ON PETITION FROM REVIEW OF AN ORDER OF THE INTERSTATE COMMERCE COMMISSION.
Adams and Higginbotham, Circuit Judges and Teitelbaum,*fn* District Judge. Adams, Circuit Judge, concurring in part and dissenting in part.
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
In this case we are asked to review and set aside the order of the Interstate Commerce Commission (ICC) granting Allied Bulk Carriers, Inc. (Allied) a certificate to operate as a common carrier, by motor vehicle, in interstate or foreign commerce, transporting commodities in bulk between points in New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Maryland. Petitioner, Port Norris Express Co., Inc. (Port Norris) asserts that the evidence of record does not support the ICC's findings that Allied is fit, willing and able to provide the proposed service, and that there is a public demand or need for the proposed service. We do not find error in the ICC's decision, and therefore, will deny the Petition for Review.
In February, 1981, Allied, an intrastate carrier of bulk commodities, applied for a Certificate of Public Convenience and Necessity authorizing it to engage in transportation as a common carrier, by motor vehicle, over irregular routes, transporting commodities in bulk between points in New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Maryland. Four shippers of bulk commodities submitted statements in support of Allied's application: Stauffer Chemical Company (Stauffer); AMETEK, Westchester Plastics Division (Ametek); Union Chemicals Division, Union Oil Company of California (Union); and Exxon Chemical Americas (Exxon).
Port Norris, a motor carrier specializing in bulk transportation, was the only protestant to Allied's application. In timely filed objections, Port Norris argued that granting Allied's application would be contrary to the public interest because it would allow traffic in bulk commodities to be diverted from Port Norris, and would create a "destructive competition" threatening to Port Norris' continued existence. Port Norris also contended that the evidence failed to establish a public need for Allied's expanded authority or Allied's fitness, willingness and ability to provide the service.
In its decision of June 8, 1981, served June 26, 1981, Review Board No. 2 awarded Allied a partial grant of authority permitting Allied to transport commodities in bulk between the facilities of the four supporting shippers located in the six-state area of New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Maryland on the one hand and, on the other hand, other points within the six-state area. Review Board No. 2 denied Allied's request for nonradial authority, which would have permitted Allied to operate between any two points in the six-state area without reference to a base point, because the public need for it could not be adduced from the evidence offered by Allied. Specifically, Review Board No. 2 limited Allied to shipments in which one of the supporting shipper's facilities was the origination or destination point because it found that Allied and the supporting shippers had failed to sufficiently identify "actual, future, or representative origins or destinations between which traffic will or may be transported, [or] to describe, even in general terms, the geographic movement of the traffic." Allied Bulk Carriers, Inc., Common Carrier Application, No. MC-154152, App. at 59. Review Board No. 2 concluded, however, that a partial grant of authority would serve a useful public purpose responsive to public demand or need, that Allied was fit, willing and able to perform the granted authority in conformity with statutory and administrative requirements, and that Port Norris had failed to present evidence showing that the authority granted was inconsistent with public convenience or necessity or contrary to the public interest.
Allied filed an administrative appeal, contending that the shipper support submitted with its application provided sufficient evidence to justify a grant of unrestricted authority. ICC Appellate Division No. 2, consisting of three commissioners, agreed with Allied, reversed Review Board No. 2, and on September 4, 1981, granted Allied's application for unrestricted authority. The appellate division rejected Port Norris' assertion that facilities restriction was proper and found that Port Norris had failed to establish that an unrestricted grant would adversely affect Port Norris' operations to an extent contrary to the public interest. Port Norris' subsequent Petition for Administrative Review was denied summarily by the entire ICC on October 16, 1981. On January 6, 1982, the ICC issued a Certificate of Public Convenience and Necessity to Allied.
Port Norris urges this court to set aside the decision of the ICC for three reasons. First, it asserts that the record lacks substantial evidence to support the ICC's finding that Allied was fit, willing and able to provide the transportation service granted. Second, it argues that Allied failed to establish a prima facie case of public demand or need for the transportation service granted and that the ICC's finding otherwise was in error. Finally, Port Norris asserts that because the ICC failed to articulate any rational basis for its findings and conclusions, its decision was arbitrary, capricious, and not in accordance with law.
A. The Applicant's Burden of Proof
Pursuant to the Motor Carrier Act of 1980, Pub. L. No. 96-296, 94 Stat. 793 (1980), a Certificate of Public Convenience and Necessity may only be issued if the ICC finds that the applicant is "fit, willing, and able to provide the transportation authorized" and that "the service proposed will serve a useful public purpose, responsive to a public demand or need." 49 U.S.C. § 10922(b)(1)(A) and (B).*fn1 The applicant for motor carrier operating authority has the burden of proving its fitness and ability. American Trucking Associations, Inc. v. ICC, 659 F.2d 452, 469 (5th Cir. 1981); Kroblin Refrigerated Express, Inc. v. United States, 197 F. Supp. 39, 47 (N.D.Iowa 1961). This generally requires the applicant to show that it is financially fit, willing to comply with the rules and regulations of the ICC, and able to perform the service in a safe manner. Rules Governing Applications for Operating Authority, 364 I.C.C. 508, 539-41 (1980), appeal pending, sub nom. American Transfer and Storage Co. v. ICC, No. 80-4072 (5th Cir., filed Feb. 23, 1981); see also, Consolidated Carriers, Inc., Common Carrier Applications, 131 M.C.C. 104, 108; Latin Express Service, Inc., Common Carrier Application, 132 M.C.C. 289, 297 (1980).
The statute also places on the applicant the burden to provide the ICC with sufficient evidence to establish a prima facie case of public demand or need for the proposed service and to show that the service serves a useful public purpose. The evidence may consist of user support statements or other indicia of public need. Pre-Fab Transit Co. Ext. -- Nationwide General Commodities, 132 M.C.C. 409, 411 (1981). But "an applicant's evidence, whatever it consists of . . ., must establish with reasonable particularity a rational connection between the specific public needs shown and the breadth of the authority requested, . . ." Tri-State Motor Transit Co., Ext., General Commodities, 132 M.C.C. 504, 513 (1981). See also, Green Field Transport Co., Inc., Ext. -- General Commodities, 132 M.C.C. 584, 589 (1981). Evidence of objecting parties must be considered by the ICC, which may deny a certificate which it finds inconsistent with public convenience or necessity. 49 U.S.C. § 10922(b)(1)(B).
In Pre-Fab Transit Co., the ICC enunciated evidentiary guidelines for determining whether or not an applicant has met its threshold burden of showing that a proposed service would serve a useful public purpose, responsive to public demand or need. Declaring that it would no longer look to the criteria set forth in Novak Contract Carrier Application, 103 M.C.C. 555 (1967),*fn2 the ICC stated:
If applicants rely on shipper support, the evidence should tell us something about the present or future direction, quantity, and type of traffic involved. This evidence need not be precise. In the past we have accepted shipper contentions that development of new product lines or new marketing strategies preclude specification of commodities, volumes, or points involved. Given the policies of granting broad applications and of removing excessivly narrow restrictions, the latitude for acceptable imprecision is even wider. However, shipper supported applications should provide sufficient information for us to determine the basic nature of the public's transportation needs or demands of which their supporting shipper's statements are representative.
Applications relying on other types of support should also present reliable and probative evidence showing that a proposed operation will serve a useful public purpose, responsive to a public demand or need. However, we cannot specify what informational elements must be supplied for this purpose, as our experience under the new law is quite limited as yet. Plainly, carriers can put forth innovative rate proposals, means by which the new authority would help rationalize their operations and make them more efficient, the amount of fuel likely to be saved, small communities and rural areas to be served, or marketing surveys showing prospective customers who might use the service if authorized. We do believe that any optional types of evidence submitted ordinarily should be directed to elements of the national transportation policy enunciated at 49 U.S.C. § 10101(a)(7). While these policies are primarily decisional standards which the Commission will consider to the extent applicable in a given proceeding, they are useful also as guides to type of evidence applicants may submit. Reliable evidence showing that a proposed operation would promote competitive and efficient transportation service designed to meet one or more of the enunciated policies would establish a threshold useful public purpose case in most instances. We reiterate that some hard information or genuine proposal is required. Mere assertions alone are insufficient.
We recognize that the above guidelines are less explicit than Novak type criteria. We believe that this lack of specificity is appropriate at a time when we are trying to implement a new direction in motor carrier entry policy. A case-by-case development will be helpful.
Pre-Fab Transit Co., 132 M.C.C. at 413-14 (emphasis added) (footnotes omitted).
In accordance with the liberalized entry policy mandated by Congress in the Motor Carrier Act,*fn3 the burden of proof on appellants has been lessened. H.R. Rep. No. 96-1069, 96th Cong., 2d Sess. 14-15, reprinted in 1980 U.S. Code Cong. & Ad. News 2283, 2296-97. See also, Port Norris Express Co., Inc. v. ICC, 687 F.2d 803, slip op. at 6 (3d Cir. 1982) (Port Norris v. ICC (I)). Although the ICC may not grant applications for operating authority automatically, congressional emphasis on the importance of competition in the national trucking industry indicates that it will be substantially easier for applicants to obtain new authority. Port Norris v. ICC (I) at slip op. pp. 6-8; Gamble v. ICC, 636 F.2d 1101, 1103 (5th Cir. 1981); Tri-State Motor Transit Co., Ext. -- General Commodities, 132 M.C.C. at 513.
B. The Standard of Review
As a court reviewing an agency decision, we must determine whether the agency's findings and conclusions were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or "unsupported by substantial evidence." 5 U.S.C. § 706 (2)(A) and (E). Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 42 L. Ed. 2d 447, 95 S. Ct. 438 (1974).
Under the "arbitrary and capricious" standard the scope of review is a narrow one. A reviewing court must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency." Citizens to Preserve Overton Park v. Volpe, . . . 401 U.S. [402,] 416, 91 S. Ct. [814,] 824, 28 L. Ed. 2d 136. The agency must articulate a "rational connection between the facts found and the choice made." Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S. Ct. 239, 246, 9 L. Ed. 2d 207 (1962). While we may not supply a reasoned basis for the agency's action that the agency itself has not given, SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S. Ct. 1575, 1577, 91 L. Ed. 1995 (1947), we will uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned. Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 595, 65 S. Ct. 829, 836, 89 L. Ed. 1206 (1945).
Bowman Transportation, Inc. at 285-86.
The Supreme Court has defined "substantial evidence" in the context of court review of an administrative agency decision as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 16 L. Ed. 2d 131, 86 S. Ct. 1018 (1966), quoting Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938). Substantial evidence is "more than a mere scintilla," Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 477, 95 L. Ed. 456, 71 S. Ct. 456 (1951), but is "something less than the weight of the evidence, and the possibility of drawing two ...