AMERICAN FARM LINES v. BLACK BALL FREIGHT SERVICE

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Argument of Joseph A. Califano, Jr.

Chief Justice Warren E. Burger: Number 369, American Farm Lines against Black Ball Freight Service, Interstate Commerce Commission against Black Ball.

Mr. Califano for American Farm Lines, --

Mr. Joseph A. Califano, Jr.: Yes, Mr. Chief Justice.

Chief Justice Warren E. Burger: -- you may proceed whenever you're ready.

Mr. Joseph A. Califano, Jr.: Thank you, sir.

Mr. Chief Justice and may it please the Court.

These consolidated appeals are taken from a decision of the United States District Court for the Western District of Washington.

That decision nullified a grant of temporary motor carrier authority to my client, American Farm Lines.

The appeals present two questions concerning Interstate Commerce Commission's award of temporary motor carrier authority.

One relates to the adequacy of the evidence to support the grant under the Interstate Commerce Act and ICC rules.

The other relates to the jurisdiction of the ICC to reopen a proceeding handing before it at a time when some of the parties had obtained preliminary judicial relief against the Commission and others have asked the Commission to reconsider its opinion.

Appellants have divided the allotted time for argument.

I will state the facts and deal with the first issue.

Mr. Cerra on behalf of the United States Government will discuss the second issue.

We would like to reserve a few minutes for rebuttal.

The conflict before this Court arises because of the determination of the Defense Department to reduce the time during which defense material is in transit and does achieve substantial savings, increased deficiency and with respect to explosives and other dangerous cargo, increase safety.

Until 1966, virtually all defense motor carrier shipments were on a joint line basis by regulated carriers with routing specified in detail and their certificates of operating authority.

The routings were generally circuitous.

They required several carriers to transport the same load of defense material.

In 1966, the Department began to use exempt farm cooperatives including American Farm Lines to provide a fast, direct, point-to-point service.

The Department use farm cooperatives because a legislative exemption freed them from the certificate restrictions of regulated carriers and thus enable them to provide the direct single-line service.

Under this exemption, American Farm Lines has hold substantial amounts of defense material.

Its operations promptly demonstrated three advantages to the Department of direct service.

The direct savings from lower direct transportation costs, the indirect savings from lower inventories enhanced fewer pipe line costs, and increase safety in the movement of explosives and dangerous materials because of a shorter period, a population exposure.

In 1968 after two years, roughly two years of operation by American Farm Lines, two actions sharply restricted its ability to provide this service.

The first was an injunction obtained by the Munitions Carriers Conference, and the second was a change in the legislative exemption for farm cooperatives.

As a result of the eminent curtailment of American Farm Line service, American Farm Lines supported by the Defense Department applied to the ICC for temporary authority to continue its direct single-line service as a regulated carrier.

Protests were filed by 125 proposing carriers.

The application of American Farm Lines was made under Section 210a of the Interstate Commerce Act.

That Section authorizes the Commission in its discretion and without hearings or other proceedings to grant such authority and I quote, “to enable a provision of service for which there is an immediate and urgent need to a point who appoints within a territory having no service capable of needing that need.”

Justice Byron R. White: What's the duration of that authority?

Mr. Joseph A. Califano, Jr.: The duration of that authority was 180 days has been extended the permanent authority proceedings with the Defense Department support.

The hearings have been completed and the case now being briefed before the ICC.

ICC regulations --

Justice Potter Stewart: As the -- once having granted temporary authority, does the Commission have unlimited power to keep granting extensions?

Mr. Joseph A. Califano, Jr.: Under decisions of this Court until the permanent authority case --

Justice Potter Stewart: It didn't matter --

Mr. Joseph A. Califano, Jr.: -- is granted.

The ICC as I indicated granted American Farm Lines the authority requested.

60 protestants of that point file petitions for reconsideration.

Some of them moved that the ICC stay its grant of temporary authority pending resolution of the petitions for reconsideration.

The ICC denied that motion and several of the protestants then went to the Western District Court and ask for a temporary restraining order.

That temporary restraining order was granted.

No further action was taken by the court.

The ICC then reopened its proceedings to receive additional evidence from the Defense Department, American Farm Lines, and the protestants.

The ICC promptly notified the court of its action and move for a stay of the courts full review of the proceedings.

The court, the Western District Court took no action on the Commission's motion.

In the reopen proceeding, the Defense Department filed a 22-page detailed statement supporting American Farm Lines.

The statement was filed by the Director of Transportation Policy for the Defense Department, the highest ranking transportation official in the Department.

Protestants filed hundreds of pages of detailed replies to the defense statement and upon reviewing all the additional evidence, the ICC again granted temporary authority to American Farm Lines.

The Commission concluded that the Defense Department had an immediate and urgent need for American Farm Line services to discharge its responsibilities for the national defense.

Specifically, the ICC found among the other things that the Defense Department “imperatively requires service over the most direct routes in a minimum transit time.”

The Department knows of no carriers in a position to meet its needs and “there is nothing in this record to establish that the protesting carriers provide a service to meet its need.”

The protestants returned to the District Court and obtain to stay of the ICC Order.

On final review, the three-judge court vacated the grant of temporary authority by the ICC.

It based its decision on two grounds essentially that the Department of Defense statement did not meet two requirements of an ICC rule with respect to supporting shipper statements, and secondly that the ICC was without jurisdiction to reopen its proceedings and accept additional evidence.

On --

Justice John M. Harlan: (Inaudible) what that case was in court?

Mr. Joseph A. Califano, Jr.: The fact that the appellees here had gone to the court to obtain what we considered to be an essentially interlocutory relief.

The -- on August 21, 1969, Mr. Justice Douglas granted a stay of the three-judge court decision to avoid irreparable injury to American Farm Lines, pending the resolution of this case before this Court.

The first issue is whether the evidence adduced by the Defense Department as the supporting shipper reasonably complied with the procedural rules of the ICC.

The ICC rules call upon shippers to provide 11 categories of information and the court below raised no question about nine categories of the information provided by the Defense Department.

It questioned the Department's responds to two of these categories.

One was and I quote “whether efforts have been made to obtain the service from existing motor rail or water carriers, and the dates and results of such efforts.”

And the other is “names and addresses of existing carriers who have either failed or refused to provide the service and the reasons given for any such failure or refusal.”

Without considering the record as a whole, route considering whether the record as a whole contained evidence to support the ICC as grant of temporary authority, the District Court nullified the Commission's order on the ground that the Defense Department did not comply literarily with the requirements of these two categories.

Chief Justice Warren E. Burger: What if their answers have been negative on the first that they haven't made any inquiry and perhaps negative on the second, I'm not sure I have with the question in mind but indicating that no one had refused to furnish the service?

Mr. Joseph A. Califano, Jr.: If under a case that we believe to be almost directly in point, Estes v.the United States which this Court decided recently, if the answer had been no to the first question, there would been no requirement, you know, where efforts made, no efforts were made.

There would have been no requirement to fulfill any of the other requirements, and that also an effect of being fairly say conceded in the appellees' brief.

In the Estes case, the Railway Express Agency applied for temporary authority after a railroad had announced that is was canceling service between Washington and Richmond.

The Railway Express Agency indicated that it had not tried to get that service from anyone else because it was simply not available.

When the protesting shippers came in, none of them held themselves out publicly as capable of providing a direct service from Richmond to Washington, the Conroe (ph) Express, and the lower court and this Court, the lower court held that Railway Express was entitled to the temporary authority and this Court affirmed that decision per curium.

We believe that a careful reading of the defense statement against the categories I've mentioned shows that the direct single-line service of American Farm Lines was unique, that the protesting certificated carriers were incapable legally of furnishing this service.

And that the Defense Department aware of this was not required to make efforts in a conventional sense to obtain single-line service from protesting carriers who had no authority to furnish it.

Both of those categories you will note are concerned only with one of the salutatory standards whether the existing carriers are capable of providing the service involved.

The other standard, the immediacy and urgency of the shippers need for that service is not involved in these two categories.

Moreover, it's important to note that the ICC rules in of temporary authority proceeding require only one thing from the protesting carrier that he give a specific statement “as to the service which such protestant can and will offer.”

In evaluating the shipper's response to these categories, the first question is what the service was?

The service in this case was direct single lines service covering a 14-state area.

In its verified statement, the Defense Department concluded that this service was substantially faster than joint line regular route service and many cases three times as fast.

The Department believed that this service was materially different from joint line regular route service because of the direct savings in transportation costs and because of the enormous impact in indirect savings on its inventory pipe line.

The next question in terms of these categories is whether this certificate of carriers were capable of providing this service over the territories covered by American Farm Lines, and there's ample evidence in the record on this point.

First, the Defense Department verified statement which among other things specifies some 65 point-to-point routings and says that there is no known carrier who can provide direct service over those routings.

And I think in this connection, it's important to realize that the Defense Department is probably the most experienced shipper in the western world moving 64 billion pounds of freight every year.

Second, from American Farm Lines own analysis and uncontested analysis of the authorities of the seven largest carriers operating in this area.

Of some 2,030 routes involved in those authorities, those carriers were capable of providing direct point-to-point service over only 93 of those routes, less than 5%.

Third, the evidence provided by protestants.

The protesting carriers introduced their certificates in this proceeding and those certificate shows on their face that these carriers have no authority to provide direct single-line service.

Moreover as we point out in the reply brief, these very protestants are standing now before the ICC with applications for precisely the same kind of authority supported by the Defense Department that American Farm Lines was granted on a temporary basis by the ICC.

Chief Justice Warren E. Burger: What would be the consequences if that's granted?

That's just an economic consequence?

Mr. Joseph A. Califano, Jr.: The consequence would be I think substantial Mr. Chief Justice, economically in direct savings costs if comparable reductions resulted the record indicates American Farm Lines in effect to reduced direct cost by about 10%.

The Defense Department spends 500 -- last year, they spend $599 million for transportation.

That alone would be a $59 million saving.

There'd be savings in the indirect cost because you have to carry less inventory and your pipe line if your transit times are shorter, and third there'd be increase safety because explosives and dangerous materials would be on the road for shorter periods of time.

Chief Justice Warren E. Burger: Is that --

Mr. Joseph A. Califano, Jr.: -- across the board.

Chief Justice Warren E. Burger: Is that expenditure figure you mentioned the surface transportation within the continental limits to the United States or all their transport?

Mr. Joseph A. Califano, Jr.: No, that is transportation by the Defense Department excluding contract carrier transportation and contract air transportations.

So, it's virtually grand transportation within the United States, all there is some air transportation in there.

Justice Byron R. White: That's by railroad all over the country and all over the (Inaudible)?

Mr. Joseph A. Califano, Jr.: Most of the -- it -- most of the figure, you might discount it by 5 or 10% to take out transportation outside the United States.

It does not include contract transportation and a good portion if not all of the defense transporters abroad are operating on a contract basis and --

Justice Byron R. White: Does it include air transportation, rail transportation, truck transportation?

Mr. Joseph A. Califano, Jr.: No, no, sir, it does not include air service -- contract air service which is most of the air transportation.

Some air transportation is in there.

Unknown Speaker: Commercial?

Mr. Joseph A. Califano, Jr.: Yes, sir.

Unknown Speaker: But in --

Mr. Joseph A. Califano, Jr.: No -- yes Mr. Justice.

Rail is in there and railroads are protesting in this case.

The array of briefs before this Court present a wide spectrum of views on the question whether “efforts have been made to obtain” the single-line service for motor carriers.

Some appellees including those represented by my colleague, Mr. Dempsey, say that the Defense Department made such efforts, but did not disclose the dates and results.

The court below and other appellees say that the Defense Department made no such efforts.

One appellee attempts to argue that the Government brief claims the Defense Department made such efforts and that our brief for American Farm Lines indicates that the Department made no such efforts.

I think that the -- all of these papers fail to recognize the unique status of the Defense Department as a unique shipper.

It is the most experienced shipper in the western world as I indicated thoroughly familiar with the legal restrictions on the operating authorities of the shippers that has been using for years.

If the point is that when faced with eminent curtailment of American Farm Line service, someone in the Defense Department did not pick up a telephone and asked the protestants whether they could provide service under certificates that did not give them legal authority to do so.

Obviously, no such phone calls were made.

They would resubmit in a Feudal Act and not required by the law.

If the question is whether the Department reviewed its existing authorities, the existing authorities of existing carriers which were serving it on a joint line basis over irregular routes, I think the answer is equally obvious.

There are scores of transportation officials in the Department thoroughly familiar with the service these carriers were capable of providing.

Chief Justice Warren E. Burger: What is the purpose, what's your hypothesis as to the purpose of that question in the ICC form?

Mr. Joseph A. Califano, Jr.: I think Mr. Chief Justice for the ordinary shipper, the question -- the ICC does not grant the new authority just because there's a preference for it.

The concept is whether or not there's an immediate and urgent need and whether other carriers can provide the same service.

The idea of having to make efforts I think was to help the ICC as the ICC itself has said in the statement explaining the regulations make quick adjudications in cases like this, did you try and check other carriers to see if they can do the same thing.

Chief Justice Warren E. Burger: If its down to the necessity, doesn't it?

Isn't that one of the factors?

Mr. Joseph A. Califano, Jr.: I think Mr. Chief Justice that it really -- it goes more to the question of whether or not carriers are capable of providing the service, and that of course does relate to necessity.

I would make one further point in terms of appellees arguments that they were prejudiced because they were not fairly informed of the charges against them.

Appellees like every other party in this case knew exactly that the issue here is whether single line served whether the Defense Department could obtain direct single-line service which it viewed as materially different from circuitous joint line service.

Every defense statement presented in this case is abundantly clear on that point.

When the American Trucking Association try to get the Defense Department to withdraw its support of American Farm Lines, the assistant secretary of defense for instillations and logistics wrote to the president of the organization expressing precisely the point that department was trying to get direct single-line service.

The protesting carriers, we submit fully understood this and thus were not in any way prejudiced in preparing any of their responses.

To the extent, I might note that they were -- could show that they could provide this service was peculiarly also within their own ability.

They were the best people to show that because they had their own certificates of authority.

I would make one point in closing with respect to this case Mr. Chief Justice.

The -- this is a summary proceeding before the ICC and which the standard of review is whether there is any evidence in the record to support the Commission's decision.

Commission handles a 5,000 temporary authority cases a year and we think there was ample evidence in this one of them to support its decision.

Chief Justice Warren E. Burger: Mr. Cerra.

Argument of Arthur J. Cerra

Mr. Arthur J. Cerra: Mr. Chief Justice, if it please the Court.

In the remaining time, allotted to appellants except for the few minutes we hoped to say for rebuttal, my argument will be addressed to the second question presented by these consolidated appeals.

The question concerns the Commissioner's jurisdiction to reopen its administrative proceedings after protesting carriers have sought judicial review before a three-judge court and a single-judge of the court had issued a restraining order.

Now, the pertinent facts concerning this question are not in dispute, but I think they are important and we would highlight them to bring focus on the issue.

After the Commission issued its first order, many protesting carriers filed petitions for reconsideration and some sought that the Commission stay the effect of its grant until the petitions could be determined.

The Commission denied the stay and the grant became effective immediately.

Shortly thereafter, some of the protesting carriers went to court and they obtain from the judge, a single district judge a temporary restraining order against the operation of the Commission's grant of authority.

Upon issuance of the restraining order, the Commission exceeded to it and itself postponed the operation of its initial order.

Now in reply to the petitions that arrive in pending before the Commission, the Department of Defense and AFL made specific request that these petitions should be looked at because number one, the Department of Defense had add it in its reply of the petition, some additional reasons supporting a grant.

AFL meanwhile had also asked that the petition be reopened in order to receive this evidence.

Our commission of course had a problem.

This addition -- evidence had not been a part of the original record, nor had the existing carriers been offered enough and extended an opportunity to reply to that evidence.

So on the 5th of November, it decided to reopen the matter and it reopened it for the purpose of receiving the additional evidence to be submitted by the Department of Defense, as well as any evidence of reply by the existing carriers.

We immediately notified -- the Government immediately notified the court of this reopening, and we move for a stay.

Pending final completion of the administrative process, we specifically stated in the motion that it was our intent that upon completion of the administrative process, the parties have the opportunity, the plaintiffs that is, protesting carriers, have the opportunity if they so desire to renew their request for relief from the court.

Unfortunately, the motion to reply has never came on for hearing under local rules of the court.

But after receiving the additional evidence, the Commission considered the record anew, both as previously made and as supplemented by the additional evidence and they granted the temporary authority for the second time.

The protesting carriers immediately file a complaint in court, a supplemental complaint attacking the second grant and the obtained from the same district judge a temporary restraining order against that grant's operation.

On final review, after briefs and oral argument, the three-judge court held that without prior leave of court, the Interstate Commerce Commission lack jurisdiction to reopen its administrative proceedings after the court have assumed jurisdiction and issued the first temporary restraining relief.

In this connection, the court also held that there was nothing validly pending before the Commission.

They said that the Commission that the protesting carrier's petitions for reconsideration were not authorized by temporary authority Rule 6 or by general rule of practice 101 (a) (2).

With this holding, the court concluded that there was nothing properly before the Interstate Commerce Commission when it reopened the proceedings leading to its second order.

Now taking these holdings in reverse order, we submit first that the court simply misconstrued the Commission's rules of practice, and indeed and more importantly, they overlooked the controlling rule of practice which is Rule 101 (g).

Now generally speaking, the Commission's General Rules of Practice prescribe limitations on the rights of parties to petition for reconsideration.

For example, Rule 101 (a) (2) and (3) specified that all orders of a division of the Commission shall be considered administratively final except in two instances one not pertinent here.

But in the instance that is pertinent here except wherein a division reverses, changes, or modifies a prior decision of a hearing officer.

The court below had held that temporary authority board that would not a hearing officer, yet the very rules provide that the term officer is defined as including a board of employees.

So properly construe, we would submit that Rule 101 (a) (2) of the Commissions General Rule of Practice authorize petitions for reconsideration in the circumstances of this case, where an appellate division had reversed the temporary authorities board, but we need not however to rely on it.

Justice William O. Douglas: Where is that printed?

I don't find it in your brief.

Mr. Arthur J. Cerra: 101 (a) (2) is printed in -- at page -- I'm sorry Your Honor, it is not in our brief.

It is in the -- I regret, Your Honor I don't know where it's printed.

We're relying on Rule 101 (g) which appears at page 33 of our brief.

Now, I was getting to that point.

Even considering for the cause indulgence, I do have a copy of the General Rules of Practice where it is printed, if Your Honor would like to look at it Mr. Justice Douglas.

I'd be glad to send it in to the clerk to hand up to you.

The railroads do have it in their brief that footnote 13 on page 18 but here's the text -- the entire rule in the General Rules of Practice.

As I was saying, we need not to rely on Rule 101 (a) (2) however because the construction that we would give from a definition of the term hearings, isn't necessary.

Rule 101 (g) specifically authorizes the filing of petitions for reconsideration where the appellate division reverses, changes, or modifies a previous decision by a board of employees.

Faced with the plain language of this Rule 101 (g), three of the four brief of the appellees don't even mention it.

In the remaining brief filed by Consolidated Freightways, et al., the temporary thought they contend only that temporary authority Rule 6 is later in time and therefore supersedes or restricts the vested right to petition for reconsideration which is granted by General Rule 101 (g).

But we submit that no such content is expressed in the Rule 6, nor can one be so implied.

Indeed, the language of temporary authority Rule 6 which basically says that petitions for reconsideration of the determination by the board or an initial determination by the division without it prior determination by a board are sudden to reconsideration is merely a repetition of the General Rules of Practice.

Rule 6 itself does not grant the right to petition for reconsider or rather it specifies that such right exist and I quote “pursuant to and in accordance with the Commission's General Rules of Practice, the rules of practice of the governing matter.”

It would seem to us that the court's construction of the Commissioner's temporary rule and general rules just simply inaccurate and incorrect.

They were validly pending before the Commission, petitions for reconsideration under Rule 101 (g) and the administrative proceeding had not been completed.

Well, this will lead me to the discussion of the remainder of the court's ruling.

That is that simply because judicial review had been commenced the ICC lack jurisdiction to reopen or hear additional evidence.

I want to point out first that contrary to the decision below, the Government did not concede that the Commission's initial grant of authority was administratively final, rather, we urged first that the Commission proceeding was not administratively final because the petitions for reconsideration were pending.

Secondly, we urged that this lack of administrative finality however did not deprived the court of jurisdiction to issue temporary injunctive relief to prevent irreparably injury pending final agency action where as in this case, the order have already been become effective and the Commission had to disclaim -- to stay its operation.

Now, we've cited those cases in our brief and they include among others, Oklahoma Natural Gas, Pacific Inland Tariff Bureau and Cantley and (Inaudible), they are on pages 24 and 45, 44 and 45 respectively of both of appellants brief.

We want to point out here that appellees briefs either acknowledge, refer to, or attempt to explain away this particular rule.

Now, we know that the basic tend in this that nobody is entitled to judicial review until the agency all administrator remedies have been exhausted and the agency's action is final.

The one that we attempted to use here was an exemption which was stated in these cases we've cite.

Plaintiffs don't -- excuse me, I referred them as plaintiffs because of my experience below, the appellees here don't even attempt to explain them away, rather they urged this three thing that once a court asserts jurisdiction, the Commission is simply without anymore authority that simply does not posses any more authority to proceed further.

The court's jurisdiction is inclusive -- exclusive and then they urge that there's no statute that authorizes the Commission to act concurrently with the reviewing court.

And finally the third matter they urge is that, permitting an agency to reopen after court review has been commenced disrupts the judicial procedures and creates the danger that the agency may not be acting as an impartial or judicatory tribunal, but rather as a litigant, merely trying to paper all the defects in an attempt to win a lawsuit.

Now, we would submit that these arguments have no foundation in fact or in law simply because a court may have jurisdiction to preserve a status quo pending completion of agency action.

It does not mean that the Commission loses all jurisdictions to complete the administrative process.

In such circumstances we would submit the proper procedure is for the reviewing court to hold the judicial action in advance pending completion of the administrative process.

The caution had experienced over the past 18 years as we pointed out to the court below and then our jurisdictions statement here.

With this very situation, most of the cases did not involve -- were temporary restraining order have been initially issued by the judge but some of them did.

And no court has ever taken issue with this on this procedure except in the foot -- except in the cases such as Atchison, Topeka which is cited by appellees at the -- the statutory foundation that we believe for the ability for the Commission to reopen while a judicial review proceeding is pending is Section 17 (7) of the Act.

This grants the Commission continuing jurisdiction over its orders and empowers it to rehear, reconsider, resend, change, or modify them anytime for the purpose of correcting errors; any error or any injustice that is.

That statute has been in existence since 1906 and it hasn't been changed, and where Congress has sought to impose a limitation on the rights of review, for other agencies, it has specifically done so.

It is said that once the reviewing action is filed, the only time an agency can reopen is up until the point whether the administrator record is filed.

Once that record is filed, the Court of Appeals and the citations we give in our brief, Court of Appeals jurisdiction becomes exclusive.

Now, Congress was aware the Interstate Commerce Commission's practice under 17 (6), 17 (7), although they expressly limited, the reopening powers of other agencies such as the Federal Trade Commission.

So, we simply say that were Congress was aware of this situation, it was careful to provide some limitation against reopening where it considered appropriate.

But the review provisions of the Interstate Commerce Act and the Urgent Deficiency Act which applies here, which both of which apply here, I submit there is no such limitation and the absence of such provisions is therefore meaningful.

But more importantly, we need not even rely on Section 17 (7).

As we have shown, the case was validly before the Commission because the petitions for reconsideration were pending.

And we would submit that there is simply no inconsistency between the Commission's reopening and issuing a second order on new evidence on the one hand, and on the other hand, the court's action in supplying temporary relief from operation of initial grant pending completion of the administrative process.

We informed the District Court of the reopening.

There was no attempted evasion or any evasion at all of the court's stay of the first order.

The District Court had an opportunity to stay operation of the second order and in fact that did so.

We failed to see how the prejudice -- how the appellees could have been prejudice in that situation.

Certainly, they have ample opportunity before the Commissioner to present all the evidence that they needed to present to rebut, but the Department of Defense had submitted.

They did so.

They also have ample opportunity to go back before the reviewing court and seek relief, and they did so and they obtained it.

Justice Byron R. White: Could I just ask you, do the Commission's rules prescribe a standard, a substantive standard for when temporary authorities to be granted more specifically, do the rule say whether or not the absence of single-line service as compared with joint interline service is a basis for temporary authority?

Mr. Arthur J. Cerra: Yes, Your Honor, they do.

Justice Byron R. White: What did they say?

Mr. Arthur J. Cerra: That is the rule, point four.

Justice Byron R. White: What did they say?

Mr. Arthur J. Cerra: Generally --

Justice Byron R. White: They say generally that single-line -- the desire for single-line service --

Mr. Arthur J. Cerra: Is not enough.

Justice Byron R. White: -- isn't enough?

Mr. Arthur J. Cerra: No, no.

They say this.

The desire of a shipper for single-line service in lieu of existing interchange or connecting carrier service will not warrant a grant of temporary authority.

Justice Byron R. White: Well now did the Defense Department say what need it had over and beyond the single-line service?

Mr. Arthur J. Cerra: The Defense Department's need over and above beyond single-line service --

Justice Byron R. White: But that's was --

Mr. Arthur J. Cerra: They had -- they expressed so.

In their -- in Mr. Caputo's affidavit, he said that the single-line service was needed to complement rather than replace the existing joint lines.

Justice Byron R. White: I know but the single-line service isn't a reason for getting temporary authority?

Mr. Arthur J. Cerra: It is here Your Honor --

Justice Byron R. White: Under your rules?

Mr. Arthur J. Cerra: It is here Your Honor because this rule further provides that a grant of temporary authority to effect single-line service will be authorized only when it is clearly established, and there are two test that the carrier providing -- the carriers providing multiple line service are not capable of or have failed in meeting the reasonable and immediate transportation needs of the shippers.

Justice Byron R. White: Oh, I know --

Mr. Arthur J. Cerra: Mr. --

Justice Byron R. White: -- but the -- I gather the Defense Department; one of its big reasons from wanting this single-line service is just because of the single-line service?

Mr. Arthur J. Cerra: That is not correct, Your Honor.

They wanted a single-line service for the various savings that could be experience in both time, time-wise and money-wise.

Justice Byron R. White: I know but that wouldn't be enough under the rules to want a temporary authority, would it?

Mr. Arthur J. Cerra: It would be warrant.

It would be enough under the rule --

Justice Byron R. White: You mean under that rule if I commence and say well the only reason I want this temporary authority is to provide the single-line service and the only reason of what single-line service, it saves time and money.

Mr. Arthur J. Cerra: Your Honor, we would say that you would have to show what the deficiencies were.

Justice Byron R. White: Well, the only deficiency is that the other carriers are interlined.

They haven't got single-line service.

Mr. Arthur J. Cerra: But the question of only interlining is that were talking about here, Your Honor, vast geographical areas and commodities and for the -- for an applicant to come before the Commission and say he simply desired single-line service would not be sufficient.

But if he showed that there was an immediate and an emergent need for it and that there were no carrier service capable of meeting those immediate and urgent needs, then the Commission would be authorized on the rule, balancing the equities of the situation and the evidence of determining.

Justice Byron R. White: Single-line -- this rule is the need -- the desire for single-line services sometimes -- they perfectly added at places for granting a --

Mr. Arthur J. Cerra: It could be very much so as in this case, Your Honor.

Justice Byron R. White: In spite of this rule?

Mr. Arthur J. Cerra: But it's not in spite of the rule, it's because of the rule, Your Honor.

I think that the basic reason I'm talking here about the jurisdiction of the Commission to reopen while this Court case is pending is that it's a basic tentative administrative law that no party has the vested right to have an agencies error preserved pending review.

If the agency wishes to correct that error without the necessity of reviewing court, remanding the matter to the Commission for this purpose, and as here where there would be an effective judicial review of the corrective action.

Now, they've talked, the appellees have talked about the point of perhaps this would not create an impartial quasi-judicial body in rendering a decision, but rather that the Commission would be attempting to win a case as a litigant.

We submit that there's absolutely no fact in that suggestion.

The Commission's primary and never ending role is to administer the transportation policy.

Even if a reviewing court had remanded the Commission -- to the Commission an order which had put out, it's still would be responsible as this Court has said on many occasions to administering the transportation policy by either reopening the matter to reconsider it on the existing record, reopening to receive new evidence or otherwise disposing of it.

The court has clearly spelled that out in the Idaho Power case in 344 U.S.

There's another reason though we think that this procedure should be sustained here.

In avoiding the delays, inherent the court reversals in remands, the Commission's action is consistent with the broad purpose of the temporary authority provision to the act themselves.

That is the question of immediacy.

It's also consistent with the mandate of Section 17 (3) which instructs the Commission to conduct its proceedings in such manner as best full conduce to the ends of justice and the proper dispatch of business.

Absent any statutory prohibition against reopening prejudice to the parties or an attempted evasion of the court order, the Commission was free to do so.

And finally, we submit that such procedure would be in the both and the best interest of judicial economy and the agency responsibility.

We'd like very much to save our remaining time for rebuttal.

Chief Justice Warren E. Burger: Very well, Mr. Cerra.

Mr. Dempsey.

Argument of William H. Dempsey, Jr.

Mr. William H. Dempsey, Jr.: Mr. Chief Justice and may it please the Court.

In responding to the arguments advanced by Mr. Califano and Mr. Cerra, I should like to begin with the issue respecting the Commission's regulations and then move on to a discussion of the second issue regarding the real thing of the record by the Commission.

Now as to the first question, I would like to if the outsets spend a few moments discussing the statutory framework in which these issues arise.

This has nothing to do I may note with the tension between the exemption provisions of the act relating the cooperatives and the other provisions of the act because as Mr. Califano has noted that Congress settle that problem with the enactment of legislation in 1968, so that no question respecting that legislation is before the Court.

The relationship that seems to us to be significant is the relationship between the temporary authority's statute and those provisions of the statute and the regulations that bear upon the issuance of permanent of operating authority.

As this Court of course is well aware, this industry of interstate transportation since the time the Congress first in an important way move in its regulation in 1887 has not been characterized by unlimited competition.

The Congress from the beginning of its legislative program or a variety of reasons having to do with the protection of shippers and the maintenance of economic stability and the key industry that does that common carrier obligations has decided that the public interest would be best served in and by enlarged by the application of the principle of regulated competition.

And it's carried forward that judgment in each time that it brought a new mode of transportation within the jurisdiction of the Commission.

So that today, we have regulation in rates and in service and most pertinently here in terms of entry into the market.

So that in the case of any application for permanent operating authority of any consequence, there are extended and the extensive proceedings; evidence, cross-examination of witnesses, or hearing examiner -- report of the hearing examiner, briefs and the appeal within the Commission, perhaps to the full commission often litigation.

All of these were denied toward insuring that if an application for permanent authority is granted, it will be upon the basis of a careful consideration and evaluation of all of the facts that bear upon the need for the service, the competitive impact of a grant and the ability and willingness of existing carriers to perform that service.

Justice John M. Harlan: How is this transportation being held -- carried out now?

Mr. William H. Dempsey, Jr.: The Government transportation, Mr. Justice Harlan by motor carriers and rail and as the Department said to a small extent by air.

By sort of -- by certificated carriers for the most part by cooperatives to the extent that under the new legislation --

Justice John M. Harlan: Did that arise; did it expand its course on that?

Mr. William H. Dempsey, Jr.: This temporary authority?

Oh no, Your Honor, no.

Under this Courts decision in Pan-Atlantic Steamship Company, as I believe Mr. Califano indicated a grant of temporary authority despite the attack, 180-day limitation of the statute is continued now until the termination of the permanent authority proceeding.

Now, in its jurisdictional statement, AFL estimated that and I think that was filed on July of last year.

AFL estimated that it would take another three years for completion of the permanent authority proceeding and I would consider that to be a pretty good guess, so that we face a long period of time of the life of this temperate authority.

Justice John M. Harlan: Or you prevail below?

Mr. William H. Dempsey, Jr.: Yes, Your Honor but --

Justice John M. Harlan: Is there a stay?

Mr. William H. Dempsey, Jr.: There is a stay, there is a stay.

Now, the temporary authority statute which was enacted in 1938 and it has to the Interstate Commerce Commission shortly after passing 35 Motor Carrier Act, of course, cut sharply across the grain of this general statutory scheme because it permits the Commission without hearings at its discretion to permit this kind of authority to be exercised.

And what the Commission said to the Congress quite sensibly it seems to me was that there might very well be occasions in which a shipper's need was so imperative, so immediate that its satisfaction should not await the conclusion of the often prolonged permanent application proceedings.

Now what the Congress had in mind when it enact the statue was that it would be limited to emergencies.

This is what the Senate Report said, such temporary grants would be limited to situations in which there was an emergency, and that accorded with the kind of things that the Commission was talking about to the Congress because it was speaking in terms of new oil wells coming in and the havoc that's brought by floods and what it referred to in short as calamities visitations.

And the Commission did represent to the Congress that it recognized that need would be -- would have to be -- care would have to be exercised to protect the interest of the existing carriers.

And the language that the Congress chose was well suited to limit the application of this statute.

The Congress spoke as the Court is aware in terms of an immediate and urgent need for service that no existing carrier could provide.

Now, it was that statutory framework against which the Commission was called upon to evaluate AFL's application for authority.

It may be that in the annals of the Commission, there are applications that have been granted that are sweeping in scope as this one, but if there are, we do not know them and the Commission is not preferred to them.

These applications sought authority and authority was granted to transport for all branches of the United States Government, all commodities from all points of origin to all points of destination in a 14-state geographical area without restriction as to roots.

Justice Byron R. White: And -- without restriction as to roots and it require -- it will all be continuous single service -- single-line service?

Mr. William H. Dempsey, Jr.: Well it would be single-line service because it will be performed by AFL.

I believe there is --

Justice Byron R. White: I suppose they are in line with other carriers?

Mr. William H. Dempsey, Jr.: I believe Mr. Justice White that there is a provision in the regulations that would prohibit interlining, but I'm not absolutely certain about this.

Certainly what is contemplated was single-line AFL service.

The application was --

Justice William J. Brennan: What sort of fact is given to you?

Mr. William H. Dempsey, Jr.: I'm sorry Mr. Justice Brennan, I don't know.

Justice William J. Brennan: What fact has been -- has there been any --

Mr. William H. Dempsey, Jr.: Any interlining?

Justice William J. Brennan: Yes.

Mr. William H. Dempsey, Jr.: I don't believe so, but I'm, I'm -- it is in the record and I'm an absolutely confident about it, but my impression would be that there is no.

The application was supported as the court has been advised by statement by a single branch of the Government, the Defense Department.

In that statement, the Department did not state that in the absence of AFL's service, the existing service would be inadequate and that is not surprising because in two letters that were written by the Defense Department, one to AFL and one to another motor carrier within two weeks of the filing of this support statement.

The Department said this and I quote that “the Department is not in a position to state that there would be insufficient or inadequate service without American Farm Lines.”

And then shortly after the filing of the statement in another letter that it sent to American Trucking Associations, it said that its support of AFL was, “an expression of the desire of the Department who have available to it the type and quality of service which AFL has provided regardless of the carriers which might provide the same.”

So that in our view, it was not particularly astonishing when the temporary authorities Board of the Commission denied this application, but as the court has been advised division, one of the Commission on appeal reversed that determination, the authority was granted, the protesting carriers went to courts, secured the temporary restraining order, the Commission bear upon on its own motion reopened the record and finally the last deal, the statement the so-called Caputo statement was put into the record.

Justice Byron R. White: What do we have in the way of the ICC statement about this, is it only their orders that are in the record?

Mr. William H. Dempsey, Jr.: Only their orders that are --

Justice Byron R. White: You don't have a findings or anything of that kind in this case?

Mr. William H. Dempsey, Jr.: Well --

Justice Byron R. White: There just be the order of the Division I, it's order 143 (a) and 146?

Mr. William H. Dempsey, Jr.: December 29, 1968 on page 367 on the record.

Justice Byron R. White: That's it?

Mr. William H. Dempsey, Jr.: That's it, that's it.

All application were referred to it I think there is a finding of sorts there.

Justice Byron R. White: But no opinion, no opinion or any?

Mr. William H. Dempsey, Jr.: No.

Now, that brings me to the question that's involved on this first branch of the case and that is what the Caputo statement measured up to the requirements of the regulation.

So I -- I turn now to the regulations which are set forth in -- I think, it is appendix B to the brief of certain motor carrier appellees beginning on page 32 of that brief.

Now what the regulations say at the outset is that they're designed to implement the temporary authority statute, and I think the first thing perhaps to notice that they divide temporary authority in the two categories.

One is called the Emergency Temporary Authority and the other for -- better word, I'll call Ordinary Temporary Authority.

Emergency Temperate Authority according to the regulations is to be granted only whether is an enough time to provide notice to interested parties, and then it's restrictive.

It's restricted to 30 days and then it can be continued only until Ordinary Temporary Authority can be either granted or denied.

Now, this case of course is one of Ordinary Temporary Authority, and the regulations that begin on page 37 I think clearly make this an adversary proceeding before the Commission because they require the basic elements of an adversary proceeding, they require that notice be given to interested persons in the Federal Register and they provide interested persons who are willing and able or say they are, to provide the service have a right to reply.

They have a right to file a protest.

Justice Potter Stewart: Page 37 of what?

Mr. William H. Dempsey, Jr.: Page 37 of -- Mr. Justice Stewart of the brief of certain motor carrier appellees.

Justice Potter Stewart: Thank you.

Mr. William H. Dempsey, Jr.: Now, it's a truncated proceeding to be sure, there is no cross-examination of witnesses, the timetable is telescope, but it is nonetheless and adversary proceedings.

Now, what the protestants are able to put in their rebuttals of course depends in large measure on what the applicant is required to put in his application, and associated papers and that brings me to the regulation that is most directly involved and that begins on page 34, subparagraph C supporting statements.

That regulation refers to the supporting statements of shippers and it says this it says that each application or temporary authority must be accompanied by a supporting statement or statements designed to established an immediate and urgent need for service which cannot be met by existing carriers, the statutory standards.

And then, it goes on say that any self-supporting statement must contain at least the following information and it sets forth 11 categories as much Mr. Califano has indicated and of those were concerned here basically with subparagraphs 7 and 8.

And the basic question is whether the Caputo statement compiled with the requirements of 7 and 8, and if it didn't, what the consequence is ought to be?

7 and 8 go to what a shipper is suppose to say is to whether or not he has made efforts to get this service from existing carriers, and if it has made all those efforts, he is then suppose to give the names and the dates of the allegedly defaulting carriers and the reasons they assigned for not being able to perform, and that sort of thing.

Now, analysis at this point in our view is impaired somewhat by the fact that we believe that the appellants have taken rather markedly diverging views of what the Department of Defense said in response to the threshold question of subparagraph 8.

Now, that question is whether efforts have been made to obtain the service from existing carriers.

American Farm Lines says clearly in its brief and I did not understand Mr. Califano to retreat from it that DOD's response to that question was negative, that it did not make any such efforts.

The argument is spelled forth at some length on pages 20, I think 20 to 23 of their opening brief and their conclusion is this on page 22.

In short, the Department's response to the requirements of subparagraphs 8 and 9 was that it had not requested the proposed service from other carriers, and then it goes on to explain why in its view that shouldn't be fatal, and I'll take that up in a moment.

But now let me turn -- well, and then its analysis proceeds this way and says that as DOD said it did not may be his efforts then course the other requirements of 8 and 9 never came into play because the Department couldn't be required to supply details as to efforts that it never made.

Now, the Solicitor General on the other hand, I understand not to advance that argument but rather the argument that indeed DOD said -- now, this isn't the question I should make clear as to what DOD actually did.

This is a question as to what DOD said in its statement, no one knows really what DOD actually did.

We can only go on the basis of what it said.

The Solicitor General as I read its brief, of course, the Government has not argued this aspect of the case so we have to rely on that brief I think.

As I understand their brief, they say that the Solicitor General did make these efforts and that he did provide -- I mean, DOD and that the DOD did provide most of the information are required and really all that ought to be required.

This is what he says on page 16 and 17 of his brief.

In fact the statement of DOD that is did provide much of the information there specified, thus DOD did state whether it made efforts to obtain the service from existing carriers and graphically describe the results of its efforts as subsection 8 dictates, and it explained in detail the reasons whey existing carriers were only able to provide the service needed as subsection 9 contemplates.

We acknowledge the statement did not give the dates of DOD's efforts to secure service as 8 further asks, or the names and addresses of the carriers who do not provide service as 9 specifies.

But these are the only deficiencies, and then it goes on to explain why he doesn't consider those fatal and I'll move on to that in due course.

Now, the good deal in terms of how one approaches this case depends upon which of these views to the DOD statement is correct.

In our view the Government is the only one that is open, and that is because the Commission, Mr. Justice White, does have what I consider to be a finding of sorts here in its order, and it bears directly on this problem.

Unknown Speaker: What page is that?

Mr. William H. Dempsey, Jr.: Page 368 (a) of the appendix.

Now this -- and I am referring particularly the subparagraph 3, but I'll incorporate when I read it the -- it further appearing language at the top of the page.

The Commission says this in its order, yet further appearing that by its verified statement field November 20, 1968, the Department of Defense has established that it has attempted but has been unable to obtain the required and necessary type of service.

Not that it has not attempted as AFL indicated and that quotation that I read from it brief.

So the number well established doctrine emerging from decisions of this Court such as that in the Chenery case and the Burlington Truck Lines case, we suggest that the order of the Commission has to be defended upon the grounds that it put it on.

And therefore that this argument that AFL advances here newly devised, advance here I think for the first time in this litigation is simply not open.But I would like to say that there are additional infirmities in it.

I'd like to touch on those for a moment.

Because of course normally if the shipper says that he hasn't made any efforts to get the service that he wants from existing carriers, that would be fatal.

Not because of noncompliance with the regulations, but because of noncompliance with the statute.

He simply would not have made this sufficient showing.

Now, AFL says that that shouldn't be the case here because as Mr. Califano said what DOD wanted was single-line direct route service and it knew that wasn't available from existing carriers between many of the points, and therefore it would have been bootless for them as for it.

And they add that single-line direct route service is obviously superior to joint line service.

Well, I think they summarize your position quite succinctly in the reply brief back on page 13.

This is what AFL says, the Department made clear that it support for AFL way premise not upon service failures but upon the Department's desire to upgrade the quality and to reduce the cost of the motor transportation service available to it through the certification of direct single-line service.

Now, have that been the argument made by DOD and explicitly to the Commission, we suggest that the Commission surely would have concluded or surely should have conclude at least that for the reasons I've already indicated, the temporary authority statue was simply not designed to permit the short circuiting of all of the other procedures of the act simply in order to upgrade the quality and reduce the cost of the service available.

Justice William J. Brennan: Is that because it's not urgent or what?

Mr. William H. Dempsey, Jr.: That's because it's not urgent and immediate.

That's correct Mr. Justice Brennan.

Now so far as cost is concerned, the Commission has never --

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

You don't think that cost savings and we're not dealing with pennies in this case --

Mr. William H. Dempsey, Jr.: Well --

Justice William J. Brennan: -- at least enormous cost savings would not be an emergent to?

Mr. William H. Dempsey, Jr.: No, no I don't Mr. Justice Brennan.

Certainly in the order, the Commission never suggested that it was considering cost savings from the Government, and indeed, I can provide the court citations in which the Commission has said that even in permanent authority cases, a rate question is not irrelevant factor.

Now of course, we're talking about this enormous savings.

We're not talking about this particular case either in the American Farm Lines having single-line direct writ authority.

It's not going to save the Government this money, monumental sum of money.

But if every carrier, if the entire certification scheme under the act is to be abandoned now and every carrier, west of the Mississippi is to have direct single-line authority, well I don't doubt that there would be very considerable savings.

I don't doubt that al lot of carriers would go on to business.

I don't doubt that the Commission would regard this all as a very complicated and difficult question.

Justice William J. Brennan: What about the pipe line and safety factors?

Mr. William H. Dempsey, Jr.: Excuse me?

Justice William J. Brennan: Pipe line and safety factors?

Mr. William H. Dempsey, Jr.: (Voice Overlap) you mean the pipe line?

Justice William J. Brennan: Do you consider those as part of the expense argument?

Mr. William H. Dempsey, Jr.: Well, I don't know.

I -- it's a -- perhaps, I can respond this way.

If the Defense Department had said that what we're talking about here ammunitions destined for Vietnam and here the points of origin, and here are the points of destination nor or aircraft parts or something that sort, and to be sure we're only talking in terms of saving a day or saving 12 hours from east to west or something of that sort but that's very important because fighting men are depending on this material.

Well I mean, I would never suggest that that would be irrelevant consideration in a highly persuasive consideration under the temporary authority.

Justice Byron R. White: In the ICC, no one else has ever suggested before that it was illegal or somehow improper to interline explosives.

Mr. William H. Dempsey, Jr.: No sir, Mr. Justice White and I refer here to the regulation.

The regulation that you discussed with Mr. Califano -- Mr. Cerra, I believe was, is a regulation that we set forth quoted in full in at pages 50 and 51 of our opening brief.

Now, it's never been mentioned by the appellants until your colloquy with Mr. Cerra.

It seems to us that that regulation says pretty clear that whatever theoretical advantages may be thought to be associated with single-line service --

Justice Byron R. White: Or practical --

Mr. William H. Dempsey, Jr.: Or practical, if you can that way, will not be enough in a temporary authority proceeding.

One have must show some sort of unusual and significant actual default in the part of the existing joint line carriers.

Chief Justice Warren E. Burger: Mr. Dempsey, while you're --

Mr. William H. Dempsey, Jr.: Mr. Chief Justice.

Chief Justice Warren E. Burger: -- stopped as you are, am I interrupting you now?

Mr. William H. Dempsey, Jr.: Not at all.

Chief Justice Warren E. Burger: I'm trying to reconcile the findings of 368 (a) of the appendix, the three and four, I think you referred to sometime ago in relation to the question that Mr. Califano about the failure to answer questions 8 and 9.

Is there anywhere in this record that indicates that would shed some light on the gap that failure to answer those questions in the original application for the temporary authority and ultimately, a finding by the Commission that is right on target on those two points.

Mr. William H. Dempsey, Jr.: There is nothing in the record to shed light on it, but I think what there is in the record only makes it more surprising if I may say because the Caputo statement after all was not written in the dark.

It was submitted to the Commission some roughly a month after Judge Boldt in the hearing on the temporary restraining order identified noncompliance with subparagraphs 8 and 9 as a serious problem in his mind.

So that what one would reasonably expect would be that the Defense Department in putting in another statement would have been particularly careful to comply with subparagraphs 8 and 9.

I can only -- well, I shouldn't assume anything.

I should simply answer and the answer to the question I think is that there is nothing in the record to indicate.

Chief Justice Warren E. Burger: What's the time laps?

I see that these findings 3 and 4 on 368 (a) are based on verified statements of November 1968.

What was the date of the --

Mr. William H. Dempsey, Jr.: That is the date of the Caputo statement, the final DOD statement.

The hearing on the temporary restraining order, I believe was in October.

Chief Justice Warren E. Burger: What's the date of the document that was filed the application or petition which they fail to answer questions 8 and 9?

Mr. William H. Dempsey, Jr.: Well, the November 20, this statement that's being referred to here is the only DOD statement that is being spoken up in any respect now.

Chief Justice Warren E. Burger: Well then, I'm even more confused.

Mr. William H. Dempsey, Jr.: Yes.

Chief Justice Warren E. Burger: Maybe you can clear that up or someone can.

I thought they had fail to answer on this two points 8 and 9 that the findings says that by the verified statement, the following things have been established and two of the following items down on 3 and 4 are precisely the answers to the question 8 and 9.

Where did the Defense -- where did the Commission get the data for --

Mr. William H. Dempsey, Jr.: Well as to finding 3 or in subparagraph 3, I assume that the Commission thought that a fair inference from what the Defense Department's statements said, and I am not prepared to say it was not a fair inference.

Now our complaint of course is that having said that they did attempt to get the service they wanted, they were then required to comply with the other parts of subparagraphs 8 and 9 and provide the details.

So, --

Chief Justice Warren E. Burger: Well now, I take it that you are concerned about the lack of underlying factual basis --

Mr. William H. Dempsey, Jr.: Yes.

Chief Justice Warren E. Burger: -- for those two --

Mr. William H. Dempsey, Jr.: Yes.

Chief Justice Warren E. Burger: -- findings in a very important way.

Mr. William H. Dempsey, Jr.: Yes, that's right and let me move directly to that.

I just -- on the single-line authority problem, I just like to make sure I made one final point on it, and then -- let me move directly into that.

I think that really conclusive evidence that the Commission did not issue this authority on the premise advance now by AFL; that is the desirability of single-line services, the fact that they didn't limit, they did not limit it to those points between which various exist no single-line direct service.

It's simply a broad 14-state geographical ground.

So far as the extra record material that cited in AFL's reply brief is concerned with respect to the statements made by some appellees about the desirability of single-line service, those statements were made in the context of applications for permanent authority and for reasons that I've already indicated that's much different than an application for temporary authority.

But I would cite to the Court since we didn't have an opportunity to reply, to ICC examiner's decisions in this chain of litigation going on before the Commission.

Ashworth Transfer, Inc., M.C.1872 sub number 71 and served January 7, 1970 and Derrick Freight Lines Inc. M.C. 263 sub number 185 November 20, 1969.

In both of these cases, the examiner in permanent authority cases denied single-line authority direct routes sought by the Defense Department upon substantially the same grounds as they sought this authority criticizing the Defense Department for not establishing sufficiently the asserted deficiencies in multiple line service.

Now, I don't say that this is terribly important, but I do say that's -- it is indicative of the kind of evidence that has to be introduced when one realize on the single-line authority concept even in a permanent authority case.

Now, Mr. Chief Justice, let me go into this question of what it is that we complain about in terms of the Government side which I understand to be that there where depots.

The Solicitor General says that yes, the Caputo statement did not give names, dates, particulars about the service deficiencies about which it was complained, but he says that shouldn't matter and -- so I guess really, the basic question is whether it should matter or not.

There isn't any question I think that he's right in making the concession that does in this entire DOD statement, not a single, not a single existing allegedly defaulting carrier is named.

No dates, no names and no particulars.

We suggest that the standard to be used in measuring whether or not this is -- if I may for a lack of a better word say prejudicial error ought to be the traditional one and ought to be whether have the error and not been committed might the outcome have been changed.

The Government says that it would not have been.

They say on their brief that the provision of these details could not be affected the outcome and I understand them to say that on the notion that the evidence of record was compelled.

Now, that's kind of a harmless error doctrine.

It seems to us it has no place unless the evidence that's being relied upon is compelling is independent of the error; that is to say that correction of the error would not have affected that evidence.

Now if you got 20 eyewitnesses to a crime and they all identified the defendant in a trial and the trial judge improperly circumscribes cross-examination going to the eyesight and one of them, well maybe that's harmless error.

But that situation does not resemble the one at bar at all because the provision of the details by DOD might radically have undercut the force of its submission.

Now, I don't have the time in oral argument for the kind of detailed textual analysis of this statement that we do have in the briefs, but let me illustrate to the Court what kind of thing I have in mind.

The most important parts of the statement are generalities.

They're always qualified in what we regard as suggestive way.

Now for example, page 368 of the Caputo statement, the statement -- no, that‘s not a statement, that's the order.

The statement begins on 194, I think, yes.

Page 198 contains what is sort the topics sentence of the statement.

There, Mr. Caputo says this defense need for speed has not been met in many, many instances by the current certified motor carriers.

Now, no place in this statement does he indicate anything about those many, many instances.

I suppose arithmetically, that could 50 or 100 or a 150 or almost any figure, but surely it would make a difference if it were only a 50 in this broad geographical area among these dozens of carriers, and I don't really see how it reasonably could be suggested otherwise.

In the next sentence he says -- and let me just string some of these together because they're all really the same.

In the next paragraph, he says we must in some cases allow no less than 24 hours for each 300 miles of joint line service, some cases.

The next sentence he said, prescribe routes are often circuitous.

In the next paragraph he says, some regular route carriers utilize single drivers instead of two-men driving teams and this sometimes results in delays.

The next page he says, some shipments of explosives between McAllister and Vanguard Transit for lengthy periods of time.

And it's that way throughout.

In many instances, it is necessary to closely coordinate the arrival of inbound shipments with production schedules.

He gives one example, how many are many in addition to one?

In the next page he says DOD has experience situations where shipments routed the currently certificated carriers failed to arrive at destination in time for transshipments and it gives one example there.

How many more times beyond one did DOD actually experienced these situations?

Now, he does provide in his statements some what he calls examples.

We've analyzed them one by one in our brief and I won't detain the Court with the flaws that we see in the examples other than to note that again that they did not comply with the regulations.

The allegedly defaulting carriers were not identified.

They had no opportunity of rebuttal.

But beyond that, I suggest that the fact that DOD did provide some examples cuts in our favor and not against us because in the first place, it shows they can provide examples.

And in the second place, one cannot put aside the possibility Mr. Chief Justice that this is about all they could come up with.

Because as I said before, they grafted the statement in the face of the temporary restraining order which pointed to noncompliance with subparagraphs 8 and 9 as a problem.

They went back and they drafted it and I think it is at least reasonable, it is reasonably possible to assume that this was about as good as they could do.

But if that's a possibility, then surely compliance with the regulations, compelling the Department to deploy with the regulations might entirely have change the outcome of this case because if this handful of examples is all that the Department could come up with.

I would find it very difficult to believe that the Commission would have granted this temporary authority.

And I have not spoken of the possibility of rebuttal, but that possibility could not be put aside either as this record demonstrates, the Department is not always infallible in what it says.

I would refer the Court to the statement of the munitions carrier's conference which is here some place.

What the -- let me just summarize what it says, what it says -- here it is, it's on page 308 and 309 and what it says basically is that, that DOD in one of its statements gave before this Caputo statement gave three examples of what are deserted and were deficiencies.

And those -- two of them could be verified in terms of the carriers that were involved and those carriers put in rebuttals.

One of them indeed as the statement says submitted photo static copies of documents which established of the charge was false, and DOD did not repeat any of those in the Caputo statement.

So that the opportunity to rebut specific data, when that's specific data is given by the DOD is important to the appellees.

I should mention Estes briefly but I think Mr. Califano really has given me my basis for distinguishing Estes it's the one that I rely on, there are several but the shippers in Estes as Mr. Califano said stated very explicitly that they have not made any efforts to get the service that they were interested in from other carriers.

So --

Justice Byron R. White: Do you think if all shippers who supported temporary application come forward and say that we are not in the position to say that there is insufficient or inadequate service without this temporary authority.

If all the shippers say we don't think there is anything wrong with the present, that the present services inadequate, but we just want better service.

Would you think a temporary authority would ever be justified?

Mr. William H. Dempsey, Jr.: No, I think it would be never justified in those circumstances.

Justice Byron R. White: Apparently the -- but do you think the ICC thinks it would be?

I don't suppose the Department of Defense ever repudiated these statements that it filed certainly the Assistant Secretary when he wrote didn't repudiate that statement.

He said just to be satisfied, however with present, the capabilities is not to say we shouldn't have better service.

Mr. William H. Dempsey, Jr.: Oh, right, yes, I found that interesting passage in this letter and Mr. Justice White, I think you will not find in the Caputo statement a repudiation of the three letters that DOD wrote and which the --

Justice Byron R. White: But the -- but the Commission found -- seems to found that there had been shown an urgent and immediate need.

Mr. William H. Dempsey, Jr.: Yes.

Justice Byron R. White: Well, they apparently construe a desire for better service as urgent and immediate need.

That's certainly not in, that's not illogical, I don't suppose it is?

Mr. William H. Dempsey, Jr.: That they -- well, I -- it's not illogical?

Justice Byron R. White: No, it isn't, it isn't, I mean --

Mr. William H. Dempsey, Jr.: It's not internally inconsistent.

Justice Byron R. White: You just say you have an urgent need for better service.

Mr. William H. Dempsey, Jr.: Yes, yes, well you might as a matter of fact.

I mean it's possible.

All that I can say is that when you can -- I think you can visualize a company in extreme financial client or something like that might really need better service.

But it's hard for me to believe that the Commission having set forth in its single-line service regulations pretty clearly an indication of this isn't the case, and the Commission after all does know what the statute says and what the history of the statute was.

I think that what the Commission must have done here was to accept the general statements made by DOD in the Caputo statement in terms of what it said where its actual service failures that in many, many instances they haven't gotten goods on time for transshipment and that sort of thing and based their decision base on the order on that and not upon a mere statement by DOD of a preference for better service.

Now if in this order, I certainly don't suggest that this order is a model of clarity far from it, but if in this order the Commission had said which you just suggested Mr. Justice White, then the litigation that seems to me would have taken an entirely different path.

What we would have been arguing in lower court was that the order did not comply with the statute and with that kind of a fine thing by the Commission we would have tested this on a different basis.

Let me spend what remaining time I have on the second issue in the case, the question respecting the Commission's reopening of the record.

I regret that I do not have more time for this because it is an important issue bearing as it does upon the Commission's relation to the federal judiciary.

But we have set forth our arguments in our briefs in detail and of course, we rely upon them.

Let me try simply to touch upon the highlights over the central factors of these issues.

Chief Justice Warren E. Burger: Before you to get on that --

Mr. William H. Dempsey, Jr.: Yes, Mr. Chief Justice.

Chief Justice Warren E. Burger: Let me go to that number 4 again which -- of the 3 and 4 that troubles me on 368.

Mr. William H. Dempsey, Jr.: Yes.

Chief Justice Warren E. Burger: Four has the finding that there's nothing in this record to establish that any of the protesting carriers provide a service to meet its needs.

What if the regulations or the case is hold about where the burden lies in establishing that?

Who had the burden there?

Mr. William H. Dempsey, Jr.: Oh, well, I think clearly the applicant has the burden under the regulation say and particularly if they're talking about single-line service because that requires in terms of the regulations are clearly showing that the existing carriers have defaulted.

I don't think really that commission counsel would disagree that the burden here is on the applicant especially in terms of the concern of the Congress expressed in the committee reports that this temporary authority statute be utilized only in a emergencies as it is an exception to the general statutory scheme.

Chief Justice Warren E. Burger: I suppose you'd agreed that it might be very sensible to have the Government carriage exempt from these provisions that Congress hasn't done that as a --

Mr. William H. Dempsey, Jr.: Exempt from the -- from which provision --

Chief Justice Warren E. Burger: From these, the -- from the 8 and 9 question requirements from --

Mr. William H. Dempsey, Jr.: No.

Chief Justice Warren E. Burger: -- making the showing --

Mr. William H. Dempsey, Jr.: No, I would not -- if I understand the question right --

Chief Justice Warren E. Burger: You wouldn't think that would be a sensible thing to do?

Mr. William H. Dempsey, Jr.: I don't --

Chief Justice Warren E. Burger: But in any event they have in coming --

Mr. William H. Dempsey, Jr.: And certainly they done it.

They have exempted the Government from the rate discrimination provisions of the legislations so that they can and effect that the rate discrimination in favor of the Government.

They've done that, but they haven't done anything with respect to the routings that are to be used during that sort.

But I should say that the importance of Government traffic to the regulated motor carrier industry in particularly to some elements of it is very, very great.

And the Commission will one way or another in the many, many proceedings that are pending before it now seeking modification of routes and that sort of thing will have to decide how this problem can be worked out so as to provide the best service to the Department without working, undo damage on the existing motor and rail carriers.

I think that's a complex problem, and so I would much prefer to see that worked out in permanent authority applications with full hearings than by way of this kind of summary proceeding.

Now, I would gather from Mr. Cerra's argument that perhaps erroneously but let me just state what I seem to feel about it, and that is that if these petitions for reconsideration have not been pending at that time that the Commission reopened the record, there would not be a very strenuous argument from the other side that the Commission was free to do what it did.

But if I incorrectly surmise that in any event, I think that's what the appellants ought to be conceding because Inland Steel in the -- this Court in establishing that the Commission cannot act in a way inconsistent with the Commission's jurisdiction taking together with the other cases that we have cited which in other context indicated what that sort of thing means.

It seems to me lead to the conclusion that where the Commission in effect wipes out the raise of the litigation, they're acting inconsistently with the court's jurisdiction, and that's what the Commission did here.

In effect, it wiped out the order that was under view.

It reopened the record in effect that a new trial and entered in effect a new judgment which was then subject to further appeal.

So that it seems to me that the turning question here is the effect of the pending petitions for reconsideration.

Our first position on that is that those petitions for reconsideration could not have extended the authority of the Commission because they were not authorized.

The regulation respecting petitions for reconsiderations in temporary authority proceedings is set forth on page 47 of the brief of certain motor carrier appellees.

Now, it identifies two kinds of orders from which such petitions can be taken and this case does not involved either one of them that I think is conceivable.

But what Mr. Cerra says is that the general rules of practice of the Commission do authorize a petition for reconsideration in these circumstances.

And that that rule should be ready into the temporary authority rule because the temporary authority rule starts out pursuant to and in accordance with the Commission's general and special rules of practice.

Now, we think that the a more normal reading of that phrase pursuant to and in accordance with would be to refer to procedural questions such as a number of copies and that sort of thing.

But more important than that, if the general rules and the special rules are read into this rule, then this rule is robbed of any independent significance because the petitions for reconsideration that are authorize by this rule are also authorize by the general and special rules.

So that to give it any meaning, one must read it restrictively.

One must conclude that this rule establishes the only circumstances under which petitions for reconsideration are to be permitted in temporary authority proceedings.

If I may add that there is no support here to the court and no help to the court by way of the construction of these regulations by the Commission.

The Commission in no order construed these regulations to permit these petitions for reconsideration.

It reopened the proceeding on its own motion.

There is a reference in a footnote and AFL's brief to the effect that that is not so and that the Commission indicated that it believed the petitions were authorized but I refer the Court to the record citation.

It is to a brief by commission counsel and the court below.

But beyond that, we say that even if the petitions were not authorized that the results should be the same.

And we say that fundamentally because we think if the result is different, that an important policy consideration underlying the principle restricting agency freedom in the context of judicial review would be undercut.

And that policy we think arises from the dual role of the agency.

It is of course first and foremost the neutral arbiter, but then when its orders are attacked it becomes a litigant.

Now, so long as the litigation is simply conducted by the general counsel's office, there's no possibility of conflict of interest.

But where the Commission reopens the procedure after judicial review has commenced and particularly where the court has identified would it seize as a possible difficulty in the Commission's position.

Then we suggest that there is a risk that the agency will add it more as a litigator than as an arbiter.

Now, the counsel for the Commission says yes, but -- well, he doesn't say yes to that, but he says in connection with this point that one must allow the Commission the right to correct errors and certainly that's true, and that's an important policy consideration.

But first of all, the rule that we're arguing for it doesn't deny the agency the right to do that.

It simply requires that the agency get the authority of the court to do whatever it wishes to do.

And in the second place, the facts of this case, well certainly not conclusive one way or the other, do not fit very neatly we suggest into the notion that what the Commission is doing here was correcting error in that alone.

The Government in a footnote to its brief indicates that the Commission had in mind when it reopened the record, this problem respecting subparagraphs 8 and 9 of the regulations.

But if that is so, you didn't do anything about that problem at least directly.

It did not suggest to the Department if they comply with subparagraphs 8 and 9.

It did not direct the attention of the Department to subparagraphs 8 and 9.

What it did was to reopen the record and take additional evidence from the Department and then its counsel returned to court below as they do here and conceive that there were defaults with respect to the compliance with these regulations as Judge Boldt indicated in that very first hearing, but argued that the additional evidence that was taken was so compelling as to outweigh these problems with respect to the regulation.

As I say, I don't suggest that these facts are conclusive with respect to this risk that I'm talking about, but they're not inconsistent at least with the theory that I advance.

And so what we argue for and I may say it seems to me that what's needed here is a rule.

There ought to be a clear cut rule.

I don't suggest that this is a -- that the policy consideration is either way here are so strong as to establish that we're right or we're wrong.

What I do say is that we think that the burden on the Commission in complying with the rule that we're talking about would be very, very slight indeed.

Whereas, the risk of danger on the other side is reasonably significant and so what we urge is a rule that would require the Commission when should this review is commence or at the very least, after the court has taken a significant step in the case.

And that here was the grant of the temporary restraining order after a full hearing.

But at that point, the Commission then be required to go to the court, seek authorization if it wishes to reopen the record and enter a new order.

We think that as I say, that's a slight burden on the Commission.

It prevents any hazards with respect to the legitimate interest of the parties before the Commission.

That I think summarizes our case if it please the Court.

Chief Justice Warren E. Burger: Thank you Mr. Dempsey.

Mr. Califano.

Rebuttal of Joseph A. Califano, Jr.

Mr. Joseph A. Califano, Jr.: Mr. Chief Justice, if I -- may I just make a couple of points.

One, with respect to the regulation Mr. Justice White on the granting of temporary authority were single-line services involved that regulation does go on to provide that a grant of temporary authority to effectuate single-line service will be authorized only when it is clearly established that the carriers providing multiple line service are not capable of or fail to meet needs.

The same regulations subsection 2 of it, specifically list as one of the occasions on which an immediate and urgent need exists in occasion whether it's “a discontinuance of existing service.”

And I do you think it's important to note that the Department of Defense had the service of American Farm Lines for some two and half years, and it was --

Justice Byron R. White: On an exempt basis.

Mr. Joseph A. Califano, Jr.: On an exempt basis, and that service was being discontinued.

Secondly, Mr. Chief Justice, with respect to the burden of proof, I just would like to point out quoting from the regulation, that's in the brief filed by Mr. Adams in the American Trucking Association that with respect to the filing of protest it says, “such protest must be specific as to the service which such protestant can and will offer and must consists of a signed original etcetera, etcetera.”

I think it's at best it's fuzzy as to where the burden of proof lies when you read this regulation which follows immediately upon the regulation listing the 11 points.

Chief Justice Warren E. Burger: But if this a default in the first place, failure to answer the questions like 8 and 9, doesn't that perhaps altered the situation somewhat?

Mr. Joseph A. Califano, Jr.: I think Mr. Chief Justice that as I've indicated in this many the appellees have considered, there's no -- if you say no efforts have been made, that's an answer to -- that's an answer to 8 and 9.

If you say efforts have been made, then the question is what kinds of efforts were made and what came out of them.

The problem -- this is a procedural rule of the ICC designed to help them I believe and I think the problem is that we have just a unique shipper.

It's not like any other shipper in the country and the question is whether or not his statement measures up under either of those alternatives.

And we believe that what he was asking for was clear here and I clearly couldn't provide it.

Finally on the point of need, I would indicate as, I think Mr. Justice Brennan asked that in this day and age, if there's not a need for sharply reducing defense cost as this would do and for safety in moving dangerous materials, I don't like you know, it's hard to think to put more urge and needs we could have than that.

Thank you Mr. Chief Justice.

Chief Justice Warren E. Burger: Thank you Mr. Califano.

Thank you Mr. Dempsey.

The case is submitted.