Opinion for the court filed by TAMM, Circuit Judge.
TAMM, Circuit Judge:
This appeal seeks to set aside orders of the Interstate Commerce Commission (Commission) authorizing a gateway elimination in conjunction with the grant of an application to purchase motor carrier authority. Because we find that a portion of the Commission's broad authorization is not supported by substantial evidence, we vacate the Commission's orders in part and remand for further proceedings.
Prior to 1974, the Commission permitted irregular-route motor carriers
Inefficient use of limited fuel resources resulted from the circuity frequently involved in tacking. In response to national concern for energy conservation, 41 Fed.Reg. 2459 (1976), the Commission revised its policy and promulgated restrictive tacking and gateway elimination rules. 49 C.F.R. § 1065 (1977).
The requisite showing of public convenience and necessity may be made in either of two ways: (1) in the traditional manner, through public testimony that the proposed authority will fulfill public need which cannot be satisfied by existing service, and, in so doing, will not affect operations of other carriers in a manner contrary to the public interest, see Pan-American Bus Lines Operation, 1 M.C.C. 190, 203 (1936); or, in the absence of such evidence, (2) through proof that special gateway elimination criteria have been met. See F-B Truck Line Co., Extension — Colorado/Utah, 128 M.C.C. 628, 635 (1978); Gray Moving & Storage, Inc. — Purchase (Portion) — Thomas C. Warner, 122 M.C.C. 316, 330 (1976). The gateway elimination criteria, first announced in Childress — Elimination Sanford Gateway, 61 M.C.C. 421, 428 (1952), and found by the Commission to be applicable under the new rules in Ex parte No. 55 (Sub.-No. 8), Motor Common Carriers of Property, Routes & Service, 119 M.C.C. 530, 543, 550 (1974), require proof that:
61 M.C.C. at 428.
In October 1974, Aero Trucking, Inc. (Aero), an intervenor in this appeal, filed an application under section 5(2) of the Act, 49
Nine shippers supported Aero's applications;
Review of the Commission's Orders
A. Scope of Review
The Administrative Procedure Act requires that the reviewing court set aside all agency action that is unsupported by substantial evidence in those cases subject to 5 U.S.C. §§ 556, 557 (1976). 5 U.S.C. § 706(2)(E) (1976). A section 207 application invokes the adjudicatory procedures of
In so ruling, we are mindful of the restricted scope of our review and of the broad discretion traditionally lodged in the Commission when determining issues of public convenience and necessity. See United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 535-36, 66 S.Ct. 687, 90 L.Ed. 821 (1946); ICC v. Parker, 326 U.S. 60, 65, 65 S.Ct. 1490, 89 L.Ed. 2051 (1945). Nonetheless, the Commission's discretion under section 207 is not limitless, see Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167-68, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962), nor can it be shielded from "thorough, probing, in-depth review." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971).
A careful review of the record shows that the proffered evidence is fatally deficient and will not support the award of direct-route authority between all of the jurisdictional origin and destination points encompassed within the Commission's orders. Aero submitted two traffic studies as well as public testimony in support of its application. The ALJ and thereafter Division 3 concluded that the studies satisfied the special gateway elimination criteria set forth in the Childress case, and that the testimony met the rigors of the traditional, and independent, public convenience and necessity test. J.A. II at 866-69. We find, however, that a substantial number of the more than 600 new direct-route authorities granted, see note 14 infra, are without any evidentiary foundation — there is no public testimony pertaining to them, nor are the Childress criteria met. We further find the evidentiary basis for many of the remaining authorities inadequate in more than one respect.
B. Public Testimony
The ALJ concluded that the testimony presented by the nine supporting shippers demonstrated that public convenience and necessity required elimination of the gateway. J.A. II at 869. Review of the record reveals, however, that the evidence adduced through these witnesses falls far short of the "substantial evidence" necessary to uphold the Commission's orders in their entirety.
The geographic scope of the shippers' testimony is extremely limited. Of the nine shippers, three — Jones & Laughlin Steel Corp., id. at 852; Elwin J. Smith Division of Cyclops Corp., id.; and Colt Industries, Crucible, Inc., id. at 854 — support Aero's application only insofar as it pertains to the shipment of commodities from Pennsylvania to North Carolina, South Carolina, Georgia, and Florida. Bethlehem Steel Corp., id. at 851, expressed a need for transportation from Pennsylvania to these four destination states, and additionally to Alabama. Universal Cyclops Specialty Steel Division, id. at 851-52, supports Aero's application as it relates to shipments from Pennsylvania and Ohio to North Carolina, South Carolina, Georgia, Florida, and Louisiana.
The remaining shippers claim a generalized need for national service. Of those four, Gibson Motor & Machine Service, Inc., id. at 854, requires transportation only from a single point in Massachusetts; and Grove Manufacturing Co., id. at 852, solely from one point in Pennsylvania. The testimony presented by Wheeling-Pittsburgh Steel Corp. and United States Steel Corp., while broader territorially, is still manifestly restricted. Wheeling-Pittsburgh Steel Corp. testified to a need for transportation from points in Pennsylvania, Ohio, and West Virginia to points throughout the nation. Id. at 853-54. United States Steel Corp. expressed a requirement for service from points in Illinois, Indiana, New Jersey, Ohio, and Pennsylvania to points throughout the United States. Id. at 855.
The testimony of these nine witnesses can be construed, at best, as favoring a
The shippers' testimony is not only territorially restricted, but it is also substantively deficient in several respects. The elements necessary to establish public convenience and necessity in motor carrier operations are set out in Pan-American Bus Lines Operations, 1 M.C.C. at 203:
Satisfaction of this standard generally requires a showing that one or more shippers desire transportation of the type sought to be authorized and that their plans to use the service are reasonably definite. In this regard, shippers supporting an application for motor carrier authority must "`identify clearly the commodities they ship or receive, the points to or from which their traffic moves, the volume of freight they would tender to applicant, the transportation services now used for moving their traffic, and any deficiencies in existing
By the ALJ's own admission, the testimony offered in this case was "somewhat general." J.A. II at 869. Several witnesses failed to identify the specific volumes of freight to be shipped through Aero to particular points.
Analyzed in its entirety, the shippers' testimony can be construed only as demonstrating that public convenience and necessity require direct-route authority from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia. Seven of the nine
C. The Childress Criteria
The plain language of the first Childress criterion requires, at a minimum, that prior traffic have traveled through the pertinent gateway. 61 M.C.C. at 428.
Of the two traffic studies offered by Aero, the first, and most important, consisted of an abstract of 2,224 shipments
There is no evidence that any of the shipments abstracted in the first study were interchanged at York, Pennsylvania, the only gateway relevant in these proceedings.
The second traffic study considered by the ALJ abstracted 587 shipments transported by Aero from November 25, 1974, to June 30, 1975, under a temporary lease of Miller's authority. 49 U.S.C. § 310a(b) (1970); J.A. I at 144-73. Although most of these shipments passed through the York gateway, J.A. II at 850, they represent only some fifty of the over 600 new direct authorities awarded in this case. The study is thus manifestly deficient. As the Commission has explained, "it is not enough to show that between selected points applicant has transported substantial traffic," rather the proposing carrier must show that it is an "effective competitor as to substantially all points encompassed within the scope of its pertinent outstanding authority." Maryland Transportation Co. Extension — Specified Commodities, 83 M.C.C. 451, 455 (1960). Traffic related to only some fifty pairs of origin and destination states cannot rationally support a finding of transportation between substantially all of the over 600 new pairs encompassed within the scope of Aero's application.
Two further inadequacies preclude our finding this study sufficient justification for the Commission's orders either in whole or in part. First, the ALJ failed to determine whether the shipments made between designated points constituted "a substantial volume of traffic" through the gateway within the meaning of Childress. 61 M.C.C. at 428. About 400, or approximately sixty-eight percent, of the shipments abstracted moved from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia. We have already held the public testimony sufficient to justify elimination of the gateway with respect to these pairs of states. Only one or two shipments, however, were made between most of the remaining pairs of states. The finding of substantiality, crucial to any determination of compliance with Childress, becomes even more important when single and double shipments are involved. We therefore remand to the Commission for an explication of its substantiality criteria and a specific determination of whether the shipments abstracted in the second study meet those tests. See Burlington Truck Lines, Inc. v.
Second, the ALJ failed to analyze the effects of eliminating the gateway on Aero's competitive position. The second test set out in Childress requires proof that elimination of the gateway will not "enable applicant to institute a new service or a service so different from that presently provided as to materially improve applicant's competitive position to the detriment of existing carriers." 61 M.C.C. at 428. Mileage distances under present operations as compared with those proposed are to be considered in evaluating the effect on the competitive status quo. Id. In Childress, the Commission found that a mileage saving of twenty-three to twenty-nine percent where a one way movement was 300 miles or more constituted a new service. Id. Similarly, in Hermann Forwarding Co. Extension — Pomona, N.J., 99 M.C.C. 476, 479-80 (1965), the Commission denied a gateway elimination application on the ground that a ninety-one mile reduction that enabled the carrier to provide same day service constituted a new service and altered the competitive balance. See, e. g., Overnite Transportation Co. Elimination of Gateway — Monroe, N.C., 103 M.C.C. 135, 149-51 (1966); Chicago Express, Inc., Extension — Tuscola, Ill., 79 M.C.C. 384, 385-86 (1959).
Enormous time and mileage savings will result from a complete grant of Aero's application.
Viewing the record as a whole, we are able to uphold the Commission's orders only insofar as they award direct-route authority from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia. The remaining direct-route authorizations sought by Aero are not supported by substantial evidence. Indeed, our analysis reveals that there is no mention anywhere in the record — either in the traffic studies or in the witnesses' testimony — of approximately 200 of the jurisdictional pairings authorized by the Commission.
Respondents vigorously challenge the validity of an analysis based upon all possible origin and destination permutations and combinations encompassed within an award. See Joint Brief for the Commission and the United States of America at 21-22; Brief of Intervening Respondent Aero at 13-14. They argue that the sporadic nature of call-on-demand shipments of "size and weight" commodities renders unrealistic the requirement that evidence be offered pertinent to all states within a grant of authority. In effect, they contend that evidence supplied with respect to some of the states justifies elimination of the gateway and direct-route authorization as to all. Given the broad authority sought in this case, we cannot agree.
We are unpersuaded by the numerous cases cited by respondents in support of their proposition. These cases deal exclusively with proceedings under section 5(2) of the Act, 49 U.S.C.A. § 5(2) (1978), and are not dispositive in a section 207 inquiry. Section 5 requires that a carrier seeking to acquire the rights of another satisfy a "public interest" standard.
A showing that adequately meets section 5(2), however, may not necessarily meet the more stringent requirements of section 207. Whereas section 5(2) only demands demonstration of "public interest," section 207 requires a showing of "public convenience and necessity." As this court has previously noted, the standard of public convenience and necessity is higher than that of public interest. Common Carrier Conference — Irregular Route v. United States, 175 U.S.App.D.C. 244, 246, 534 F.2d 981, 983, cert. denied, 429 U.S. 921, 97 S.Ct. 317, 50 L.Ed.2d 288 (1976). See J. V. McNicholas Transfer Co. — Control — Tom's Express, 122 M.C.C. 786, 792 (1977); Baggett Transportation Co. — Purchase — W. A. Bishop, 36 M.C.C. 659, 663-64 (1941); see also Refrigerated Transport, Co. v. ICC, 552 F.2d 1162, 1169 n.6 (5th Cir. 1977). Although atomization may be contrary to well-established precedent in motor carrier acquisition cases that is not to say the same applies in gateway elimination actions. The Commission has in the past uniformly
The Commission's recent decision in Groendyke Transport, Inc., Extension — Gateway Elimination, 126 M.C.C. 571 (1977), fully supports our analysis. The Groendyke case is analogous to that presently before us. The application filed in that case, as in this, was "overbroad" in terms of the territories sought. Id. at 575. The Commission employed an analytic method identical to ours and reached a similar result, ruling that the entire gateway elimination was improper because "applicant ha[d] not shown that it ha[d] moved any traffic from and to many of the points sought." Id. at 575. In concluding that a "full grant of territorial authority was not warranted, particularly with respect to operations from [various states] from which . . . applicant handled only sporadic movements," id. at 576, the Commission's decision is fully consistent with our conclusion here.
We are inclined to view the lack of evidence in this case, not as the result of the sporadic nature of the "size and weight" shipments, as respondents suggest, but rather as the manifestation of the operational and economic disabilities involved in gateway observance which have prevented Aero from effectively competing with petitioners. A grant of direct authority between points for which Aero has not actually transported traffic through the gateway and for which there is no public testimony demonstrating public convenience and necessity may result in an unjustified windfall to Aero, inconsistent with both the explicit standard of section 207 as well as the purpose of the gateway elimination rules. See text supra at ___ of 191 U.S.App.D.C., at 568 of 589 F.2d.
In remanding this case, we recognize the wide latitude afforded the Commission in determining issues of public convenience and necessity. We do not undertake to substitute our judgment for theirs. Rather, our observations are intended to emphasize that the record, as supplied thus far, does not support the scope of the decision reached by Division 3. This is not a case going solely to an evaluation of the weight of the evidence, but instead, one that involves, in part, a complete lack of evidence in the particulars we have specified. While the record justifies a grant of direct authority from points in Pennsylvania and Ohio to points in North Carolina, South Carolina, Florida, and Georgia, it is plainly insufficient to support the remainder of the award. Accordingly, we vacate the orders under review insofar as they grant direct authority beyond that set out immediately above and remand the case to the Commission to conduct proceedings consistent with this opinion.
Vacated in part and remanded.
We also note that Gibson Motor & Machine Service, Inc. testified to a need for transportation from Lawrence, Massachusetts. Id. at 854. This can hardly be construed as evidence of public need requiring authorization of direct-route travel from all points in Massachusetts as was granted.
FROM points in Connecticut and Vermont
FROM points in New Hampshire
FROM points in Michigan
FROM points in Wisconsin