its charges may be called
in question only if they are found to fall below a reasonable minimum level.
Id.
252. Demise of Common CarriageAnticipated, TRAFFIC WORLD, Dec. 12, 1983, at 5.
253. Id.
254. 49 U.S.C. §§ 10702(b), I0761(b), 10762(a) (1982).
255. Id. § 10701(a).
256. Id. § 10741(a).
257. Id. § 10708(d)(6); see Dempsey, Rate Regulation andAntitrust Immunity in Transportation:
The Genesis and Evolution of This Endangered Species, 32 Am. U.L. REv. 335, 345-54 (1983) (discussing discrimination provisions) [hereinafter cited as Rate Regulation and Antitrust Immunity].
258. 49 U.S.C. §§ 10702(b), 10761(b), 10762(f) (1982).
259. See Armored Carrier Corp., Petition for Relief from the Provisions of Section 218(a)
of the Interstate Commerce Act, 303 I.C.C. 781 (1958).
260. Id. at 787.
261. U.T.F. Carriers, Inc., Petition for Exemption from Tariff Filing Requirements Under
49 U.S.C. § 10761(b), 47 Fed. Reg. 45,107 (1982) (granting exemption to carrier handling
traffic primarily for affiliates).
262. Exemption of Motor Contract Carriers from Tariff Filing Requirements, 133 M.C.C.
150 (1983). This exemption relieves all contract carriers of property from the tariff filing
1984]
INTERSTATE COMMERCE COMMISSION
39
As the preceding subsection indicates, recent ICC pronouncements have almost erased the distinction between contract and common carriage. 263 Any carrier, provided it actually consummates
some contracts and states some generalized intention to meet the
needs of a shipper or a class of shippers, may now acquire a nationwide contract carrier permit to serve broad industry categories. The
decision to exempt contract carriers from their obligation to file tariffs, therefore, has implications far beyond the general public perception of a limited contract carrier industry. The motor carrier
industry may also use the decision to avoid its statutory obligation
to file tariffs with the Commission. By liberalizing contract carriage
requirements to such an extent, the ICC may succeed in discarding
its ratemaking responsibilities under the 1980 Act.
The 1980 Act did not dilute the traditional statutory prohibition
against rate discrimination.2 64 Indeed, Congress emphasized the
prohibition by introducing a statutory ban on excessively low rates
that are predatory. 265 The ICC, however, recently has taken actions
that erode the concept of nondiscrimination in carrier ratemaking.
The ICC proposed rules to eliminate the general prohibition
against publishing rates for named shippers, receivers, and locations.26 6 These rules would have effectively shifted to opponents of
requirement. Id. at 150. It does not, however, grant a blanket exemption to contract passenger carriers. The Commission will consider such an exemption upon a proper application. Id.
at 152.
The Commission justified the exemption by finding that the tariff reporting requirement
was not in the public interest. Id. at 157. Calling the requirement expensive, burdensome,
and anticompetitive, the Commission determined that the original goals of rate regulation
should no longer take precedence over other considerations. Id. at 158. Finding the public
interest and the resulting benefits to be more important than the effect of the exemption upon
one segment of the industry, the Commission dismissed the argument that an uneven regulatory burden would fall upon common carriers that must continue to file tariffs. Id. at 159. The
Commission was not concerned that common carriers might convert to contract carriage. It
noted that such occurrence would merely reflect a favorable increase in competition. Id. at
159.
Commissioners Andre and Sterrett separately concurred with the exemption decision. Id
at 163-68. Noting the benefits of cost savings, they contended that the 1980 Act emphasizes
competition and efficiency over Congress' prior goals of protecting the industry from abusive
practices. Id. at 165. The concurring Commissioners did grant some merit, however, to the
argument that a heavy regulatory burden upon common carriers would place them at a competitive disadvantage with contract carriers. Id. at 167. They found that, rather than justifying the status quo, this competitive disadvantage necessitated additional reforms to equalize
the burdens of regulation. Id. But see Contract Tarif FilingAbolished: Industry-Wide Permits Proposed, TRAFFIC WORLD, June 6, 1983, at 50 (by exempting contract carriers from reporting of
tariffs, ICC has placed unwarranted trust in market's ability to protect against abuses).
263. See supra notes 238-53 and accompanying text (discussing ICC's recent treatment of
contract carriage).
264. See 49 U.S.C. § 10741 (1982). For a review of policy reasons for the prohibition
against discrimination, see Rate Regulation and Antitrust Immunity, supra note 257, at 347-48.
265. See 49 U.S.C. § 10741 (1982).
266. Rates for a Named Shipper or Receiver, 47 Fed. Reg. 28,430, 28,431 (1982) (proposed June 30, 1982) ("rates may be published to specifically named sites as well as for the
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
filed tariffs the burden of proving unlawful discrimination by means
of rate protests and formal complaints 26 7-a burden that may be impossible to satisfy. In addition, the ICC recently declined to establish standards to govern the filing of discount rates.26 8 Petitioners
had argued that the widespread rate discounting prevalent throughout the motor carrier industry was causing a significant loss of business and was jeopardizing the financial viability of much of the
industry. 2 69 They also had argued that such discounting was inconsistent with the national transportation policy 2 70 and had alleged
that rates not related to costs discriminated unfairly between shippers. 27 1 The Commission ignored these pleas. 2 72 Moreover, it has
approved the filing of thousands of individual tariffs embracing a
wide range of discount rates, including introductory discounts of up
to fifty percent to open a new territory; aggregate tender discounts
or allowances; volume discounts; discounts specifically limited to
named facilities, commodities, or shippers; and blanket
273
discounts.
The ICC also is considering a proposal to reduce the statutory
thirty-day notice requirement for tariff filing 2 74 to a one-day period
for rate reductions, and a five-day period for rate increases. 2 75 Even
the current Chairman of the ICC has admitted that "it [is] highly
questionable whether a shipper or other interested party would
accounts of specifically named shippers"). The ICC has prohibited carriers from publishing
rates for services for a named shipper or receiver. See 49 C.F.R. § 1310.7(a)(5) (1984).
267. See Rates For a Named Shipper or Receiver, 47 Fed. Reg. 28,430, 28,431 (1982)
(supplementary information) (proposed rule would permit issues of unlawful discrimination
to be addressed on the merits through protests and formal complaints).
268. See Petition for Declaratory Order-Lawfulness of Volume Discount Rates by Motor
Common Carrier of Property, 365 I.C.C. 711 (1982). The Commission denied the petition to
establish future discount rates on three grounds: its desire for noninterference with marketoriented adjustments, id. at 712; its belief that the petitioners' view of current price competition was based on a misunderstanding of the effectiveness of standards governing discount
rates and the reforms that the 1980 Act imposes, id. at 714-15; and its belief that there are
presently adequate safeguards against unreasonable discrimination. Id. at 715-17. But see
L C.C. Refuses Plea to Establish Truck Discount Rate Standards, TRAFFIC WORLD, May 24, 1982, at 7
(finding fault in ICC's rationale for failing to define reasonable discount rates).
269. Petition for Declaratory Order-Lawfulness of Volume Discount Rates by Motor
Common Carrier of Property, 365 I.C.C. 711, 711-12 (1982).
270. Id. (citing 49 U.S.C. § 10101 (1982)).
271. Id at 712.
272. Id. at 716-17 (declining evaluation of discount rates).
273. See Great Trucking Wars, DIsTRmtmoN, Nov. 1982, at 30 (discussing ICC approval of
discounts).
274. 49 U.S.C. § 10762(a)(2), (c)(3), (d)(1) (1982); see Rate Regulation and Antitrust Inmunity
in Transportation,supra note 257, at 345 (discussing 30-day notice requirement).
275. See Short Notice Effectiveness for Independently Filed Motor Carrier and Freight
Forwarder Rates, 48 Fed. Reg. 34,307 (to be codified at 49 C.F.R. §§ 1309, 1310) (proposed
July 28, 1983). For a discussion of the proposal to reduce the period for filing tariffs, see
Comments are Varied on ICC Proposal to Permit Short-Notice Rate Filings, TaFFIC WORLD, Sept. 19,
1983, at 61.
1984]
INTERSTATE COMMERCE COMMISSION
even have knowledge of a rate that [is] allowed to become effective on
2 76
less than [ten] days' notice.
The Commission recently has announced that it does not welcome allegations concerning predation or discrimination prior to
the time that a rate becomes effective, and that it probably will not
suspend a tariff upon such bases. 27 7 The ICC additionally has advised shippers who believe that a motor carrier has offered them a
discriminatorily high rate merely to seek out more advantageous
rates from competing carriers and not to file a complaint. 278
This policy undoubtedly will have a chilling effect on oppositions
to new rate filings on grounds that they are discriminatory or predatory. The ICC apparently will review such unlawful practices only
after they have caused significant economic injury. Yet, if the injury
is sufficiently severe, the harmed carrier or shipper may no longer
have the ability to oppose the unlawful rate. Despite an express
congressional mandate, the ICC's interest in protecting the public
interest against predation or discrimination no longer exists.
By private agreement, motor common carriers may work together
or create organizations to determine rates, allowances, classifications, divisions, and ratemaking procedures. 2 79 The ICC must approve the agreements of these organizations-"rate bureaus"prior to their implementation. 2 80 Rate bureaus traditionally have
provided stability and predictability in the pricing structure for
transportation services, and they have served as an informational ve276. Disagreements, Significant Rulings in 1983 Reviewed by ICC Chairman, TRAFFIC WORLD,
Dec. 26, 1983, at 15 (emphasis in original).
277. See Pricing Practices, supra note 210, at 10, 14-17 (evidence to assess unlawful pricing
claims is more readily available after rate becomes effective). Moreover, the Commission will
deem discrimination to exist only if the complainant sustains the tripartite burdens of proving
disparity of rates, competitive injury, and common control by the carrier over the rates
charged to the prejudiced and preferred shippers. See Lawfulness of Volume Discount Rates,
365 I.C.C. 711,714 (1982). For a discussion of the likelihood of both predation and discrimination in a deregulated marketplace, see Wagner, Exit of Entry Controlsfor Motor Common Carriers: Rationale Reassessment, 50 ICC PRAC. J. 163, 172-73 (1983) (discussing use of regulatory
process to control predatory pricing and discrimination); Wagner & Dean, A Prospective View
Toward Deregulationof Motor Common CarrierEntry, 48 ICC PRAc.J. 406, 413 (1981) (discussing
potential for price instability resulting from deregulation of motor common carriers). In a
recent case the ICC held that the provisions of the Interstate Commerce Act prohibiting discrimination, 49 U.S.C. § 10741(b) (1982), "were intended solely for the benefit of shippers."
Brown Transp. Corp. v. McLean Trucking Co., 367 I.C.C. 943, 948 (1984). The ICC, therefore, concluded that injury to a competing carrier is irrelevant to the determination of
whether unlawful discrimination exists. Id.
278. See PricingPractices, supra note 210, at 17. The American Trucking Associations, Inc.,
and several rate bureaus are currently appealing this decision in the United States Court of
Appeals for the Seventh Circuit. See American Trucking Ass'ns v. United States, No. 83-2993
(7th Cir. appeal filed Nov. 14, 1983).
279. See 49 U.S.C. § 10706(b) (1982).
280. Id. § 10706(b)(2). The Reed-Bulwinkle Act, ch. 491, 62 Stat. 472 (1948) (codified as
amended at 49 U.S.C. § 10706 (1982)), confers antitrust immunity upon rate bureaus.
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
hicle for carriers, shippers, and the Commission. 2 8 ' The 1980 Act
imposes a number of procedural reforms on rate bureaus. It allows
only carriers with authority to participate in the transportation to
which a rate applies to vote on a bureau proposal regarding that
rate. 28 2 In addition, the Act prohibits agreements between motor
common carriers that permit the discussion of rates falling within
the zone of rate making freedom and of limited liability rates.2 85
The Act provides that the public must have access to information
regarding rate bureau discussion and voting.2 8 4 It also prohibits bureaus from interfering with a carrier's right of independent action2 8 5
and from protesting a carrier's rate. 28 6 By establishing in the 1980
Act a presumption that rate bureau agreements satisfying the Act's
requirements are valid, 28 7 Congress intended to limit the discretion
of the Commission to approve or disapprove rate agreements
among motor common carriers. 28 8 Without congressional authorization, the Commission, however, has revised the restrictions on the
activities of rate bureaus. 28 9 The most significant of the ICC's revisions prohibits rate bureaus from informing the public of the in2 90
dependent rate actions of members who request confidentiality.
281. For a discussion of the functions of rate bureaus, see Rate Regulation and Antitrust
Immunity in Transportation,supra note 257, at 354-75; Kenworthy, Antitrust Considerations in Motor
CarrierRat emaking--Rate Bureau Operations and Alternatives, 11 TRANSP. L.J. 65, 71-77 (1979).
282. 49 U.S.C. § 10706(b)(3)(B)(i) (1982).
283. Id. § 10706(b)(3)(C) (citing id. §§ 10708(d), 10730(b)). The zone of ratemaking freedom is the range within which a motor common carrier may propose a rate that the ICC will
not investigate for being unreasonably high or low. See id. § 10708(d)(I)(B), (3)(B). A limited
liability rate is a rate under which a carrier's liability is limited to a reasonable value established by the shipper or by an agreement between the carrier and the shipper. See id.
§ 10730(b)(1).
284. Id. § 10706(b)(3)(B)(v).
285. Id. § 10706(b)(3)(B)(ii).
286. Id. § 10706(b)(3)(B)(iii).
287. Id. § 10706(b)(2). The Act requires the ICC to approve rate agreements that satisfy
the conditions of § 10706(b) unless the agreement is inconsistent with the transportation policy in 49 U.S.C. § 10101(a) (1982). Id. § 10706(b)(2); see Kretsinger, supra note 27, at 43-44
(discussing presumption of validity granted to rate bureau agreements).
288. See ICC v. American Trucking Ass'ns, 104 S. Ct. 2458, 2467 n.9 (1984) (Congress
passed rate bureau reform provisions partially to restrain ICC discretion); see also Fessenden,
What the Motor CarrierAct Does and Does Not Do, ISSUES IN AMERICAN TRUCKI~NG 69, 71 (1981)
(discussing objectives underlying rate bureau reform).
289. See Motor Carrier Rate Bureaus, Implementation of P.L. 96-296, 364 I.C.C. 921
(1981).
290. Id. at 468-69. In American Trucking Ass'ns v. United States, 688 F.2d 1337 (1 Ith
Cir. 1982), afd in part, rev'd in part, 104 S. Ct. 2458 (1984), the court partially upheld the
ICC's new rules by affirming the Commission's findings that a carrier may control the confidentiality of its independent rate action, that general rate increase discussions must be limited
to the subject of industry average costs, that tape recordings must be allowed at bureau meetings, and that actions on released rates were circumscribed. Id. at 1345. The court, however,
reversed the Commission's revocation of the bureaus' longstanding special permission authority to publish rate reductions to meet competition on short notice. Id. at 1345-46. The
court also found invalid the ICC's conclusion that it has the power to reject a tariff that has
1984]
INTERSTATE COMMERCE COMMISSION
As a consequence of the ICC's new confidentiality rule, neither shippers served by an independent actor nor carriers competing with it
will learn of the independent action before the tariff becomes effective. The confidentiality rule, therefore, will preclude shippers and
carriers from protesting a predatory rate before it inflicts injury on
29
them. 1
Rate bureaus have been the subject of another of the ICC's questionable appropriations of authority. In the 1980 Act, Congress retained responsibility for deciding whether to eliminate antitrust
immunity for rate bureaus. 292 In a recent notice of a proposed
rulemaking, however, the ICC has announced its intention to withdraw from rate bureaus antitrust immunity for collective ratemaking
293
with respect to shipments of less than one thousand pounds.
Once again, the Commission may have taken its deregulatory crusade beyond the well-defined parameters of the 1980 Act.
E. Merger, Consolidation, and Acquisition Abdication
A motor carrier merger, consolidation, or acquisition of control
requires Commission approval. 29 4 Although the Commission proposed that Congress delete the approval requirements from the Interstate Commerce Act, the Bus Regulatory Reform Act of 1982
already become effective on grounds that the tariffviolates approved rate bureau agreements.
Id. at 1347.
In ICC v. American Trucking Ass'ns, 104 S. Ct. 2458 (1984), the Supreme Court accepted
the view of the Eleventh Circuit that the ICC lacks general authority to reject effective tariffs.
Id. at 2465. The Court, however, reversed the Eleventh Circuit's decision by holding that the
Commission may choose to nullify effective tariffs submitted in substantial violation of rate
bureau agreements. Id. at 2468. Characterizing the retroactive rejection of such tariffs as a
remedy, id. at 2466, the Court found that the ICC may elaborate upon its express statutory
remedies when necessary to achieve specific statutory objectives. Id. at 2465. The Court concluded that the ICC's proposed remedy constituted a justifiable method of ensuring that motor carriers collude only as permitted by the requirements of the 1980 Act. Id. at 2466. The
Court confined its holding to circumstances involving tariffs submitted in violation of rate
bureau agreements, id. at 2465, and did not consider other aspects of the Eleventh Circuit's
decision. But see id. at 2472 (O'Connor, J., dissenting) (if Commission needs additional remedial power to enforce the Act's provisions, it should seek such power from Congress).
291. For further discussion of the effects of the ICC's new rules, see Rate Regulation and
Antitrust Immunity in Transportation,supra note 257, at 365.
292. See 49 U.S.C. § 10706(b)(3)(D) (1982). The 1980 Act scheduled antitrust immunity
for single-line ratemaking to expire on July 1, 1984 unless Congress enacted legislation to
extend the immunity. Id. Congress did not enact such legislation.
293. Withdrawal of Antitrust Immunity for Collective Ratemaking on Small Shipments, 48
Fed. Reg. 46,399 (1983) (to be codified at 49 C.F.R. Ch. X) (proposed Oct. 12, 1983). For an
analysis of the proposed rulemaking, see DOT Supports Withdrawal of Antitrust Immunity; Bulk
Carriers Opposed, TRAFFIC WORLD, Dec. 19, 1983, at 37; Justice Dep't Backs End to Truck Rate
Immunity; Educators Have Doubts, TRAFFIC WORLD, Jan. 9, 1984, at 10; Proposed End to Truck
Immunity Hit By Pro-Competition Group, Others, TRAFFIC WORLD, Jan. 16, 1984, at 64.
294. 49 U.S.C. § 11343(a) (1982).
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
(1982 Reform Act) 295 only allows the ICC to exempt carriers from
the finance approval requirements. 296 Under the 1982 Reform Act,
the ICC may exempt classes of carriers or transactions from the finance requirements if it finds that regulation of such classes would
not be necessary to carry out the requirements of the national transportation policy. 297 To grant an exemption, the Commission also
must find that the transaction is of limited scope or that finance regulation is unnecessary to protect shippers from the abuse of market
298
power.
Although the Commission assured Congress that it would not employ the exemption authority in major transactions that might have
possible anticompetitive effects, 299 the ICC recently announced its
intention to exempt motor carriers from all finance proceedings. 30 0
The statutory language of the 1982 Reform Act does not appear
sufficiently broad to permit the ICC to exempt the entire industry
from all finance regulation. It is doubtful that Congress or the
courts would consider such a broad exemption to be of "limited
scope," or to be free from the danger of serious abuses of market
power. The proposed rule represents a major effort by the ICC to
divest itself of a significant portion of its statutory responsibilities.
295. Pub. L. No. 97-261, § 21(b), 96 Stat. 1102, 1122 (1982) (codified at 49 U.S.C.
§ 11343(e) (1982)).
296. 49 U.S.C. § 11343(e) (1982).
297. Id. § 11343(e)(1)(A) (citing id. § 10101 (1982) (national transportation policy)).
298. Id. § 11343(e)(1)(B).
299. 48 Fed. Reg. 26,485, 26,488 (1983) (Taylor, Chairman, dissenting in part, concurring in part).
300. See 48 Fed. Reg. 26,485 (1983) (to be codified at 49 C.F.R. pt. 1186) (proposed June
8, 1983).
Evaluating the relationship between the proposed industry-wide exemption and the national transportation policy, the Commission concluded that transactions such as mergers,
consolidations, and acquisitions generally promote efficiency and allow carriers to compete
more efficiently. Id. at 26,486. Discussing its recent experience with individual exemptions,
the Commission reasoned that the present regulatory scheme impedes these types of transactions. Id.
The Commission also concluded that detailed scrutiny of merger, acquisition, and consolidation of these transactions is not necessary to protect shippers from market power abuses.
Id. It found that the eased entry provisions and the small capital requirements of the 1980 Act
combine to insure that there will be many carriers actively competing for business. Id. at
26,486-87. The Commission noted that reduced regulation already has resulted in more authorized carriers and greater competition rather than concentration of market power, Id. at
26,487.
Under the Commission's proposal, parties proposing § 11343(a) transactions still would
have to file a notice with the ICC requesting exemption. Id. The Commission would merely
review the notice for accuracy and publish it in the Federal Register. Id.
This proposed rule effectively would remove the Commission's obligation to monitor in an
in-depth manner individual transactions. The ICC's interpretation transforms Congress' limited exemption provision into a general policy of nonregulation. It is unclear under the proposed rule what the Commission would or could do if it perceived there was a concentration
of market power or abuses of such power.
1984]
INTERSTATE COMMERCE COMMISSION
F.
The Railroadingof Motor Carriers
Because rail and motor carriers compete in transporting much of
the same freight, the deregulation of one mode of transportation
creates extreme pressure for the deregulation of the other in order
to equalize the government's relationship with each industry. Several ICC decisions concerning railroads, therefore, are pertinent to
the analysis of the ICC's deregulatory efforts in the motor carrier
industry.
The Staggers Rail Act of 1980 (Staggers Act)30 1 includes a broad
provision that allows the ICC to exempt rail carriers from regulation.3 0 2 The Staggers Act, however, is silent regarding the impact of
its provisions on motor carriers. It is surprising, therefore, that the
Commission used the Staggers Act to exempt intermodal rail and
truck service provided in trailer-on-flatcar (TOFC) and containeron-flatcar (COFC) service from economic regulation.3 0 3 Recognizing that the Staggers Act exemption of rail carriers could place unregulated railroads in a competitive position superior to that of
regulated motor carriers, 30 4 the Commission found that the proper
regulatory response was to free affected motor carriers from regulatory restraints so that they could compete on equal terms with the
railroads 305
The Commission has interpreted the Interstate Commerce Act to
permit rail carriers to hold non-rail-related motor carrier operating
authority only when a compelling public need for service not offered
by existing motor carriers warrants such authority.3 0 6 The purpose
of Congress' general prohibition on dual authority was to protect
motor carriers from domination by their more powerful competi301. Pub. L. No. 96-448,94 Stat. 1895 (codified in scattered sections of 49 U.S.C. (1982)).
302. 49 U.S.C. § 10505(a) (1982). In order to grant the exemption, the Commission must
find that the proposed exemption is either of limited scope or will not result in an abuse of
market power. Id.
303. See Improvement of TOFC/COFC Regulation, 364 I.C.C. 731, 732 (1981), aff'd
American Trucking Ass'ns v. ICC, 656 F.2d 1115 (5th Cir. 1981).
304. See id. at 732 (1981) (TOFC/COFC traffic competes with long-haul truckload motor
carriage).
305. Id.
306. See Rock Island Motor Transit Co.-Purchase-White Line Motor Freight Co., 40
M.C.C. 457 (1940) (granting motor carrier permit to railroad subsidiary on condition that
carrier only perform service auxiliary to rail transport); Kansas City S. Transp. Co., Common
Carrier Application, 10 M.C.C. 221 (1938) (denying motor carrier permit to company that
made agreement to share facilities, customers, and revenue with railway); Pennsylvania Truck
Lines-Control-Barker Motor Freight Lines, 1 M.C.C. 101 (1936) (denying authorization of rail
carrier's purchase of motor freight company); cf 49 U.S.C. § 11344(c) (1982) (Commission
may approve and authorize rail carrier's application for transaction involving motor carrier
only if transaction is consistent with public interest, will enable rail carrier to use motor carrier transportation to public advantage, and will not unreasonably restrain competition).
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol. 34:1
tors, the railroads.3 0 7 The Supreme Court has upheld this legislative policy.30 8
The Motor Carrier Act of 1980 did not remove the traditional
prohibitions against rail carriers' control over motor carrier services. Moreover, although the Staggers Act gave the Commission rail
exemption powers,3 0 9 Congress specifically limited this power to situations in which regulation is not needed to prevent abuses of market power. 3 10 The Act prohibits the Commission from using its
exemption authority to authorize otherwise prohibited intermodal
ownership. 3 1 ' In a recent decision, however, the ICC disavowed the
traditional standards governing issuance of motor carrier operating
authority to railroads. 3 12 In addition, the Commission has announced its intention to eliminate the standards for acquisition of a
3
motor carrier by a railroad. 13
CONCLUSION
As almost every federal appeals court has recognized, Congress
did not grant the ICC unlimited authority in the Motor Carrier Act
of 1980 to bring about a radical transformation in the economic environment of the motor carrier industry. 3 14 Instead, Congress
adopted the 1980 Act to provide a moderate approach to entry and
ratemaking liberalization 3 15 and to provide the Commission with
well-defined policy guidelines for regulation of the motor carrier industry. 3 16 In revising the national transportation policy, Congress
307. See Beardsley, Integrated Ownership of Transportation Companies and the Public Interest, 31
GEO. WASH. L. REv. 85, 92-96 (1962) (discussing development of congressional policy concerning railroad ownership of nonrail carrier authority).
308. See American Trucking Ass'ns v. United States, 364 U.S. 1 (1960) (upholding national transportation policy's goal of preventing railroads from invading trucking industry);
American Trucking Ass'ns v. United States, 355 U.S. 141 (1957) (affirming ICC's authority to
impose restrictions on railroad operation of motor carriers).
309. Staggers Rail Act of 1980, Pub. L. No. 96-448, § 213, 94 Stat. 1895, 1912 (codified at
49 U.S.C. § 10505 (1982)).
310. 49 U.S.C. § 10505(a)(2) (1982).
311. Id. § 10505(g)(1).
312. See Applications for Motor Carrier Operating Authority by Railroads and Rail Affiliates, 132 M.C.C. 978 (1982) (eliminating "special circumstances" doctrine to facilitate rail.
road acquisition of unrestricted motor carrier authority).
313. See Motor Carriers; Acquisition of Motor Carriers by Railroads, 48 Fed. Reg. 37,539
(1983) (proposing to allow railroads to acquire motor carriers engaged in activities not supplemental to rail operation).
314. See supra notes 54-201 and accompanying text (discussing judicial reversals of ICC
decisions).
315.
See CongressionalIntent and Agency Discretion, supra note 16, at 22-31 (discussing legisla-
tive intent of 1980 Act).
316. See 49 U.S.C. § 10 101(a) (1982); see also ICC v. American Trucking Ass'ns, 104 S. Ct.
2458, 2468-70 (1984) (O'Connor, J., dissenting) (noting that Congress intended to reduce
regulation of trucking industry only to limits specified in 1980 Act).
1984]
INTERSTATE COMMERCE COMMISSION
emphasized that there may be instances when unbridled competition would lead to wasteful fuel consumption.3 1 7 The ICC has, nevertheless, recognized the promotion of competition as the only
salient purpose of the 1980 Act. 3 18 In disregarding the other con-
gressional objectives of the national transportation policy, the ICC
has threatened those statutory goals that do not find high priority in
the marketplace.
The ICC's free-market economy approach will not "allow the
most productive use of equipment and energy resources," 3 19 at least
not until mergers have consolidated the strong and bankruptcies
have slaughtered the weak. The contemporary expansion of the nation's largest motor carriers by means of predatory price discounting does not enable their smaller competitiors that are otherwise
"efficient and well-managed . . .to earn adequate profits, attract
capital, and maintain fair wages and working conditions." 3 20 As the
nation's experience with airline deregulation suggests, deregulation
of the motor carrier industry will thwart the congressional goal of
maintaining "service to small communities and shippers."'3 2 ' It is
unlikely that unbridled competition will enhance "greater participation by minorities." 3 22 Finally, the maintenance of a "sound [and]
safe.
.
.
motor carrier system" 3 23 is jeopardized as hundreds of car-
317. See SENATE COMM.ON COMMERCE, SCIENCE AND TRANSPORTATION, REPORT ON THE
MOTOR CARRIER REFORM ACT OF 1980, S. REP. No. 641, 96th Cong., 2d Sess. 4-5 (1980);
HOUSE Com. ON PUBLIC WORKS AND TRANSPORTATION, REPORT ON THE MOTOR CARRIER ACT
OF 1980, H.R. REP. No. 1069, 96th Cong., 2d Sess. 12 (1980); see also CongressionalIntent and
Agency Discretion, supra note 16, at 26 (breadth of national transportation policy demonstrates
competition not sole consideration of ICC in performing regulatory function).
318. See Rules Governing Applications for Operating Authority, 46 Fed. Reg. 2294 (1981)
(Clapp, Comm'r. concurring in part, dissenting in part) (noting ICC has placed increasing
emphasis on competition); Elimination of Certification as the Measure of "Holding Out," 46
Fed. Reg. 8604, 8605 (1981) (noting ICC's responsibility to place emphasis on competition as
principal regulatory device); see also CongressionalIntent and Agency Discretion, supra note 16, at
53.
319. See 49 U.S.C. § 10101(a)(2)(C) (1982).
320. See id. § 10101(a)(2)(D); see also Adams, A Changing TransportationPolicyfor the 1980's,
17 HARV. J. ON LEGIS. 397, 403-04 (1980) (arguing that complete deregulation would encourage predatory pricing and other abuses by larger competitors).
321. See 49 U.S.C. § 10101(a)(2)(E) (1982).
322. See id. § 10101(a)(2)(H).
323. See id. § 10101(a)(2)(G). The 1980 Act requires that the Commission "promote intermodal transportation." 49 U.S.C. § 10101(a)(2)(I) (1982). In the regulated environment
that preceded the contemporary rush to abandon statutory controls over entry and ratemaking, the ICC made tremendous progress in facilitating intermodal operations. See, e.g., Dempsey, The Contemporary Evolution of Intermodal and International Transport Regulation Under the
Interstate Commerce Act: Land, Sea, and Air Coordinationof Foreign Commerce Movements, 10 VAND. J.
TRANSNAT'L L. 505 (1977) (ICC has promoted growth ofintermodal transportation by regulation); Dempsey, Foreign Commerce Regulation Under the Interstate Commerce Act: An Analysis of Intermodal Coordination of International Transportationin the United States, 5 SYRACUSE J. INT'L L. &
CoM. 53 (1977) (regulation of intermodal transportation has contributed to growth of foreign commerce).
THE AMERICAN UNIVERSITY LAW REVIEW
[Vol.
34:1
riers go bankrupt and thousands more suffer severe economic hardship. The congressional objectives can be protected only if the ICC
performs its regulatory duties in a lawful and responsible manner.
Modest governmental participation in the competitive marketplace ensures the promotion of societal objectives beyond the accumulation of wealth. Responsibly administered economic
regulation ensures that all shippers and receivers of transportation
services, no matter how large or small, enjoy a high level of service
at just and reasonable rates. This prohibition against pricing and
service discrimination also protects small shippers and remote communities from receiving the high prices and poor service that the
marketplace would offer them.
Diligent adherence to the express congressional scheme of regulation would, in the long run, likely foster the promotion of healthy
competition among motor carriers. The regulatory environment for
the motor carrier industry that preceded the 1980 Act was by no
means devoid of competition. Indeed, more than 16,000 motor carriers held operating authority from the ICC. Marketplace imperatives of supply and demand largely influenced the establishment of
rates, although government intervention existed to restrain carriers
from exploiting monopoly or oligopoly market positions or to prohibit larger carriers from employing predatory pricing activities to
drive their smaller competitors out of business. The market, therefore, provided the basis for the lion's share of the decisions regarding pricing and service, and the government participated only
occasionally to protect those societal objectives that Congress stated
3 24
to be within the public interest.
324. For a discussion of the workings of the motor carrier industry in a regulated environment, see CongressionalIntent and Agency Discretion, supra note 16, at 3-7.
In analyzing the motives and behavior of administrative agencies, some commentators have
suggested that after an initial developmental period, an agency inevitably falls captive to the
industries it regulates. See M. BERNSTEIN, REGULATING BUSINESS BY INDEPENDENT COMMISSION
294 (1955) (arguing that commissions tend to become protective representatives for agencies
regulated); Freedman, supra note 25, at 1055-56 (stating that regulated groups exert pressure
on administrative agency in proportion to their economic importance);Jaffe, The ElJective Limits of the Administrative Process: A Reevaluation, 67 HARV. L. REv. 1105 (1954) (finding that Congress' failure to provide clear statutory standards leads to control of agencies by private
groups).
Even though the ICC once may have been a "captive" of the industries it regulated, it has
not been during the past decade. Although the major railroads seem to have favored greater
liberalization of ICC regulatory control, the motor carriers have not. Yet, both are subject to
de facto deregulation by the ICC. If the "captive theory" is valid, then the railroads must
have captured the ICC largely to the exclusion of the motor carrier industry. Indeed, deregulation of the railroads allows them to maximize profits by abandoning trackage to small communities and by raising prices on market dominant traffic. Some in the motor carrier industry
have argued that rail interests are receiving preferential treatment in Washington. See DOT
and ICC are Held "Prostituting"Intent of Congress in Trucking Act, TRAFFIC WORLD, Sept. 5, 1983,
at 13 (arguing that affiliation of ICC with railroads has diminished ICC's objectivity and im-
1984]
INTERSTATE COMMERCE COMMISSION
49
As dissatisfaction with the size and breadth of the government
grew in the mid-1970's, the trend toward deregulation developed.
The Proposition 13 tax revolt and the country's disillusionment with
the Great Society experiment reflected the sentiment that government generally had become too ineffecient, costly, and ineffective.
The populace generally perceived regulation as an unnecessary intrusion that wrapped small businessmen in red tape and marched
them through a confusing bureaucratic labyrinth. 32 5 It was this public sentiment that in part encouraged two consecutive presidents to
favor transportation deregulation. Presidents Carter and Reagan
indeed have been able to accomplish comprehensive deregulation
even in the absence of statutory authority. 32 6 White House influence
in the ICC, as reflected in ICC endorsement of presidential policy, is
3 27
presently at its highest level in the agency's history.
The Commisssion has lost the autonomy that traditionally
shielded its decisionmaking from the political winds that blow down
Pennsylvania Avenue. The White House has been the dominant
political force influencing ICC policy in recent years. 3 28 With the
Commission dominated by the deregulatory policy of the executive
branch and with Congress split on the wisdom of deregulation, the
32 9
remaining check on aberrant ICC action has been the judiciary.
As this Article reveals, parties have frequently and successfully used
the judicial forum to challenge the Commisssion's actions. Many
partiality). Nevertheless, the "captive theory" has received serious criticism. See Jaffe, The
Illusion of the Ideal Administration, 86 HARV. L. REV. 1183, 1185 (1973).
325. See Dempsey, Erosion of the Regulatory Process in Transportation-The Winds of Change, 47
I.C.C. PRAC.J. 303, 318-20 (1980) (discussing the rationale underlying deregulation); Dempsey, The Rise and Fall of the Civil Aeronautics Board-Opening Wide the Floodgates of Enty, 11
TRANSP. L.J. 91, 114-18 (1979) (discussing public dissatisfaction with regulation of airline
industry). Neither the press nor the general public differentiate the kind of regulation that
provides no economic benefit to business, such as environmental, safety, and health regulation, from economic regulation, which does confer economic benefits. The economic benefits
resulting from motor carrier regulation include freedom from destructive competition and
predatory pricing, and the assured access of small and remote shippers and communities to
motor carrier services.
326. See supra notes 11-15 & 27-32 and accompanying text (discussing presidential attempts to influence passage of 1980 Act).
327. See E. GELLHORN & R. PIERCE, JR., REGULATED INDUSTRIES 382 (1982) (arguing that
catalyst for transportation deregulation has originated in executive, not legislative, branch).
But see supra note 25 (discussing congressional intent to minimize presidential influence in
1980 Act).
328. See Verkuil, supra note 25, at 944-47 (discussing Carter administration's confrontations with agency policymakers). Dean Verkuil has noted that "[h]ighly charged White House
intervention poses a danger of frustrating the will of Congress as expressed in legislation
establishing an agency and defining its mission." Id. at 949-50; see also Butler, ICC Chairman
Taylor Again Displays Depth of Rift Between Commissioners, TRAFFIC WORLD, Apr. 16, 1984, at 46,
47 (ICC no longer heeds congressional mandate but follows executive policy).
329. See CongressionalIntent and Agency Discretion,supra note 16, at 55 (discussing judiciary's
role in overseeing ICC).
THE AMERICAN UNIVERSITY LAW REVIEW
(Vol. 34:1
federal courts of appeals have concluded that the ICC's actions in
the area of motor carrier deregulation are inconsistent with statu330
tory intent and in contravention of explicit statutory provisions.
But judicial review consumes vast amounts of time, energy, and
money. Although aggrieved parties have won numerous victories,
that
the Commission has proceeded on so many deregulatory fronts 33
the courts cannot repair all the damage that the ICC has done. '
Despite congressional and judicial admonitions to the contrary,
the ICC has not slowed its lemming-like rush to the stormy seas of
deregulation. On the seventy-fifth anniversary of the ICC, Justice
Felix Frankfurter prophetically cautioned the agency that "institu33 2
tions do not die, they commit suicide."
Any student of law and history must note with chagrin the disintegration of a venerable legal institution whose carefully defined mission has been so twisted and distorted in so short a period of time.
If an administrative agency can deregulate one of this nation's major
industries despite the absence of statutory authority, then our nation has ignored the warnings of our founding fathers of the propensity of the state to become a government of men, rather than a
3 33
government of law.
330. See supra notes 54-201 and accompanying text (discussing judicial reversals of ICC
decisions). In formulating a standard ofjudicial review for agency decisions, District of Columbia Circuit Court Judge Leaventhal has stated:
[a court should] intervene not merely in the case of procedural inadequacies, or
bypassing the mandate in the legislative charter, but more broadly if the court becomes aware, especially from a combination of danger signals, that the agency has
not really taken a "hard look" at the salient problems, and has not genuinely engaged in reasoned decision-making.
Greater Boston Television Corp. v. FCC, 444 F.2d 841, 850-53 (D.C. Cir. 1970), cert. denied,
403 U.S. 923 (1971).
331. See Gardner, The Administrative Process, in LEGAL INSTITUTIONs TODAY AND TOMORROW
108, 140 (M. Paulsen ed. 1959) (noting that it would be sounder business practice merely to
adjust to agency decision rather than to endure years of uncertainty in attempting to improve
result).
332. F. FRANKFURTER, supra note 5, at 245 (1965).
The actions of the current commissioners portend the ICC's destruction unless the judiciary ultimately is successful in wearing down the agency's obstinacy, presidents begin to appoint persons other than deregulatory zealots to fill vacant seats on the Commission, or
Congress is able successfully to reassert its traditional role as guardian, protector, and defender of the ICC. If none of these events occurs, the day will soon come when the industry
itself calls for the death of the beast that has devoured the few benefits it traditionally has
derived from the regulatory burden. See ATA Blames ICCfor Truckers' Ills; Government Points to
Recession, TRAFFIC WORLD, June 28, 1982, at 14 (quoting statement by former ATA president
that ATA may endorse dissolution of ICC if agency continues to ignore legislative mandate);
Truck Industry Hits Administrationfor Continued Economic Decline, TRAFFIC WORLD, July 12, 1982,
at 16 (discussing motor carrier industry's dissatisfaction with ICC).
333. THE FEDERALIsT,No. 48, at 146 U. Madison) (R. Fairfield ed. 1981). James Madison
once reminded the nation that "power is of an encroaching nature . . . [and] ought to be
effectively restrained from passing the limits assigned to it." Id. More recently, Judge Skelly
Wright provided a description of agency behavior that accurately describes the ICC:
It may be that the agency is sufficiently insulated from political pressure so that it can
1984]
INTERSTATE COMMERCE COMMISSION
In the end, only history will record whether transportation deregulation was a successful or ill-advised endeavor, a prudent or disastrous choice of policy. If the former, then it will be an unfortunate
and unnecessary oversight that the political process failed to bring
the legislation into line. But if deregulation, on balance, proves to
have been a mistake, then its proponents will be perceived as misguided ideologues and its implementors viewed as above the law. In
a democratic society, it surely cannot be too idealistic a notion to
expect major changes in public policy to be made by our elected
legislative representatives, rather than by political appointees. Undoubtedly, the former approach is slower and more cumbersome
than the latter. The democratic process, however, ensures that
power will not be concentrated in the executive. It permits the
broad consensus of the people, rather than individuals appointed to
regulatory commissions, to decide national policy.
take action which would have been unavailable to Congress, or that Congress is
badly split while the agency is united. In this situation, a strong agency will be able
to [pursue its chosen policies]. But, these goals will have been accomplished at the
expense of democratic decision-making. The putatively substantial portion of the
electorate which opposes the agency action, or which is merely uncertain as to its
wisdom, is likely to believe-and with some justification-that Congress has done
through the back door what it could have accomplished in direct, democratic fashion.
Wright, Beyond DiscretionaryJustice, 81 YALE LJ. 575, 586 (1972).