B.j. Mcadams, Inc., Petitioner, v. Interstate Commerce Commission and United States of America,respondents, 698 F.2d 498 (D.C. Cir. 1983)

B.J. McAdams, Inc. ("McAdams") seeks to set aside a decision of the Interstate Commerce Commission granting the application of Freight Express, Inc. ("Freight Express") to broaden the territories its certificate of public convenience and necessity permits it to serve. A certificate of August 29, 1980, authorized Freight Express to transport " [g]eneral commodities" (with some designated exceptions) between "the facilities of National Brands, Inc., Troy, MI, and Feather Lite Manufacturing Company, a Division of National Brands, Inc., at Hot Springs, AR, on the one hand, and, on the other, points in the United States, including Alaska but excluding Hawaii." Brief of the ICC at 14. On May 13, 1981, Freight Express applied, pursuant to the Motor Carrier Act of 1980, Pub. L. 96-296, 94 Stat. 793 (1980), to broaden its authority to operate " [b]etween Oakland County, MI., and Garland County, AR., on the one hand and on the other all points in the United States." Appendix (App.) 4. Notice of Freight Express' application was published in the Federal Register and McAdams and its affiliates submitted adverse comments. The ICC's Restriction Removal Board granted Freight Express' application on July 30, 1981, App. 53; McAdams' appeal to the Commission was denied on January 7, 1982. App. 78. McAdams then petitioned for review in this court as authorized by 28 U.S.C. § 2342(5).

Three issues are raised on appeal. Does McAdams have standing to challenge this ICC decision? Did the ICC adequately assess the fitness of applicant Freight Express in the restriction removal proceeding? Did Freight Express sufficiently address, in its application, the factors the statute prescribes as grounds for removing certificate restrictions? For the reasons set forth below we uphold the ICC's decision granting Freight Express' application except insofar as it authorizes Freight Express to transport commodities to and from Hawaii.

McAdams and Freight Express hold operating authority in the same territory.¹  This is enough, the Commission recognizes, to permit McAdams to file comments with the agency opposing broadened territorial authority for Freight Express.²  But authority to carry general commodities within the same territory does not suffice to support McAdams' petition for judicial review, the ICC argues.³  To cross the standing threshold established by the "case or controversy" requirement of Article III of the Constitution,⁴  McAdams must demonstrate "injury in fact."⁵  McAdams has not done this, the Commission maintains.

The ICC acknowledged at argument that the standing question it raises here is novel.⁶  It is settled that a disappointed applicant for an exclusive license has standing to challenge the grant of the license to a competitor, see, e.g., Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 62 S. Ct. 875, 86 L. Ed. 1229 (1942); it is equally clear that a business enterprise generally does not have standing to challenge the economic regulation of a competitor. See, e.g., Sprunt & Son, Inc. v. United States, 281 U.S. 249, 254, 50 S. Ct. 315, 317, 74 L. Ed. 832 (1930); Rural Electrification Administration v. Northern States Power Co., 373 F.2d 686 (8th Cir.), cert. denied, 387 U.S. 945, 87 S. Ct. 2079, 18 L. Ed. 2d 1332 (1967). But we know of no case that squarely addresses the standing of a non-exclusive licensee challenging a regulatory agency's grant of overlapping authority to a competitor.⁷ 

We need not decide whether the mere fact that two licenses entail overlapping authority confers standing on one licensee to challenge an agency's grant of the second license. In the case before us McAdams alleges, in addition to an overlap in authority, actual operations which the newly-granted authority will expose to competition with Freight Express. Specifically, McAdams states that it is "serving on a continuous basis within the scope of [Freight Express'] Restriction Removal Application (transporting general commodities between points in Oakland County, Michigan, and Garland County, Arkansas, on the one hand, and, on the other, points in the United States)." Reply Brief at 7.⁸  In our view, existence of such exposure to competing operations within the same territory does suffice to satisfy the "case or controversy" threshold. We leave for another day the question whether a licensee who alleges only overlapping authority--but no overlapping routes or shared customers--has standing to challenge in court the grant of a new or expanded license to a competitor.

The ICC invites us, alternately, to hold that McAdams, which itself has no authority to serve Hawaii, lacks standing to challenge the removal of Freight Express' Hawaii restriction. Brief of the ICC at 29-30.⁹  If carriers are in actual, head-to-head competition in any region, however, each will be injured, in some degree, by any expansion of the other's territory. A carrier gains a competitive advantage in all areas it serves when it is granted broadened authority; the grant equips the carrier to offer better service to existing or potential customers for whose trade others operating in the region compete.

Freight Express sought, and the ICC granted, the removal of two types of territorial restriction from Freight Express' certificate. The names of designated plant sites were replaced by those of the counties in which the plants were situated. And Hawaii was included with the rest of the United States in the description of territories Freight Express was allowed to serve.

McAdams protested to the Commission that Freight Express was engaged, with other carriers, in a conspiracy to obtain nationwide general commodities authority inconsistent with congressional intent, and through procedures intended to circumvent standard ICC review of requests for such authority. Freight Express, McAdams contended, was not "fit" to operate under the enlarged authority requested, indeed, it was not even fit for the original grant of authority. App. 9. But the ICC held that a restriction removal proceeding, governed by rules designed to expedite decision, was not an appropriate occasion to explore McAdams' broad allegations of conspiracy. App. 53-54. The Restriction Removal Board therefore disregarded McAdams' charges and agreed, as Freight Express requested, to effect site-to-county expansions and to remove the restriction on service to Hawaii.

In Ritter Transportation, Inc. v. ICC, 684 F.2d 86 (D.C. Cir. 1982), petition for cert. filed, 51 U.S.L.W. 3448 (U.S. Oct. 4, 1982) (No. 82-594) ("Ritter I"), we considered the ICC's removal of restrictions on the commodities a carrier was allowed to transport. We held that the ICC's restriction removal mandate under the Motor Carrier Act of 1980 to "reasonably broaden the categories of property authorized by the carrier's certificate," 49 U.S.C.A. Sec. 10922(h) (1) (B) (i), entails considering whether the applicant is "fit, willing, and able" to provide the additional transportation for which it seeks authorization. 684 F.2d at 87. In so holding, we aligned this Circuit with precedent initiated in the Fifth Circuit, most immediately, Steere Tank Lines, Inc. v. ICC, 666 F.2d 255 (5th Cir. 1982), reh'g denied, 671 F.2d 1380 (March 8, 1982), petition for cert. filed, 51 U.S.L.W. 3013 (U.S. July 9, 1982) (No. 82-41). We quoted, with approval, this passage from Steere:

We believe that an applicant for removal of a restriction should be required to make a prima facie showing in its application that it is fit, willing and able to provide the transportation for which it is seeking authorization. We do not suggest that such a showing must be elaborate. What form that showing should take and how detailed it should be are, in the first instance, matters that should be addressed by the Interstate Commerce Commission.

666 F.2d at 258.

The logic of Ritter I and its Fifth Circuit antecedents is applicable to the territorial restriction removals challenged here. In removing commodity or territorial restrictions, the ICC must consider the applicant's fitness to take on the expanded authority sought.¹⁰  However, as explained below, the Commission need not entertain, in restriction removal proceedings, issues relating to a carrier's fitness to hold a prior certification. Further, the ICC may rely on published guidelines that provide a reasonable basis to infer, from prior certification or experience, fitness for described expansions.B. Scope of the fitness examination

The Motor Carrier Act of 1980 requires the ICC, on application by individual carriers, promptly to remove unreasonably narrow restrictions in operating authority. The Act provides that restriction removal proceedings may be informal, without opportunity for oral evidentiary hearings. 49 U.S.C.A. Sec. 10922(h) (2). The ICC is to "process expeditiously" each restriction removal application, "not later than 120 days after the date the application is filed," except in "extraordinary circumstances," when the ICC may extend the deadline no more than 90 additional days. Id. Sec. 10922(h) (1) (B), (h) (2). These statutory provisions, and the regulations that implement them,¹¹  would be severely undercut if the ICC, in response to comments on a restriction removal application, were to embark on a fitness inquiry reaching back to the applicant's original certification. Given a door so widely opened, carriers seeking to obstruct expansion of their competitors' authority could protract any restriction removal proceeding by filing wide-ranging fitness challenges. Removing minor restrictions in successive applications for restriction removal might thus become more onerous than obtaining a new certificate consolidating the same authority. Congress did not intend this result.¹² 

We therefore hold that when restriction removal is sought, the ICC may tailor its scrutiny of the applicant's fitness to the requested expansion in operating authority. If the expansion is major, the fitness inquiry should be comparable in scope to the inquiry that would be made if the applicant were applying for a new certificate. But if the changes in operating authority are interstitial, or represent a relatively minor expansion in already broad authority, the Agency's consideration of the applicant's fitness may be correspondingly modest. In either case, the ICC may assume, for the purposes of the restriction removal proceeding, that the applicant is fit to operate under the authority previously granted to it. The ICC may thus exclude from the restriction removal proceeding, and reserve for separate consideration sua sponte or through the Commission's complaint process, a challenge that calls into question the applicant's fitness to operate under a certificate it already holds.¹³ 

The ICC has promulgated "guidelines"¹⁴  presenting specific examples of restriction removals it will grant routinely. 49 C.F.R. Secs. 1137.20-.29. We reiterate here what we have stated before: prior operations of a kind described in Commission guidelines may serve as a sufficient indicator of fitness for certain expansions of operating authority. See Ritter v. ICC, 697 F.2d 1153, at note 1 (D.C. Cir. 1983) ("Ritter II"); Ritter I, supra, 684 F.2d at 87-88. For example, we suggested in Ritter II, at 1155, that a carrier's fitness to transport "all bulk commodities" might, as a matter of course, be inferred from the breadth of its prior authority to transport numerous itemized bulk commodities. The Fifth Circuit's opinion in American Trucking Associations v. ICC, 659 F.2d 452, 468 (5th Cir. 1981) ("ATA"), approved the ICC's use of generic guidelines relating to site-to-county territorial expansions. (See infra p. 505.)

In short, the ICC may rely on generic guidelines that describe when applicants will be found fit to operate under described types of expanded authority. Commission management of restriction removals in this manner is supported by 49 U.S.C.A. Sec. 10922(h) (1) (B), (h) (2). This same section of the 1980 Act justifies the Commission's refusal to reexamine, in a restriction removal context, fitness to hold prior certifications. See supra p. 503. The statute requires expeditious, uncomplicated restriction removal proceedings; generic guidelines may be essential to achieve that goal.

Generic guidelines must, of course, be reasonably calculated to further the statutory requirement that carriers be "fit, willing, and able," 49 U.S.C.A. Sec. 10922(a), (b), and may not dispense with the case-by-case adjudication of restriction removal applications required by 49 U.S.C.A. Sec. 10922(h) (1) (B).¹⁵  But the guidelines may be engaged on a simple showing that an applicant's circumstances justify their application, and when the guidelines do apply, the ICC need not supply additional support for its inference that an applicant is fit to operate under the expanded authority sought.¹⁶ 

D. The "site-only" and "Hawaii" generic restriction removal policies

Two specific ICC generic guidelines are challenged here. The Commission has announced that territorial restrictions confining a carrier to a designated business site are presumptively too narrow; as a matter of course the ICC is prepared to replace facility-specific designations with county-wide specifications. 49 C.F.R. Sec. 1137.24.¹⁷  And the ICC suggests it has a settled policy that carriers authorized to serve the continental United States will routinely have their certificates extended to cover Hawaii as well.

ATA, supra, addressed the first of these territorial guidelines:

The Commission is also, upon carrier application, to "eliminate unreasonable or excessively narrow territorial limitations." 49 U.S.C.A. Sec. 10922(h) (1) (B) (iv). The "guidelines" provide that authorizations to serve a territory less extensive than a county are considered excessively narrow. A carrier whose certificate is so restricted may seek expansion to all points in the county in which any authorized service point is located .... These standards are appropriately adapted to the elimination of unreasonable territorial limitations. A single point designation such as a particular plant site is obviously unreasonably narrow. What area extending beyond one point is wide enough not to be excessively narrow, yet not so large as to be unreasonably broad, cannot be determined by formula or crow's flight distances. The [guideline] does contemplate territorial authority broader than typically issued in the past, but the geographic areas it fixes are reasonably bounded and tailored to the purposes of the Act.... The decision is reasonable and its selection is well within the Commission's discretion.

659 F.2d at 468 (footnotes omitted). We agree with the Fifth Circuit: an applicant found fit in a prior proceeding to serve a designated site may be assumed fit to serve the county surrounding that site; no further fitness inquiry by the ICC should be required.¹⁸  An interested party, such as McAdams, who opposes a site-to-county certificate expansion challenges more than the applicant's fitness to operate under the new authority sought; as already discussed, the Commission may require a challenge sweeping beyond the applicant's request to be presented separately from the restriction removal proceeding.¹⁹ 

Turning to the ICC's assumption that carriers fit to serve the continental United States are fit to serve Hawaii as well,²⁰  we note a threshold concern. It is unclear whether this "Hawaii" policy existed prior to the instant review petition, or whether the ICC discovered it, post hoc, to justify to this court its disposition of the Freight Express application. The ICC states that the Hawaii restriction removal policy is inferable from a Commission policy statement on new grants of authority. Brief of the ICC at 11, citing 45 Fed.Reg. 8679, 86802-86803 (December 31, 1980). The cited statement does announce that " [w]here applicants [for new certificates] justify a need for service in the United States, it will include service to points in ... Hawaii," 45 Fed.Reg. 86803, but nowhere addresses applications for restriction removal. Nor is a "Hawaii" policy included with the other restriction removal guidelines at 40 C.F.R. Secs. 1137.20-.29. Neither the Restriction Removal Board, App. 53-54, nor the Commission, App. 78, referred to any such policy, or even noted the new certificate policy statement now cited by the ICC.

Assuming the ICC in fact has a Hawaii restriction removal policy, we are at a loss to determine how the policy rationally implements the requirement that applicants for expanded authority establish their fitness to operate under the expanded license. In reviewing the same Hawaii policy in its intended application to new certificates, the Fifth Circuit stated: " [T]he notion that any carrier fit, willing, and able to transport throughout the continental forty-eight states is ipso facto fit, willing and able, by intermodal service or otherwise, to provide service to ... Hawaii, 2,392 miles by sea or air from San Francisco, defies logic." 659 F.2d at 474. We agree.

III. THE STATUTORY FACTORS RELATING TO RESTRICTION REMOVAL

The Motor Carrier Act of 1980 directs the ICC to undertake case by case restriction removal when it finds that restrictions are "wasteful of fuel, inefficient, or contrary to the public interest." 49 U.S.C.A. Sec. 10922(h) (1) (B) (v). The ICC is required to consider "the impact [of a restriction removal] ... upon the consumption of energy resources, potential cost savings and improved efficiency, and ... [to] give special consideration to providing and maintaining service to small and rural communities and small shippers." Id. Sec. 10922(h) (2). The Commission's regulations require restriction removal applications to include a statement describing the anticipated effect of the proposed expansion on these statutory factors. 49 C.F.R. Sec. 1137.10(c).

McAdams contends that Freight Express' application failed adequately to address the statutory factors;²¹  on that account, McAdams urges, the ICC acted arbitrarily in granting the application. The ICC answers that the statutory factors were addressed, albeit in a single sentence;²²  in the context of Freight Express' limited application, the ICC maintains, the applicant's statement was sufficient.

Although Freight Express' "statement" concerning the statutory factors was terse and entirely conclusory, the ICC did not act arbitrarily in granting Freight Express' application without insisting on more detailed remarks. The scope of the application was narrow. The carrier evidently relied on, and the ICC applied, 49 C.F.R. Secs. 1137.20, .24, which announced the ICC's view that, "under normal circumstances," site territorial designations will be found "excessively narrow, wasteful of fuel, inefficient, or contrary to the public interest." That guideline is so obviously reasonable that its uncritical application cannot be termed arbitrary.²³ CONCLUSION

Since McAdams has alleged that it operates in direct competition with Freight Express in the territorial region in question, McAdams has standing to challenge in court the ICC's grant of expanded operating authority to Freight Express.

The ICC is required to determine that applicants are fit to provide the additional service that will be authorized by restriction removal, but the Commission need examine only questions of fitness linked specifically to the expansion requested. Generic guidelines may be used to support an inference of fitness from prior operating experience or certificates already issued. The ICC's site-to-county restriction removal guideline reasonably grounds fitness to serve a county on a prior finding of fitness to serve a site within the county. It is not, however, reasonable to find a carrier fit to serve Hawaii merely on the ground that it has demonstrated fitness to serve the continental United States.

The site-to-county guideline also embodies a reasonable finding that the restriction removals it permits will promote fuel and cost savings and enhance service to small and rural shippers. For the limited purposes of its application to replace site designations with county-wide territories in its certificate, Freight Express adequately described the effect of these statutory factors.

The ICC's decision is affirmed in principal part. The Commission's order is vacated only insofar as it grants Freight Express authority to serve Hawaii.