AMERICAN TRUCKING ASSNS. v. U.S.

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Argument of Peter T. Beardsley

Chief Justice Earl Warren: -- Associations, Incorporated, et al., Appellants, versus Interstate Commerce Commission.

Mr. Beardsley.

Mr. Peter T. Beardsley: Mr. Chief Justice, if the Court please.

This case is an appeal from a decision of a three-judge court for the District of Columbia which dismissed our complaint to set aside a report and order of the Interstate Commerce Commission on two grounds.

First, on the merits, second, the Court said -- or two of the three judges said that the plaintiffs had no standing to bring this suit to begin with.

The report and order, which is involved here, authorizes Pacific Motor Trucking Company, a wholly owned subsidiary of the -- of the Southern Pacific railroad to perform unrestricted motor carrier service from three California General Motors assembly plants, are set forth in detail in the appendix to the Commission's report which is printed at page 39 of the record here.

The appellants are six independent motor carriers, four common -- four common carriers and two contract carriers and three carrier associations.

The status of these independent carriers, their ICC authority and their testimony regarding their willingness and ability to serve General Motors is set forth in Appendix B of our brief on the merits here.

We believe the Commission aired in the following manner.

First in authorizing the rail subsidiary to perform service not restricted the so-called auxiliary and supplemental operations in view of its specific finding in this case that there was no showing of unusual circumstances here.

We also believed that the Commission's report and order here violates the so-called dual authority provisions of Section 210 of the Interstate Commerce Act, which of course is Section 310 or 49 U.S.C. Annotated.

We think the court below compounded the Commission's error, so to speak, in holding contrary to the Commission, that special circumstances justified the Commission's action in holding that the plaintiffs had no standing to bring this suit and in attaching any significance at all to the amendments made in 1957 to Section 209 of the Interstate Commerce Act, dealing with applications to perform contract carrier service.

And both of the Commission's reports which -- which are printed in the record here, one of them commencing at page 8 and the other at 54, there, the heading of Sub 34.

Although you will note from the authority sought in these various applications in which is set out in our brief at page 5, that the Sub 34 case involved relatively minor authority compared with that which was sought in the Sub 37 case.

This proceeding really started out as four separate applications before the Commission, Sub 34 through 37.

After the Commission's first report in the Sub 34 case and while the other three cases were pending before it, it granted petitions for reconsideration of its Sub 34 report and consolidated all the four cases into one proceeding and it is with respect to its consolidated report which is dated September 9, 1958 and commencing at page 8 of the record when our complaint was filed.

Coming immediately to what we think is the most important error committed by the Commission here is our belief that it does violence to this Court's very recent decision in a so-called, ATA case, American Trucking Associations v. United States and ICC, which is reported at 355 U.S. 141.

That case involved an application filed under Section 207 of the Act which deals with applications to perform common carrier service.

This proceeding involves an application filed under Section 209 dealing (Inaudible) but the Commission's report conceives and for once, we agree with it.

They then so far as grants of motor rights to railroads or their subsidiaries are concerned, the same principle applies regardless of the type of carrier it sought to be performed.

If I may very briefly, I just like to review the ATA case.

That involved an application by a subsidiary, the Rock Island railroad to the Commission, seeking unrestricted authority essentially between Omaha and Chicago.

Now, in that case, the independent motor carriers, who were protestants before the Commission and appellants here, urged that the proviso of Section 5 (2) (b) of the Act, which is directly applicable in Purchase cases, and which in effect, requires that railroads maybe authorized to perform only what has come to be known as auxiliary and supplemental service.

They urge there that those provisions of 5 (2) (b) had to be read into Section 207 because it should be pretty obvious that if the railroad can do on the one hand what it can't do on the other, the restriction in the first instances is of very little value.

The Commission held, however, that in the 207 case, where we were asking that that language be read in and in where it was not directly applicable, the Commission said that where exceptional circumstances prevailed as it found they did there, it was entitled to issue in a 207 proceeding, a -- an unrestricted certificate.

Now, the exceptional circumstances which the Commission found in that case were that the independent motor carriers who were protestants before the Commission, had failed to provide adequate service to the small aisle or points involved between Chicago on the one hand and Omaha on the other.

In fact, the Commission went even further and made what amounted to a finding of willful failure.

It said they had provided the service only where it suited their convenience.

Now, that Commission finding respecting what I call the willful failure, the independent carriers in that case to provide service was upheld both in the District Court and in this Court and the holding was that (Inaudible) policy underlying Section 5 (2) (b), ordinarily has to be applied even in Section 207 cases.

The Commission can, in exceptional circumstances, grant unrestricted authority.

And in your decision in the ATA case, you referred to your prior decision in the Texas and Pacific case and the Rock Island case, back in 1951, and you said this and I'm quoting now from your decision at 355 U.S. 151, 152, “We repeat, as we said in those cases, that the underlying policy of 5 (2) (b) must not be divorced from proceedings for new certificates under Section 207.

Indeed the Commission must take cognizance of the National Transportation Policy and apply the Act as a whole, but for reasons we have stated, we do not believe that the Commission acts beyond its statutory authority, when in the public interest, it occasionally departs from the auxiliary and supplementary limitations in a Section 207 proceeding.”

I would like to concur as the factual situation.

Justice John M. Harlan: Did the Commission ignore the ATA case?

Mr. Peter T. Beardsley: We think they did, sir.

Justice John M. Harlan: Well I mean did it refer to it?

Mr. Peter T. Beardsley: It referred to it because I see that more or less tipped its head in passing by, but it -- it did not follow what I think on the clear guidepost laid down by ATA case.

Of course that's the nub of this argument here.

In this instance, in this proceeding, far from being unwilling to provide service as was a case in the ATA case, if prostesting motor carriers here have been literally banging on General Motors' door for years in unclean effort to get some of their trucking, only to be given a very cold shoulder, they had been able to attain some traffic out of these General Motors plants in instances in which the automobiles involved had been bought and paid for by the Government and in which the Government pays the freight and control of the traffic, but that is all.

You might say to paraphrase a -- well, a well-known statement that this is one instance in which what's good for the Government isn't good for General Motors.

But again and I think it of utmost importance to know that here, in a very striking contrast to its situation in the ATA case, there were no in advocacies shown at all in the service of the independent motor carriers, rather their failure to handle any of these General Motors traffic is simply as Commissioner Murphy said dissenting here.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: I say the Commission did not find.

Justice Hugo L. Black: Did they find (Inaudible)

Mr. Peter T. Beardsley: No, sir.

I'll be happy to.

They said in effect that the General Motors had been using PMT for some years, for intrastate service in California where the same kind of policy doesn't apply, they spoke of the possibility of confusion at General Motors plants if -- if some other carrier were used.

And as we say it, the -- they simply tailored their decision to suit the wishes of General Motors in this case.

And we think that they simply tailored their decision to suit the wishes of General Motors in this case and we don't believe that under the congressional policy which is involved, that under the facts of this case that was properly done.

You think that's a --

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: We're arguing in anything, Justice Black.

We don't have to meet -- don't have to go quite that far, sir, for this reason.

We are arguing that in any event before an unrestricted authority maybe issued, that at least, the Commission must find that there are exceptional circumstances which justify its issuance.

Here, the Commission made a --

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: Well, I would think so, but we don't even have to reach that point because here, the Commission made a specific finding that there were no exceptional circumstances by using all the phrase on usual conditions, but those two phrases are synonymous as far as we're concerned.

We think that at least, the ATA case stands for the proposition.

But before the Commission may validly issue an unrestricted certificate, it must find that there are exceptional circumstances which justify departure from its usual policy.

It not only didn't find any exceptional circumstances, here, it found precisely to the contract.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: No, sir.

I'm --

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: No, sir.

I'm considering it synonymous.

The Commission found here specifically that there were no unusual conditions in this case.

Now, I'm considering in that --

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: It's at the -- it's at -- it's at page 31 of the record, Mr. Justice Black.

You'll note there through the middle of the page, the Commission says, “In the absence of any showing of unusual conditions in these proceedings, etcetera.

Now --

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: Yes, sir.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: To me, that means the same as if the Commission had said in the absence of any showing of exceptional circumstances.

I think that means that there are no unusual --

Justice Hugo L. Black: (Inaudible) automatic grant to this person (Inaudible) based on circumstance of this case in the opinion of the Commission, justified (Inaudible)

Mr. Peter T. Beardsley: Well, obviously, the majority of the Commission thought that it was justified in doing what it did.

I don't deny that.

Justice Hugo L. Black: If I get that --

Mr. Peter T. Beardsley: Well, I think, it's almost automatically.

Justice John M. Harlan: The reason that's used in a different context they say that in the absence of unusual conditions permits of the contained territory limitations, etcetera.

Mr. Peter T. Beardsley: Well --

Justice John M. Harlan: You didn't affirm.

Mr. Peter T. Beardsley: I don't -- I don't think so, Mr. Justice Harlan.

I think that the words are -- they're synonymously as they might as well have said in the absence of any unusual exceptional circumstances.

Every permit, every certificate as issued to any carrier, has some limits on it.

And I think it's getting way off into a semantical argument to say that because a man can't serve every point in the country, he's been given a restricted certificate and certainly even if a term be used, he hasn't been given an auxiliary and supplemental certificate.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: Yes, sir.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: Pacific Motor Trucking Company.

Justice Hugo L. Black: Will contain a territorial limitation first on the point that you're placing your substance at the railroad.

Mr. Peter T. Beardsley: Yes, sir.

And that --

Justice Hugo L. Black: Stating you in the absence of (Inaudible) they were limiting it in granting (Inaudible)

Mr. Peter T. Beardsley: And the whole nub of our argument is that a mere territorial restriction to points throughout the vast system of the Southern Pacific Railroad does not satisfy the congressional policy here involved.

Yes, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: Yes, sir.

Justice Felix Frankfurter: And did you (Inaudible)

Mr. Peter T. Beardsley: Yes, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: Well, usually at the same --

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: No, I don't -- I don't read it that way.

I read it as --

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: I don't read it that way at all, Mr. Justice Frankfurter.

And as I read it, it means in the absence of any showing by the applicant that there are any unusual conditions in this proceeding.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: We will impose a territorial limitation, which as I say, is really no restriction at all.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: In many, many cases in which railroads or the subsidiaries have filed applications before the Commission, they have come in, in the first instance and specifically laid out restrictions which they're willing to accept.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: Well, of course, in this first instance, they --

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: Yes -- yes, they are.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: Yes, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: I made it precisely to the contrary.

Justice Felix Frankfurter: (Inaudible)

Mr. Peter T. Beardsley: In any event, it is our contention.

Justice William O. Douglas: (Voice Overlap) unusual circumstances that they found is the preference of -- of a -- this shipper on this survey.

Mr. Peter T. Beardsley: Well, of course, there is no question here that General Motors prefers to use Pacific Motor Trucking Company.

Justice William O. Douglas: But that's the -- isn't that the way they -- they thought they complied with the --

Mr. Peter T. Beardsley: Well, that's undoubtedly one of their bases for their ultimate holding and we point out on brief in case after case that the Commission has consistently held that when they have preference of the shipper for the use of a particular carrier.

And this is a case, it's involving independent carriers where there are no disabilities such as there are in the case of rail subsidiaries.

We point out on brief case after case, in which the Commission has held that the mere preference of the shipper for the use of a particular carrier is not grounds for granting the authority sought.

We believe, in short, that because of the failure to show any exceptional circumstances here that the Commission really had only two alternatives.

It could have denied this application all together or it could have limited it to the so-called auxiliary and supplemental service.

It didn't either.

It simply grant them the rail subsidiary authority to perform the same operations which would be -- be performed by an independent motor carrier and entirely revolves from the operations of the rail parent.

Now, in that brief in the ATA case in this Court, the independent motor carrier interest there involved, complained to this Court that the Commission's current administration of the Act indicated that if it had forgotten about its obligation which this Court set forth in its partner decision in 326 U.S., the guard against monopoly in his field.

And the appellants there asked this Court to forcefully remind the Commission of this mandate and to require it to conform to it.

Now, this Court declined to do that in that case because of the special circumstances which I've already adverted to.

But you said this, “Finally, if under our interpretation, a loophole exists in the Act, the Commission has shown no information to permit it to use of such.

Should the Commission prove to be less stringent in the future, appellants not only have recourse to the Congress, but also to the courts for review of the Commission's finding that special circumstances exist.”

Now, that very last phrase there suggests that before the Commission can issue an unrestricted certificate, it must make a finding that special circumstances exists.

How else can people come here as we're doing today and asking -- ask for a review?

And it's precisely because we believe the Commission's decision here creates a loophole big enough to drive the largest locomotive through.

And is -- then in doing so, it simply floats this Court's ATA decision both its spirit and its luck that we're here before you today.

Justice Hugo L. Black: (Voice Overlap) --

Mr. Peter T. Beardsley: Yes, sir.

Justice Hugo L. Black: -- finding (Inaudible) do you agree that counsel allowed to pass a particular finding that can be done on a case (Inaudible) are they?

Mr. Peter T. Beardsley: Oh, yes.

Justice Hugo L. Black: If you ask for --

Mr. Peter T. Beardsley: Yes.

Justice Hugo L. Black: -- this finding on this particular fact.

Mr. Peter T. Beardsley: Yes, we do.

Justice Hugo L. Black: Where is that in the record?

Mr. Peter T. Beardsley: Well, we would ask that on brief, Mr. Justice Black, and I'm --

Justice Hugo L. Black: What page?

Mr. Peter T. Beardsley: We would ask that on brief and our briefs are not a part of the record here before the Commission if that's what you mean.

Justice Hugo L. Black: (Inaudible)

Mr. Peter T. Beardsley: No, sir.

No, sir.

I think you can determine when you do read the record.

Justice Hugo L. Black: You must hold formal finding to that?

Mr. Peter T. Beardsley: Well, I can't frankly recall right now, what we proposed, but what I would say is this that when you do read the record, you will have no doubt in your mind from what the Commission says about our contentions as to what we were asking it to do.

Now, before I come to the Commission's rationale underlying its grant of this unrestricted authority here, I want to go back a minute to what it said in the case before it which ultimately became the sub nomine this Court, the ATA case.

That's the issue and that's the case in which the Rock Island was involved.

The Commission in that case prefer to its policy of imposing five so-called auxiliary and supplemental restrictions in grants of authority at the railroads or their affiliates.

And it said this, “This policy was and is sound and should be relaxed only where the circumstances clearly establish first, that the grant of authority has not resulted and probably will not result in the undue restraint of competition.

And second, that the public interest requires the proposed operation which the authorized independent motor carriers have not furnished except where it suited their convenience.”

Notice the Commissions report here does nothing else.

We submit that it attest to its rather short memory.

It made the first finding, I just referred to even though its report here perpetuates and broadens the monopoly which already exist that these General Motors plants and which is enjoyed by the Southern Pacific Rail Motor combined.

But it couldn't make the second finding regarding the failure of independent motor carrier to furnish service, because as I stated, the independent carriers here are willing, ready, able, indeed, anxious to do business with General Motors.

Nevertheless, the Commission wants a hand and it relaxed its policy in this case to precisely the same extent as it did in the ATA policy.

And in doing this, it made these two observations.

First, it said it couldn't impose the usual restrictions in this case because if it did so, it would be authorizing common rather than contract carriage, which had been applied for.

Now, as we point out on brief, the Commission hasn't been nearly as solicitous when independent motor carriers had been before it.

It has often issued one type of authority when another has been requested.

And as we also point out and the Commission agrees with us in its brief, at page 21 of its brief, that there's little distinction between common and contract carriers in the automobile transport field.

Plus the Commission here could well have authorized PMT to provide a common carrier service and having done that, it could've imposed restrictions designed to limit that service to auxiliary and supplemental operations.

Now, they admitted that kind of authority would not have been acceptable with General Motors.

And in the final analysis, we contend that the Commission simply bowed its neck and did what General Motors wanted it to do.

Now, the other reason which the Commission gives to justify its departure from its usual policy, despite its finding that no unusual circumstances had been shown, is really all we're doing here is simply allowing the Southern Pacific Railroad to transport the use of motor trucks in the service, to transport automobiles where it has formally used its railcars.

Well now, this philosophy I think will completely emasculate the congressional policy that's involved here.

After all, if all the railroad has to do in order to get motor truck authority, all along its line, is simply to show that it's presently moving traffic in railcars and every railroad in the country is in business as a motor carrier to points all over its system without any restrictions at all.

And every railroad in the -- railroad in the country could pick its largest shippers and its choicest traffic and simply go into the motor carrier business.

Now, if that's all this Congressional policy needs, there's been a lot of water over the dam over something that doesn't to a hill of beans in the final analysis.

We think it means a lot more than that.

Really, in the final analysis, here's what the Commissions order tells the railroads of the country.

It says first, if you can prove on all the ATA case, that the independent motor carriers in the area in which you want to perform unrestricted trucking, are dodging their responsibilities, failing to provide inadequate service, come in and file a common carrier application.

And on the basis of that case, we will be able to give you unrestricted rights.

But it says on the other hand, if you can't show that the independents are -- are doing a poor job, if they appear to be rendering inadequate service, why come in and ask for contract carrier rights and we will give you those unrestricted, because we wouldn't want to attach restrictions to those kind of rights because then we -- making common carriers out of you and we shouldn't do that.

And as we read this case, the Commission in a very real sense has simply consigned the congressional policy here in the limbo and certainly not because of any change in the law at all.

Now, the argument is made on brief and it's going to be made across before the Court that in reality, the authority has -- has been granted is restricted.

PMT and General Motors and their joint brief, even go so far as to say that the territorial limitation imposed by the Commission amounts to an auxiliary and supplemental restriction.

But we think that the term is too well-known in the court decisions and we think it means that the operations have to be tied in with the rail service.

And for that reason, we think that claim by General Motors and PMT simply doesn't hold water.

But further of what the Commission refers to as a territorial limitation is a restriction or not, we certainly submit that it does not and cannot satisfy the congressional policy against the lying railroads, complete freedom to get into the trucking business, because that's what this is in the final analysis.

We think that the two reasons.

First, we think -- think it because of common logic.

And next, we believe the Commission's own decision support this view.

I think the Court will take judicial notice of the fact that the railroads of the country and the aggregate serve just about every point of any commercial importance at all.

Now, if merely limiting them, the points on their line complies with the congressional policy here, are then the independent motor carriers of the country are going to find themselves confronted throughout all the railroad system, with railroads operating its railroads on the one hand and an unrestricted truck service on the other.

Though there'll be a few hamlets here and there, small towns that aren't important enough to want being on any railroad line, where the trucks may not encounter that kind of dual competition, but they would be very small and very few and far between.

That's the logic of it.

Now, the Commission itself long ago has -- in 1946 and it's quite my decision, completely refuted the contention that's made here.

Then they referred that to the earlier Barker decision and they said this and I'm quoting, “There also appears to have developed a tendency in rail motor acquisition proceedings to treat the Barker case restrictions as geographical or territorial only in their intent rather than substantive limitations upon the character of the service.”

And there, the Commission emphasized that word, “service” which might be rendered by a railroad or its affiliate under any acquired right.

Now, in our brief here at pages 33 and 34, we've quoted the opening and closing paragraphs of a rather lengthy discussion in the Commission's White Line decision on this point.

And if I may, I just like to repeat here the most significant portion of the last paragraph which is quoted in our brief.

The Commission said this, “It is clear that any tendency to treat the Barker case as an approval of future rail motor operations which should be unrestricted except territorially, ignores the clear declaration that certain types of operations are disapproved, wherever conducted, and must bring from a misinterpretation of the intent of the reports therein,” referring back to its Barker decision.

In its brief here, the Commission makes no mention, whatever, of the White Line case.

In their joint brief, PMT and General Motors however, we think by quoting out of context attempt to leave the impression that the Commission was endorsing the idea that a territorial limitation was all it was needed to conform to Congressional policy.

Now that, of course, is really the very antithesis of the Commission's conclusion reached in the White Line case.

The Commission report here says that it reserves the right to impose in the future and I quote, “Any conditions or restrictions which may then appear to be necessary or desirable in the public interest.”

You will note even in that reservation, they don't refer to auxiliary and supplemental restrictions.

Now, certainly, this reservation isn't a restriction as of now.

And in addition, if the Commission is correct in saying in its report here that it can impose the usual auxiliary and supplemental restriction because to do so, what convert these operations from contract to common carriage which is not what the applicant wants, then obviously, if they can't do it now, they can't do it anytime in the future either.

So the reservation is a meaningless, we think, phrase.

So we believe in the final analysis entirely aside from the technical semantical distinctions and what the Commission has done here is to authorize unrestricted operations by this railroad subsidiary without any finding that such operations are justified because of exceptional circumstances and indeed in the teeth of a finding just of contrary.

In so doing, we think that Commission's decision ignores a clearly discernible guidepost which this Court laid down for it in its ATA decision.

I see that my share of the time is moving along.

If I may, I'd like to come next to the issue of standing to sue here.

That issue is raised only by PMT and General Motors, a permission has never challenged their standing to sue.

The basis for the argument seems to be this.

In the proceedings before the Commission, General Motors steadfastly took the position that no matter what happened, even if the application were denied, none of these independent motor carriers who were protesting the application are going to get any of its business.

Now, of course, it's either the court below gave a good bit of credence to that and certainly the appellees do, the words of the General Motors' witnesses are really treated almost as the laws of the Medes and the Persians.

And the argument is made that if you're never going to get any business in General Motors issue now, then you can -- and suffered any damage.

You haven't suffered any damage, even though you have no standing to sue.

It's interesting to know that the District Court's majority here which did accept this argument said that if the complaint had been found by qualified party in interest, all of the plaintiffs would've had the right to intervene.

Now, we simply can't imagine who would be qualified parties and interest and entitled to test the validity of this Commission decision if it weren't the protest in carriers before the Commission, if not them, then who?

And what the decision really does in this area is to insulate from review any order of the Commission, provided only that the supporting shipper who was before the Commission, of our General Motors here says, “I'm not going to give you any business no matter what happens.”

And the argument would be made subsequently when review were sought that well, you were told you wouldn't get any business and so there's no reason for you to go to court because you haven't been damaged.

I supposed General Motors here instead of taking the attitude it did had said that if the application were denied, some of the protestants would be used by it, then I think presumably, these same protestors would've then had the right to go to Court, because that would've been considered to be damaged -- damaged and therefore, given them a standing to sue.

So that in a real sense, the attitude of this supporting shipper before the Commission here is taken as -- a -- let's put it this way, that the supporting shipper is really given a right by a virtue of its attitude to determine whether or not there'll be any court review of the Commission decision depending on how it goes.

The next point I'd like to touch on is the holding of the court below that special circumstance and justified a grant of authority here.

The Court said this at page 81 of the record, “Thus, although the Commission found an absence of unusual conditions which would justify the issue of sub permits for service to points and not on SPs rail line.

There was in the Court's opinion substantial evidence or special circumstances justifying the extension of PMT's contract carrier authority to serve GM.

We think there are two things wrong with that.

First, in effect, it overrules the Commission's finding and no unusual -- no unusual conditions and constitutes a substitution of its judgment for that of the Commission without, in any way, elaborating wherein the Commission was wrong or wherein it's committed any error, that second and we think more importantly, the matters which the Court found to constitute evidence of special circumstance.

The fact that PMT had used the intrastate service in California for many years, the fact that the operations were closely coordinated, the possibility of confusion and disarrangement at General Motors plants of other carriers were used.

And finally, the alleged need to meet the competition of Ford and Chrysler.

These matters were all within the control of General Motors.

And General Motors knew certainly no one would believe that they don't have a competent counsel.

New years ago that a motor subsidiary of a railroad was under a specific disability by virtue of the very provisions of the Act and so as we see it, if there is any annoyance by virtue of a denial of authority here as far as General Motors is concerned, that again, we believe, there's no reason to kick a hole in this congressional policy which is we're afraid if it has many more holes, it's going to be more of a seal than a policy.

We think also that the court below in attaching any significance at all to the amendments in Section 209, of the Act of 1957, we think it was incorrect in attaching any significance to those amendments at all.

You'll recall that this Court in the Contract Steel Carriers case in 1956 held that motor carriers were free to aggressively search for new business within the limits of their license and that just didn't jive with the Commission's idea.

The Commission's believed that any contract carrier which had as many contracts as the carrier there did.

I had in reality converted its operations to common carriage, so it sought legislations to overcome the effects of this Court's Contract Steel Carriers decision.

And in 1957, the Congress enacted just such legislation.

We therefore dealt with that in a good deal of -- detail on brief.

We think the legislative history of that matter shows clearly that all that Congress intended to do.

As Commissioner Clark, put it and in testifying in favor of the bill, was simply to restrict the opportunity of contract carriers to solicit customers without restriction.

We don't believe Congress in any way intended to alter its traditional policy against allowing railroads to get into the truck field.

There's nothing in the whole legislative history that suggests that and I don't need to dwell on the rule against repeal by implication here.

Finally, we think the Commission erred in allowing this authority because of dual operations provisions of the law, which say that unless good cause is shown, the Commissioner shall not allow the performance of both common and contract carriage by the same person.

Now, when this aspect of a case was first considered before these four cases were consolidated in the first Sub 34 report, the Commission pointed out that the specific language of a statute dealt only with transport by motor carriers, but it said we would be remiss in our obligations if we didn't consider the spirit of this legislation and consider the fact that the common carrier here by rail, is a -- that the Southern Pacific serves in a dual capacity as a common carrier by rail and as a contract carrier by motor vehicle.

And it then went on in its -- in its first report to admonish PMT for its failure to really introduce any evidence at all to meet that statutory standard, other than to rely upon the fact, the Commission in its earlier decisions had authorized it to conduct dual operations.

But when Sub 37 cases heard over a year after, the Sub 34 case, PMT again is -- there is no evidence at all on the point, even the self-serving declarations of PMT's employee which it has set forth in the appendix to be to its brief and which it claims provides ample evidentiary support for this grant of dual authority, come from the first Sub 34 decision and not from the later and far broader Sub 37 case.

Now, again on our brief, we have discussed numerous cases in which -- which involved independent motor carriers in which the Commission held that the mere opportunity to engage in discriminatory practices and I stress that and they are opportunity not as actual exercise is sufficient to warrant disapproval of a grant of dual authority.

In here on the situation, we think far more pregnant with opportunity for discriminatory practices, than is a usual case where only motor operations are involved, where the Commission in the first report told PMT that it couldn't rely on its previous grants of dual authority to justify such future operations and where PMT in the Sub 37 proceeding was seeking far broader authority than it sought in the Sub 34 case and it totally ignored the Commission's warning and its obligation to present evidence on this dual authority issue nevertheless, the Commission granted the right (Inaudible).

And we believe that in doing that, the Commission violated a statutory requirement that there must be a good cause shown.

If we have any time left over after Mr. Solomon finishes, I'd like to reserve for rebuttal.

Thank you.

Argument of Richard A. Solomon

Mr. Richard A. Solomon: May it please -- may it please the Court.

United States is appearing here in support of the petitioners, because we read the decision.

It makes a serious in-row in a congressional policy of great importance to preclude railroad domination of the trucking business.

Now, prior to this case under the case law of the Commission and of this Court, the law was that a railroad or a railroad subsidiary could enter the trucking business only in one or two circumstances.

It could do so if its rail operations were to be used to public advantage in connection with its own operations.

And this Court held in the American Trucking case.

It can also do so occasionally on the showing of special circumstances which require in the public interest that a rail owned motor carrier provide service.

Now, in this case, as we read the Commission's decision, the ICC has said in a contract carrier situation despite the fact that in this case we find no special circumstances.

Despite that fact, the railroad may nevertheless serve in an extended area -- pardon me, to the railroad subsidiary may nevertheless serve as a motor carrier in an extended area in a manner which isn't conceivably related to the rail's operations.

In other words, if this decision stands, as we see it, in a contract carrier situation, a railroad is going to be free at least within the area in which it has rail lines to provide motor service for the largest shippers of this country, such as Southern Pacific is here providing for General Motors, which isn't at all restricted or tied to the railroads operations.

And whether or not, we believe that might be good policy, as we understand it, that that is the policy which Congress was intending to preclude in the National Transportation Policy and in Section 5 (2) (b) of this Act, which this Court has properly held has to be considered in this application.

Justice John M. Harlan: What do you consider the limits of what the Commission is entitled to do on -- on this record?

Mr. Richard A. Solomon: On this record?

On this record and on the findings of the Commission made, the limits it was entitled to do were to deny the application.

I had slightly in saying upon the findings the Commission made, I must perfectly frank in saying that there are underlying facts in this record which are discussed at great length by both of the -- of the appellees here, which if the Commission have thought they were significant, may conceivably have been significant within the meeting of Justice Clark's decision in the American Trucking case.

But as I will try and point out, the Commission found exactly the opposite.

And on this record and with the findings that the Commission made on this record, its alternative was, as we see it, to deny.

I presume there's another alternative to restrict but as a practical matter, restriction is denial, if the restriction is the type of restriction that we always understood the Court and the Commission was talking about, i.e., a restriction with -- does tie rail operations to motor operations to the railroad.

Justice Felix Frankfurter: Do you think it would go on to the Court (Inaudible)

Mr. Richard A. Solomon: Well, I think there's some dispute as to what the Court was saying there.

My friends, the --

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: You're quoting the Court's language correctly, Your Honor, and I can only say that the Interstate Commerce Commission here doesn't believe that's what the Court meant.

Mr. Ginnane will argue here that the Court wasn't saying that there were special circumstances and he agrees that there was no finding of special circumstances.

Justice Felix Frankfurter: Finding that they weren't (Inaudible)

Mr. Richard A. Solomon: It -- it can be, but the problem that you were raising before as to burden here, I think it's fairly clear in this situation.

The general policy of Congress is that railroads do not engage in the trucking business.

The exceptional policy is that they might, upon the showing special circumstances.

Under those situations, I think it's clear that the burden was on the railroad here.

But irrespective of where the burden may have been, the Commission made opposite claims.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: Well --

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: I would prefer to say that the Court was in error rather than indulging a non-census.

My friend, Mr. Ginnane and so I read his brief that's in effect says that they're indulging in at least bad English.

Justice Felix Frankfurter: That is.

Mr. Richard A. Solomon: As I understand Mr. Ginnane's opinion -- brief, that's what he says about this language.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: Now, the Interstate Commerce Commission's position before this Court is a perfectly simple one.

They say the policy of Section 5 (2) (b) in the National Transportation Act is applicable in contract carrier situations.

They have said it.

The Court of Appeals has said it and there's no dispute about that.

They say, as I read their brief at least, there were no special circumstances in this case of the type that was involved in the previous ATA case.

But they say in recognition of that fact, the Commission did exercise its discretion here and gave PMT less authority than they sought.

Now, there's no question about it that the Commission did give PMT less authority than PMT thought -- wanted.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: One Commissioner thought they ought to have a little more, but mostly that fight was between whether they should have as much they got or any.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: No, they did not and that's the ICC argument here.

They say, there were no special circumstances and the policy is applicable and therefore, instead of giving PMT the authority to operate for General Motors throughout this entire area, we only gave them part of the authority they wanted.

Now, I'd like, in a minute, if I have time to go over the decision, because I don't think that's what the Commission, in fact, said.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: Several States that they wanted to serve were entirely excluded.

Certain other States that they wanted to serve were included only to the extent that points on the Southern Pacific rail lines were involved.

I think it's fair but --

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: The rationale is set forth, Your Honor -- Mr. Justice on page 27 of the Commission's decision.

This is a very long Commission decision, but very little of it is a decision.

Most of it is recital of facts.

What the Commission said on page 27 and I want to point out initially that they weren't discussing on page 27 the 5 (2) (b) problem at all.

They were just merely discussing general public interest considerations.

What they said there was that insofar as PMT wants to serve beyond the rail lines of the Southern Pacific, we don't think they should because that service at the present moment is being shared by rail between the Southern Pacific and other railroads and in one case, another motor carrier.

And if we allow PMT to serve General Motors beyond the Southern Pacific rail line, it means that some business that Southern Pacific now has as a rail line is going to be diverted to its subsidiary away from other rail lines.

And in making this determination since General Motors had argued very strongly that there were special circumstances that required in, in making this determination, the Commission -- and this is in the middle of page 27, says -- talking about the request to serve beyond the rail lines, “Such eventuality has it been in no way justified and the public interest in forestalling it as a parent.

And then they say shippers' argument that motor services needed to meet competition of other automobile producers can be accorded little prohibitive way in the face of its continued refusal to make use of the available services of the protesting motor carriers.

And they go on in the next sentence to throw out another major argument that General Motors made here.

Now, when they came to the service on the Southern Pacific line, at the bottom of the same page, they reached a different conclusion and they reached it for two reasons.

The first reason is the protesting motor carriers aren't going to gain anything because after all, Southern Pacific has this traffic.

It's merely going to go from the rail line to the motor carrier line.

Well, Your Honors, that maybe good economics in the year 1960, but it's very bad law under the Transportation Act.

Congress has not provided that railroads may freely follow their traffic when for one reason or another the shipper wants to use trucks or aviation or water carriers.

That is not a reason.

I shouldn't think it would be a reason under a public interest standard, but it certainly is not a reason why the express policy of this Congress against unrestricted rail operation of motor transport could be negated.

And the other reason they give is the reason to which Mr. Beardsley referred previously and that is they say we might as well grant this service because after all General Motors has said that they're not going to give the business to these protestants.

They're going to give it to another contract carrier in Texas which they happen to like better or if the Commission wouldn't grant that carrier, they'll go in through operations for themselves.

That was the basis upon which they made this determination and the basis was not that they were restricting the service to comply with 5 (2) (b) because, to please the Court, when you look on the very next pages, on page 28 through 31, which is the discussion, the only discussion that this Commission has as to why they were not making the restrictions and not denying the grant because of -- despite the 5 (2) (b) problem.

What they say here is -- and I'm going to have to go very quickly through it because my time is going up.

What they say there is first of all, they say, "We recognize that the same principles are applicable here in contract carrier situations as were applicable in common carrier situations.”

Then they say, “So let us look at our various conditions which we normally apply if these were a common carrier applicant.”

And they say there are five of them.

And they list them at the bottom of page 29.

Justice Felix Frankfurter: Before you (Inaudible)

Mr. Richard A. Solomon: Well, I think not.

I think what they're merely doing there is referring to the fact that 207 and 209, the application sections do not contain the express limitations that 5 (2) (b) does.

And -- and it's for that very reason that this Court has held that in exceptional circumstances, there could be unrestricted grants.

Justice Felix Frankfurter: (Inaudible)

Mr. Richard A. Solomon: That is correct.

And that's this Court's holding in American Trucking case and if there are special circumstances here of a type.

Now obviously, this Court in the American Trucking case wasn't saying merely by labeling something special circumstances you get around from the policy.

Obviously, it was talking at least, Justice Black, in terms of special circumstances which would warrant a deviation from the basic policy of the Act which is that trucking business should be carried on by truckers and not by railroads.

But the point I'm trying to make is that in this discussion of whether they should impose restriction or not, they end up by saying the restrictions we normally impose and which we imposed in the ATA case -- I mean the Rock Island case, all happened to be applicable to contract carriers.

Those restrictions would result in making this carrier a common carrier and therefore, we're very sorry but we can't make these restrictions and the only one we can make is the limiting -- restrictions limiting it to a -- the rail lines of the Southern Pacific.

A restriction which is I've pointed out and Mr. Beardsley pointed doesn't do the job.

They don't consider whether other restrictions might be available.

They simply say, “Well, we'll make what restrictions we can irrespective of their effectiveness.”

Now, the trouble with that is that it begs the entire questions in the case.

The question in this case was not how much this grant has to be restricted.

The question in this case was whether the grant should be made or not and the difficulty with this entire position of the Commission here is that they assumed that they were going to make the grant.

And the only question that they're discussing in this entire three or four-paged discussion in this matter is to what extent it is going to be restricted.

And they end up by saying they are restricting it, but the -- and of course you can play on words here as to what's a restriction and what is not.

But the final thought I do want to leave you with is, whatever you call it, Pacific Motor Transport Company which is a subsidiary of the Southern Pacific is authorized, if this case stands to carry many, many trucks for General Motors from its plants in California to a number of bulk points in a number of States and there isn't any connection between the service which has been authorized here and the railroad, the Southern Pacific parent.

There is no connection whatsoever except, of course, that the stockholders of the Southern Pacific will reap such profits as might be involved.

Now that type of restriction, I suggest, is no restriction as far as the policy applied to (Inaudible) biggest concern.

Chief Justice Earl Warren: Mr. Ginnane?

Argument of Robert W. Ginnane

Mr. Robert W. Ginnane: May it please the Court.

I am sharing the appellees' time with Mr. Pierce, who will argue on behalf of the Southern -- of Pacific Motor Trucking and General Motors, and we have tried to divide the time and argument in such a way as to minimize repetition.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: We contend that this case is governed that the Commission's order should be sustained under that American Trucking Association case as applied to the facts in this case as to the shippers, as to General Motors special -- or specialized need for PMT's transportation service.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Out of the -- out of the needs of a particular shipper.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: And Your Honors can read the ATA case, at least, as well as I can, so I would like to devote myself primarily to the facts and so as the shipper's need for service.

Chief Justice Earl Warren: Does the -- does the Commissioner find on this subject?

Mr. Robert W. Ginnane: Yes.

Chief Justice Earl Warren: Do they find them important with what the (Inaudible) I don't want to quarrel with the record, just tell me if they did find on that subject to -- on what you stated.

Mr. Robert W. Ginnane: They say to the -- well, they make this finding and I would like to demonstrate it from the record on page 20.

In our opinion, the evidence reasonably establishes that General Motors requires from its Raymer plant -- that's one of the three plants, a personalized service in the movement of its automobiles and trucks.

Chief Justice Earl Warren: (Inaudible)

Mr. Robert W. Ginnane: A personalized service.

Chief Justice Earl Warren: It requires or do not require?

Mr. Robert W. Ginnane: Requires.

Chief Justice Earl Warren: Requires, yes.

Mr. Robert W. Ginnane: From -- from its Raymer plant, a personalized service in the movement of its automobiles and trucks similar to that which is presently being rendered by applicant from other points that is from other General Motors plants.

And I would like to -- to point out from the record just what is this service which the shipper needs.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: Well, a similar finding was made as to one of the other plants.

But it's the -- it's essentially the same finding.

And -- and the shipper need is admittedly the same from all three assembly plants in California.

Chief Justice Earl Warren: Is that (Inaudible) on which you call our attention on page 31 in the absence of being short from I believe your position?

Mr. Robert W. Ginnane: That is the Commission's deference to the policy underlying 5 (2) (b).

I think I'd be able to persuade you that General Motor's proof of need for this specialized exclusive service was at least as great for the points which were not rail stations on the Southern Pacific lines as for those points which were that if this had been an application by a non-rail -- by a non-railroad controlled motor carrier, there have been ample basis for the Commission to have granted the authority sought for the entire eight-state area that makes it very clear.

That except in -- under circumstances which it did not find to exist here, it would not allow a rail controlled -- a railroad controlled motor carrier to depart that far from the railroads regular service area.

As a matter of fact the Commission never has granted an application as broad as this one for a rail controlled motor carrier to depart this far from the railroad lines.

And it is a --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Yes, because in the preceding -- on the preceding page, it refers --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: I will, indeed, sir.

Now here, PMT has been performing extensive contract carrier service of these three General Motors plants for periods ranging back to 1935.

Practically all of this prior contract carrier service has been intrastate to California destinations pursuant to permits issued by the California Commission.

Substantially, all the transportation from these three assembly plants to points in their distribution areas outside of California has been by rail.

That is by a Southern Pacific railroad and its rail connections such as Union Pacific.

The economics of this is that for some years, there's been a steady shift from the rail transportation of new trucks and automobiles to highway transportation by these -- and these specialized trailers which you see in the streets and on the highways all the time.

Automobile dealers including GM dealers refer the faster service by highway.

They prefer smaller dealers like the split deliveries which are more feasible with highway trailer than with railroad car.

The result is that highway transportation of new trucks and automobiles has a competitive factor in a highly competitive industry.

Now these assembly plants have a very large physical outfit.

In 1955, for example, the General Motor Chevrolet plant in Oakland produced 125,000 vehicles incidentally at -- at about $2000 a piece, that represents an output with a value of -- of $250,000,000.

And its Raymer plant produced 122,000 cars.

The product is valuable and it's fragile.

And we all know from our experience in parking lots.

The product is bulky.

It has to be moved promptly not only to meet dealer's competitive needs, but just to get it out of the plants.

The Oakland plant, for example, has a storage capacity equal to one-day's productive capacity.

Each automobile plant, not just GM but any automobile plant, produces a great variety of combinations of color, model, upholstery, special equipment such as power brakes.

And each assembly line tries to have these things come off to each dealer's order of 4 or 8 or 12.Come off pretty much simultaneously.

Something to be loaded, get on the box car or on a trailer and simply moved out of the way.

Now at the beginning of the highway transportation of motor vehicles, about 10 or 15 years ago, the initiative from the dealers and the dealers themselves or through carriers from they selected would go to the assembly plants and pick up their cars.

And very shortly, it became a chaos of 40, 50 or 100 motor carriers trying to pick up the product.

The result was that the automobile manufacturer generally simply took charge of the motor carrier delivery of their product.

They found that the essential coordination of their production lines with transportation could be achieved only, but if they worked with one or perhaps two or three carriers who could completely gear their operations to the assembly line schedules.

Some of the motor carrier -- some of the motor manufacturers prefer to use common carriers.

Some prefer to use contract carriers, but all operate only through one or a few.

And as the appellants suggest, the services are specialized and -- and for such a small number of shippers that there's not much difference between common and contract carriage in this area, but with one major exception.

The contract carrier is free, but the common carrier is not to dedicate these facilities as equipment solely to the use of one shipper.

But briefly, a motor carrier serving an automobile assembly plant becomes a -- a part of the distribution system of the manufacturer.

The record here shows for example that in the course of PMT's prior contract carrier service for General Motors, it is advised months in advance, the production schedules.

It is even given advance information of that sacred piece of information on the automobile industry, new model changes, so the equipment can be modified to fit the new models.

In the course of this prior service is the -- that going back to 1935, PMT has established its receiving yards, physically adjacent to the storage yards of these three plants.

And the practical physical nature of these -- of those layouts is illustrated by charts and aerial photographs in the record.

So it was against this background that General Motors requested Pacific Motor Trucking to apply to the Interstate Commerce Commission or Motor Contract Carrier Authority to serve the entire distribution area, now that's three California assembly plants, specially TMG applied for authority to transport --

Unknown Speaker: Yes.

Mr. Robert W. Ginnane: -- to all points in Arizona, Idaho, Montana although only from South Plant, now that on New Mexico, Oregon, Utah and Washington.

And as was been told that the Commission granted authority to serve only the points in Oregon, Nevada, Utah, New Mexico, and Arizona which are stations on the Southern Pacific Railroad and of course that was a drastic limitation.

For example in -- just to use one example in -- in New Mexico, that -- that amounted to a denial of a right to serve Albuquerque, which is by far, the largest city of New Mexico.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: It was done because despite the findings as to General Motor's need for an expansion of this type of service, which it was already getting from PMT, the Commission still was unwilling and could not find there a justification for --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Pardon?

Justice Felix Frankfurter: Could not find (Inaudible) --

Mr. Robert W. Ginnane: It couldn't find such complete dependence that it was going to allow PMT to go away outside the service area of its parent railroad.

Justice Felix Frankfurter: And that is the finding of (Inaudible)

Mr. Robert W. Ginnane: I'm not sure I understand the question, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: If this -- I think it's perfectly clear from the findings I've made.

At least, I'm willing to conjecture this, that if Pacific Motor Trucking had not been controlled by a railroad, the entire authority sought would have been granted.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: It would have gotten to Albuquerque, in Washington, Idaho --

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: I think that -- I think the Commission report makes that clear.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: Because the -- the showing of need from the record was not of -- of the shipper's need for the service.

It was certainly not less great for the non-rail points than for the rail points.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: But Arizona, only the points served by the railroad in Arizona.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Now the --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Now the -- the service authorized in each of the findings.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Yes.

And the service in Arizona is limited to points which are stations in the Southern Pacific.

Justice Felix Frankfurter: There -- there's no need for that --

Mr. Robert W. Ginnane: That's right.

The line does not go near Albuquerque.

Justice Felix Frankfurter: (Inaudible)

Chief Justice Earl Warren: Just as you made in one during the argument, I understand that on what may, why they stopped right in Washington line (Inaudible) and left the State of Washington and the State of Idaho (Inaudible) why do they grant it in Oregon as desired on the facts.

Mr. Robert W. Ginnane: Only to those --

Chief Justice Earl Warren: (Voice Overlap) in Oregon and Washington and in Idaho.

Mr. Robert W. Ginnane: They granted in Oregon only as to the points which are stations on the Southern Pacific.

Chief Justice Earl Warren: Yes, but how about Washington?

Mr. Robert W. Ginnane: It doesn't serve Washington.

Chief Justice Earl Warren: Then -- and nor Idaho?

Mr. Robert W. Ginnane: Nor Idaho, nor Montana.

It -- it denied authority to serve Washington, Idaho, and Montana in total because Southern Pacific doesn't get in to those states at all.

And as of the five states in which it did grant authority, it restricted the authority to points already served by the Southern Pacific Railroad.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: That's right, sir.

Justice Potter Stewart: It was in minor exception to that, wasn't there, with respect to three places in Nevada?

Mr. Robert W. Ginnane: Yes, to three small non-rail points in Nevada, as to -- as to which no real point has been made in this proceeding.

Justice Hugo L. Black: Suppose General Motors has organized a corporation of its own (Inaudible) would it have been required to get a license?

Mr. Robert W. Ginnane: No, Justice Black.

It would -- General Motors is completely free to set up its own operation to deliver all of its products.

Unknown Speaker: (Inaudible)

Mr. Robert W. Ginnane: Restricted to carrying its own products.

Justice William O. Douglas: Even through it did it through a separate corporation?

I'm going about the (Voice Overlap) --

Mr. Robert W. Ginnane: I don't recall -- I recall, sir, but if -- if they did it directly without going to a separate corporate shop, they could certainly do that.

As a matter of fact, the common carriers of the country both rail and motor, have viewed a dramatic growth in such private carriage as it is called as the greatest threat to public transportation, a tremendous increase in that sort of so-called private carriage.

Justice Hugo L. Black: Do any of the automobile terminal deliver their own in what ways affection to the Interstate Commerce?

Mr. Robert W. Ginnane: I don't think so.

As far as I know, they use various combinations of contract carriage or common carriage or solely contract carriage as in the case of particularly General Motor Chevrolet division.

We think it's significant that California has three times the total the population of Arizona, Nevada, New Mexico, Oregon and Utah, even without subtracting the non-rail points.

That we think it's clear as we pointed in our brief that most of PMT's motor carrier service for GM will continue to be intrastate service in California.

And that is that these interstate operations are distinctly a minor part of the total operation.

Now, the sole contention in this part of the case is not that General Motors doesn't need motor transportation service or that contract carrier service is not an appropriate form of service, but simply that PMT cannot be allowed to perform it.

Now, we think this Court made it clear in ATA that the specific limitations that provides on Section 5 (2) (b) are not to be applied when the Commission is authorizing new service.

In the Court's words which we think embodied the whole thing, we conclude that the Congress did not intend the rigid requirement of Section 5 (2) (b) to be considered as a limitation on certificates issued under Section 207.

We repeat that the underlying policy of Section 5 (2) (b) must not be divorced from the proceedings for new certificates or as in this case, new contract carrier permits.

Now, we can admit that the Commission cannot ignore that policy.

We simply say that the Commission has a rather broad discretion in determining how do we effectuate it and what did it do here.

It was acting solely in response to the specialized massive needs of one shipper, General Motors.

General Motors demonstrated their need and none of these facts as to -- as to the shipper's need for service are disputed in this case, never have them.

A need for a specialized motor service completely synchronized with its production line schedules wherein an immense value of product.

It was already obtaining intrastate service from PMT for the great bulk of the production of its three California plants.

Now, I'd like to illustrate about a large portion of this whole operation is intrastate.

Taking one plant alone, the Raymer plant in Los Angeles, the Chevrolet plant, 77% of its 1955 production were delivered to California points.

And of that 77% of its total production, 100% was delivered by PMT in intrastate service.

77% of the South Gate plant was thrown entirely in California and PMT delivered 65% of that.

So to a certain extent and I don't want to exaggerate it, but to a certain extent, the intrastate service in traffic here involved, is the tale, a rather healthy tale to be true of a large intrastate dock.

In this combination of intrastate and interstate operation in a single carrier even though controlled by a railroad in order to provide a needed shipper service was one of the major elements of the special circumstances which this Court recognized and sustained in the ATA case.

Justice Hugo L. Black: Mr. Ginnane, you read a -- written of the word, conclusary finding on page 20, that's the read evidence reasonably established to generals motors besides a personalized service, what subsidiary findings of -- of there which show what that personalized service, the element that it needs.

I presume many competent would like to have -- I don't know if that's what you mean by that, but many customers would like to have a personalized service as the state instructed, “Go to their doors into their plants.”

It be great for them many can answer to --

Mr. Robert W. Ginnane: And many got it, sir.

That's the whole purpose of -- that's the whole point of contract carriage.

Justice Hugo L. Black: And they get -- and they get that from the contract carriers?

Mr. Robert W. Ginnane: They do, they do.

Justice Hugo L. Black: What is the nature of the special service that this company can deal General Motors according to the fact that it could not get from the general trucking service.

Mr. Robert W. Ginnane: General Motors' PMT has and is serving only one automobile manufacturer.

Its entire contract carrier operations are devoted to one commodity automobiles for one shipper, General Motors.

Its fleet of specialized equipment is completely available to the service of that one shipment.

Justice Felix Frankfurter: And why (Inaudible)

Mr. Robert W. Ginnane: That's correct, sir.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Exactly, it would be illegal for it to completely dedicate its equipment to the service of one shipper.

A contract carrier on the Interstate Commerce Act is completely free to dedicate its equipment and efforts to the service of this -- only one shipper.

Justice Hugo L. Black: Then what you are saying is as I understanding it, decide to get each --

Mr. Robert W. Ginnane: Surely.

Justice Hugo L. Black: -- that any -- that the contract carrier renders a special contract service, interstate service, to a special company can do that under the Act and there's no reason so far as the Commission why that cannot be done by a railroad common carrier -- a railroad contract carrier or which he knows of.

Mr. Robert W. Ginnane: If under the -- if under the circumstances, I think -- I think all the phrase special circumstances mean it does -- is that --

Justice Hugo L. Black: I understand the only special circumstance would be that they are serving who they want to serve, and I understand that other people have raised the question.

Maybe I'm wrong that's why I'm asking you this.

If you don't have power under the -- the law to give this right to a railroad subsidiary, the contract carrier --

Mr. Robert W. Ginnane: That's the contract --

Justice Hugo L. Black: -- unless you show that they can't get the service on whether they -- they are seeking to limit the meaning as I understand it, as your case to what it actualy was, and you were saying as I understand it, that from it -- that the Commission can, if he sees fit, let railroad subsidiary contract carriers serve one shipper as they do again.

Mr. Robert W. Ginnane: Yes, sir.

Yes, sir.

Justice Hugo L. Black: Whether there's nothing in the Act which permits the desolate example.

Mr. Robert W. Ginnane: That's correct, sir.

Justice Felix Frankfurter: A matter of fact that the (Inaudible)

Mr. Robert W. Ginnane: And want the -- and what the Commission --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Robert W. Ginnane: -- and could be, could be.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: That's right, sir.

I think General Motors has -- has made its position as the shippers do all the time before the Commission.

It wants to deal exclusively with one contract carrier that will make its -- its services, its equipment exclusively available to General Motors.

Justice William J. Brennan: But (Voice Overlap) --

Mr. Robert W. Ginnane: And I -- and I have tried to outline some of the evidence of their needs for that kind of service as -- as supporting the Commission's findings.

Justice Felix Frankfurter: (Inaudible) I don't think the Commission could ever buy that entirely.

Mr. Robert W. Ginnane: It never has.

Justice Felix Frankfurter: It never undivided?

Mr. Robert W. Ginnane: I mean --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: I don't think so.

Justice Felix Frankfurter: Why not?

Mr. Robert W. Ginnane: Because any shipper can come before the Commission and say well, now, if you -- if you -- we are supporting the -- the application of applicant A.

If you don't grant it just the way we want it, we'll go into private carriage ourselves.We couldn't -- we couldn't blackmail like that.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Well, they say they aren't going to divide their business.

They say they aren't going to divide their business and maybe they mean it, but the -- the Commission can't take the -- can't react in response to that sort of statement.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: The need and convenience to the shipper of --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: What other needs are we concerned with under the Interstate Commerce Act?

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Well, if this application had been denied in toto, the appellant's claim, who knows what General Motors would actually do.

Maybe we would end up getting some General Motors business.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: Depending upon the record before them, what the proof was.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert W. Ginnane: The fact that General Motors is already getting service from PMT from most of the output of the -- of at least three assembly plants that so far as we can foresee most of the -- most of the transportation involved in delivering their product at least three plants, will continue to be intrastate service.

And that these amounts to match a minority expansion of that service into interstate commerce.

So that if, this shipper with its specialized needs is able to get the motor carrier service at once, all of it from one shipper -- from one carrier, the moment it has had exclusive dedicated service for periods of time going back to 1935.

Justice Hugo L. Black: I can't see why and maybe it's correct -- I can't see why if this is correct that the amount establishing of the rule at any railroad which has – any railroad can through an affiliated trucking company, contract companies that needed service to perform intrastate business and have a right to get it if -- if this shipper wants to.

And it seems to me and I guess a general amount in effect to a general establishment of the law that can, which -- which maybe the -- which maybe the existence of the Act.

I might say it can.

Mr. Robert W. Ginnane: I -- I don't think anything – I don't think anything the Commission said in its report in this case establish such a general principle that the shifting -- well the shifting shipper -- shipper habits are railroad could --

Justice Hugo L. Black: Why this -- be bad for the Commission to get the contracts of the contract shipper at least to make a contract, would get the happiness or the satisfaction of them, to serve alon their line only, as I understand it.

That's what your -- that's it is restricted to that extent.

Mr. Robert W. Ginnane: And its all that was allowed here, yes, sir.

Justice Hugo L. Black: But the -- why -- why wouldn't -- why would it be fair for the Commissions to allow that?

The one shipper is not allowed to another railroad business.

They want to be with a railroad business, if that's a -- if they own a reason that you've given them was that -- they like it and it's a good reason.

And in commonsense that's a good reason we're they are good, legally, why not.

Mr. Robert W. Ginnane: The fact -- because the facts of shipper need will vary from case to case.

Justice Hugo L. Black: (Voice Overlap) --

Mr. Robert W. Ginnane: Here, the shipper, is already getting most of its motor carrier transportation requirements which are intrastate from PMT under intra -- under intrastate operating authority.

And the -- the combination of the two, the interstate relatively minor, and intrastate allows this shipper with its huge specialized transportation needs to get it all from one contract carrier, PMT, but though it's have been dealing out of satisfactory basis for 25 years.

Justice Hugo L. Black: (Inaudible)

Mr. Robert W. Ginnane: It would be a totally different case, it seems to me.

Justice Hugo L. Black: You mean they wouldn't be a part of that?

Mr. Robert W. Ginnane: It would -- it would certainly not be the demonstration of shipper need that that was in this case.

Justice Felix Frankfurter: In other words, then you'd say to present this reliability of competition that (Inaudible)

Mr. Robert W. Ginnane: Certainly come into play more than here on this -- on this historical set of facts.

Justice Tom C. Clark: (Inaudible)

Mr. Robert W. Ginnane: I beg your pardon, sir.

Justice Tom C. Clark: (Inaudible) a supplemental to the line of the railroad.

Mr. Robert W. Ginnane: No.

And all -- all it can do.

The PMT will be running these trucks to these interstate destinations, stations on the railroad in the -- in the same -- in the same way that an independent automobile carrier would be.

Justice William J. Brennan: Indeed, they wouldn't need to be running under the stations in those places, they'd be running under the -- the dealers where we're getting lucky, wouldn't it?

Mr. Robert W. Ginnane: And --

Justice William J. Brennan: (Voice Overlap) come nowhere near, into the railroad station of the railroad line.

Mr. Robert W. Ginnane: That is quite correct, sir.

The destinations are not limited to -- to the railroad stations.

Chief Justice Earl Warren: Suppose you never manufacture or moved into the same area and the (Inaudible)

Mr. Robert W. Ginnane: And it quite seem – may -- may I answer you this -- Mr. Chief Justice, may I answer you this way.

In this case, the Commission, it seems to me, was striking a balance between this particular shipper's need.

There has -- with the -- with the historical background against statutory policy of preventing rail domination or monopoly of motor transportation.

It seems to me that balance might be entirely different when a new shipper for the first time is saying, I don't know it.

I've never had any contact with this rail control motor carrier before, but now I'd like to try their exclusive contract carrier service.

They would take -- it would -- it would take quite a strong shot but it ought to be a different case.

Chief Justice Earl Warren: I got this, it's so beneficial to -- the (Inaudible) of the manufacture why -- why submit being just to spend (Inaudible)

Mr. Robert W. Ginnane: With PMT.

Chief Justice Earl Warren: Yes.

Mr. Robert W. Ginnane: Well, that would be a different case.

It would be a different balance to be struck between shipper need and --

Chief Justice Earl Warren: What -- what is the difference?

Mr. Robert W. Ginnane: The -- the difference here is that General Motors -- our period is going to back to 1935, has been utilizing PMT in intrastate service for the transportation of most of the output of these three plants and establish working relationship years old.

Chief Justice Earl Warren: (Inaudible)

Mr. Robert W. Ginnane: They might indeed, but I suggest here, that this established relationship and all that's invalid in it, is one of the factors the Commission could take into a -- into consideration and distinguish between the two cases.

Now, I think the balance is going to vary.

The balance between shipper need and the policy against rail domination of transportation will vary with the facts as in the ATA case and as in this case.

I'd like to make one more point.

The appellants make a light of the geographical restriction into points which are stations on the Southern Pacific railroad.

I can only suggest if the restrictions have not been imposed, they would really be complaining.

Chief Justice Earl Warren: Mr. Ginnane, one -- one question I don't believe (Inaudible) and that was the -- the language in the -- the attention of the District Courts in fact that there were no findings by the -- by the (Inaudible) unacceptable circumstance and value I think, of counsel (Inaudible)

Mr. Robert W. Ginnane: Yes, sir.

The language of the District Court into which they adjust themselves --

Chief Justice Earl Warren: Where are you reading?

Mr. Robert W. Ginnane: It's in the record at page 81.

The three-judge court said, “Thus, although the Commission found an absence of unusual conditions which would justify the issuance of permits for service to points not on SP's rail line, there was in the Court's opinion, substantial evidence of special circumstances justifying the extension of PMT's contract carrier authority to serve GM.”

Now, from that, the appellant's contend that -- had like them in their briefs -- that the Court substituted itself for the Commission in making findings, making its own independent findings of fact or we think that read in context for all -- all of it -- all the three-judge court is saying that we think there were substantial evidence of sufficient shipper need to justify the Commission in going as far as it did.

And that was authorizing service to points which are stations on the railroad.

Chief Justice Earl Warren: (Inaudible) that were no special circumstances, what does that language mean?

Mr. Robert W. Ginnane: Which would justify the issuance of permits for service to points not on SP's rail line, and the Commission did find -- and the Commission did find that there are not in your presence such unusual circumstances no matter what the shipper's need as would want letting this operation go beyond the rail lines.

Chief Justice Earl Warren: You may proceed --

Argument of Robert L. Pierce

Mr. Robert L. Pierce: Mr. Chief Justice --

Chief Justice Earl Warren: -- Mr. Pierce.

Mr. Robert L. Pierce: -- may it please the Court.

As we regard appellant's contentions, they are the -- here, with respect to the restrictions the Commission has granted completely unrestricted authority so far as the usual auxiliary and supplemental restrictions are concerned.

This appellant say the Commission could not have done under the language of Section 5 (2) (b), the National Transportation Policy and this Court's decision in the ATA case unless it made the precise specific findings as to the existence of the same special circumstances as existed in that case.

Now, we think, it is plain from the face of the Commission's decision that appellants major premise that the Commission here granted completely unrestricted authority is patently incorrect as the District Court found and that we think it's also clear that the Commission definitely paid attention to the National Transportation Policy under Section 5 (2) (b) and to the ATA decision.

I think this is clear from a -- an examination of the Commission's report.

Let's turn to what the Commission decided on this phase of the case and as discussion of this question at first correctly described this Court's ATA decision as holding that though the policy of Section 5 (2) (b) and the National Transportation Policy must be considered as guiding lights in granting common carrier certificates to railroad subsidiaries nevertheless, they are not rigid limitations and they do not prevent occasional departures from that rule when special circumstances in the public interest exist.

It then went on to say that undoubtedly the same principles of the ATA case were to be applied when we had a contract carrier situation.

And it went on to say that it had here given due consideration to the National Transportation Policy under Section 5 (2) (b).

It next, carefully listed the five restrictions which are specifically described as those and I quote, “Usually imposed in common carrier certificates issued to rail affiliates in order to ensure that the service rendered there under shall be no more than that which is auxiliary to or supplemental of train service.

Among those listed as number two was the requirement that applicant shall not serve any point, not a station on the railroad.

The Commission then stated that it believed Congress except an unusual circumstances, did not intend to permit railroad subsidiaries to provide contract carrier service in competition with other railroads and independently operated motor carriers without safeguards to ensure that the service should not be broader in scope in its real operations.

Accordingly it concluded that in the absence of any showing of unusual conditions, the present permit would be restricted to points on the lines of Southern Pacific.”

In other words, the Commission adopted and applied the territorial restriction which he'd -- had set forth as listed as being one of the auxiliary and supplemental restrictions.

We think it is evident from the opinion that when the Commission said, there was an absence of unusual conditions, it was referring only to the precise specific special circumstances of the ATA case namely, adequacy of independent motor carrier service.

And we think it is also evident that the very reason that the Commission imposed this territorial restriction, this auxiliary and supplemental territory restriction, well, it's because it felt obligated to do so by the ATA decision.

Now, the only situation in which the Commission did not impose this territorial restriction was in its permitting of service to three small off rail points Austin, Tonopah and Yerington, Nevada, which were points not on Southern Pacific's rail lines.

There, however, it appeared that the precise special circumstances of the ATA decision were present since those points were served neither by any railroad, nor by any of the appellant-protesting motor carriers.

They were not on the line for Southern Pacific either.

And the Commission, so far as the restrictions were concerned, also attached a restriction reserving the right to impose in the future any restrictions which may appear then necessary or desirable in the public interest.

Now, we submit, that the restriction of the rail points is a basic auxiliary and supplemental restriction.

And I think my answer would be somewhat different from what Mr. Ginnane has said on that.

We say that this is true whether it's viewed historically or in light of his -- of the policy behind these restrictions.

This restriction to territorial points on the rail lines was in fact that one percent adopted by the Commission in the very first volume of the motor carrier reports in the Barker as the basic auxiliary and supplemental restriction to carry out the special limitations on rail acquisitions of motor carriers which were contained on the Motor Carrier Act of 1935, and about 40 cases from that time up until the Kansas City Southern case in 1938, it was constantly -- consistently attached as the only one.

In the Kansas City Southern case and cases dissents, others of the five restrictions which were listed here have been adding -- have been added including more functional ones such as that service must be performed on rail rates and on rail billings through rail billings with a prior subsequent rail halt, but the Commission ever since despite that, has consistently continued to attach this territorial restriction as one of the auxiliary and supplemental restrictions.

Justice Felix Frankfurter: May I - May I ask you a question (Inaudible)

Mr. Robert L. Pierce: Well I don't -- I mean not just a -- a -- it may not be auxiliary --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert L. Pierce: I think it is.

It's the same points that we can serve either by rail or by truck.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert L. Pierce: That's right.

Justice Felix Frankfurter: (Inaudible) is it not?

Mr. Robert L. Pierce: Well, I would say that's what we mean by auxiliary --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert L. Pierce: That's correct.

From that -- in that sense, it is true.

It is not directly connected to help out the rail operations, but nevertheless --

Justice Felix Frankfurter: (Inaudible) that it is not included as (Inaudible) on the railroad.

I will not (Inaudible) is there advantage in operation?

Mr. Robert L. Pierce: I think, in a sense, it is advantage in our operation.

Justice Felix Frankfurter: (Inaudible)

Mr. Robert L. Pierce: I will be happy to.

This enables us to provide service to the same points either by rail or by truck.

Now at one -- if one, motor transportation was strike down to some difficulty, you could always go to the other.

So it does enable the same company in effect to provide the same type of service either by rail or by motor truck, and in the sense, the motor truck service is an adjunct of the rail service.

Now, we said that in at least four cases, this Court has approved the Commission's practice of treating this territorial --

Justice Felix Frankfurter: (Inaudible)

Mr. Robert L. Pierce: The word territorial would be actually in no connection with the railroad.

We think the present case has to be distinguished from what this Court properly described as completely unrestricted operations in the ATA case.

There, the Commission in the prior Rock Island case had first attached all five auxiliary and supplemental restrictions including the territorial one.

And in the second Rock Island or ATA case, it has eliminated all five of them.

Furthermore, as this Court has recognized, Congress must be deemed to have approved the Commission's practice of considering this an auxiliary or supplemental restriction since it reenacted the restricted policy originally contained in the Motor Carrier Act as Section 5 (2) (b) of the Interstate Commerce Act by the Transportation Act of 1940.

And clearly too, this restriction was auxiliary and supplemental within this period of such restrictions.

You know, the purpose behind these restrictions, auxiliary and supplemental restrictions as this Court has recognized, is to prevent rail monopolization of independent motor trucking.

Here, the Commission's decision clearly shows that it imposed this restriction solely to carry out this purpose and for the competitive protection of the independent motor truckers as well as the protesting rail lines.

It was obviously a restriction which did not reflect the need of the shipper and which probably, as Mr. Ginnane has told, you would not have been attached, if anyone other than a rail subsidiary has been the applicant.

Thus, the record establishes that General Motors had just as much need, in fact, if not more to off rail points as they did to the rail points.

In fact, also this was a very stringent restriction indeed considering that the application of PMT has sought authority to serve three States which weren't even on the line of Southern Pacific and considering that in the other States the applications had requested authority which was statewide whereas the Commission restricted it to the points on the Southern Pacific rail lines.

Now, we think that the Commission's refusal to impose the other usual auxiliary and supplemental restrictions applied in common carrier cases was not based on any departure from the policy of the ATA case instead as the decision clearly shows, it was plainly based on the simple fact and the very different reason that such restrictions would convert these operations of PMT into common carrier operations and would therefore have been beyond the power of the Commission to impose under Section 209 (b).

Both before and after Section 209 (b) was reenacted by this public law adopted in August 22, 1957, this section had only authorized the Commission to impose in a permit, reasonable terms, conditions and limitations consistent with the character of the holder as a contract carrier.

This is a good time to stop [Laughs].

Print this transcript Transcript: 

Argument of Robert L. Pierce

Mr. Robert L. Pierce: Your Honors please.

Before recess, I was pointing out that in our opinion, the basic reason why the Commission could not attach this other auxiliary and supplemental restriction because this could have converted the carrier into a common carrier and that's where beyond its power under Section 209 (b) to impose.

Now, the reason why the imposition of these usual restrictions attached in motor common carrier cases must necessarily have converted these operations of PMT into common carrier operations.

It is apparent from the Commission's decision of the -- in the (Inaudible) case which is cited in its opinion.

There, the Commission observed that coordinated rail motor service, which results, when it's, in that case, the usual auxiliary and supplemental restrictions are attached could only be accomplished through a medium -- through routes and joint rates between a railroad and a motor carrier.

In the present case, also, the Commission described the other usual restrictions as requiring a through bill of lading under rail rates covering also a prior subsequent rail haul.

Under Section 216 (c) of the Interstate Commerce Act, only through routes and joint rates between railroads and motor common carriers are permitted there, not permitted with contract carriers.

So that appellants' argument, we submit, thus leads to the observed result that they would have the Commission-attached restrictions commanding Southern Pacific and PMT to do that, which they cannot lawfully do under the above section unless PMT is considered to be a common carrier under these operations.

Neither in brief nor in oral argument have the appellants or the Government successfully establish that the Commission, as a matter of law, had any authority to attach these other auxiliary and supplemental restrictions in a contract carrier situation, which, we submit, is the real weakness to their case.

Now, the appellants try to meet this issue by saying that the Commission should -- could have granted -- should have granted a common carrier certificate instead of a contract carrier permit with the usual restrictions attached.

But under its past practice and under the law, the Commission could only have done this if it found that this particular operations were, as a matter of fact and a matter of law, common carrier operations.

And here, instead it found that that was not the case.

It found that they were common contract carrier operations within the classical definition of that because they were restricted to a single shipper.

And in fact, the permit specifically limits the service to -- to be performed for General Motors.

The Government attempts to meet this issue by arguing that if the Commission had no power to attach this other condition in a contract carrier case, then in the absence of the precise special circumstances of the ATA case, it had no power to grant any permit.

We think there are several persuasive answers to this argument.

First, the ATA case itself is --

Justice Felix Frankfurter: Do we --

Mr. Robert L. Pierce: -- clear authority that the limitation --

Justice Felix Frankfurter: -- do we have to pass on that in this case?

Mr. Robert L. Pierce: What's that, sir?

Justice Felix Frankfurter: Do we have to decide in -- is it open to us to decide whether a common carrier permit could be granted here?

Mr. Robert L. Pierce: I think it is.

I think that -- I think you --

Justice Felix Frankfurter: Why?

Why?

Mr. Robert L. Pierce: -- have to decide the Commission had no power to grant a -- any -- impose any restrictions, which would --

Justice Felix Frankfurter: Well, I know but all we have here is this -- this -- the contract carrier application.

Mr. Robert L. Pierce: That's right.

Justice Felix Frankfurter: Do we have to say they have power or to go beyond that they couldn't -- on a different record, it might not give a common carrier license?

Mr. Robert L. Pierce: No.

Justice Charles E. Whittaker: In other words, could we or could the Commission require this trucking man to devote its equipment to common carrier service against its will?

Mr. Robert L. Pierce: It could not.

It could not.

Justice Charles E. Whittaker: That's the answer, it isn't.

Mr. Robert L. Pierce: That's right.

Secondly, we think that any requirement that the Commission must attach any particular restrictions which may heard perhaps in the broad language of the National Transportation Policy must yield to the more specific language of Section 209 (b) which requires the Commission shall not attach restrictions inconsistent with contract carrier status.

And thirdly, the language of Section 209 (b) is much less broad in the comparable language of Section 208 (a) in which allows the Commission in common carrier cases to attach such reasonable limitations as the public convenience and necessity may in time require.

Fourthly, when Congress, in 1957, amended Section 209 (b) and spelled out in detail the various criteria which the Commission was to consider under the public interest of the National Transportation Policy, it did not list any special rules to be applied when railroads subsidiaries were applicants, and it left in the limitation that any restrictions to be attached must be consistent with contract carrier status.

We think it is significant that at the time or prior the time when this amendment was made, the Commission had decided at least six cases involving issuance of contract carrier permits to rail subsidiaries, one involving the Pennsylvania Railroad and for involving PMT and including the first decision in the present case, and none of which were the present auxiliary and supplemental restrictions attached.

It is also significant that in 1957, when the motor carrier industry had become a strong competitor of the railroads, there was much less chance of the railroads monopolizing independent motor carrier transportation.

And there was in 1935 and 1940, when these policy limitations were first adopted.

In fact, the recent book by Mr. James C. Nelson, entitled “Railroad Transportation and Public Policy”, which was produced by the Brookings Institute, shows that in 1940, the railroads had 67.4% of the total rail motor transportation, whereas in 1935, their share of those revenues had dropped to or in -- to 38.7% in 1955.

Now, we say also that there's another reason why the Commission was justified in not attaching the usual restrictions even in the absence of the precise special circumstances of the ATA case, namely, the adequacy of other private carrier service.

Both that decision and the Commission's decisions in the Rock Island cases indicate that special circumstances are not to be confined any particular set of facts, but rather mean that such unusual conditions show that forgoing of the usual restrictions will be consisted with the public interest because not amounting to any undue restraint of independent motor carrier competition.

Only two weeks ago or only about a week ago, the Commission decided a case which Your Honors might like to note, (Inaudible) Truck lines purchased George R. Pirnie, P-I-R-N-I-E, and James Pirnie, that's MCF 6345.

This case indicates in a --

Unknown Speaker: (Inaudible)

Mr. Robert L. Pierce: 6345.

This case indicates that even in a purchase case, the Commission does not regard special circumstances as confined to any particular set of facts but rather considers the primary criterion as to whether the grant of the authority or the purchase is going to result in undue harm and competitive restraint of independent motor carriers.

Now, if that is the test of what you're talking about when you say special circumstances, certainly the Commission made the -- make findings here along that line.

It found first that since -- so far as traffic the rail point is concern and since this traffic had all been moving by rail before that, the grant of this authority would not have any competitive cause, any competitive injury to the independent truck lines.

It also found that if the permit was denied, General Motors would not use the appellant service but would institute proprietary operations of its own or else call upon another contract carrier.

Now, the record clearly shows that this was a very reasonable decision of General Motors.

It shows that PMT had faithfully served General Motors and dedicated its service to it as an intrastate carrier ever since 1933 in California and as an interstate carrier ever since 1945.

It further shows that PMT was the only carrier which had its loading and unloading facilities immediately adjacent to the General Motors' plant.

It shows that none of the other available common carriers could have dedicated their service to General Motors because that would have been inconsistent with their common carrier calling.

It shows also that General Motors' competitors have the advantages of this same type of service in the form of two of the contractors, who -- who are appellants in this case, namely, it shows that BMH, a contract carrier, served Ford and that or rather hardly served Ford and that BMH had been serving Studebaker.

So we submit that so far as the question of restriction is concern, there is nothing to appellants' case.

I'm not going to labor the argument about the dual operations, particularly, the Government even concedes the Commission was right on that.

Essentially, the Commission made three findings there.

They found that -- that based on the prior record, PMT service had been completely -- without any charge of discrimination, it found that there was not much chance of any discrimination here anyway since it was to serve by the single shipper, but the primary thing is that it confined -- required PMT as an incident to securing this contract carrier authority to give up all of its rights to carry the same commodities as a common carrier, so that absolutely, there was no chance of any violation of Section 210 because of its dual operation question.

One other question, we submit too that the Commission or that the lower court, the majority of the lower court were purely correct when they held that the appellants here, either the individual truck lines or the associations had no standing to sue because they were -- were not parties in interest and they were not damaged by the administrative action.

Essentially, this is a jug in a manger action by the American Trucking Association and some of its members to keep the railroads from engaging in even a limited form of -- of carrier -- motor carrier transportation.

The -- the complaint is completely devoid of any allegation of injury to the appellants.

And the Commission's decision shows clearly that there was none.

Thus, from the decisions of the Commission, it appears that this traffic had already -- had long been moving by rail and would continue to move by rail.

And it shows also that even if the applications were denied, General Motors would not use these appellant services but would use these other services or bring in its own.

And another indication that there was no real injury is the fact that after appellants had -- had made a motion for temporary restraining order, which was denied, they, thereafter, abandoned their claims for an interlocutory injunction.

And we submit that on the authority of the Santa Fe case, which is mentioned in our brief and which was affirmed by this Court a few years ago, under this set of facts, the appellants really had no standing to maintain its action.

There, the shoe was on the other foot.

In that case, certain railroads attempted to set aside an order of the Commission which had permitted the merger of -- of several motor carriers under a stronger financial hat.

And the Court held there that something more than a common desire for the enforcement of the law must be present but that there must be some actual injury, and it -- it distinguished such cases as the Alton Railroad case upon which the appellants rely because there, it said that there was a right of the carrier to try to stop and set aside a commission order approving a grant of authority to -- of new operations to a competing form of transportation where it threatened the traffic.

And here, as I try to make it clear, there is no competitive threat to the traffic of these appellants arising from this order.

Now, this authority has been in effect ever since November 1958.

This operation has been conducted under -- for that considerable length of time.

The Commission has definitely found it to be in the public interest.

It has tried to weigh the requirements under Section 209 (b) which are -- that the -- as amended, which says that the Commission shall consider primarily the effect of granting the application upon the services of the competing forms of transportation.

That's exactly what it tried to do here.

It -- it attempted to accommodate the shipping -- shippers' needs without causing undue harm to the competing forms of transportation.

So I submit that the order should be affirmed.

Thank you, Your Honors.

Chief Justice Earl Warren: Mr. Beardsley.

Argument of Peter T. Beardsley

Mr. Peter T. Beardsley: In the short time I have left, I want to see if I can take a few other shingles off the back of the rather large Ethiopian that's still down there.

Before the Commission, in addition of the motor carrier protesters, there were six railroad protesters.

Why aren't they here?

Because the Commission's decision gives them exactly what they wanted.

Why are we here?

We got what (Inaudible).

The result of this Commission decision is this.

The traffic that used to lullaby rail out of the Southern Pacific plants to points of the Southern Pacific lines and other areas will still continue to move that way and be interchanged with the other railroads.

They have lost nothing.

They are protected, the motor carriers, despite the Commission's statement that they're attempting to protect them.

I think counsel for the railroad has made it clear.

In view of the fact that PMT has been given contract carrier rights, they cannot interchange with any independent motor carriers under any joint rates of through routes, so the result is this.

The traffic that's going to points on the PMT lines continues to move by Southern Pacific motor.

The motor carriers get nothing there.

The traffic is going to points of the Southern Pacific lines, continues to move by Southern Pacific rail and interchange with the other rail carriers.

Now, that has, to us, is very ironic result.

Here is a policy which was imposed in the first instance that protect the interest of independent motor carriers.

The Commission has thrown the interest of the independent motor carriers out of the window and has ended up with protecting only the interest of the railroads here.

The Commission makes it clear, I think.

Justice Felix Frankfurter: For the ship -- for the shippers?

Mr. Peter T. Beardsley: There is nothing in this record that shows that the independent motor carriers couldn't do just as adequate a job for the shipper as a rail -- as a rail subsidiary it chooses to support.

Justice Felix Frankfurter: (Voice Overlap) allows them to do it.

Mr. Peter T. Beardsley: Yes, sir, but the shipper -- the Commission has held in many, many cases that in their preference by a particular shipper for the particular carrier involved is not enough to justify grant of authority.

Now, the Commission says this, at page 27 of the record, “On the other hand, use by General Motors of applicants' proposed service on a state-wide basis, as distinguished from just the points on the SP lines, would permit Southern Pacific to invade the territory served by other rail lines.”

And it goes on to say it's protecting the motor carriers too, but I have shown you, I think, that it doesn't protect them at all.

And that's precisely the reasons that Commissioner upheld when he dissented, said, “In essence, the majority has not only failed to file a congressional policy but has misapplied the congressional mandate.”

It has protected rail protesters against invasion and competition.

It has failed to extend protection for the motor carrier protesters.

Thank you.