Under the Motor Carrier Act, 1935, as amended, the Interstate
Commerce Commission promulgated rules governing the use by
authorized motor carriers of equipment not owned by them but leased
from the owners or obtained by interchange with other authorized
motor carriers. These rules abolish trip leasing and revenue
splitting with driver owners; require written contracts, carrier
inspection, control and responsibility for nonowned equipment, and,
for interchanged equipment, require drivers employed by the
certified carrier over whose route it travels.
Held:
1. The promulgation of these rules for authorized carriers is
within the Commission's power, despite the absence of specific
reference to leasing practices in the Act. Pp.
344 U. S.
308-313.
2. The rules do not violate the National Transportation Policy.
Pp.
344 U. S.
313-314.
3. The rules and the exemptions therefrom are not unreasonable.
Pp.
344 U. S.
314-316.
4. The rules do not violate § 208(a) or § 209(b), protecting the
carriers' right to augment their equipment. Pp.
344 U. S.
316-317.
5. They do not violate § 203(b)(6), which exempts from the
Commission's jurisdiction vehicles used in carrying only livestock,
fish, or agricultural commodities -- though they may increase the
cost of operating such vehicles. Pp.
344 U. S.
317-318.
6. Nor were the rules the product of proceedings fatally at
variance with requirements of the Administrative Procedure Act. Pp.
344 U. S.
318-320.
(a) Section 7(c) of the Administrative Procedure Act, providing
that the proponent of a rule "shall have the burden of proof," is
inapplicable, since these rules were promulgated under
Page 344 U. S. 299
§ 204(a)(6) of the Motor Carrier Act, which requires no record
or hearing. Pp.
344 U. S.
318-320.
(b) Similarly inapplicable is § 8(b) of the Administrative
Procedure Act, which requires that decisions shall include a
statement of "findings and conclusions." P.
344 U. S.
320.
7. In a carrier's suit to enjoin enforcement of these rules, the
District Court did not err in refusing to permit introduction of
evidence of "confiscation," though the rules may affect the value
of some going concerns. Pp.
344 U. S.
320-323.
101 F.
Supp. 710 and
103 F.
Supp. 694, affirmed.
Two federal district courts declined to enjoin enforcement of
rules promulgated by the Interstate Commerce Commission governing
the use by motor carriers of equipment not owned by them.
101 F.
Supp. 710;
103 F.
Supp. 694. On appeal to this Court,
affirmed, p.
344 U. S.
323.
Page 344 U. S. 300
MR. JUSTICE REED delivered the opinion of the Court.
These appeals attack new Interstate Commerce Commission rules
governing the use of equipment by authorized motor carriers when
the equipment is not owned by the carrier, but is leased from the
owner or obtained by interchange with another authorized carrier.
They
Page 344 U. S. 301
were prescribed by the Commission and reported
Ex Parte No.
MC-43, Lease and Interchange of Vehicles by Motor Carriers, 52
M.C.C. 675. As will be seen from the portions we have quoted in the
344
U.S. 298app|>Appendix, they principally require carrier
inspection; when the equipment is leased, control for a minimum of
thirty days, and a method of compensation other than division of
revenues between lessor and lessee; and, in the case of use of
another carrier's equipment, authorization to the exchange point
and actual transfer of control. Thus, the practice of using leased
equipment and that obtained by interchange is brought into
conformity with the regulation of carrier-owned equipment to avoid
evils that had grown up in that practice.
Some six suits were instituted to test the validity of the rules
in the district courts under 28 U.S.C. §§ 2321-2325. Three were
stayed by orders, and one was not moved pending disposition of the
instant cases. [
Footnote 1]
These came here on direct appeal from two separate judgments
denying the injunctive relief prayed for, one in the Southern
District of Indiana,
Eastern Motor Express, Inc. v. United
States, 103 F.
Supp. 694, and the other in the Northern District of Alabama,
American Trucking Associations, Inc. v. United
States, 101 F.
Supp. 710. The issues there considered and resolved against the
applicants concerned the Commission's authority under the Motor
Carrier Act of 1935, Interstate Commerce Act, Part II, 49 Stat.
543, as amended, 54 Stat. 919, 49 U.S.C. § 301
et seq..;
the impact of the rules on agricultural trucking and on the
guaranteed right of authorized carriers to augment their equipment;
the application of the
Page 344 U. S. 302
Administrative Procedure Act, 5 U.S.C. § 1001
et seq.,
and the right of the protestants to introduce additional evidence
in the district courts. Since there were only minor differences in
the content of the two cases appealed, they may be treated
together.
I.
Introduction. -- We consider at the outset the
existing conditions of the motor truck industry and its regulation
as developed during the Commissioner's hearings, because only
against such a background are the rules meaningful. Commission
authorization in the form of permits or certificates of convenience
and necessity is a precondition to interstate service by virtue of
the Motor Carrier Act. Such authorization, except under the
"grandfather" clause, is granted only after a showing of fitness
and ability to perform and a public need for the proffered service.
And it specifically limits the scope and business of the permitted
operations in the case of a contract carrier, and the routes and
termini which may be served by a certificated common carrier.
[
Footnote 2]
The Act waives these conditions of agency authorization and
service limitations for a sizable portion of the industry, however.
Most important of the exempt operations are those involving
equipment used in the transportation of agricultural products. By
and large, the equipment in this category is owned and operated by
the same person. It falls only within the Commission's jurisdiction
over drivers' qualifications, hours of service, and safety.
[
Footnote 3] And so there is no
mandate on these exempt owner-operators to provide adequate and
nondiscriminatory
Page 344 U. S. 303
service, adhere to published rates, and comply with the strict
insurance requirements imposed on carriers authorized for general
carriage. [
Footnote 4]
Because of the limiting character of the regulatory system,
authorized carriers have developed a wide practice of using
nonowned equipment. They have moved in two directions. The first is
interchange. This includes those arrangements whereby two or more
certificated carriers provide for through travel of a load in order
to merge the advantages of certification to serve different areas.
In this fashion, a wholly or partially loaded trailer may be
exchanged at the established interchange point, or even an entire
truck travel the line without interruption, under the guise of a
shift in control. The second is leasing. This relates to the use of
exempt equipment in authorized operations. Carriers subject to
Commission jurisdiction have increasingly turned to owner-operator
truckers to satisfy their need for equipment as their service
demands. By a variety of arrangements, the authorized carriers hire
them to conduct operations under the former's permit or
certificate. Such operators thus travel approved routes with
nonexempt property, and, in the great majority of instances, sever
connections with their lessee carrier at the end of the trip.
[
Footnote 5]
The use of nonowned equipment by authorized carriers is not
illegal, either under the Act or the rules under
Page 344 U. S. 304
consideration. [
Footnote 6]
But evidence is overwhelming that a number of satellite practices
directly affect the regulatory scheme of the Act, the public
interest in necessary service, and the economic stability of the
industry, and it is on these that the rules focus. It appears, for
instance, that, while many arrangements are reduced to writing,
oral leases are common; some were concluded after the trips were
made, and, in several cases, exempt operators solicited business
themselves with blank authorized carrier forms or other evidence of
agency. It is strongly urged that this very informality of the
contractual relationship between carrier and exempt operator
creates conditions in the industry inconsistent with those which
the Act contemplates. Proof was proffered during the proceedings
that the informal and tenuous relationships in lease and
interchange permit evasions of the limitations on certificated or
permitted authority. Since the driver of the exempt equipment is
not an employee of the carrier, sanctions for violation of
geographical restrictions are clearly difficult to impose,
especially in the case of the single trip lessor. Interchange may,
as well, become a device to circumvent geographical restrictions in
the certificate. The practice of authorized carriers conducting
operations beyond the territory they are entitled to serve under
cover of a lease from the local carrier was clearly shown in the
evidence before the Commission. It appeared, in fact, that some of
these operations are entirely fictional, being created
ad
hoc after the trip is made -- and this at times in the wake of
a specific denial by the Commission of an application to serve the
area.
Page 344 U. S. 305
It was also alleged, and shown by evidence of some incidents,
that the Commission's safety requirements were not observed by
exempt lessors. Because of the fact that the great bulk of the
arrangements cover only one trip, leasing carriers have little
opportunity or desire to inspect the equipment used, especially in
cases where the agreement is made without the operator's appearance
at the carrier's terminal. Enforcement sanctions by the carriers
for violations would be clearly as difficult to impose as route
standards. Hence, the carrier may not extent the supervision of
rest periods, doctors' certificates, brakes, lights, tires,
steering equipment and loading, normally accorded his own employees
and vehicles, to equipment and drivers secured through lease. And
the owner-operator himself is called upon to push himself and his
truck because of the economic impact of time spent off the road and
investment in repairs on his slim profit margin. [
Footnote 7] Further, the absence of written
agreements has made the fixing of the lessee's responsibility for
accidents highly difficult.
Consequences on the economic stability of the industry were also
noted. The carrier engaged in leasing practice is at the mercy of
the cost and supply of exempt equipment available to him. Hence, he
may at times find himself unable to undertake shipping obligations
because no trucks are available willing to make a relatively
unprofitable trip or to assume the burdens of less than carload
service. Certification is granted on a showing that a concern is
fit and willing to provide nondiscriminatory service required by
the public convenience. To sustain this obligation, the authorized
integrated carrier who finds his
Page 344 U. S. 306
leasing competitor only willing to undertake the more profitable
ventures may be obliged to rely on miscellaneous freight without
compensating economic long carload hauls to sustain estimated
profit margins.
Use of exempt equipment by authorized carriers also tends to
obstruct normal rate regulation. Schedules are traditionally
grounded in costs. But the cost picture of a carrier who depends
largely on leased equipment is far different from that of a carrier
owning his own trucks. Not only is the former able to undertake
operations with relatively slight investment. As well, his current
overhead involved in operating leased equipment is solely
administrative, the owner of the exempt equipment bearing the
expense of gas, oil, tires, wages, and depreciation out of his
share of the fee. And to refer to the exempt owner's own expenses
as determinative of what is a "reasonable" rate would be manifestly
impossible as long as the relationships between lessor and lessee
are too tenuous, short-termed, and informal and the compensation of
each based on a division of revenue.
It is claimed that the practice in fact has had a demoralizing
effect on the industry. Authorized carriers find it advantageous to
expand their operations by leased equipment because of the fact
that no investment is required, nor is the risk of empty return
trips and other overhead incurred. Hence, carriers owning their own
trucks face a fluid rate structure in competition with those
specializing in use of exempt equipment, especially where such
equipment is offered for a trip, as it often is, for expenses.
There is thus a pressure on the certificated operator to enter the
leasing field, and hence expand the effect of these conditions and
practices on efficient, safe, and nondiscriminatory truck service
which the Act is designed to promote.
II.
Commission Proceedings. -- All before us admit the
difficulties which have developed. In fact, the Commission has
considered them for some years. As early as
Page 344 U. S. 307
1940, following complaints, the Bureau of Motor Carriers held
hearings on the subject which culminated in a statistical report in
1943. The necessity of maximum use of transportation resources
during the war postponed any action thereafter until 1947.
[
Footnote 8] In that year,
however, the Director of the Bureau reinstituted discussion, had
suggested regulations drafted, and drew on his field staff for
reports of the use of the exempt vehicles by authorized carriers.
The present proceedings were instituted by the Commission on
January 9, 1948, when it became apparent that carrier agreement
regarding a proper solution was unlikely. Its order, published at
13 Fed.Reg. 369, declared all authorized carriers respondents and
set forth the practices to be investigated, four possible schemes
of regulation, and suggested rules. A qualified examiner thereafter
heard some 80 witnesses in Washington and St. Louis, and issued a
report and proposed rules. A full report by the Commission's
Division 5 followed on June 26, 1950, confirming the examiner's
findings and amending his proposals, [
Footnote 9] and, following petitions for reconsideration,
the entire Commission reopened proceedings for oral argument. The
Commission's report, dated May 8, 1951, in effect adopted the
Examiner's proposed rules, after affirming and reiterating the
nature and effect of
Page 344 U. S. 308
leasing and interchange practices on the industry and regulation
under the Act.
III.
The Rules. -- In this final form, the rules
establish as conditions to the use of nonowned equipment by
authorized carriers the reduction of the contracts to writing.Rule
§ 207.4(a)(2), 52 M.C.C. 743. It is required that such contracts
vest exclusive possession of, and responsibility for, the equipment
in the authorized carrier during the rental, Rule § 207.4(a)(4),
the life of which must exceed thirty days when the driver is the
owner or his employee. Rule § 207.4(a)(3). Finally, the contract
must fix the compensation of the lessor, which may not be measured
by a percentage of the gross revenue. Rule § 207.4(a)(5).
Interchange agreements between two authorized carriers must also be
in writing, and the equipment must be driven by an employee of the
certificated carrier over whose authorized route it travels. Rule §
207.5(a), (c).
The rules also require inspection of nonowned equipment when the
lessee carrier takes possession, Rule § 207.4(c), as well as the
identification of the trucks as within its responsibility, Rule §
207.4(d), and the testing of the driver's familiarity with Motor
Carrier Safety Regulations. Rule § 207.4(e). Records of the use of
rented and interchanged equipment are mandatory. Rule §
207.4(f).
IV.
Commission Authority. -- Appellants focus their
principal attack on the lease provisions requiring a thirty-day
period of carrier control and a measure of compensation other than
revenue splitting. All agree that the rules thus abolish trip
leasing. Unfortunate consequences are predicated for the public
interest because the exempt owner-operator will no longer be able
to hire himself out at will -- in sum, that the industry's ability
to serve a fluctuating demand will suffer, and transportation costs
accordingly go up. It is the Commission's position that
Page 344 U. S. 309
the industry and the public will benefit directly because of the
stabilization of conditions of competition and rate schedules, and
that, in fact, the continued effectiveness of the Commission's
functions under the Motor Carrier Act is dependent on regulation of
leasing and interchange. Needless to say, we are ill equipped to
weigh such predictions of the economic future. Nor is it our
function to act as a super commission. So we turn to the legal
considerations so strongly urged on us.
Here, appellants have framed their position as a broadside
attack on the Commission's asserted power. All urge upon us the
fact that nowhere in the Act is there an express delegation of
power to control, regulate, or affect leasing practices, [
Footnote 10] and it is further
insisted that, in each separate provision of the Act granting
regulatory authority, there is no direct implication of such power.
Our function, however, does not stop with a section by section
search for the phrase "regulation of leasing practices" among the
literal words of the statutory provisions. As a matter of
principle, we might agree with appellants' contentions if we
thought it a reasonable canon of interpretation that the draftsmen
of acts delegating agency powers, as a practical and realistic
matter, can or do include specific
Page 344 U. S. 310
consideration of every evil sought to be corrected. But no great
acquaintance with practical affairs is required to know that such
prescience, either in fact or in the minds of Congress, does not
exist.
National Broadcasting Co. v. United States,
319 U. S. 190,
319 U. S.
219-220;
Phelps Dodge Corp. v. Labor Board,
313 U. S. 177,
313 U. S.
193-194. Its very absence, moreover, is precisely one of
the reasons why regulatory agencies such as the Commission are
created, for it is the fond hope of their authors that they bring
to their work the expert's familiarity with industry conditions
which members of the delegating legislatures cannot be expected to
possess.
United States v. Pennsylvania R. Co.,
323 U. S. 612.
Moreover, we must reject at the outset any conclusion that the
rules as a whole represent an attempt by the Commission to expand
its power arbitrarily; there is clear and adequate evidence of
evils attendant on trip leasing. The purpose of the rules is to
protect the industry from practices detrimental to the maintenance
of sound transportation services consistent with the regulatory
system. Sections 216(b) and 218(a) of the Act, for instance,
require the filing of a just and reasonable rate schedule by each
common carrier, and the violation of these rates and the
demoralization of rate structures generally are a probable
concomitant of current leasing practices. Section 204(a)(2)
requires the Commission to impose rules relating to safety of
operation for vehicles and drivers. These are likewise threatened
by the unrestricted use of nonowned equipment by the common
carriers. And the requirements of continuous service in §
204(a)(1), of observance of authorized routes and termini under §§
208(a) and 209(b), and the prohibitions of rebates, §§ 216(d),
217(b), 218(a) and 222(c), also may be ignored through the very
practices here proscribed.
Page 344 U. S. 311
So the rules in question are aimed at conditions which may
directly frustrate the success of the regulation undertaken by
Congress. Included in the Act as a duty of the Commission is
that
"[t]o administer, execute, and enforce all provisions of this
part, to make all necessary orders in connection therewith, and to
prescribe rules, regulations, and procedure for such
administration."
204(a)(6). And this necessary rulemaking power, coterminous with
the scope of agency regulation itself, must extend to the
"transportation of passengers or property by motor carriers
engaged in interstate or foreign commerce and to the procurement of
and the provision of facilities for such transportation,"
regulation of which is vested in the Commission by § 202(a).
See also § 203(a) (19).
We cannot agree with appellants' contention that the rulemaking
authority of § 204(a)(6) merely concerns agency procedures, and is
solely administrative. It ignores the distinct reference in the
section to enforcement. Furthermore, the power of the Commission to
make rules applicable to transfers of certificates or permits is
recognized by § 212(b). That section permits transfers "pursuant to
such rules and regulations as the Commission may prescribe." It
does not strain logic or experience to look upon leasing of exempt
equipment and interchange as a transfer, temporary in nature, of
the carrier's authorized right to serve his specified area; in
fact, we think this interpretation is dramatically supported here
by the evidence that owner-operators themselves take the initiative
in securing cargoes, while the carriers accept only the
administrative function of approving the use of the non-owned
equipment over their authorized routes and under their names. It is
an unnatural construction of the Act which would require the
Commission to sit idly by and wink at practices that lead to
violations of its provisions.
Page 344 U. S. 312
We hold then that the promulgation of these rules for authorized
carriers falls within the Commission's power, despite the absence
of specific reference to leasing practices in the Act.
See
General American Tank Car Corp. v. El Dorado Terminal Co.,
308 U. S. 422,
308 U. S. 432.
The grant of general rulemaking power necessary for enforcement
compels this result. It is foreshadowed, of course, by
United
States v. Pennsylvania R. Co., 323 U.
S. 612. That case validated an order requiring railroads
to lease cars to a competing carrier by sea, in spite of the
inability of the Commission to ground its action on some specific
provision of the Act. 323 U.S. at
323 U. S. 616.
This Court pointed to the fact that the
"unquestioned power of the Commission to require establishment
of [through] routes would be wholly fruitless without the
correlative power to abrogate the Association's rule which
prohibits the interchange."
323 U.S. at
323 U. S. 619.
There is evidence here that convinces us that that regulation of
leasing practices is likewise a necessary power; in fact, we think
its exercise more crucial than in
United States v. Pennsylvania
R. Co. The enforcement of only one phase of the Act was there
endangered; here, practically the entire regulatory scheme is
affected by trip leasing.
A fair analogy appears between the conditions which brought
about the Motor Carrier Act and those sought to be corrected by the
present rules, confirming our view of the Commission's
jurisdiction. Then, the industry was unstable economically,
dominated by ease of competitive entry and a fluid rate picture.
And, as a result, it became overcrowded with small economic units
which proved unable to satisfy even the most minimal standards of
safety or financial responsibility. [
Footnote 11] So Congress felt
Page 344 U. S. 313
compelled to require authorization for all interstate operations
to preserve the motor transportation system from overcompetition,
while at the same time protecting existing routes through the
"grandfather" clause. [
Footnote
12] The Commission's rulemaking here considered is based on
conditions that similarly threaten, though perhaps to a lesser
degree, the efficient operation of the industry today.
And, as exercised, the power under § 204(a)(6) is geared to and
bounded by the limits of the regulatory system of the Act which it
supplements. It is thus as clearly defined for constitutional
purposes as the specified functions of the Commission, and so
reliance on
Schecter Poultry Corp. v. United States,
295 U. S. 495,
295 U. S. 529,
and
Panama Refining Co. v. Ryan, 293 U.
S. 388,
293 U. S. 421,
is misplaced. We reject for similar reasons the contention that
Federal Power Commission v. Panhandle Eastern Pipe Line
Co., 337 U. S. 498, is
controlling here. Our holding that the Federal Power Commission's
authority did not extend to production and gathering of natural gas
was specifically grounded in a provision of the Natural Gas Act to
that effect. 337 U.S. at
337 U. S.
504-505.
V.
The National Transportation Policy. -- What we have
said above answers appellants' companion contention that the rules
are invalid because they violate the National Transportation Policy
as set out in 49 U.S.C. preceding § 1. Regulation under the Act is
there declared to be in the interests of the preservation of the
inherent advantages of all modes of transportation, and of an
economically sound, safe, and efficient industry.
See United
States v. Rock Island Motor Transit Co., 340 U.
S. 419, and
United States v. Texas & Pacific
Motor Transportation Co., 340 U. S. 450. But
no overly-nice distinction between law and policy is needed to
support
Page 344 U. S. 314
the view that the question is hardly one for the courts; it is
clear that the rules represent, at best, a compromise between
stability and flexibility of industry conditions, each alleged to
be in the national interest, and we can only look to see if the
Commission has applied its familiarity with transportation problems
to these conflicting considerations. The mere fact that a contrary
position was taken during the war years when active interchange and
leasing were required, [
Footnote
13] that the Commission has never before restricted trip
leasing, and has in fact, approved it from time to time, [
Footnote 14] does not change our
function.
VI.
Reasonableness of Rules and Exemptions Therefrom.
-- The relationship of these rules to the regulatory scheme they
are designed to protect forms a basis for the answer to the various
allegations that certain rules are arbitrary. For our purposes,
such an argument must mean that the Commission had no reasonable
ground for the exercise of judgment. In the instant case, such is
not the situation; the evidence marshalled before the Commission
plainly supports the conclusion that the continued effectiveness of
its regulation requires the rules prescribed.
We also affirm a reasonable relationship between the aims of the
federal regulatory scheme and the exemptions in the rules. That, as
to interchange between carriers over routes which both are
authorized to serve, Rule § 207.3(a),
Page 344 U. S. 315
is founded on the proposition that unauthorized certificate
extensions are here impossible. The exemption extended to trucking
equipment used in railway express operations, Rule § 207.3(b),
which are largely confined to municipalities and contiguous areas,
and short trips, duplicates the similar exemption applicable to
contract and common carriers in Rule § 207.3(c). It is alleged that
the exclusion of the substituted motor-for-rail transport equipment
from the rules' coverage by Rule § 207.3(b) also is based on the
fact that the evils of unauthorized service, law observation, of
safety regulations, and demoralized competitive conditions are not
present in such operations. As the Commission found, the leasing
practices in the field are undertaken through long-term contracts
with certain established lessors, and the equipment inspected and
controlled by the railroads, and identified with its name. In such
a context, the exemption is not unreasonable; certainly it is not
required that the Commission extend its supervisory activities
under the rules into fields where the evidence before it indicates
no need, merely to satisfy some standard of paper equality. And
this is especially so in the field of substituted motor-for-rail
carriage which falls within the Commission's strict regulation by
virtue of the restrictions which we approved in
United States
v. Rock Island Motor Transit Co., 340 U.
S. 419, and
United States v. Texas & Pacific
Motor Transportation Co., 340 U. S. 450. The
exemption for plans of operations merged under § 5 of the Act, Rule
§ 207.3(d), is said to have been directed solely toward Allied Van
Lines, whose § 5 proceeding, reported
Evanston Fireproof
Warehouse -- Control -- Allied Van Lines, 40 M.C.C. 557,
involving a unique leasing arrangement by stockholding hauling
agents under the company's name, has already been scrutinized by
the Commission. Since Allied operates entirely with equipment
supplied under this arrangement,
Page 344 U. S. 316
and since the Commission has specifically approved it, it seems
to us that the exemption has a reasonable basis; the guarantees of
insurance coverage, financial responsibility, lessee route control,
and equipment identification in Allied's operations, 40 M.C.C. 551,
563-566, promise protection against the evils the rules seek the
correct.
VII.
Preservation of the Right to Augment Equipment. --
Appellants further contend, however, that the rules in effect will
violate the protections in §§ 208(a) and 209(b) of the Act of the
carriers' right to augment their equipment. [
Footnote 15] We do not agree. The provisos in
question are not to be read as blanket restrictions on the
Commission's regulatory powers; they are aimed at the restrictions
on the increase in volume of traffic through acquisition of
additional vehicles. Clearly, a numerical limitation would be
invalid, but the Commission's refusal to permit carriers to secure
and use equipment which does not satisfy its safety, loading, and
licensing rules would not. As we pointed out in
Crescent
Express Lines, Inc. v. United States, 320 U.
S. 401,
320 U. S. 408,
in sustaining a certificate
Page 344 U. S. 317
limited to seven-passenger vehicles, since § 208
"requires the Commission to specify the service to be rendered,
this could not be done without power also to specify the general
type of vehicle to be used."
We think it equally apparent that regulation of the conditions
and circumstances of the use of nonowned vehicles is not a
"limitation on the addition of more vehicles of the authorized
type." 320 U.S. at
320 U. S.
409.
VIII.
Preservation of Agricultural Exemption. -- As
indicated above, the Act also exempts from Commission
jurisdiction
"motor vehicles used in carrying property consisting of ordinary
livestock, fish (including shellfish), or agricultural commodities
(not including manufactured products thereof), if such motor
vehicles are not used in carrying any other property, or
passengers, for compensation;"
§ 203(b)(6), [
Footnote
16] and appellants, and particularly the intervening Secretary
of Agriculture, urge that the rules will drastically reduce the
significance of this section in violation of Congress' intent. All
admit, of course, that the rules do not directly apply to
agricultural equipment; it is merely required that authorized
carriers using such trucks comply with certain provisions. But it
is contended that the preconditions to such use imposed on those
within Commission jurisdiction will wipe out much of the traffic
which the agricultural carriers have heretofore engaged in. It
appears, for instance, that a substantial leasing is built on
agricultural haulers who would otherwise return empty to their
place of departure, having unloaded the farm produce carried; the
authorized carriers have found them prepared to accept a one-trip
engagement for the return route. The thirty-day
Page 344 U. S. 318
lease provision will make such arrangements impossible.
We are unable, however, to conclude that the economic danger to
the agricultural truckers from these rules constitutes a violation
of § 203(b)(6). The mere fact that commercial carriers of
agricultural products will hereafter be required to establish their
charges on the basis of an empty return trip is not the same as
bringing them within Commission jurisdiction generally. The
exemption extends, by its own words, to carriage of agricultural
products, and not to operations where the equipment is used to
carry other property. Needless to say, the statute is not designed
to allow farm truckers to compete with authorized and certificated
motor carriers in the carriage of nonagricultural products or
manufactured products for off-the-farm use merely because they have
exemption when carrying only agricultural products. We can
therefore find nothing in it which implies protection of
agricultural truckers' right to haul other property, even though
from an economic standpoint that right is important to protect
profit margins. Regulated truckers must also receive protection
upon their restricted routes and limited carriage. A balance
between these competing factors, carried out in accordance with
congressional purpose, [
Footnote
17] does not seem to us unreasonable or invalid.
IX.
Agency Procedure. -- We need not pause long over
certain procedural objections which appellants have interposed.
They object that the rules were the product of proceedings fatally
at variance with certain requirements of the Administrative
Procedure Act. Appellants In No. 35 point to the requirement of §
7(c), that "the
Page 344 U. S. 319
proponent of a rule or order shall have the burden of proof,"
and insist that the Commission, or its Motor Carriers Bureau, which
drew up suggested rules published as a supplement to the hearing
order, 13 Fed.Reg. 369, did not satisfy this burden by
preponderating evidence. But, even assuming that the Commission was
a statutory "proponent" of the regulation and that it did not
actively introduce the requisite degree of proof in support of its
position, we think it plain that the requirement is inapplicable to
the instant proceedings. For § 7 of the Administrative Procedure
Act is limited by its own terms to "hearings which section 4 or 5
requires to be conducted pursuant to this section." Turning to
those sections, it is found that they invoke § 7 only when
specified by statute:
"Where rules are required by statute to be made on the record
after opportunity for an agency hearing, the requirements of
sections 7 and 8 shall apply in place of the provisions of this
subsection. [
Footnote
18]"
In short,
Page 344 U. S. 320
§ 7 applies only when hearings were required by the statute
under which they were conducted to be made on the record and with
opportunity for oral hearing. As we have pointed out, the
rulemaking authority in the instant case stems from § 204(a)(6) of
the Motor Carrier Act; nothing there requires record or hearing, in
direct contrast with the ratemaking procedure provisions of §§
216(e) and 218(b). Hence, whatever our view of the substantiality
of the evidence, we do not think that the rules must fall because
the Commission failed to assume and satisfy a "burden of
proof."
Similar reasoning supports our conclusion that § 8(b) of the
Administrative Procedure Act, which requires that decisions shall
"include a statement of (1) findings and conclusions" invoked by
appellants in No. 26, is likewise inapplicable. For it, in turn, is
limited to a "hearing . . . required to be conducted in conformity
with section 7."
X.
Right to Introduce Evidence of Confiscation. --
Finally, appellants assign as error the refusal of the District
Court in No. 35 to permit introduction of additional oral evidence
there. Their offer of proof indicated that it would concern the
"value of Plaintiffs' property and rights" and "the effect of the
order on said property and rights." This Court has indicated many
times, it is true, that those concerned with an order affecting
their just compensation for transportation services must be heard;
indeed, their right to introduce evidence to support the claim that
the order in question will unconstitutionally confiscate their
property may be enforced even in the District Court, if the
Commission bars an opportunity to do so.
Manufacturers R. Co.
v. United States, 246 U. S. 457,
246 U. S.
488-490;
St. Joseph Stock Yards Co. v. United
States, 298 U. S. 38,
298 U. S. 53-54;
Baltimore & Ohio R. Co. v. United States, 298 U.
S. 349,
298 U. S.
362-369;
New York v. United States,
331 U. S. 284,
331 U. S.
334-335.
Page 344 U. S. 321
But the right is not to be construed as an avenue toward delay.
The claim of confiscation must be substantial, the import of the
proffered evidence clear, and the inability to test the question
before the Commission patent, in order to justify an oral hearing
on the question in the courts. In the case at bar, appellants seek
in substance to show that the outlawing of trip leasing will affect
their business; perhaps they might even be able to prove that some
concerns would fail if they were unable in the future to resort to
nonowned equipment for short periods. In this context, however, we
do not think that a right to trial
de novo is
automatically established merely because the Commission denied a
petition for rehearing which invoked constitutional principles. In
the first place, there was, in truth, a multitude of evidence
before the Commission on the importance of trip leasing to some
concerns. Moreover, we are clear that appellants had an opportunity
to introduce this very evidence in the agency proceedings, for it
required no great prescience, in view of the notice of the hearings
published by the Commission, to know that they would concern the
importance and desirability of the very practices appellants seek
to protect.
"Confiscatory" is not a magic word. Whether it should open the
door to further proceedings depends on the nature of the order
attacked. We think a claim of rate confiscation, which was the
concern of the cases just cited, stands on a fundamentally
different footing from that made in the instant case. [
Footnote 19] Ratemaking represents
an order affecting the volume of income; it is said to confiscate
property when it prohibits a reasonable return on
Page 344 U. S. 322
investment beyond operating and initial costs. But the economic
significance of the abolishment of trip leasing is not nearly so
direct. The Commission has merely determined by what method the
carrier's income is to be produced, and not how much it may
charge.
It is true that we have admonished the Commission and the courts
to permit introduction of evidence on the economic impact of a rate
order where the claim that it could not have been proffered during
the original proceedings was genuine. But that was because the
"constitutional right of compensation,"
St. Joseph Stock Yards
Co. v. United States, 298 U. S. 38,
298 U. S. 54,
was drawn in question. Here, appellants can make no comparable
claim. They attack an order which is valid even if its effect is to
drive some operators out of business. As we have indicated, the
rulemaking power is rooted in and supplements Congress' regulatory
scheme, which in turn derives from the commerce power. The fact
that the value of some going concerns may be affected therefore
does not support a claim under the Fifth Amendment if the rules and
the Act be related, as we have said they are, to evils in commerce
which the federal power may reach. [
Footnote 20] This being the case, appellants had no
constitutional
Page 344 U. S. 323
claim in support of which they are entitled to introduce
evidence
de novo, and the court did not err in sustaining
the objection thereto.
Affirmed.
* Together with No. 35,
Eastern Motor Express, Inc. et al.
v. United States et al., and No. 36,
Secretary of
Agriculture v. United States et al., on appeals from the
United States District Court for the Southern District of
Indiana.
[
Footnote 1]
Oklahoma-Louisiana Motor Freight Corp. v. United States
(D.C.W.D.Okla.);
Movers' Conference of America v. United
States (D.C.E.D.Mich.);
Grayvan Lines, Inc. v. United
States (D.C.N.D.Ill.), and
Apger v. United States
(D.C.N.D.Ohio), respectively.
[
Footnote 2]
Interstate Commerce Act, §§ 206-209.
[
Footnote 3]
The Commission's safety regulations are published at 49 CFR,
Part 191-196. Section 203(b) also exempts (1) school
transportation, (2) taxicabs, (3) hotel service, (4) national park
transportation, (4a) farmers, (5) cooperatives, (7) newspapers,
(7a) airlines, (8) local service, and (9) "casual"
transportation.
[
Footnote 4]
See Interstate Commerce Act §§ 209(b), 216(e), 217(b)
and 49 CFR, Part 174.
[
Footnote 5]
It apparently is difficult to generalize about the economic
significance of leasing and interchange. A survey made by the
Bureau in 1947 disclosed only that about two-thirds of the carriers
did not lease. The desirability to each carrier would be affected
by many variables, of course, including the number of trucks he
owned, the volume and stability of local demand, and the extent of
his carrying authority.
[
Footnote 6]
It appears, however, that a number of states control the
practice already. Washington, which has filed an intervenor brief
here urging affirmance, is notable in limiting trip leases, and in
requiring that the driver be an employee of the carrier and that
the latter control the vehicle. The relevant provision is cited to
us as "Leasing Rule 40" by the Brief of the Attorney General of
that State.
[
Footnote 7]
The conclusion that highway safety may be impaired rests
admittedly on informed speculation, rather than statistical
certainty. A road check examination conducted by the Bureau did not
indicate any significant difference in the number of safety
violations between leased and owned vehicles.
[
Footnote 8]
See General Order O.D.T. 3, revised, §§ 501.5(d),
501.9, 501.10, 501.13, July 14, 1942, 7 Fed.Reg. 5445
et
seq., requiring full leasing, interchange and division of
revenues; I.C.C. Emergency Order No. M-1, June 11, 1942, §§
215.101, 215.105, 7 Fed.Reg. 4429, and I.C.C. Emergency Order M-6,
November 1, 1945, § 176.10(a), 10 Fed.Reg. 13595.
[
Footnote 9]
Ex Parte No. MC-43, Lease and Interchange of Vehicles by
Motor Carriers, 51 M.C.C. 461.
The change went to the heart of the problem. The examiner had
suggested a requirement that the rental be of at least 30 days'
duration, and that compensation be on a basis other than a division
of revenues. Division 5 rejected both provisions, recognizing that
they would, in effect, abolish trip leasing.
[
Footnote 10]
The Act as originally drafted included, as a definition of
carriers, all engaged in transportation "whether directly or by a
lease." § 203(a)(14), (15), 49 Stat. 544, 545. The
"added language [was] intended to check evasion of the act by
bringing within its terms such transportation operations as are
performed through the leasing of motor vehicles or other similar
arrangements which may constitute either common or contract
carriage, according to the particular nature of the arrangements.
The language inserted will enable the Commission to strike through
such evasions where the facts warrant it."
79 Cong.Rec. 5651. The terminology was stricken by the
Transportation Act of 1940, 54 Stat. 898, 920, which, however,
introduced no qualification and which, as we have indicated, was
merely "[f]or purposes of clarity."
Thomson v. United
States, 321 U. S. 19,
321 U. S. 23.
See 86 Cong.Rec. 11546.
[
Footnote 11]
Regulation of Transportation Agencies, S.Doc.No.152, 73d Cong.,
2d Sess. 14-15, 22-35, 226; 79 Cong.Rec. 12196, 12209; Hearings,
Senate Committee on Interstate Commerce, on S. 1629, 74th Cong.,
1st Sess., Part I, 78-80, 404-405, 410-411.
[
Footnote 12]
79 Cong.Rec. 12207-12211; 12222-12225.
[
Footnote 13]
See Footnote 8
supra.
[
Footnote 14]
Dixie Ohio Express Co. Common Carrier Application, 17
M.C.C. 735;
Greyvan Lines, Inc. Common Carrier
Application, 32 M.C.C. 719.
See, however, I.C.C.
Administrative Ruling No. 4, August 19, 1936, which represents an
early effort on the part of the Commission to bring leased
equipment under the control of the carriers for purposes of the
Act. This was apparently abandoned after this Court's decisions in
United States v. N.E. Rosenblum Truck Lines, Inc.,
315 U. S. 50, and
Thomson v. United States, 321 U. S.
19.
[
Footnote 15]
"SEC. 208. (a) Any certificate issued under section 206 or 207
shall specify the service to be rendered . . . :
Provided,
however, That no terms, conditions or limitations shall
restrict the right of the carrier to add to his or its equipment
and facilities over the routes, between the termini, or within the
territory specified in the certificate, as the development of the
business and the demands of the public shall require."
"
* * * *"
"SEC. 209. (b) . . . The Commission shall specify in the permit
the business of the contract carrier covered thereby and the scope
thereof . . .
Provided, however, That no terms,
conditions, or limitations shall restrict the right of the carrier
to substitute or add contracts within the scope of the permit, or
to add to his or its equipment and facilities, within the scope of
the permit, as the development of the business and the demands of
the public may require."
[
Footnote 16]
Likewise exempted are
"motor vehicles controlled and operated by any farmer when used
in the transportation of his agricultural commodities and products
thereof, or in the transportation of supplies to his farm."
§ 203(b)(4a).
[
Footnote 17]
The National Transportation Policy, 49 U.S.C. preceding § 1,
specifically refers to
"fair and impartial regulation of all modes of transportation
subject to the provisions of this Act, so administered as to
recognize and preserve the inherent advantages of each."
[
Footnote 18]
Section 4 of the Administrative Procedure Act sets out only the
following applicable requirements:
"(a) NOTICE. -- General notice of proposed rulemaking shall be
published in the Federal Register (unless all persons subject
thereto are named and either personally served or otherwise have
actual notice thereof in accordance with law), and shall include
(1) a statement of the time, place, and nature of public rulemaking
proceedings; (2) reference to the authority under which the rule is
proposed, and (3) either the terms or substance of the proposed
rule or a description of the subjects and issues involved. . .
."
"(b) PROCEDURES. -- After notice required by this section, the
agency shall afford interested persons an opportunity to
participate in the rulemaking through submission of written data,
views, or arguments with or without opportunity to present the same
orally in any manner, and, after consideration of all relevant
matter presented, the agency shall incorporate in any rules adopted
a concise general statement of their basis and purpose."
There is no question but that the Federal Register notice and
participation requirements were satisfied.
See p.
344 U. S. 307,
supra.
[
Footnote 19]
We have already noted the Motor Carrier Act itself distinguishes
between the scope of a hearing required in rate proceedings and
those in relation to general rulemaking under § 204(a)(6).
[
Footnote 20]
Compare the principles applicable to ratemaking with
what we have said about the Fifth Amendment in the related field of
wage and hour laws under the commerce power,
United States v.
Darby, 312 U. S. 100,
312 U. S. 125.
This Court has pointed out many times that the exercise of the
federal commerce power is not dependent on its maintenance of the
economic
status quo; the Fifth Amendment is no protection
against a congressional scheme of business regulation otherwise
valid, merely because it disturbs the profitability or methods of
the interstate concerns affected.
Labor Board v. Jones &
Laughlin Steel Corp., 301 U. S. 1,
301 U. S. 43-45;
Currin v. Wallace, 306 U. S. 1,
306 U. S. 13-15;
United States v. Rock Royal Co-operative, Inc.,
307 U. S. 533,
307 U. S.
572-573;
North American Co. v. Securities &
Exchange Commission, 327 U. S. 686,
327 U. S.
707-710;
American Power & Light Co. v.
Securities & Exchange Commission, 329 U. S.
90,
329 U. S.
106-108.
|
344
U.S. 298app|
APPENDIX TO OPINION OF THE COURT
Rules prescribed governing the practices of authorized
carriers of property by motor vehicle in Interstate or Foreign
Commerce in (1) augmenting equipment, (2) interchanging of
equipment, and (3) renting vehicles or equipment to private
carriers or shippers.
* * * *
§ 207.3.
Exemptions. -- Other than § 207.4(c) and (d),
relative to inspection and identification of equipment, these rules
shall not apply
(a) To equipment leased by one authorized carrier operating over
regular routes to another authorized carrier operating over regular
routes and operated between points and over routes which both
lessor and lessee are authorized to serve, and to equipment leased
by one authorized carrier operating over irregular routes to
another such carrier and operated between points and within
territory which both the lessor and lessee are authorized to
serve;
(b) To equipment utilized wholly or in part in the
transportation of railway express traffic, or in substituted
motor-for-rail transportation of railroad freight moving between
points that are railroad stations on railroad billing;
(c) To equipment utilized in transportation performed solely and
exclusively within any municipality, contiguous municipalities, or
commercial zone, as defined by the Commission;
(d) To equipment utilized by an authorized carrier in
transportation performed pursuant to any plan of operation
Page 344 U. S. 324
approved by the Commission in a proceeding arising under section
5 of the Interstate Commerce Act.
* * * *
§ 207.4.
Augmenting equipment. -- Other than equipment
exchanged between motor common carriers in interchange service as
defined in § 207.5 of these rules, authorized carriers may perform
authorized transportation in or with equipment which they do not
own only under the following conditions:
(a) The contract, lease, or other arrangement for the use of
such equipment-
(1) Shall be made between the authorized carrier and the owner
of the equipment;
(2) Shall be in writing and signed by the parties thereto, or
their regular employees or agents duly authorized to act for them
in the execution of contracts, leases, or other arrangements;
(3) Shall specify the period for which it applies, which shall
be not less than 30 days when the equipment is to be operated for
the authorized carrier by the owner or employees of the owner; . .
.
* * * *
(4) Shall provide for the exclusive possession, control and use
of the equipment, and for the complete assumption of responsibility
in respect thereto, by the authorized carrier, . . .
* * * *
(5) Shall specify the compensation to be paid by the lessee for
the rental of the leased equipment; provided, however, that such
compensation shall not be computed on the basis of any division or
percentage of any applicable rate or rates on any commodity or
commodities transported in said vehicle or on a division or
percentage of any revenue earned by said vehicle during the period
for which the lease is effective;
Page 344 U. S. 325
(6) Shall specify the time and date or the circumstance on which
the contract, lease, or other arrangement begins, and the time or
the circumstance on which it ends. The duration of the contract,
lease, or other arrangement shall coincide with the time for the
giving of receipts for the equipment, as required by paragraph (b)
of this section.
* * * *
(c)
Inspection of equipment. -- It shall be the duty of
the authorized carrier, before taking possession of equipment, to
inspect the same or to have the same inspected. . . .
* * * *
(d)
Identification of equipment. -- The authorized
carrier acquiring the use of equipment under this rule shall
properly and correctly identify such equipment as operated by it. .
. .
* * * *
(e)
Driver of equipment. -- Before any person other
than a regular employee of the authorized carrier is assigned to
drive equipment operated under these rules, it shall be the duty of
the authorized carrier to make certain that such driver is familiar
with, and that his employment as a driver will not result in,
violation of any provision of parts 192, 193, 195, and 196 of the
Motor Carrier Safety Regulations (Rev.) pertaining to "Driving of
Motor Vehicles," "Parts and Accessories Necessary for Safe
Operation," "Hours of Service of Drivers," and "Inspection and
Maintenance," and to require such driver to furnish a certificate
of physical examination in accordance with part 191 of the Motor
Carrier Safety Regulations (Rev.) pertaining to "Qualifications of
Drivers," or, in lieu thereof, a photostatic copy of the original
certificate of physical examination, which shall be retained in the
authorized carrier's file.
Page 344 U. S. 326
(f)
Record of use of equipment. -- The authorized
carrier utilizing equipment operated under these rules shall
prepare and keep a manifest covering each trip for which the
equipment is used in its service, containing the name and address
of the owner of such equipment, the make, model, year, serial
number, and the State registration number of the equipment, and the
name and address of the driver operating the equipment, point of
origin, the time and date of departure, the point of final
destination, and the authorized carrier's serial number of any
identification device affixed to the equipment.
§ 207.5.
Interchange of equipment. -- Common carriers
of property may by contract, lease, or other arrangement,
interchange any equipment defined in § 207.2 of these rules with
one or more other common carriers of property, or one of such
carriers may receive from another such carrier, any of such
equipment, in connection with any through movement of traffic,
under the following conditions:
(a)
Agreement providing for interchange. -- The
contract, lease, or other arrangement providing for interchange
shall specifically describe the equipment to be interchanged; the
specific points of interchange; the use to be made of the equipment
and the consideration for such use, and shall be signed by the
parties to the contract, lease, or other arrangement, or their
regular employees or agents duly authorized to act for them, in the
execution of such contracts, leases, or other arrangements.
(b)
Authority of carriers participating in interchange.
-- The certificates of public convenience and necessity held by the
carriers participating in the interchange arrangement must
authorize the transportation of the commodities proposed to be
transported in the through movement, and service from and to the
point where the physical interchange occurs.
Page 344 U. S. 327
(c)
Driver of interchanged equipment. -- Each carrier
must assign its own driver to operate the equipment that is
proposed to be operated from and to the point or points of
interchange and over the route or routes or within the territory
authorized in the participating carriers' respective certificates
of public convenience and necessity.
(d)
Through bills of lading. -- The traffic transported
in interchange service must move on through bills of lading issued
by the originating carrier, and the rates charged and revenues
collected must be accounted for in the same manner as if there had
been no interchange of equipment. Charges for the use of the
equipment shall be kept separate and distinct from divisions of the
joint rates or the proportions thereof accruing to the carriers by
the application of local or proportional rates.
(e)
Inspection of equipment. -- It shall be the duty of
the carrier acquiring the use of equipment in interchange to
inspect such equipment, or to have it inspected in the manner
provided in § 207.4(c) of these rules, and equipment which does not
meet the requirements of the safety regulations shall not be
operated in the respective services of the interchange carriers
until the defects have been corrected.
(f)
Identification of equipment. -- The authorized
carriers operating equipment in interchange service under this
section shall carry with each vehicle so operated a copy of the
contract, lease, or other arrangement while the equipment is being
operated in the interchange service.
* * * *
MR. JUSTICE BLACK, with whom MR. JUSTICE DOUGLAS concurs,
dissenting.
I agree with the Court that the Interstate Commerce Act grants
the Commission broad implied powers to carry out the general
purposes outlined in the law.
See United
Page 344 U. S. 328
States v. Pennsylvania R. Co., 323 U.
S. 612,
323 U. S. 616.
But the Commission is without power to invoke vague implications to
defeat the Act's purpose or to override its clearly expressed
provisions. This, I think, is what the Commission has done in most
of the Commission rules which the Court upholds. In my view, the
rules run counter to the Act in three important respects:
"A. The congressionally granted right of motor carriers to
choose for themselves whether they would use leased or purchased
equipment is practically destroyed by the imposition of burdensome
restrictions."
"B. The exemption from regulation granted carriers of
agricultural products by § 203(b) of Part II of the Act is burdened
by restrictive rules that substantially take away the advantages
Congress intended to confer by the exemption."
"C. Railroads that operate motor vehicles as a part of the
business of common carriage are granted special advantages in
violation of the express policy of the Act which requires each
method of transportation to be left with its inherent
advantages."
A. Motor vehicle common carriage had reached an advanced stage
when Congress passed the Motor Carrier Act in 1935. [
Footnote 2/1] Early development of the
business was along lines that the carriers found to be
advantageous. Some carriers owned their vehicles, while others
leased them. The Act did not try to disrupt this system, but left
motor carriers free to continue to own or lease equipment in
accordance with their best financial judgment. And Congress was
content to regulate the common or contract carriers themselves; it
made no effort whatever to regulate those who owned the vehicles
that were leased to the regulated carriers. Congress was thus
talking
Page 344 U. S. 329
about the acquisition of equipment by lease, as well as by
purchase, when it provided that the Commission should be without
power to restrict the right of carriers to add to their equipment
or facilities as the development of their business and the demands
of the public required. [
Footnote
2/2] While this provision is patently not designed to forbid
the Commission from limiting the type of vehicles in the interest
of safety, [
Footnote 2/3] the
provision just as patently does deprive the Commission of power to
forbid the lease and purchase of vehicles which meet the test of
safety.
The new rules adopted by the full Commission put burdensome
restrictions on the power to lease appropriate vehicles,
restrictions which, in my view, go beyond the power of the
Commission. These burdensome restrictions had been previously
rejected by the Commission's Division V, composed of Commissioners
particularly responsible for supervision of motor vehicle affairs,
as distinguished from supervision of railroad affairs. This record
makes plain that enforcement of these burdensome rules will produce
violent repercussions in the motor carrier industry; many motor
carriers will suffer ruinous losses. The business of leasing
vehicles for use by common carriers will be curtailed, or perhaps
even destroyed. The tendency of the rules is thus to eliminate many
small business ventures. It may be, as the Commission seems to
think, that the Nation's motor carrier business can be more
efficiently accomplished by a few big companies that own all their
equipment than by a large number of small companies that obtain all
or part of their equipment by lease. But if that governmental
alteration in our business structure is to be ordained, Congress,
not the Commission, should do the ordaining.
Page 344 U. S. 330
B. The farmers of the Nation have for a long time been largely
dependent upon reasonably priced motor transportation to get their
produce to market. [
Footnote 2/4]
When the Motor Carrier Act was under consideration, there was much
apprehension expressed lest regulation deprive farmers of this
advantage. [
Footnote 2/5] To meet
this feeling, the bill was amended several times, and finally was
passed with the agricultural exemption set forth in § 203(b).
Except as to certain safety requirements § 203(b) exempts from
regulation motor vehicles of farmers and farm cooperatives
Page 344 U. S. 331
used for farm purposes; the same exemption is also granted to
all motor vehicles while being used to carry agricultural
commodities. There can be no doubt that the Commission's new rules
will drive many of these carriers of farm products out of business,
and that many others will be compelled to increase their rates.
Section 207.4 of the new rules is rather obviously designed to make
this exemption much less valuable. It forbids authorized carriers
to lease motor trucks except for terms of at least 30 days if the
trucks are to be operated by owners or employees of owners. The
Commission reported that this rule would completely prohibit trip
leasing. [
Footnote 2/6] A very
large part of all trip leasing takes place between regulated
carriers and truckers who are exempt because they carry farm
products. An illustration can be found in the carriage of Florida
citrus fruits. On delivering fruit in northern states, the practice
of these exempt truckers has been to lease their motor vehicles to
regulated carriers for the transportation of goods to Florida.
Unless vehicles that bring citrus fruits north can make such
arrangements they must go back to Florida empty. "Empty or
partially loaded trucks on return trips may well drive the
enterprise to the wall."
United States v. Carolina Freight
Carriers Corp., 315 U. S. 475,
315 U. S. 488.
The Commission's rules make it impossible for these exempt carriers
of agricultural products to get the advantage of a lease for a
return haul. The result is destruction for a large part of that
business.
The reason the Commission has adopted a rule so destructive of
the agricultural exemption Congress granted is apparent from a
colloquy which took place in the District Court. The attorney for
the Commission was asked
Page 344 U. S. 332
if it was wasteful for a truck to go back to Florida empty. With
commendable candor he said:
"It does seem uneconomical in requiring it to go back empty, but
they can -- The difficulty comes, I think, in letting it come up in
the first place."
In other words, the "difficulty comes" because Congress agreed
to exempt these farm products. This congressionally created
"difficulty" is being cleared up by the Commission. Its new rules
against trip leasing will force these agricultural carriers to
raise their rates high enough to frustrate purposes underlying the
agricultural exemption. [
Footnote
2/7]
C. The Commission has exempted railroads and express companies
that carry goods for hire in motor vehicles from all of the
regulations except the provisions of § 207.4(c) and (d), which
latter two provisions relate to inspection and identification of
equipment. It is rather interesting that, while the full Commission
granted the railroads this amazing exemption, Division V, the Motor
Carrier Division of the Commission, refused to allow it. The
Commission at the same time refused to exempt from its new rules
motor carriers whose operations were shown to be substantially
identical with those performed by railroad and express carriers
which the Commission left free from the burdens of the rules. Since
the railroads and the independent motor carriers are in
competition, it is not strange to find the railroads arguing here
that, while the railroads' exemption should be sustained, the new
rules should be applied in all their vigor to the independent motor
carriers. I know of no power which the Commission has to allow
railroads which
Page 344 U. S. 333
engage in the motor carrier business exemptions and preferences
which are denied completely motor carriers not owned by
railroads.
The Commission's rules as a whole fashion broad new national
transportation policies different from, and in conflict with, those
Congress adopted after mature consideration. I would reverse the
judgments of the District Courts and direct that the rules be set
aside as beyond the Commission's authority.
[
Footnote 2/1]
49 Stat. 543, as amended, 54 Stat. 919, 49 U.S.C. § 301.
[
Footnote 2/2]
This denial of power to the Commission appears in § 208(a) and
209(b) of Part II of the Act. 49 U.S.C. §§ 308(a) and 309(b).
[
Footnote 2/3]
Crescent Express Lines v. United States, 320 U.
S. 401,
320 U. S.
408-409.
[
Footnote 2/4]
For example, in 1950:
PERCENTAGES OF SELECTED FARM PRODUCTS TRANSPORTED
TO PRINCIPAL MARKETS IN TRUCKS
Percent Percent
Hogs. . . . . . . . . 79 Grapefruit . . . . . . 43
Cattle. . . . . . . . 76 Oranges. . . . . . . . 33
Calves. . . . . . . . 78 Apples . . . . . . . . 64
Sheep and Lambs . . . 44 Tomatoes . . . . . . . 60
Shell Eggs. . . . . . 93 Potatoes . . . . . . . 37
Dressed Poultry . . . 76 Lettuce. . . . . . . . 41
Live Poultry. . . . . 99 Milk . . . . . . . . . 79
Transportation of Selected Agricultural Commodities to
Leading Markets by Rail and Motor Truck, 1939-1950, United
States Department of Agriculture, Bureau of Agricultural Economics
(June 1951), Table 1, p. 10.
[
Footnote 2/5]
For illustration, Congressman Walter Pierce of Oregon said,
"Mr. Chairman, I have watched the debate very closely. I wonder
why this bill? I am a farmer, living 300 miles from tidewater. I
raise wheat and stock. The only relief I have ever seen in my 40
years on that farm from the terrific confiscatory railroad freight
rates was when the trucks came."
"
* * * *"
"The camel is certainly getting his nose into the tent, and this
means the death of the motor transportation which the farmer has
had and which has been the only relief that has come to him from
the previous excessive railroad rates."
79 Cong.Rec. 12216, 12217;
see also 12197-12198.
[
Footnote 2/6]
Trip leases can be made by motor carriers specifically exempted
from the rules by the Commission -- railroad motor carriers,
express company motor carriers, and the Allied Van Lines.
[
Footnote 2/7]
This statutory agricultural exemption reflects a congressional
belief that
". . . it would be better for the Congress to decide what should
be exempted, rather than to leave it in the hands of the Commission
that might nullify the entire intentions of Congress. . . ."
79 Cong.Rec. 12225.