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November 12, 1965

UNITED STATES of America et al., and Roy Bros., Inc., Intervenor

The opinion of the court was delivered by: DAVIS

The plaintiffs bring this action before a statutory three-judge court pursuant to 28 U.S.C. §§ 1336, 2284, 2321-2323, and 2325 to set aside, vacate, and annul Order No. MC-FC 65847 of the Interstate Commerce Commission and to enjoin the Commission from enforcing the Order. *fn1"

 In April 1963, Roy Brothers, Inc. and Bianchi Motor Transportation, Inc. both motor carriers, filed with the Interstate Commerce Commission an application for approval of a transfer of a portion of Bianchi's motor operating rights to Roy Brothers. The application was filed under the provisions of § 212(b) of the Interstate Commerce Act, 49 U.S.C. § 312(b) and the rules and regulations of the Commission pursuant thereto. In 1963, the Transfer Board, to which the Commission had referred the matter, entered an order authorizing the transfer of the operating rights in question. It also found that the transfer came within § 212 of the Interstate Commerce Act and the rules and regulations pursuant thereto and was not subject to the more difficult and complicated provisions of § 5 of the Act, 49 U.S.C. § 5. *fn2" After the Board's Order was published in the Federal Register, 28 Fed.Reg. 7541 (1963), the plaintiff motor carriers filed timely petitions for reconsideration of the Order and requested a hearing before the Board. The plaintiffs' petition raised two points. First it questioned the computation of the number of vehicles that the transferor and transferee declared that they were operating in interstate commerce. The applicants had claimed less than twenty vehicles between them while the plaintiffs asserted that the transferee's Annual Report filed with the Commission showed twenty-six for the transferee alone and consequently that the transfer should have been governed by the more stringent § 5 which is the pertinent provision where the aggregate number of vehicles of both applicants exceeds twenty. Secondly, the petition alleged that the transferor had not engaged in the transportation of chemicals in bulk and that under the rules and regulations of the Commission such dormant authority could not be transferred. The request for oral hearing did not contain any affidavits or state the existence of any knowledge to support the plaintiff's allegations. In fact, all that the plaintiffs presented in support of their petition was the 1962 Annual Report of the transferee which listed twenty-six vehicles.

 Pursuant to § 17(8) of the Interstate Commerce Act, 49 U.S.C. § 17(8), the Commission in August 1963 stayed the Order of the Transfer Board pending disposition of the petitions for reconsideration. The applicants thereupon filed a joint reply to the petitions with affidavits signed respectively by the presidents of the transferor and transferee companies. While both presidents acknowledged errors in their original computation, they made the corrections and certified the new computation which was still below twenty vehicles. They explained that the transferee's annual report in no way contradicted the affidavit and transfer application since the Annual Report listed the company's total number of units while those units used exclusively in intrastate are not counted for jurisdictional purposes under § 212(b) of the Act. On the issue of dormancy, the transferor's president submitted his company's records showing a frequent and diversified transportation in the movement of chemicals in the area sought to be acquired by the transferee, as well as his company's Certificate of Public Convenience and Necessity authorizing it to transport chemicals without restriction.

 On October 31, 1963, the Commission denied the petitions for reconsideration and gave effect to the Order of the Transfer Board, stating:

"* * * the petitions set forth no facts or arguments which were not previously considered or which would establish that the transaction is subject to Section 5 of the Interstate Commerce Act; or that the transfer was not properly approved under the Rules and Regulations Governing Transfers of Rights to operate as a Motor Carrier in Interstate or Foreign Commerce * * *; and that a hearing is not necessary to a determination of the matter."

 Plaintiffs then filed with the Commission petitions seeking a determination that an issue of general transportation importance was involved. In February 1964, the Commission rejected these petitions. Subsequently, the plaintiffs instituted the present action to review the Commission's Order which denied the plaintiffs' petition for reconsideration and request for a hearing.


 The first question presented to the court is whether the Interstate Commerce Commission acted within the scope of its authority in finding that the transfer application was subject to § 212(b) of the Interstate Commerce Act and not § 5 of the Act without holding the requested hearing.

 The purpose of Congress in carving out an exemption under § 5(10) of the Act was to permit the transfer of operating rights between small motor carriers as expeditiously as possible without the delay and lengthy administrative procedures involved under § 5. As explained by Senator Wheeler, the sponsor of the 1935 Motor Carrier Act:

"* * * we eliminate from this provision [§ 5] such a case, for example, as that of two small operators who might want to get together, and we made it apply only to cases where they had more than 20 vehicles, so that the small operators could get together without the necessity of going throught a great deal of red tape with the Commission". *fn3"

 The Supreme Court in United States v. Resler, 313 U.S. 57, 59, 61 S. Ct. 820, 821, 85 L. Ed. 1185 (1941) declared:

"Read together, the two sections [§ 5(10) and § 212(b)] can mean only that a transfer involving not more than twenty vehicles is governed by § 212(b) and the regulations pursuant to it. * * *" ...

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