368 U.S.

81
82 S.Ct. 216
7 L.Ed.2d 147

INTERSTATE COMMERCE COMMISSION, Appellant,

v.
J-T TRANSPORT COMPANY, Inc., et al. U.S.A.C.
TRANSPORT, INC., et al., Appellant, v. J-T TRANSPORT
COMPANY, Inc., et al.
Nos. 17, 18.
Decided Dec. 4, 1961.

On appeals from the United States District Court for the Western District
of Missouri.
[Syllabus from pages 81-82 intentionally omitted]
B. Franklin Taylor, Jr., Washington, D.C., for appellant in No. 17.
Roland Rice for appellants in No. 18.
Richard A. Solomon, Washington, D.C., for appellee United States, in
both cases.
James W. Wrape, Memphis, Tenn., for appellee J-T Transp. Co., Inc., in
both cases.
Nos. 49, 53, 54:
Robert W. Ginnane, Washington, D.C., for appellant in No. 53.
Roland Rice for appellants in Nos. 49 and 54.
Richard A. Solomon, Washington, D.C., for appellee United States in all
three cases.
A. Alvis Layne, Washington, D.C., for remaining appellees in all three
cases.

Mr. Justice DOUGLAS delivered the opinion of the Court.

These are appeals from judgments of three-judge district courts, 28 U.S.C.

1253, 28 U.S.C.A. 1253, which set aside orders of the Interstate Commerce
Commission denying applications for permits as contract carriers. 185 F.Supp.
838; 188 F.Supp. 160.

Appellee JT Transport Company asked to extend its present operations as an

irregular-route contract carrier of airplane parts to include carriage of aircraft
landing gear bulkheads for Boeing Airplane Co. Boeing supported the
application. Common carriers opposed the application, as did another carrier,
U.S.A.C. Transport, Inc., appellant in No. 18. Boeing indicated it preferred the
applicant over the other because of its unsatisfactory experience with the latter
in other operations. Boeing indicated that contract carriage was more
practicable in its experience than common carriage, as a contract carrier's
operations could be better integrated with a manufacturer's production. Though
the examiner recommended a grant of the permit, the Commission denied it (74
M.C.C. 324, 79 M.C.C. 695) saying that no attempt had been made to ascertain
if the existing services were capable of meeting the needs of the shipper. It
ruled that 'There is, in effect, a presumption that the services of existing carriers
will be adversely affected by a loss of 'potential' traffic, even if they may not
have handled it before.' 79 M.C.C. 695, 705. It held that the applicant had not
established a need for this contract service and that the applicant had not shown
'the existing service' of the other carrier to be 'inadequate.' Id., 709. It indicated
that a service 'not needed' cannot be found consistent with the public interest or
the National Transportation Policy, as those terms are used in 209(b) of the
Interstate Commerce Act as amended, 71 Stat. 411, 49 U.S.C. 309(b), 49
U.S.C.A. 309(b). It said that the shippers did not require a distinct type of
service that could not be provided by the protesting carrier, which was indeed
in a position to provide any service needed and which would be adversely
affected by a grant of this application, even though it never had had the
business in question.

Appellee Raddish made application to carry canned goods as a contract carrier

from three points in Arkansas and one in Oklahoma to various points in thirtythree States and to carry other goods on return. His application was supported
by his prospective shippers and opposed by motor common carriers, appellants
in No. 54, and by rail common carriers, appellants in No. 49.

Reddish showed that he delivered to customers who ordered goods in less-thantruckload amounts. These customers maintained low inventories and needed

expedited deliveries in small quantities and on short notice. Some accepted

deliveries only on certain days, a requirement calling for integration and
coordination between shipper and customer. The shippers said that common
carriage was an inadequate service for these shipments, as they were in such
small lots that they often had to be carried in consolidated loads which caused
delays in shipments. Moreover, it was shown that not all points would be
served by one common carrier, making it necessary to unload the shipments
and reload them on another carrier causing delays, misconsignment, and
damage to goods. The shippers also testified that the cost of common carriage
was prohibitive for less-than-truckload shipments and that if the Reddish
application were denied they would use private carriage. The protesting motor
common carriers testified they could render adequate service for these
shipments and provide multiple pick-up and delivery services to most of the
points by transferring the shipments to other carriers. The Examiner
recommended that the application be granted. The Commission denied it,
saying, inter alia, that the services needed by the shippers could be performed
by existing common carriers, that they would be injured by the loss of potential
traffic, and that the shippers' desire to obtain lower rates for less-than-truckload
shipments was the primary reason for their support of the application, but was
not a sufficient basis to justify a grant of authority to this contract carrier. 81
M.C.C. 35.
5

The cases turn on the meaning of language added to the Act in 1957.

Our decision in United States v. Contract Steel Carriers, 350 U.S. 409, 76 S.Ct.
461, 100 L.Ed. 482, held that a contract carrier, rendering a specialized service
in the sense that it hauled only a limited group of commodities over irregular
routes, did not become a common carrier because it reached for new business
within the limits of its license. That decision caused concern to the Commission
which proposed amendments to the Act.1 It proposed that 203(a) (15) be
amended so as to define a contract carrier as one who engages in transportation
by motor vehicle 'under continuing contracts with one person or a limited
number of persons for the furnishing of transportation services of a special and
individual nature required by the customer and not provided by common
carriers.' It also proposed that 209(b) be amended by adding an additional
requirement for issuance of a contract carrier permit, viz., 'that existing
common carriers are unwilling or unable to provide the type of service for
which a need has been shown.'

These amendments were vigorously opposed in some quarters.2 The addition to

203(a)(15) was objected to on the ground that many contract carriers would
be driven out of business because they could not meet the test of performing a

service 'not provided by common carriers.' The change in 209(b) was opposed
because it would be impossible for a contract carrier to prove that competing
common carriers were 'unwilling' to render the service and very difficult for it
to prove that common carriers were 'unable' to render the service, as the
applicant would have no intimate knowledge of the business of the opposing
carriers.
8

The Commission bowed to these objections;3 and the bill as it passed

eliminated the proposed changes except the ones that changed the result of our
decision in United States v. Contract Steel Carriers, supra.4 Section 203(a)(15),
however, was amended, so far as material here, by adding to the description of
the term 'contract carrier by motor vehicle' one who furnishes 'transportation
services designed to meet the distinct need of each individual customer.'5 And
209(b) was amended by adding a sentence which sets forth five factors the
Commission shall consider in determining whether the permit should issue:

'In determining whether issuance of a permit will be consistent with the public
interest and the national transportation policy declared in (this Act), the
Commission shall consider (1) the number of shippers to be served by the
applicant, (2) the nature of the service proposed, (3) the effect which granting
the permit would have upon the services of the protesting carriers and (4) the
effect which denying the permit would have upon the applicant and/or its
shipper and (5) the changing character of that shipper's requirements.'
(Numerals added.)

10

It seems clear from these provisions that the adequacy of existing services is a
criterion to be considered by the Commission, as it is instructed to consider 'the
effect which granting the permit would have upon the services of the protesting
carriers,' as well as the effect of a denial upon the shippers. Or to put the matter
otherwise, the question of the need of the shipping public for the proposed
service necessarily includes the question whether the extent, nature, character,
and suitability of existing, available service makes the proposed service out of
line with the requirements of the national transportation policy. But the
adequacy of existing facilities or the willingness or ability of existing carriers to
render the new service is not determinative. The 'effect which denying the
permit would have upon the applicant and/or its shipper and the changing
character of that shipper's requirements' have additional relevance. This is a
phase of the problem reflected in the broadened definition of 'a contract carrier
by motor vehicle'one who furnishes transportation services 'designed to meet
the distinct need of each individual customer.' 203(a)(15). It means, we think,
that the 'distinct need' of shippers for the new contract carrier service must be
weighed against the adequacy of existing services. The Commission indulged in

'a presumption that the services of existing carriers will be adversely affected
by a loss of 'potential' traffic, even if they may not have handled it before.' 79
M.C.C. 695, 705. The effect of the presumption is in substance to limit
competing contract carriage to services 'not provided' by existing carriersa
provision that the Commission sought unsuccessfully to have incorporated into
the Act. We see no room for a presumption in favor of, or against, any of the
five factors on which findings must be made under 209(b). The effect on
protesting carriers of a grant of the application and the effect on shippers of a
denial are factors to be weighed in determining on balance where the public
interest lies. The aim of the 1957 amendments, as we read the legislative
history, was not to protect the status quo of existing carriers but to establish a
regime under which new contract carriage could be allowed if the 'distinct need'
of shippers indicated that it was desirable.
11

We cannot assume that Congress, in amending the statute, intended to adopt the
administrative construction which prevailed prior to the amendment.

12

By adding the five criteria which it directed the Commission to consider,

Congress expressed its will that the Commission should not manifest special
solicitude for that criterion which directs attention to the situation of protesting
carriers, at the expense of that which directs attention to the situation of
supporting shippers, when those criteria have contrary implications. Such a
situation doubtless exists in these cases, for granting the permits might well
have produced some consequences adverse to the protesting carriers, while
denying them may just as certainly prove burdensome to the supporting
shippers. Had the Commission, having drawn out and crystallized these
competing interests, attempted to judge them with as much delicacy as the
prospective nature of the inquiry permits, we should have been cautious about
disturbing its conclusion.

13

But while such a determination is primarily a responsibility of the Commission,

we are under no compulsion to accept its reading where, as here, we are
convinced that it has loaded one of the scales. By indulging in a presumption
'that the services of existing carriers will be adversely affected by a loss of
'potential' traffic, even if they may not have handled it before,' and by assigning
to the applicants the burden of proving the inadequacy of existing services, the
Commission favored the protestants' interests at the expense of the shippers' in
a manner not countenanced by anything discoverable in Congress' delegation to
it of responsibility.

14

It is argued that the Commission, in holding that U.S.A.C. is willing and able to
render the service, did not rely on the presumption. We are, however, not

convinced. The Commission seems to have placed the burden of proving

inadequacy of existing services on the applicant, for it said that the applicant
had not shown that the service of U.S.A.C. was 'inadequate.' 79 M.C.C. 695,
709. Such a burden is improperly placed on the applicant, as the rejection of the
proposed amendment to 209(b) suggests. The capabilities of protesting
carriers are matters peculiarly within their knowledge. In the Reddish case the
Commission made the same error, as is evident from its statement that the
'shippers have failed to show that they have been unable to obtain reasonably
adequate service upon request.' 81 M.C.C. 35, 42.
15

The proper procedure, we conclude, is for the applicant first to demonstrate

that the undertaking it proposes is specialized and tailored to a shipper's distinct
need. The protestants then may present evidence to show they have the ability
as well as the willingness to meet that specialized need. If that is done, then the
burden shifts to the applicant to demonstrate that it is better equipped to meet
the distinct needs of the shipper than the protestants.

16

Moreover, as we read the Act, as amended in 1957, the standard is not whether
existing services are 'reasonably adequate.' It is whether a shipper has a 'distinct
need' for a different or a more select or a more specialized service. The
protesting carriers must show they can fill that 'distinct need,' not that they can
provide a 'reasonably adequate service.'

17

In the Reddish case the Commission ruled that the desire for lower rates offered
by the applicant was irrelevant to a shipper's needs, that if the rates of existing
carriers were too high, shippers should seek relief for their reduction. 81
M.C.C. 35, 42 43. We think the matter of rates is one factor to be weighed in
determining the need for the new service. In a contest between carriers by
motor vehicles and carriers by rail, we held in Schaffer Transportation Co. v.
United States, 355 U.S. 83, 78 S.Ct. 173, 2 L.Ed.2d 117, that the ability of a
particular mode of transportation to operate with a lower rate is one of the
'inherent advantages' that one type may have over another within the meaning
of the Act. 54 Stat. 899, 49 U.S.C.A. note preceding section 1. By analogy,
contract carriage may be more 'economical' than common carriage by motor or
rail within the framework of the national transportation policy, as it is defined
in the Act6 'the Commission's guide' to the public interest. McLean Trucking
Co. v. United States, 321 U.S. 67, 82, 64 S.Ct. 370, 378, 88 L.Ed. 544. It would
seem hardly contestable that if denial of the application meant, for example,
that a shipper's costs of transportation would be prohibitive, the shipper had
established a 'need' for the more 'economical' service. See Herman R. Ewell
ExtensionPhiladelphia, 72 M.C.C. 645. This does not mean that the
lawfulness of rates would be injected into certificate proceedings. The issue of

whether or not the proposed service offers a rate advantage and if so whether
such advantage establishes a 'need' for the service that overrides
counterbalancing considerations presents issues that fall far short of a rate
proceeding.
18

We agree with the court in the JT Transport Co. case that, while the 1957
amendments changed the result of our decision in United States v. Contract
Steel Carriers, supra, by giving the Commission power to limit the number of
contracts which a contract carrier can maintain, the amendments in other
respects put the contract carrier on a firmer footing. That court said, 'Under the
statute a shipper is entitled to have his distinct needs met.' 185 F.Supp. 838,
849. We agree. We also agree that though common carrier service is reasonably
adequate and though another carrier is willing and able to furnish the service, a
permit to a contract carrier to furnish this particular service still might be wholly
consistent with the national transportation policy defined in the Act. For it is
'the distinct need of each individual customer' that the contract carrier is
designed to fill. 203(a)(15). And 'the changing character' of the shipper's
'requirements' is a factor to be weighed before denying the application.
209(b). Hence the adequacy of existing services for normal needs and the
willingness and ability of an existing carrier to render the service are not the
end of the matter. The 'distinct need' of the shipper may nonetheless not be
served by existing services, if the new service is better tailored to fit the special
requirements of a shipper's business, the length of its purse, or the select nature
of the delivery service that is desired. The fact that the protesting carriers do not
presently perform the service being tendered and that the grant of the
application would not divert business from them does not necessarily mean that
the grant would have no effect 'upon the services' of the protesting carriers
within the meaning of 209(b). But where the protesting carriers do not
presently have the business, it would seem that the grant of it to a newcomer
would have an adverse effect on them only in the unusual case.

19

We intimate no opinion on the merits, for it is the Commission, not the courts,
that brings an expertise to bear on the problem, that makes the findings, and
that grants or denies the applications. Yet that expertise is not sufficient by
itself. Findings supported by substantial evidence are required. Public Service
Comm'n v. United States, 356 U.S. 421, 427, 78 S.Ct. 796, 799, 2 L.Ed. 886;
United States v. United States Smelting Co., 339 U.S. 186, 193, 70 S.Ct. 537,
542, 94 L.Ed. 750.

20

Since the standards and criteria employed by the Commission were not the
proper ones, the causes must be remanded for further consideration and for new
findings. American Trucking Assns. v. United States, 364 U.S. 1, 1517, 80

S.Ct. 1570, 1578, 1579, 4 L.Ed.2d 1527. Accordingly the judgments below are
affirmed.
21

Affirmed.

22

Mr. Justice FRANKFURTER, whom Mr. Justice HARLAN and Mr. Justice
STEWART join, dissenting.

23

These are related appeals from a decree of a District Court setting aside an
order of the Interstate Commerce Commission denying an application for a
contract-carrier permit under the 1957 amendments to 203(a)(15) and
209(b) of the Interstate Commerce Act, 49 U.S.C. 303(a)(15), 309(b), 49
U.S.C.A. 303(a)(15), 309(b). At issue are the District Court's determinations
that the Commission exceeded its authority under those provisions in four
particulars. First, by considering the adequacy of existing carriage for the
transportation service proposed, the Commission is said to have injected an
inadmissible 'sixth criterion' into the five factors designated by Congress in the
revised 209(b). Second, the Commission was held to have imposed on the
applicant a burden of proving the inadequacy of existing services that Congress
had specifically refused to approve. Third, the court concluded that the
Commission's reliance on the capacity of existing carriers to meet the
'reasonable transportation needs' of the shipper did not meet the standard of
specific needs in amended 203(a)(15). Fourth, the Commission is charged
with invoking an impermissible presumption that an existing carrier willing and
able to perform a transportation service it has not previously undertaken will be
adversely affected by the loss of potential traffic.

24

Disposition of these conclusions turns first on a construction of the 1957

amendments in the context of the Motor Carrier Act of 1935, apart from which
they are unintelligible; next upon due consideration of what the Commission
has here undertaken to do, as disclosed in a fair reading of its final report
denying the application; and, most importantly, on appropriate regard for the
limits on judicial review of such Commission action as is now before us.

I.
25

The Motor Carrier Act, this Court has noted, was passed at a time when 'the
industry was unstable economically, dominated by ease of competitive entry
and a fluid rate picture. And as a result, it became overcrowded with small
economic units which proved unable to satisfy even the most minimal standards
of safety or financial responsibility. So Congress felt compelled to require

authorization for all interstate operations to preserve the motor transportation

system from overcompetition * * *.' American Trucking Ass'n v. United States,
344 U.S. 298, 312313, 73 S.Ct. 307, 315, 316, 97 L.Ed. 337.
26

These were indeed the conditions that prompted legislative recommendations

by the greatly esteemed Federal Coordinator of Transportation, Joseph B.
Eastman. See S.Doc. No. 152, 73d Cong., 2d Sess. (1934). One of the prime
purposes of the measure he proposed was to control the number and scope of
contract-carrier operations in order to preserve and protect common-carrier
service:

27

'These private and contract carriers might be ignored if they did not have a
tendency to demoralize or impair the system of common carriage which
undertakes to serve all alike and is of prime importance to the county. * * *

28

'The contract carrier may differ from the common carrier only in the fact that
he undertakes to skim the cream of the traffic and leave the portion which lacks
the butterfats to his common-carrier competitor. Obviously such operations can
have very unfortunate and undesirable results.

29

'* * * So far as regulation is directed against private and contract operators, it

should be for the chief purpose of protecting the common carriers against
unfair and demoralizing competition.' Report of the Federal Coordinator of
Transportation, 1934, H.R.Doc. No. 89, 74th Cong., 1st Sess. 17 (1935).

30

Coordinator Eastman's proposal was enacted by Congress into the Motor

Carrier Act of 1935 (now Interstate Commerce Act, Part II). See H.R.Rep. No.
1645, 74th Cong., 1st Sess. 5 (1935); S.Rep. No. 482, 74th Cong., 1st Sess. 2
(1935). As enacted, it laid far more stringent controls upon common carriers
than on contract carriers. The former were required to hold themselves out to
the general public, 203(a)(14), 207, under just and non-discriminatory
tariffs, 216(d), 217, while the latter were uncontrolled in their charges above
a reasonable minimum, 218. Motor carriers owning more than 20 vehicles,
which presumably included most common carriers and few if any contract
carriers, had to obtain Commission approval before going out of business,
Interstate Commerce Act, Part I, 5, and see 49 CFR 179.2179.5 (1961).
No limitation was laid on the types of traffic for which contract carriers could
compete, and indeed there has never developed any inherent difference in the
operations performable by common or contract carriers.1 Instead, Congress
chose to protect common carriers from destructive competition by entrusting
the Interstate Commerce Commission with the administration of certain

generalized qualifications needed to obtain a contract-carrier permit.

31

As originally enacted, 49 Stat. 543, 544 (1935), 203(a)(15) provided:

32

'The term 'contract carrier by motor vehicle' means any person, (other than a
common carrier) * * *, who or which, under special and individual contracts or
agreements, and whether directly or by a lease or any other arrangement,
transports passengers or property in interstate or foreign commerce * * *.'

33

Section 209(b), as enacted by 49 Stat. 543, 553 (1935), authorized the

Commission to issue permits to contract carriers when it appeared, inter alia,

34

'* * * that the proposed operation, to the extent authorized by the permit, will
be consistent with the public interest and the policy declared in section 202(a)
of this part (the 1935 forerunner of the National Transportation Policy adopted
in 1940) * * *.'

35

The design of these sections was explicated by the Commission shortly after
their passage, in Contracts of Contract Carriers, 1 M.C.C. 628 (1937). This was
a rule-making proceeding under 209(b) to attach limitations to contract-carrier
permits in order to forestall transgression upon common carriage. The reasons
given for promulgation of the rule afford persuasive evidence of the
contemporaneous understanding of the Act:

36

'The term 'contract carrier' was coined in State statutes for the regulation of
motor carriers. In a number of these statutes, protection of the common carrier
was expressly recited as the purpose of regulating the contract carrier. In others,
this purpose appeared by necessary implication. * * *

37

'This principle is inherent in the Motor Carrier Act, 1935. The underlying
purpose is plainly to promote and protect adequate and efficient commoncarrier service by motor vehicle in the public interest, and the regulation of
contract carriers is designed and confined with that end in view. * * *

38

'* * * The patent object of Congress is to protect the common carriers against
cut-throat competition.' 1 M.C.C., at 629. See also Filing of Contracts by
Contract Carriers, 20 M.C.C. 8, 11 (1939).

39

After reciting the relative freedom from regulation enjoyed by contract carriers,
the Commission concluded, in terms peculiarly appropriate to the present

controversy:
40

'This inherent and inevitable disadvantage of the common carriers is

accentuated and becomes a source of positive peril to them when competitors,
claiming to be contract carriers, are promiscuous in their dealings with shippers
(who) * * * may play the contract carrier against the common carrier * * * with
the result that the unfair and destructive competition which Congress sought in
the act to abate is instead intensified * * *.' 1 M.C.C., at 631.

II.
41

In acting upon applications for contract-carrier permits, the Commission has

from the beginning regarded the adequacy of existing common-carrier facilities
to be of crucial importance in determining consistency with the public interest
as defined by the history and purposes of the Act. In C. & D. Oil Co. Contract
Carrier Application, 1 M.C.C. 329, 332 (1936), it early stated a guiding
principle that has been reaffirmed many times since:

42

'We think that, in order to foster sound economic conditions in the motorcarrier industry, existing motor carriers should normally be accorded the right
to transport all traffic which they can handle adequately, efficiently, and
economically in the territories served by them, as against any person now
seeking to enter the field of motor-carrier transportation in circumstances such
as are here disclosed.'

43

A review of Commission action from 1935 to 1957 discloses that this principle
has been unwaveringly applied in circumstances identical or nearly so to those
in the present case, and that its application has produced consistent rulings
exactly akin to those now challenged here.

44

C. & D. Oil Co. Contract Carrier Application, supra. The desire of a shipper to
engage the services of a particular carrier, although based on sound and
legitimate business reasons, does not control decision as to transportation needs,
and is not, standing alone, enough to require a finding that the proposed service
would be consistent with the public interest or national transportation policy.

45

R. L. Smith Contract Carrier Application, 1 M.C.C. 717 (1937). Applicant

proposed to carry only peak-load supplies not presently carried by protestant
common carriers, but the permit was denied because the existing carriers 'may
augment their facilities at will through the purchase or lease of additional
equipment and may thereby furnish such emergency service.' (At 719.) A loss

of potential traffic was thus made determinative.

46

Eastern Shore Oil Co. Contract Carrier Application, 7 M.C.C. 173, 175176
(1938). There were several common carriers with authority and facilities to
handle the proposed traffic, although none had in fact ever carried any of it.
The Commission concluded that no need for the service had been shown,
consistent with the public interest and the national transportation policy, and
reaffirmed its ruling in C. & D. that the desire of a shipper to engage a
particular carrier was insufficient ground for the granting of a permit.

47

William Heim Certage Co., Extension of Operations Indianapolis, 20 M.C.C.

329 (1939). Applicant proposed to dedicate three trucks to shipper's exclusive
use. There was testimony that existing common carriers had the capacity to
undertake the traffic. The shipper sought to overcome this by claiming (1) that
because of the variety of goods shipped, common-carrier rates would be
prohibitive, and (2) that if the application was denied, the shipper would not
use common-carrier service but would probably initiate private carriage.
Nevertheless the Commission denied the permit, holding that the burden was
on the applicant to show that its proposed service 'would tend to correct or
substantially improve' a deficiency in existing service. The 'mere desire' of a
shipper to engage a particular carrier was again rejected as a determining factor.

48

Horace L. Daum Extension of OperationsIllinois, 22 M.C.C. 366 (1940).

Shipper had been using its own trucks, and supported this application by stating
that, if refused, it would continue to use its own facilities. The protestant
common carrier by motor vehicle had established that its equipment was not
being operated to full capacity, and that it was able and willing to purchase
additional equipment if needed. Reaffirming C. & D., the Commission denied
the permit.

49

N. S. Craig Contract Carrier Application, 31 M.C.C. 705 (1941). The

Commission had before it the amendments introduced by the Transportation
Act of 1940, and had to determine whether the lines it had theretofore drawn
were altered by the deletion of the word 'special' from 203(a)(15)2 or by the
adoption of the National Transportation Policy in its present form.3 It
concluded from an examination of the legislative history that, far from there
being a change, Congress had approved the distinctions employed by the
Commission,4 which it restated in terms that are now unmistakably entrenched
in the 1957 amendment to 203(a)(15): '(T)he statutory definitions as now
amended are essentially declaratory of the common law. In other words, the
fact or not of a public holding out remains the final or ultimate test of common
carriage.' (At 710.) Numerous secondary tests had been used to distinguish

contract carriage, but each shared a common feature: the criterion of

'specialization, either in the nature of the physical operation, or in respect of the
shippers served, without some showing of which contract carriage cannot be
found to exist.' (At 711; italics in report.) A carrier might engage in specialized
operations and remain a common carrier if it held itself out to perform similar
service for any shipper that might want it, but unless it did so specialize it could
not be a contract carrier. The specialization the Commission had in mind
50

'* * * might take the form of specialized physical operations designed to meet
the peculiar needs of particular shippers or might consist in the rigid devotion of
an otherwise ordinary physical service to a single shipper or very limited
number of shippers.' (At 708.)

51

This, it will be seen, is an almost literal paraphrase of what later emerged as the
1957 amendment to 203(a)(15).

52

Having anticipated explicit congressional purpose in this manner, the

Commission continued to adhere to its earlier rulings as consistent with that
purpose.

53

Samuel I. Major Contract Carrier Application, 43 M.C.C. 795, 799800

(1944). No showing of consistency with public interest when there are common
carriers authorized, equipped, and willing to handle the traffic.

54

Willard J. Hibbard Extension of OperationsLime, 47 M.C.C. 311 (1947).

Shipper emphatic that only a contract carrier will do, and that it will not use the
services of a common carrier. The Commission found from the evidence that
existing common carriers could satisfactorily perform the job: 'The fact that
existing carriers have not participated in the traffic, in the absence of any
showing that they are unable or unwilling to provide a service as required, does
not warrant a grant of authority to a new carrier.' (At 314.) B & F Bus Service,
Inc., Contract Carrier Application, 53 M.C.C. 501 (1951). In a situation
remarkably like the present one, the Commission devised and applied criteria
virtually identical to those adopted by Congress in its 1957 amendment to
209(b), and denied the application. The contract carrier there proposed an
express bus service for the employees of a plant in Clifton, New Jersey, to carry
them back and forth from New York. The protestant common carriers
established that one or another of them could carry the passengers within two
miles of the plant where they could obtain a transfer on a local crosstown bus to
and from the plant. Two protestants offered to run an express service if 30
passengers could be assured. Each protestant was desirous of obtaining the

traffic and thought it necessary for his business to do so.

55

In resolving the issue, the Commission foresaw the essentials of the third and
fourth criteria now explicitly commended to their consideration by Congress in
209(b):

56

'Before the proposed operation may be authorized it must be found consistent

with the public interest and the national transportation policy. Among the
factors to be considered in making such determination are (1) the manner and
extent such service will affect the operations of competing common carriers
and their patrons, (2) the nature and extent of the inconvenience prospective
patrons of the proposed contract-carrier service will suffer if it is not authorized
and, conversely, the benefits such service will afford them, and (3) the
ascertainment of the public interest from a weighing of these respective facts.'
(At 504505.)

57

Applying this formula to that case, the Commission determined that the
potential damage to the common-carrier protestants from loss of a new service
and others like it in the future, outweighed the advantage in convenience
offered by the contract-carrier applicant. The terms in which it drew the
balance are of especial pertinency to our controversy:

58

'(W)here a proposed contract-carrier service would substantially impair the

common-carrier service upon which the public generally must rely, either
immediately or potentially through a weakening of the financial ability of the
common carriers to meet the needs of the public, issuance of a permit would be
found inconsistent with the public interest.' (At 505.)

59

This mode of adjusting conflicting interests whose accommodation was later

explicitly committed to the Commission by Congress furnishes strong evidence
of the way in which those factors are appropriately evaluated. Subsequent
rulings afford impressive proof of this uniform administrative practice.

60

Kilmer Transp. Co. ExtensionUniontown, 53 M.C.C. 561 (1961). This is

another case very close to the present one on its facts. Shippers of fragile
earthenware products, requiring special handling and equipment, desired to use
a contract carrier which had designed special trailers, trained experienced
drivers, and proposed to dedicate its equipment to the exclusive use of the
shippers. There were a number of common carriers authorized and with the
capacity to carry this traffic. The shippers had experienced some delays with
common carriage and wished the flexibility proposed by the applicant of

picking up portions of a load at different factories. The application was denied,

the Commission stating that 'In the absence of a showing that the proposed
service would provide shipper with something substantial in the way of service
which existing carriers are unable or unwilling to provide, the application must
be denied.' (At 571.)
61

Beatty Motor Express, Inc., ExtensionSoap to Pittsburgh, Pa., 66 M.C.C. 160

(1955). The application was supported by a shipper who had had a satisfactory
experience with the applicant and wished to continue its service. In refusing the
requested permit, the Commission recapitulated the standards it was applying,
clarifying especially the matter of burden of proof:

62

'It is clear from the record that existing carriers have the authority, equipment,
and facilities necessary to transport all of the considered commodities from and
to the points involved. * * * (N)or is there any showing that the proposed
service is so unique or so specialized that the existing carriers are unable to
provide the supporting shipper with a reasonably satisfactory service. There is
no doubt that a grant of authority to transport the involved soap products and
preparations would be convenient to the supporting shipper, but the record is
lacking in proof that the shipper will be prejudiced or handicapped unless the
authority sought is granted. Past use of a motor-carrier service, coupled with
the mere preference for the service of a particular carrier over that of existing
carriers, is not sufficient to warrant a grant of authority. We have consistently
held that existing carriers should be accorded the right to transport all traffic
which, under normal conditions, they can handle adequately, efficiently, and
economically in the territory served by them, without the competition of a new
operation.' (At 162.)

63

Overland Freight Lines, Inc., ExtensionKentucky, 69 M.C.C. 143, 148

(1956). An application was denied despite evidence that the placement of
common carriers at the shipper's platform had involved delays requiring
payment of overtime that raised costs on low-sales-value units of merchandise.
'(W)e cannot reasonably conclude that their placements, as a whole, have been
so unreasonably delayed or so inconveniently made as to merit a finding that
the services of these carriers have been inadequate.' Past diligence and future
willingness to spot equipment at the plant were shown and relied on to deny the
application.

64

Refiners Transport, Inc., ExtensionMissouri, 71 M.C.C. 272 (1957). Issuance

of a permit was refused despite (1) evidence of three occasions of
unsatisfactory shipment by the protestants, and (2) a statement by the consignee
that it would do further business with the shipper only if the applicant's

transportation service was obtained.

III.
65

The law and practice governing contract-carrier applications, as it emerged

from the language, history, and purposes of the Motor Carrier Act and from
consistent administrative construction between 1935 and 1957, may be
summarized as follows. Strictly regulated common carriage was considered the
backbone of the motor transport industry. Contract carriers might be able to
perform certain specialized transportation tasks more easily than common
carriers, and when this was so they should be allowed to enter the field. In
order to preserve the financial and operational capacity of common carriers to
perform the variety of tasks required by the public, however, applicants for a
contract-carrier permit must not be awarded business that existing common
carriers are equipped and obliged in their certificates to handle. Accordingly,
the applicant must first demonstrate that he proposes a specialized undertaking.
Protestants may then present evidence that they have the capacity and the
desire to carry the particular traffic proposed. If that is done, the burden shifts
back to the applicant to demonstrate that the protestants are not so well
equipped as he to meet the needs of the shipper. Shipper preference is not
sufficient. Unless the applicant can show that its service will be substantially
superior to that offered by the protestants, the issuance of a permit must be
refused, and this although the protestant may never have carried the traffic
before and may have no assurance that it will be offered him once the
application is denied. Only thus, the Common had concluded, could the policy
of Congress to preserve a viable system of common carriage be satisfied.

66

It is this body of precedent, conscientiously developed over a period of years to

effectuate the policies formulated in the Motor Carrier Act for Commission
enforcement, that we are told was overturned by congressional amendment in
1957. And so we must turn to the terms, origin, and purpose of those
amendments.

67

As now amended by 71 Stat. 411 (1957), 203(a)(15), 49 U.S.C. 303(a)(15),

49 U.S.C.A. 303(a)(15), reads as follows:

68

'The term 'contract carrier by motor vehicle' means any person which engages
in transportation by motor vehicle of passengers or property in interstate or
foreign commerce, for compensation (other than as a common carrier) * * *
under continuing contracts with one person or a limited number of persons
either (a) for the furnishing of tranportation services through the assignment of
motor vehicles for a continuing period of time to the exclusive use of each

person served or (b) for the furnishing of transportation services designed to

meet the distinct need of each individual customer.' (Changes italicized.)
69

71 Stat. 411 (1957) added to 209(b), 49 U.S.C. 309(b), 49 U.S.C.A.

309(b), the following provision:

70

'In determining whether issuance of a permit will be consistent with the public
interest and the national transportation policy declared in this Act, the
Commission shall consider (1) the number of shippers to be served by the
applicant, (2) the nature of the service proposed, (3) the effect which granting
the permit would have upon the services of the protesting carriers and (4) the
effect which denying the permit would have upon the applicant and/or its
shipper and (5) the changing character of that shipper's requirements.'5

71

From the italicized changes it is said to follow that the Commission may no
longer assign due weight, in its judgment, to the ability of existing common
carriers to furnish substantially the transportation service proposed. This is so,
it is argued, because factors (3) and (4) are placed in conjunctive equipoise,
demanding a balance on untilted scales. And the fulcrum, to complete the
metaphor, is located by this argument precisely at the 'distinct need' of the
shipper referred to in amended 203(a)(15).

72

If the issue before us were only whether the language of the amendments could
bear this construction, there would be little argument. But even if the suggested
interpretation were supported by the plain meaning of the words, this would not
advance our inquiry very far. For the 'plain meaning' rule as an automatic canon
of statutory construction is mischievous and misleading and has been long ago
rejected. See Boston Sand Co. v. United States, 278 U.S. 41, 48, 49 S.Ct. 52,
53, 73 L.Ed. 170; United States v. American Trucking Ass'ns, 310 U.S. 534,
542550, 60 S.Ct. 1059, 10631067, 84 L.Ed. 1345. Words are seldom so
plain that their context cannot shape them. Once the 'tyranny of literalness' is
rejected, United States v. Witkovich, 353 U.S. 194, 199, 77 S.Ct. 779, 782, 1
L.Ed.2d 765, the real meaning of seemingly plain words must be supplied by a
consideration of the statute as a whole as well as by an inquiry into relevant
legislative history. Indeed when there is need for aid, we may turn to 'all the
light relevantly shed upon the words and the clause and the statute that express
the purpose of Congress,' United States v. Universal Corp., 344 U.S. 218, 221,
73 S.Ct. 227, 229, 97 L.Ed. 260.

73

The starting point for determining legislative purpose is plainly an appreciation

of the 'mischief' that Congress was seeking to alleviate. In this instance,

fortunately, it is not hard to find, for the Court itself exposed it in United States
v. Contract Steel Carriers, 350 U.S. 409, 76 S.Ct. 461, 100 L.Ed. 482. The
Commission had there determined that a contract carrier had, through active
solicitation of some 69 transportation contracts, so expanded its business as to
become indistinguishable in operation from a common carrier, and ordered it to
cease and desist. This Court affirmed reversal of that order, relying on 209(b)
as it was then written6 to declare that 'A contract carrier is free to aggressively
search for new business within the limits of his license.' 350 U.S., at 412, 76
S.Ct. at 463.
74

The latitude thus authoritatively recognized in contract carriers to engage

essentially in common carriage without at the same time subjecting themselves
to regulation as common carriers, was the mischief that prompted the
Commission to seek a restrictive rewriting of 203(a)(15) and 209(b). 70
I.C.C.Ann.Rep. 162 (1956). Chairman Clarke of the Commission testified in
the Senate hearings on the Commission's proposed bill that, as matters then
stood, contract-carrier expansion could impair the ability of common carriers to
offer service to the general public, particularly to the small shipper who could
not afford the services of a contract carrier. The Commission feared that the
inherent advantages of contract carriers would permit them to 'encroach upon
the operations of the common carriers and skim off the cream of the traffic
upon which they depend to support their overall service to the public.'7

75

This clearly was the apprehended evil that prompted a favorable report of the
amendments. S.Rep.No. 703, 85th Cong., 1st Sess. 1, 3, 7 (1957), U.S.Code
Cong. & Adm.News 1957, p. 1599. As phrased in the House Report, the
freedom accorded contract carriers in the Contract Steel decision 'obliterates the
distinction which Congress intended to make between common and contract
carriers, and opens the door to unjust discrimination among shippers.'
H.R.Rep.No. 970, 85th Cong., 1st Sess. 3 (1957). In presenting the bill that was
adopted by Congress, Senator Smathers, the Senate Subcommittee Chairman,
thus stated the need it was designed to fulfill:

76

'Unlimited diversion of traffic from common carriers to contract carriers could

impair the common carriers' ability to render adequate service to the general
public; consequently, a more precise definition of contract carriage in the
Interstate Commerce Act is deemed necessary.

77

'The decision of the Supreme Court clearly means that the Congress should do
something to correct the situation.' 103 Cong.Rec. 14035, 14036 (1957).

78

The 'more precise definition of contract carriage' in the resulting 203(a) (15)

78

The 'more precise definition of contract carriage' in the resulting 203(a) (15)
was plainly intended to restrict the opportunities of contract carriers, not to
enhance them.

79

To be sure, the addition of the five criteria for Commission consideration in the
amendment to 209(b) was not explicitly responsive to the Contract Steel
decision. Neither the House nor the Senate Report makes any mention of the
meaning or purpose of the addition. The criteria were not contained in the bills,
S. 1384 and H.R. 5123, 85th Cong., 1st Sess. (1957), as initially proposed by
the Commission. They emanated instead from a suggestion by the Contract
Carrier Conference, an appellee in this case; and there is language in the
testimony of its General Counsel, Clarence D. Todd, before the Senate
Subcommittee, from which support is now drawn for the appellees' position:

80

'(T)he primary thing that we have always felt the Commission should do in
those cases is consider not only the effect of granting this authority on the
common carrierthey do that in each and every casebut to consider the
effect denial will have on the contract carriers; the public interest is something
to be balanced, and we think that both of those matters should be taken into
consideration.' Senate Hearings 300.

81

These observations, it will be noted, did not address themselves to the effect of
a denial on the shipper, which is at issue here. Consideration of the shipper's
needs was not adverted to in the recommendations made by the Contract
Carrier Conference, see Senate Hearings 305; it was added by the
Subcommittee. In any event, the 'balance' to be struck was not defined, nor the
process by which it was to be determined. As a matter of fact, the contract
carriers appear to have accepted the existing Commission practice; they neither
asked for nor anticipated relaxation of it:

82

'The amendment suggested by the contract carriers would still require proof
that the proposed service is 'consistent with the public interest and the national
transportation policy' but it sets forth certain matters which the Commission
should consider in determining this question. We do not believe that this
amendment would make it any easier for our contract carriers to obtain new
authority. * * * All it would do would be to require the Commission to give
consideration to factors which, in our opinion, are important to the public
interest.' Senate Hearings 304.

83

That this was Congress' understanding of the addition is evidenced by Senator

Smathers' explanation in recommending its adoption: 'In this, the Committee is
proposing to give the Commission more helpful standards than are contained in

the present law.' 103 Cong.Rec. 14036 (1957). Like evidence is contained in a
letter from Chairman Clarke to the House Committee, stating the Commission's
belief 'that H.R. 8825 (the bill amended by the Senate as it eventually passed) is
an improvement over H.R. 5123, submitted by the Commission in draft form.'
H.R.Rep. No. 970, 85th Cong., 1st Sess., Appendix (1957). This is hardly the
language of a loser. If, in construing legislation, we are to look to the sponsors
of a bill to determine its meaning, Schwegmann Bros. v. Calvert Corp., 341
U.S. 384, 394395, 71 S.Ct. 745, 750 751, 95 L.Ed. 1035, these statements
should leave no doubt that the addition of the five criteria to 209(b) worked
no change in the Commission's long-standing practice of preferring available
common carriers to contract-carrier applicants.
84

These particularized indications are confirmed and reinforced by the legislative

history as a whole for precluding the view, underlying the District Court's
decision, that the 1957 amendments introduced a radical departure in regulatory
policy. As we have seen, the Commission had, in advance of the amendments,
developed and applied the criteria at issue in this case, and had struck the same
balance there as here. B & F Bus Service, Inc., Contract Carrier Application,
supra. Neither this leading Commission disposition, nor any other to the same
effect, was criticized or even mentioned to the subcommittee that drafted the
amended bill. Had the Commission, which maintained a representative
throughout the Senate hearings, suspected that its practice in this regard was
being overturned, it would scarcely have given the unqualified approval that it
did to the final bill. See H.R.Rep. No. 970, 85th cong., 1st Sess. 2 (1957);
S.Rep. No. 703, 85th Cong., 1st Sess. 6 (1957); 103 Cong.Rec. 14035 (1957)
(remarks of Sen. Smathers). On the contrary, it had good reason for assuming
that its practice was being approved. The report that issued from the hearings
contained the following endorsement:

85

'Your committee is of the opinion that the public interest in a sound

transportation system, and particularly in a stable and adequate system of
common carriage, in the light of the objectives of he national transportation
policy, require that he bill, as amended, be passed.' S.Rep. No. 703, 85th Cong.,
1st Sess. 7 (1957).

86

Furthermore, the very same session of Congress that passed the amendments
here in issue also amended 218(a), by 71 Stat. 343 (1957), 49 U.S.C.
318(a), 49 U.S.C.A. 318(a), to require contract carriers to file actual rather
than minimum rates or charges. This legislation was requested by the
Commission, 70 I.C.C.Ann.Rep. 168169 (1956), and recommended by
Senator Smathers' Subcommittee, S.Rep. No. 335, 85th Cong., 1st Sess. 2
(1957), to eliminate a competitive advantage held by contract carriers. It should

be construed in pari materia with the amendments to 203(a)(15) and 209(b).

That the 1957 Congress shared the original understanding of the Motor Carrier
Act's purpose is manifested in the Senate Report, at 2:
87

'The underlying purpose of the Motor Carrier Act (pt. II of the Interstate
Commerce Act) is the promotion and protection of adequate and efficient
common-carrier service by motor vehicle in the public interest. The regulation
of contract carriers was designed with that end, among others, in view.'

IV.
88

The foregoing distillation of statutory purpose from the legislative history of

the amendments is not affected by the deletion from the bill of language
initially submitted by the Commission. In its original form, S. 1384 would have
amended the definition of a contract carrier in 203(a)(15) to make it one
engaging in transportation under contracts for the furnishing of special and
individual services required by the customer 'and not provided by common
carriers.' The Commission bill would have also amended 209(b) to require a
showing by a contract-carrier applicant 'that existing common carriers are
unwilling or unable to provide the type of service for which a need has been
shown.'8 The quoted language was objected to by the Justice Department,
Senate Hearings 1011, and deleted by the Senate Subcommittee, S.Rep. No.
703, 85th Cong., 1st Sess. 3 (1957), as 'unduly restrictive' of contract carriage.
This does not affect construction of the amendments as they emerged in final
form, so far as they are relevant to our problem. The fact that the Commission
withdrew its initial suggestion for increased restrictions on contract carriage
hardly affords the basis for a conclusion that existing restrictions were
legislatively disapproved or narrowed.

89

In truth, the Commission's language was deleted because it was thought to

place an impossible burden of proof on an applicant, of demonstrating a state of
mind ('unwilling'), or of facilities ('unable'), entirely within the knowledge of
the protestant. Thus, very early in the Senate hearings, before any other witness
had been heard from, Chairman Clarke withdrew the 'unwilling' language from
the suggested amendment to 209(b) 'because of the very difficult burden of
proof that would be imposed on applicants * * *.' Senate Hearings 22. Later on,
the representative of the Contract Carrier Conference asked for deletion of the
'not provided' language, supra, from the amendment to 203(a)(15) because it
presented the very same burden of proof problem. Senate Hearings 294295.
The Commission subsequently recommended this deletion because the
language was 'not necessary to carry out the purpose of the bill * * *.' Senate
Hearings 43 44. See also S.Rep. No. 703, 85th Cong., 1st Sess. 5 (1957).9

V.
90

An amendment is not to be read in isolation but as an organic part of the statute

it affects. An amendment is not a repeal. Even when plain words are suggestive
of a change in policy, they are not to be construed as such if there has been a
history of consistent contrary legislative policy. Boston Sand Co. v. United
States, 278 U.S. 41, 49 S.Ct. 52, 73 L.Ed. 170; Guessefeldt v. McGrath, 342
U.S. 308, 313315, 72 S.Ct. 338, 341342, 96 L.Ed. 342.

91

The Interstate Commerce Committees that considered these amendments were

addressing themselves to a limited problem laid bare by the Contract Steel
decision. It would be heedless of the practicalities of legislative procedure to
assume that these experienced committees chose to use the occasion to overturn
a consistent pattern of statutory regulation without inviting the views of the
Commission, without undertaking any review of Commission precedents, and
without selecting a language plainly evincing a purpose to change the law in
this respect. To the contrary, it seems clear that these careful architects of
motor-carrier regulation fashioned amendments that fit harmoniously into the
prior law. They did not inadvertently add a colonial wing to a gothic cathedral.

VI.
92

What has been said disposes of the contention that the Commission erroneously
imported a 'sixth criterion' of the adequacy of existing common-carrier services
into its consideration of this application. It did not. That criterion is implicit in
the third factor enunciated in amended 209(b): 'the effect which granting the
permit would have upon the services of the protesting carriers.' This has always
been a crucial consideration in contract-carrier proceedings, and nothing in the
amendments intimates a change. The fundamental difficulty with the District
Court's judgment in this case is that it rests upon a mistaken apprehension that
the 1957 amendments had eliminated preference for existing common-carrier
service as a permissible determinant of Commission action. Thus it
characterized the criteria in 209(b) as designed 'to insure that their (applicant's
and shipper's) interests would receive the same consideration and be weighed in
the same balance as those of opposing carriers.' 185 F.Supp. 838, 848
(W.D.Mo.1960). This was a destructive error.

93

There remain three further grounds on which the District Court invalidated the
Commission's order.

94

(1) The court held that the Commission had imposed on the applicant the

precise burden of proof proposed in the rejected language of its bill, that
existing carriers were unable or unwilling to provide the transportation service
applied for. Had the Commission done this it would have been in clear error. It
did not do so.
95

The trial examiner's findings and recommended order were first reviewed by
Division 1 of the Commission. It held in part that 'the burden is upon an
applicant seeking contract-carrier authority, as well as one seeking commoncarrier authority, to establish, among other things, that there is a need for the
service proposed which existing carriers cannot or will not meet. * * * A
service not needed cannot be found consistent with the public interest or the
national transportation policy.' 74 M.C.C. 324, 328 (1958). This statement is
perfectly consistent with placing the burden of proving its willingness and
ability on the protestant, leaving the applicant to go forward with a
demonstration of its superior capacity to meet the transportation needs of the
shipper.10 On reconsideration by the full Commission, a statement of like
purport was made: '(W)e cannot find that existing service has been shown to be
inadequate.' 79 M.C.C. 695, 709 (1959).

96

The court seems to have feared that the Commission was in fact placing a fuller
and impermissible burden on applicants, and turned to later Commission
dispositions to confirm its suspicions. In Roy D. Yiengst Common Carrier
Application, 79 M.C.C. 265, 268 (1959), it found a statement that there had
been no 'showing that the existing carriers are unwilling or unable' to provide
the service. But a possibly careless phrase is not conclusive of what the phraser
is deciding. If it were, our own opinions might at times be used to bind our
hands in later decisions. Had the District Court looked behind the words
employed in the Yiengst decision, supra, it would have discovered that they
were used as a shorthand description of a more complicated allocation of the
burden of proof; for the protestants there had come forward and shown their
experience and capacity to handle the traffic, and it was the applicant's
subsequent assertion of its superiority that was considered insufficient to
overcome this showing. The same thing was true in Carolina Haulers, Inc.,
Contract Carrier Application, 76 M.C.C. 254, 256 (1958), likewise improperly
relied on by the District Court.

97

We should judge a challenged order of the Commission by 'the report, read as a

whole,' United States v. State of Louisiana, 290 U.S. 70, 80, 54 S.Ct. 28, 33, 78
L.Ed. 181, and by the record as a whole out of which the report arose. When
that is done in this case, it becomes apparent that the Commission did not
assign a statutorily impermissible burden of proof to the applicant.

98

The Commission's final report found from the whole record that the protesting
carrier was in fact able and willing to perform the proposed transportation
service in the following respects, each of which is set forth explicitly in the
report. (1) U.S.A.C., the protestant, is a specialized common carrier in he
aircraft field, with approximately 60 percent of its present traffic consisting of
fragile parts, like the landing-gear bulkheads whose transportation is needed for
Boeing Airplane Company, the shipper. (2) U.S.A.C. is accustomed to
modifying its equipment to meet specific needs, and can fashion its services to
meet the shipper's production schedules. (3) Specifically, as concerns this
traffic, 79 M.C.C., at 708,

99

'U.S.A.C. holds the operating authority necessary to furnish the needed service.
Its drivers have security clearance; it has equipment suitable for transporting
aircraft assemblies, parts, and equipment; and, if the supporting shippers will
furnish it with specifications for the fixtures necessary to handle their particular
traffic, it will modify as many pieces of its equipment as is necessary to provide
adequate service. Furthermore, it is willing to dedicate certain of its trailers to
the exclusive use of each of the shippers.'

100 It is difficult to conceive of more explicit findings, or to quarrel with the

Commission's conclusion from them that 'U.S.A.C. is in a position to provide
any service that is needed. * * *' 79 M.C.C., at 707. The findings, moreover,
find ample support in the extensive and detailed testimony of Mr. Decker, in
charge of fleet control and operations for U.S.A.C. After the burden of
production was placed on the protestant to show in what respects it was capable
of handling the disputed traffic, the Commission surely exceeded no statutory
prohibition in shifting to the applicant the burden of persuasion of its substantial
superiority.
101 (2) The District Court was persuaded, however, that the Commission had
imposed too lenient a burden of production on the protestant, to show merely
that 'available common-carrier service was reasonably adequate to meet the
transportation needs involved.' 79 M.C.C., at 701. It concluded that the proper
standard was the one enunciated by Congress in amended 203(a)(15), of
meeting the 'distinct need' of each shipper. And it determined that the
Commission had not employed that standard: 'No consideration was given to
the special services which in fact could not be supplied by a common carrier.'
185 F.Supp. at 850. A review of the report and the record, judged by the
statute's requirements, does not sustain this holding.
102 In the first place, the Commission made the precise finding required by the

court under 203(a)(15): 'Plainly, there is no warrant on these records for a

finding that the supporting shippers require a distinct type of service that cannot
be provided by U.S.A.C. To the contrary, the very business of U.S.A.C. is the
transportation of the type of traffic involved.' 79 M.C.C., at 709. This finding
was itself a conclusion from the detailed enumeration of U.S.A.C. capabilities
quoted previously. And there was substantial evidence in the record to support
the conclusion that the shipper would be as well served by U.S.A.C. as by the
applicant JT.
103 The service proposed by JT was specialized in the following particulars. It
had designed a trailer exclusively for Boeing's landing-gear bulkheads at a cost
of $3,360 within about two weeks. The trailer was underslung with an
adjustable floor and roof in order to permit rearend loading, a fully enclosed
carrier, and the height clearance required by state law on the roads it traveled.
The trailer was spotted at Boeing's Wichita plant, available at all times on short
notice to leave for the supplier's plant in Indianapolis to pick up another load of
bulkheads.
104 The Traffic Manager for Boeing's Wichita plant testified that the shipper had
enjoyed particularly the close coordination with J T made possible through its
near-by Wichita terminal. The bulkheads had to be scheduled into the assembly
operation at a predetermined time; constant engineering changes necessitated
supply of particular bulkheads for particular planes, and a delay in
transportation could prove very expensive. The shipper was disinclined to use
U.S.A.C. because it had no Wichita terminal, because its tariffs gave it
authority to decide on the type of equipment it would use, and because of an
experience of carelessness in 1953, although it was uncertain whether this had
been the fault of U.S.A.C. or of the shipper.
105 U.S.A.C. offered evidence that it maintained a terminal in Indianapolis and one
in Topeka, Kansas, which could cover shipments from Wichita. U.S.A.C.
would be willing to modify its canvas-topped trailer to install necessary fixtures
and a removable or elevatable roof as needed. The roof would take three days to
install, the necessary fixtures ten days to two weeks. Its tariff power to control
equipment was used only to prevent overloading.11 It was willing to dedicate
the necessary equipment exclusively to the shipper.
106 From this evidence it was certainly open to the Commission to find, as it did,
that U.S.A.C. could meet the 'distinct need' of the shipper. The tariff power was
no obstacle. An ambiguous and ancient complaint about service need not
control. The absence of a Wichita terminal could be offset, if need be, by the
presence of an Indianapolis terminal: The traffic had thus far been entirely one

way, from Indianapolis to Wichita, and no reason was given why telephonic
consultation with Indianapolis, reaching the supplier and the carrier in the same
place, might not be as efficient or more so. Moreover, the shipper on three
occasions gave evidence that its preference for JT was in actuality based on a
misunderstanding of common-carrier authority that the Commission was under
no obligation to credit.12
107 But this does not mean that, as a statutory matter, the Commission was required
to find that the protestant could meet the 'distinct need' of the shipper. That
phrase was inserted in 203(a)(15) to restrict the definition of a contract
carrier, not to limit the opportunities of a common carrier. It should be noted
that a contract carrier may so qualify under that section either by meeting the
distinct need of a particular customer or by meeting very ordinary needs
through the assignment of vehicles to the shipper's exclusive use. If the latter
qualification were controlling in a given case, the consideration of 'distinct
need' would be irrelevant.
108 Beyond this parsing of 203(a)(15), moreover, there is reason in policy for the
Commission to deny an application when the protestant is able to furnish
'reasonably adequate' services. The Motor Carrier Act expresses a policy, as we
have seen, of preserving existing common carriage against the inroads of
contract carriage. One way of putting that policy into effect is to deny a
contract-carrier application, as the Commission has always done, unless the
applicant can demonstrate that its service will be substantially superior to that
afforded by existing carriers. Another way of describing this practice, which
the 1957 amendments have in no way affected, is that no permit will issue for
traffic that can be handled with reasonable adequacy by a protestant.
109 (3) The District Court was most emphatic in its conclusion that the Commission
had erred in its resolution of the third factor in 209(b)'the effect which
granting the permit would have upon the services of the protesting. carriers'
by the aid of an unwarranted presumption. The relevant language of the final
report is as follows:
110 'The question presented * * * is how we are to determine whether a grant of
authority will adversely affect the service of a protestant. It might be argued
that where, as here, a protestant is not now enjoying the involved traffic, it
cannot be adversely affected by a grant of authority. However, we believe that
our past holdings that existing carriers are entitled to transport all the traffic
which they can economically and efficiently handle before additional authority
is granted are equally valid today as they were prior to the 1957 amendments to
the act. There is, in effect, a presumption that the services of existing carriers

will be adversely affected by a loss of 'potential' traffic, even if they may not
have handled it before.' 79 M.C.C., at 705.
111 How the District Court could be confident that the Commission was blindly
applying what it itself called only 'in effect' a presumption, in the face of
detailed findings that the traffic was one that the protestant 'can economically
and efficiently handle,' it did not explain. Doubtless if the Commission had
erected a presumption of adverse effect from evidence simply that the
protestant possessed authority in its certificate to carry that traffic, its action
would have been inconsistent with congressional deletion of the words 'not
provided by common carriers' from the amendment to 203(a) (15). But, as we
have seen, that is plainly not what the Commission did.
112 The court went further, however, and determined that evidence of the
protestant's willingness and ability was by itself insufficient to support the
requisite finding of an adverse effect. 'Where * * * the protesting carrier is not
participating in the traffic involved, there can be no diversion of traffic and
hence ordinarily there would be no adverse effect on the services of the
protesting carrier.' 185 F.Supp. at 848. It is somewhat difficult to know by what
expert insight the District Court achieved this conclusion, at variance with the
Commission's deliberate and considered contrary resolution of the same issue.
Apparently the court thought that the shipper's expressed preference for the
applicant had to be taken into consideration in determining whether the
protestant would be injured by a grant of the permit. Even if this were a proper
reading of the statute, it would not justify the District Court's conclusion. For
the record shows that when the shipper was asked whose services it would use
if the permit were denied, it replied that it did not know.
113 But it is plainly an improper reading of the statute. The Commission has
invariably held that the preference of a shipper for a particular carrier, even
though based on sound business reasons, is not enough to warrant issuance of a
permit. This practice is unaffected by the 1957 amendments. We have ourselves
unanimously held, since those amendments went into effect, that legally
cognizable injury might accrue to an existing carrier denied potential traffic.
114 '(S)urely the statement by General Motors (the shipper) that it would not in any
event give the business to any appellant cannot deprive appellants of standing.
The interests of these independents cannot be placed in the hands of a shipper to
do with as it sees fit through predictions as to whom its business will or will not
go. * * * We conclude, then, that appellants had standing to maintain their
action to set aside the Commission's order under the 'party in interest' criterion
of 205(g) of the Interstate Commerce Act, * * * and under the 'person

suffering legal wrong * * * or adversely affected or aggrieved' criterion of

10(a) of the Administrative Procedure Act * * *.' American Trucking Ass'ns v.
United States, 364 U.S. 1, 18, 80 S.Ct. 1570, 1580, 4 L.Ed.2d 1527.
115 If a protestant may be 'adversely affected' despite shipper hostility for purposes
of seeking judicial review, it seems consistent to permit the Commission to find
it so for purposes of ruling upon an application under 209(b).
116 There is persuasive legislative history to the same effect. The amendments to S.
1384 proposed in the Senate hearings by the Contract Carrier Conference,
which were substantially adopted as the criteria in 209(b), would have erected
a presumption in favor of a contract-carrier applicant when the shipper had
previously been using private carriage. Senate Hearings 305. This provision
was supported on the ground that no adverse effect would normally be visited
on a protestant when the shipper had so demonstrated its antipathy to common
carriage. It was deleted by the Subcommittee. Thus, if we are to place emphasis
on congressional rejections, we must take this deletion as significant that
shippers' desires are not to be controlling.
117 But we need not rely on this episode to prove the point. The whole scheme of
statutory regulation points the same way. For we must remember that Congress
has chosen in the Motor Carrier Act to regulate motor transportation not by the
forces of competition but by impartial administration through an expert body.
No doubt contract carriage is frequently preferred by shippers for the
advantages, chiefly in flexibility of operations, that it may hold over available
common carriage. But the national interest to be safeguarded under the National
Transportation Policy is entrusted to the I.C.C. and not to the self-interest of
shippers. So long as the Commission does not behave arbitrarily, does not reject
the offer of relevant testimony or refuse to 'consider' some factor that Congress
has commanded to be taken into account, the weight or value accorded the
various factors and the Commission's evaluation of the comparative needs of
shipper, applicant, and protestant in a particular situation are conclusive.
118 A careful reading of the report and record demonstrates the unwisdom of
overturning the Commission's exercise of its regulatory functions upon merely
apparent surface improprieties. For the Commission found as a fact that the
protestant needed the proposed traffic; that U.S.A.C.'s.
119 'ability to obtain business depends on its ability to satisfy the needs of the
shippers having transportation requirements similar to those of these supporting
shippers, and it is dependent upon the very kind of traffic that is here

considered for the continuance of its operations.' 79 M.C.C., at 708.

120 This is the content of the 'presumption' that flows from a protestant's showing
of its willingness and ability: a decidedly adverse effect from a loss of
'potential' traffic. And the finding rested on a substantial array of record facts.
U.S.A.C. had demonstrated its needs by actually soliciting Boeing for the
traffic, far in advance of this proceeding. Its record of recent 'deadheads,' or
empty trailers, leaving Indianapolis was impressive: in March of 1957, 92
deadheads as against 61 full loads; in April, 85 against 60. A similar emptyequipment problem existed in Wichita. Aircraft-parts transportation in general
had recently decreased. The problem was one of aircraft obsolescence, making
the business spotty, with recurrent highs and lows. U.S.A.C. had been engaged
in the programs for the building of F 184's, B47's, and B36's. Each had
ended.
121 Surely it would have been permissible for the Commission, charged as it is
with preserving transportation for the national defense, to conclude that the
national interest lay in seeking to keep U.S.A.C.'s excess capacity profitably
employed and available for future defense needs. The fact that the Commission
did not advert expressly to defense needs in its report does not affect the
illustration this evidence affords of the way in which a presumption of adversity
may reasonable be drawn from evidence of a protestant's desire and capacity for
traffic.
VII.
122 The appropriate relation between the Commission and the courts was
delineated in our treatment of the closely parallel problem in Secretary of
Agriculture v. Central Roig Ref. Co., 338 U.S. 604, 70 S.Ct. 403, 94 L.Ed. 381.
The Sugar Act of 1948, 205(a), 7 U.S.C.A. 1115(a), authorized the
Secretary to allocate marketing quotas among particular refineries 'in such
amounts as to provide a fair, efficient, and equitable distribution' (compare
'consistent with the public interest and the national transportation policy'), and
directed him to do so 'by taking into consideration' three factorsone related to
processing of raw sugar from sugar cane, which the Secretary decided was
inapplicable, and the other two past marketings and future marketing capacity.
The Secretary applied these two by giving them equal weight and referring
them to a pre-World War II base period selected as one unaffected by special
wartime demands. The resulting allocation order was attacked as exceeding
statutory authority and was set aside by the Court of Appeals. This Court
reversed, holding that the Secretary had not exceeded the discretion necessarily
vested in him by the sugar-quota scheme. We noted that a direction to 'consider'

certain factors did not control the Secretary's judgment as to what weight should
be assigned to each or whether to give weight to all three in each situation. We
concluded that so long as the Secretary was not arbitrary in his choice of means
to reach an equitable distribution, his decision should stand.
123 It is a commonplace of administrative law that the evaluation to be given
criterial findings, if adequately supported, is left essentially to the
administrative agency charged with primary responsibility for interpreting the
will of Congress. The extent to which this is so will be misconceived if drawn
from abstract conceptions of 'fact,' 'law,' or 'law-application.' For one thing, the
permissible scope of administrative discretion may vary from section to section
within a single statute. For another, the task of exercising an informed
discretion in administrative proceedings extends from testimonial submissions
through considerations of regulatory policy to obedience of a statutory
command. It is a question of policy, derived from due regard for, and based on
understanding of, the regulatory scheme enacted by Congress, at which point a
reviewing court should intervene. A conclusion that the agency's determination,
resting on findings (where, as is normally true, they are required) appropriately
supported by evidence, is within its power to make is a conclusion that the
factors calling for intervention are absent. Compare Interstate Commerce
Commission v. Union Pacific R. Co., 222 U.S. 541, 547 548, 32 S.Ct. 108, 110
111, 56 L.Ed. 308.
124 Administrative agencies are not only vested with discretion in sifting evidence
and in making findings but may also draw on their specialized competence for
ascertaining the reach and meaning of statutory language. Compare Social
Security Board v. Nierotko, 327 U.S. 358, 368371, 66 S.Ct. 637, 642644,
90 L.Ed. 718, with National Labor Relations Board v. Hearst Publications, 322
U.S. 111, 128131, 64 S.Ct. 851, 859860, 88 L.Ed. 1170. The factors to be
considered on judicial review of such an administrative determination include
the precision of the statutory language, the technical complexity of the relevant
issues, the need for certainty as against experimentation, and the likelihood that
Congress foresaw the precise question at issue and desired to express a
foreclosing judgment on it. In assessing these factors, we are guided primarily
by an investigation of the prior law as it sheds light on the 'mischief' Congress
sought to alleviate, and of the statute itself to see how closely Congress sought
to define the balance of competing considerations it addressed.
125 That investigation here reveals that Congress conferred the power on the
Commission to decide as it has done in this case. None of the precedents is to
the contrary; each points to this conclusion. See United States v. Pierce Auto
Lines, 327 U.S. 515, 535536, 66 S.Ct. 687, 697698, 90 L.Ed. 821 (not for

courts to gauge public interest; so long as requisite findings are made and
supported by evidence, the resolution of relevant factors is for the
Commission); Bass v. United States, 163 F.Supp. 1, 4 (W.D.Va.1958), aff'd per
curiam, 358 U.S. 333, 79 S.Ct. 351, 3 L.Ed.2d 350 (same); cf. United States v.
Detroit & Cleveland Nav. Co., 326 U.S. 236, 240241, 66 S.Ct. 75, 77 90
L.Ed. 38. In Schaffer Transp. Co. v. United States, 355 U.S. 83, 86 n. 3, 90, 78
S.Ct. 173, 175, 177, 2 L.Ed.2d 117, the Court deliberately refrained from
guiding the Commission's discretion in evaluating the relative advantages of
competing carriers.13
126 Determinations by the Commission which Congress has committed to its
judgment must be judicially respected because such exercises of administrative
discretion are beyond the competence or jurisdiction of courts. Their power of
review is confined to correction of Commission action that transcends the
authority given it by Congress, including of course disregard by the
Commission of procedural proprieties resulting in arbitrary use of its powers.
127 In the present case, no claim can be made that the Commission's findings are
unsupported by substantial evidence. United States v. Pan American Corp., 304
U.S. 156, 158, 58 S.Ct. 771, 773, 82 L.Ed. 1262; cf. Universal Camera Corp. v.
Labor Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456; see Administrative
Procedure Act, 10(e), 60 Stat. 237, 243 (1946), 5 U.S.C. 1009(e), 5
U.S.C.A. 1009(e). The Commission's detailed report negatives this, as it
would a claim that the Commission neglected to make requisite findings.
128 Of course the provisions of the National Transportation Policy must be applied
by the Commission to each application, see Schaffer Transp. Co. v. United
States, 355 U.S. 83, 88, 78 S.Ct. 173, 176, 2 L.Ed.2d 117, but they 'represent, at
best, a compromise between stability and flexibility of industry conditions, each
alleged to be in the national interest, and we can only look to see if the
Commission has applied its familiarity with transportation problems to these
conflicting considerations.' American Trucking Ass'ns v. United States, 344
U.S. 298, 314, 73 S.Ct. 307, 316, 97 L.Ed. 337; see Interstate Commerce
Commission v. Parker, 326 U.S. 60, 66, 65 S.Ct. 1490, 1493, 89 L.Ed. 2051.
The Commission's action here certainly does not fall short of that standard. See
79 M.C.C., at 705706.
129 An order of the Commission cannot stand, it is true, if we cannot tell what has
been decided or if it leaves unclear the basis for its conclusions. United States
v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499, 510511, 55 S.Ct. 462, 467,
79 L.Ed. 1023. Findings are no doubt judicially more persuasive the more
felicitously they are formulated and the less they require extraction from a

diffuse report. But the Commission is not under statutory duty to set forth its
findings in serried array. It is the Court's duty to sustain the Commission's
findings if, as here, there is no real difficulty in determining what was decided
and on what grounds.
130 It is not the Court's function to impose our standards of lucidity or elegance in
exposition upon the Commission. And we should take due warning from the
consequences of our decision in City of Yonkers v. United States, 320 U.S. 685,
64 S.Ct. 327, 88 L.Ed. 400, of what may follow from exacting overnice
requirements of the I.C.C. There the Commission had made no explicit finding
that an electric interurban railway was an integral part of a steam railroad
system as it had to be before the Commission could allow it to suspend its
operations. The facts were so clearly spread upon the record that the point was
not argued until one of the parties raised it on appeal. This Court remanded the
case for an express finding. The Commission took some more evidence and in
due course it entered the inevitable finding. The order was attacked again in the
District Court, affirmed again after another lengthy opinion, and eventually
affirmed per curiam, Public Service Comm. v. U.S., 323 U.S. 675, 65 S.Ct. 130,
89 L.Ed. 548. That wasteful charade ought not to be repeated here.
131 I would reverse and allow the Commission's order to stand.
132 Mr. Justice FRANKFURTER, whom Mr. Justice HARLAN and Mr. Justice
STEWART join, concurring in part.
133 These are appeals from the judgment of a District Court setting aside an order
of the Interstate Commerce Commission denying an application for a contractcarrier permit. The application sought authority to transport canned goods
under continuing contracts with three Arkansas canning companies to points in
33 States and to return from those points with canned goods and canning
materials such as cans, lids, and corrugated boxes. It was opposed by two
groups of railroads, one motor contract carrier and 25 motor common carriers,
authorized to undertake transportation in the territory proposed.
134 The trial examiner's recitation of facts, as adopted by the Commission, may be
briefly summarized. Each of the supporting shippers does a substantial volume
of business with small-lot purchasers. These customers maintain low
inventories, necessitating a transportation service capable of effecting multiple
pickups and deliveries on short notice. Each shipper has engaged in private
carriage for this purpose, sending only single-lot full truckloads by common
carrier. The Steele Canning Company's private equipment was furnished in part

through a lease of the applicant's trucks. When a strike of its drivers occurred, it
sought to contract with the applicant for its independent services. The other
shippers, who before the strike sold much of their goods through Steele, now
wish to expand their sales to individual customers and desire the same type of
service from the applicant.
135 Under its temporary authority, the applicant has been offering several stops in
transit at the truckload rate, and assessing no stop-in-transit charge, thus
rendering in effect a less-than-truckload service at truckload rates.
136

Existing motor carriers possess the authority and equipment to provide service
to a substantial number of the points involved, either directly or by joint-line
operations. Although few have previously participated in this particular
transportation, each displays a desire to obtain the traffic; so do the protesting
railroads, which have recently experienced a sharp decline in canned-goods
tonnage. The motor carriers are willing and able to provide multiple pickups
and deliveries where authorized.

137 The shippers asserted a preference for the applicant's services on two specific
grounds. First, they contended that existing carriers were unable to furnish
multiple pickup and delivery service with sufficient expedition. Second, they
maintained that the less-than-truckload rates charged by common carriers were
prohibitive in light of the small profit from a canned-goods shipment allowed
by competitive conditions. Accordingly, they asserted that, if the permit were
denied, they would resort to private carriage.
138 On the first point, the Commission concluded that the type of service required
by the shippers was not substantially different from that offered by available
motor common carriers. Its treatment of the third and fourth criteria in 209(b)
of Part II of the Interstate Commerce Act, added by 71 Stat. 411 (1957), 49
U.S.C. 309(b), 49 U.S.C.A. 309(b), a treatment attacked and invalidated in
the District Court, was animated by the same policy preference for preserving
available common carriage that characterized its disposition of the JT
Transport application, reviewed here today, 368 U.S., p. 81, 82 S.Ct., p. 204,
supra. The pertinent portion of its report is as follows:
139 'Aside from evidence pertaining to rates, the record is devoid of any substantial
showing of dissatisfaction on the part of the shippers with existing service.
Complaints about joint-line service, slow transit time, and inability to arrange
multiple pickups and deliveries are of a general nature, and are not
substantiated by reference to specific instances. Although protestant motor

carriers, especially those operating over regular routes, may be hindered in

some instances by their authorities and the nature jof their operations from
achieving complete flexibility in effecting multiple pickups and deliveries, the
supporting shippers have failed to show that they have been unable to obtain
reasonably adequate service upon request. * * * In the absence of a more
positive showing that existing service will not meet shipper's reasonable
transportation needs, we are not warranted in finding that a new service should
be authorized or that the supporting shippers will be adversely affected by a
denial of this application.' 81 M.C.C. 35, 4142 (1959).
140 This conclusion was attacked and set aside in the District Court on much the
same grounds as those leading to a similar result in the JT Transport case,
supra. Little need be added here to what I said there. Suffice it to say that the
Commission made the findings required of it by 209(b) and that each was
supported by substantial evidence. Although its evaluation of those findings and
the conclusion that it drew from them1 may be different from those we might
have reached were we on the Commission, it is not for a reviewing court to
upset the Commission's informed judgment on the factors it has been asked by
Congress to consider. United States v. Pierce Auto Freight Lines, 327 U.S. 515,
535536, 66 S.Ct. 687, 697698, 90 L.Ed. 821; Bass v. United States, 168
F.Supp. 1, 4 (W.D.Va.1958), aff'd per curiam, 358 U.S. 333, 79 S.Ct. 351, 3
L.Ed.2d 350; and see Secretary of Agriculture v. Central Roig Ref. Co., 338
U.S. 604, 70 S.Ct. 403, 94 L.Ed. 381.
141 There is, however, an additional issue in this case that differentiates it from J
T Transport, supra. It is whether the Commission is required in an application
proceeding to consider evidence that the rates of available common carriers are
so high as to make transportation costs prohibitive for a supporting shipper.
142 Before reaching that issue, it is necessary to dispose of a contention that
prevailed in the District Court and is pressed here, that the Commission must
consider in every application evidence of mere rate advantages resulting from
economies inherent in contract-carrier operations. Section 209(b) makes no
such requirement.
143 In Schaffer Transp. Co. v. United States, 355 U.S. 83, 9192, 78 S.Ct. 173,
178, 2 L.Ed.2d 117, we recognized and impliedly approved the longstanding
Commission practice of ignoring rate advantages offered by an applicant over
available motor carriers. The Commission has consistently ruled that a shipper
dissatisfied with existing common-carrier rates cannot on that ground alone
successfully support an application for a contract-carrier permit, and that its
remedy lies in attacking the rates under 216 of the Act, 49 U.S.C.A. 316.

See, e.g., Dixon & Koster Contract Carrier Application, 32 M.C.C. 1, 4 (1942);
James F. Black Extension of OperationsPrefabricated Houses, 48 M.C.C.
695, 708709 (1948); Joseph Pomprowitz ExtensionPacking House
Products, 51 M.C.C. 343, 350 (1950). That is what it ruled in this case, see 81
M.C.C., at 4243.
144 This consistent Commission practice rests on relevant transportation policy
considerations. If rate advantages resulting from inherent economies were made
a determining factor, the Commission would have to permit protestants to
challenge the cost justification of an applicant's proposed rates. This the
Commission has never permitted, see Omaha & C.B.R. & Bridge Co. Common
Carrier Application, 52 M.C.C. 207, 234235 (1950), largely because at the
application stage there is as yet no revealing record of profit or loss derived
from the proposed transportation service,2 and its refusal has been judicially
approved. Railway Express Agency v. United States, 153 F.Supp. 738, 741
(S.D.N.Y.1957), aff'd per curiam, 355 U.S. 270, 78 S.Ct. 330, 2 L.Ed.2d 257;
see American Trucking Ass'ns v. United States, 326 U.S. 77, 8687, 65 S.Ct.
1499, 1503, 89 L.Ed. 2065.
145 More fundamentally, it misconceives the object of congressional motor-carrier
regulation to maintain that the Commission must in application proceedings
respect inherent cost advantages of contract as against common carriers. They
are not different 'modes' of transportation within the meaning of the National
Transportation Policy, and Congress has not been concerned with maintaining
competition between them as it has been, for example, between railroad and
motor carriers. Compare Schaffer Transp. Co. v. United States, 355 U.S. 83, 78
S.Ct. 173, 2 L.Ed.2d 117. The Commission is specifically admonished, in
218(b) of the Act, not to prescribe minimum rates that give contract carriers an
undue competitive advantage over common carriers.
146 In rate proceedings, however, the Commission has construed this section as not
authorizing it to invalidate cost-justified rates of existing, previously authorized
contract carriers even though they may draw away a large volume of traffic
from common carriers. New England Motor Rate Bureau v. Lewers, 30 M.C.C.
651 (1941). Once granted a permit, therefore, a contract carrier may exploit its
inherent cost advantages to the great detriment of existing common carriers. In
determining to ignore those cost advantages in an application proceeding, the
Commission acts well within its authority to effectuate the congressional policy
of limiting entrance to contract carriage as a means of preserving the capacity of
available common carriers to meet the Nation's transportation needs.
147 That policy is unaffected by the 1957 amendments to 203(a)(15) and 209(b).

There is not one reference to rates in the legislative history of those

amendments. If anything, the action of the 1957 Congress looks the other way;
218(a) was amended, by 71 Stat. 343, 49 U.S.C. 318(a), 49 U.S.C.A.
318(a), to require the filing of actual rather than minimum contract-carrier
rates, so as to eliminate a competitive disadvantage of common carriers.
148 The right of the Commission to disregard rate advantages as such in application
proceedings does not, however, dispose of this case. For the testimony and
arguments presented to the Commission fairly raised the claim that the
available common carrier rates, whether or not just and reasonable in relation to
transportation costs, were prohibitive for the shippers. If this claim were
sustained by the Commission, it is difficult to see how it could avoid the
conclusion that a denial of the permit would hobble the shipper without
benefiting protestants by potentially augmenting their traffic.
149 The Commission has in fact recognized what it styles an 'embargo' exception to
its usual practice of disregarding the level of rates charged by existing carriers.
See H.L. & F. McBride ExtensionOhio, 62 M.C.C. 779, 790 (1954). In
Herman R. Ewell ExtensionPhiladelphia, 72 M.C.C. 645, 648 (1957), the
Commission treated a shipper's claim similar to the present one in a manner
relevant to our problem.
150 '(T)he present record does not show any effort by the carriers to handle with the
shipper its claim that their rates are prohibitive. Sugar is a relatively
inexpensive commodity which sells at prices which, compared to prewar prices,
do not appear to have increased percentage wise to the same extent as most
other commodities. It appears not improbable that the margin of profit thereon
is so narrow that the traffic will not move except at rates lower than other
commodities customarily moved in tank-truck equipment. It may be that
protestant's rates, though not intrinsically unreasonable from a standpoint of
cost or compared to other bulk liquid rates, are still too high to move this
particular traffic. And it may be that protestants are within their rights in the
exercise of their managerial discretion in refusing any reduction even at the cost
of losing the traffic but, if so, they should at least have negotiated with the
shippers to the point of making their positions clear. Their failure to do so
indicates either decision to forego the traffic except at their present rates or a
lack of interest in it at rates at which it can move.
151 'Without departing from the general proposition that the reasonableness of rates
is not an issue in public convenience and necessity proceedings, and that if rates
are too high an adequate remedy is available under section 216 of the Interstate
Commerce Act, we conclude that authority should be granted here. * * *

(Protestants') rates have not and will not move the traffic; and to this extent the
available motor service is inadequate to meet the shipper's requirements.
Protestants, never having handled the traffic, will not be adversely affected by
this action.'
152 In the Ewell proceeding, there was evidence that the existing rates were two to
three times as high as those proposed by the applicant, that the shipper would
have to 'absorb' about $200 on each 30,000-pound shipment, and that it had
asked existing carriers to adjust their rates without result. Similar evidence was
presented in the present proceeding. The representative of the Steele Canning
Company testified that, in numerous discussions with protestant carriers, it had
learned that their less-than-truckload rates were two and three times as high as
the truckload rates proposed by the applicant, and that these rates would drive
its canned goods out of the competitive market. Whether this testimony was
specific and persuasive enough to establish that the traffic would not move at
existing rates we do not know, for the Commission made no finding on this
issue. Compare Schirmer Transp. Co., Inc., ExtensionMolasses, 77 M.C.C.
240, 242 (1958). Until it does, we are unable to exercise our reviewing function
of ensuring that the Commission stays within its statutory authority and does
not act arbitrarily. Cf. State of Florida v. United States, 282 U.S. 194, 214
215, 51 S.Ct. 119, 124 125, 75 L.Ed. 291.
153 I would vacate the judgment of the District Court and remand the case to the
Commission for a considered determination whether the rates of protestant
motor carriers are prohibitive. The scope of inquiry should be strictly limited.
The Commission need not engage in a full-dress rate proceeding to determine
whether present motor-carrier rates are unjust or unreasonable. It need only
find, from the evidence of record or additional evidence that it deems
necessary, whether those rates impose an embargo on the shippers' goods.

Hearings, S. 1384, Subcommittee of Committee on Interstate and Foreign

Commerce, 85th Cong., 1st Sess., p. 6.

The proposed amendments were objected to by the Department of Justice as

being 'unduly restrictive' (S.Hearings, Subcommittee of Committee on
Interstate and Foreign Commerce, 85th Cong., 1st Sess., p. 11) and in part by
the Department of Commerce. Id., 200 203. They were also opposed by the
Contract Carrier Conference that stated, inter alia, 'Since the state of mind of
the common carriers concerning their willingness is a matter peculiarly within
their own knowledge, it would be absolutely impossible for a contract carrier to
ever prove to the contrary. Furthermore, it would be very difficult for a contract

carrier or its supporting shipper, having no intimate knowledge of the business

of opposing common carriers, to prove that such carriers were unable to
perform a given service.' Id., p. 303.
3

The change in the Commission's attitude is summarized as follows in S. Rep.

No. 703, 85th Cong., 1st Sess., p. 4, 2 U.S. Code Cong. & Adm.News. 1957, p.
1601: '* * * the Commission, upon reflection on the objections of contract and
private carriers to the bill, concluded that in some respects S. 1384 would
provide too rigid a pattern. It decided that the proposed requirement in section
209(b) that additional permits could be issued only upon a showing that
existing common carriers are unwilling or unable to render the required types
of service should be withdrawn.'

That this change was made is clear. See S. Rep. No. 703, 85th Cong., 1st Sess.,
pp. 23, 6, 7; H.Rep. No. 970, 85th Cong., 1st Sess., p. 3.

Sec. 203(a)(15), 49 U.S.C.A. 303(a)(15) as amended reads as follows:

'The term 'contract carrier by motor vehicle' means any person which engages
in transportation by motor vehicle of passengers or property in interstate or
foreign commerce, for compensation (other than transportation referred to in
paragraph (14) and the exception therein), under continuing contracts with one
person or a limited number of persons either (a) for the furnishing of
transportation services through the assignment of motor vehicles for a
continuing period of time to the exclusive use of each person served or (b) for
the furnishing of transportation services designed to meet the distinct need of
each individual customer.'

Congress in 1940 described the National Transportation Policy:

'It is hereby declared to be the national transportation policy of the Congress to
provide for fair and impartial regulation of all modes of transportation subject
to the provisions of this Act, so administered as to recognize and preserve the
inherent advantages of each; to promote safe, adequate, economical, and
efficient service and foster sound economic conditions in transportation and
among the several carriers; to encourage the establishment and maintenance of
reasonable charges for transportation services, without unjust discriminations,
undue preferences or advantages, or unfair or destructive competitive practices;
to cooperate with the several States and the duly authorized officials thereof;
and to encourage fair wages and equitable working conditions;all to the end
of developing, coordinating, and preserving a national transportation system by
water, highway, and rail, as well as other means, adequate to meet the needs of
the commerce of the United States, of the Postal Service, and of the national
defense. All of the provisions of this Act shall be administered and enforced

with a view to carrying out the above declaration of policy.' 54 Stat. 899.
1

The Commission has classified motor carriage by 17 types of commodities, and

each one admits of common or contract carriage. 49 CFR 165.2 (1961).

54 Stat. 898, 920 (1940).

The National Transportation Policy, added by 54 Stat. 898, 899 (1940), 49

U.S.C. preceding 301, 49 U.S.C.A. preceding 301, provides in relevant part:
'It is hereby declared to be the national transportation policy of the Congress to
provide for fair and impartial regulation of all modes of transportation subject
to the provisions of this Act, so administered as to recognize and preserve the
inherent advantages of each; to promote safe, adequate, economical, and
efficient service and foster sound economic conditions in transportation and
among the several carriers; to encourage the establishment and maintenance of
reasonable charges * * * without * * * unfair or destructive competitive
practices * * *all to the end of developing * * * a national transportation
system * * * adequate to meet the needs of the commerce of the United States,
of the Postal Service, and of the national defense. All of the provisions of this
Act shall be administered and enforced with a view to carrying out the above
declaration of policy.'

Senator Truman, a Senate conferee, said in presenting the bill:

'Section 203, paragraphs (14) and (15), have been rewritten for the sole purpose
of eliminating carriers performing pick-up, delivery, and transfer service. This
change was suggested by the Chairman of the Interstate Commerce
Commission.
'The conferees wish to make it plain that it is not their intention, by changing
the language of paragraphs (14) and (15) of section 203 to change the
legislative intent of the Congress one iota with respect to definition of common
and contract carriers other than those performing pickup, delivery, and transfer
service. It is intended that all over-the-road truckers shall whenever possible
fall within the description of common carriers.
'It is intended by the definition of contract carriers to limit that group * * *.' 86
Cong.Rec. 11546 (1940).

Bracketed numbers added for convenient reference. Only the third factor and so
much of the fourth as is italicized are in issue here. The Commission
considered the others, and no challenge is made to its disposition of them.

Section 209(b) then excluded from the limitations the Commission could

impose, 'the right of the carrier to substitute or add contracts within the scope of
the permit.' As amended after Contract Steel, 71 Stat. 411, 412 (1957), the
section empowers the Commission to attach 'terms, conditions and limitations
respecting the person or persons and the number or class thereof for which the
contract carrier may perform transportation service, as may be necessary to
assure that the business is that of a contract carrier and within the scope of the
permit * * *.'
7

Surface TransportationScope of Authority of I.C.C. Hearings before the

Subcommittee on Surface Transportation of the Senate Committee on Interstate
and Foreign Commerce, 85th Cong., 1st Sess. 23 (1957) (hereinafter cited as
Senate Hearings).

S. 1384 is printed at Senate Hearings 6.

The only other light shed on the significance of the deletions is furnished in a
colloquy in the course of the hearings:
'Senator SCHOEPPEL. I would like to ask a question right there: Supposing
you had a common carrier serving certain territory but wasn't furnishing
adequate service. There was common carrier service there, but of a very limited
nature, and with the mode and extent of doing business nowadays would you
draw the line there that the common carrier had to furnish reasonably adequate
and prompt service?'
'Mr. ROTHSCHILD (from the Department of Commerce, deferred specific
answer and then replied). They should not be able to deny the application of a
common (sic) carrier simply because someone claims that there is common
carrier service there.' Senate Hearings 200201, 203.
What weight, if any, should be accorded this exploratory speculation between a
single subcommittee member and a representative of a government department
having no intimate familiarity with prior administrative practice, is
problematical. Even giving it the fullest significance it can bear, however, the
most that emerges is this: When a contract carrier applies for a permit, it is not
enough for a protestant to show that it has authority to transport the proposed
traffic. It must show also that it has the capacity and willingness to do so, and
the Commission must be satisfied from all the evidence that, in Senator
Schoeppel's words, the service it can perform is 'reasonably adequate' to meet
the shipper's needs. But this, it will be seen, is precisely the procedure that the
Commission had invariably followed from 1935 to 1957.

10

The statement may be deemed lacking in detail in not explicitly considering the
five criteria in 209(b), which became effective in its amended form on August

22, 1957, after the application had been heard but before Division 1's order was
issued. See Ziffrin, Inc. v. United States, 318 U.S. 73, 78, 63 S.Ct. 465, 468, 87
L.Ed. 621. The final order of the full Commission made the detailed findings,
however, so that the question need not detain us.
11

The evidence showed that the total weight of the haul was about 5,500 pounds
(R. 92), and the trailer proposed by U.S.A.C. had a capacity of 24,000 pounds.
(Protestant's exhibit No. 15, R. 147; R. 112.)

12

JT's application was supported because '* * * we recognized that the contract
carrier can dedicate equipment to our service, the type of equipment that we
want, and we feel that on this type of a transportation it is the best thing to have
the equipment solely dedicated to our use.' (R. 89.)
It did not choose a common carrier 'because the common carrier cannot
dedicate his equipment exclusively to our service as a contract carrier can.' (R.
97.)
Again: 'It is my understanding that a common carrier cannot dedicate
equipment to a particular shipper, that he holds himself out to furnish that
equipment to any shipper that wants it.' (R. 103.)
This was of course an erroneous understanding, as Commission precedents
demonstrate. A common carrier must hold itself out through its tariffs to serve
any shipper who desires the same class of traffic, but it may specialize as much
as a contract carrier does and may dedicate equipment to the use of any one
such shipper. When U.S.A.C. offered to do so, it was a reasonable conclusion
that the shipper's particular needs had been met.

13

Nor is the holding in the Schaffer case of any aid to the appellees. The Court
held that a common-carrier applicant could not be denied a certificate on the
grounds of existing rail service, without a finding whether the 'inherent
advantages' of motor transport should warrant the grant. Such a finding was
thought necessary to conform to the dictates of the National Transportation
Policy, the Court declaring that:
'To reject a motor carrier's application on the bare conclusion that existing rail
service can move the available traffic, without regard to the inherent
advantages of the proposed service, would give one mode of transportation
unwarranted protection from competition from others.' 355 U.S., at 9091, 78
S.Ct. at 178.
On 9192, the Court recognized that these considerations did not necessarily
pertain to applications opposed by other motor carriers. The Commission has

held in these proceedings that motor common and contract carriers are not
different 'modes' of transportation, 79 M.C.C., at 710, and its expert conclusion
is entitled to great weight. Indeed, the whole history of motor carrier regulation
negates any suggestion that Congress has been interested in preserving
competition between the different classes of motor carriers.
1

The Commission has consistently ruled that a joint-line transportation service is

not inadequate to meet a shipper's needs. See cases collected in Hale & Hale,
Competition or Control III: Motor Carriers, 108 U.Pa.L.Rev. 775, 783 n. 24
(1960).

Thus in the present case the applicant submitted a balance sheet but no income
statement (R. 31).