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CLARKE v. UNITED STATES

October 31, 1951

CLARKE et al.
v.
UNITED STATES et al.



The opinion of the court was delivered by: PRETTYMAN

This is a civil action brought by plaintiffs, to whom we shall refer as 'Clarke' and 'Atwood', respectively, seeking to have an order of the Interstate Commerce Commission enjoined and then vacated and set aside. Richmond-Greyhound Lines, Inc., which we shall call 'Greyhound', intervened in the trial court. The order which is the subject matter of the suit was entered by the Commission February 5, 1951, and granted to Greyhound a certificate of public convenience and necessity authorizing operation, as a common carrier by motor vehicle of passengers, over a certain route in southern Maryland as an alternate route for operating convenience only, serving no intermediate point.

Discussion of the controversy requires a brief preliminary geographical description. A road, Maryland Automobile Route 5, extends southeast from Washington through several towns in Maryland. From a point beyond mechanicsville this road proceeds in an irregular arc through Morganza, Leonardtown and Callaway to Lexington Park, a terminal point, where the Patuxent Naval Air Station is located. In recent years a short-cut road- Route 235- from Mechanicsville to Lexington Park, across the base of the arc in the other road, has been improved. The route by this road from Lexington Park to Mechanicsville is eight and a half miles shorter than is the route by the other road. The whole area is on a peninsula, so that the principal traffic is back and forth to Washington.

 The present situation is that Atwood operates a bus service from Lexington Park via the short-cut Route 235 to Mechanicsville and thence to Washington; Greyhound operates a bus service from Lexington Park over the longer route via Leonardtown to Mechanicsville and thence to Washington. The certificate granted Greyhound by the Commission in the order here involved is for operation over the shortcut, Route 235, but without pick-up or discharge of passengers over this short-cut portion of the route. Greyhound says that the certificate is merely for an alternate route. Atwood says that the certificate is for a new service and that, moreover, necessary findings of fact are lacking in the Commission's determination.

 The present situation developed from a series of events. Prior to World War II the only bus service in this area was the Greyhound service over Route 5 to and from Leonardtown. During the war the Government established the Patuxent Naval Air Station. Greyhound extended its service from Leonardtown to Lexington Park. There was traffic enough for two carriers. Clarke applied for and obtained a certificate for operation, and since the road which is now Route 235 had recently been improved his application and certificate were for operation by that route. Atwood is Clarke's lessee. Upon the termination of the war the traffic dropped off. Greyhound says that the traffic over its route, Route 5 via Leonardtown, is not sufficient to maintain the service. It seeks authority to operate by the short route in order to get a larger proportion of the through traffic between Lexington Park and Washington, claiming that the additional traffic and the shortened mileage will bring its net finances to a level which will permit the maintenance of the local service to the towns along the long route.

 There is a long history of proceedings before the Commission. It appears that Greyhound's original application was for an operation over the short route, now occupied by Atwood, as a full service. Thus viewed, the application was for authority to institute a new service, and it was necessary, therefore, for Greyhound to show a public need for that service. Upon that basis the application was denied. Greyhound then announced that it would accept a certificate for the short route operation without any service to intermediate points. Such an operation, it maintained, was merely an alternate route to its established route and, as such, could be granted upon a showing of economies to be derived. Upon this basis the Commission, both Division 5 and the full Commission, granted the application.

 We think it was necessary for the Commission to make definite findings of fact as to the effect upon Atwood of the grant of this certificate. For reasons which we shall detail in a moment we think that the reference in the last clause of the above quotation from the Division 5 report does not meet that requirement.

 Reference to the opinion and decision of the Supreme Court in American Trucking Associations v. United States *fn1" is sufficient to dispose of the problem as it is presently before us. There are differences of fact between that case and this one but, we think, no material difference in the applicable principles. In that case the receivers of the Seaboard Air Line Railway sought certificates for the operation of motor trucks as auxiliary to and supplemental of the railroad operation. The Court held that in such case 'the Commission must weigh the advantages of improved rail traffic against the injury to the over-the-road motor carriers to determine where public convenience and necessity lies' and that receipt and consideration of evidence of the effect of the proposals upon the protestants was an essential part of that task. The Court reversed the judgment of the District Court which had affirmed the Commission.

 While, as we have said, we think reference to that opinion is sufficient for present purposes, the fact that that case concerned supplemental motor operation by a railroad, while the present case concerns alternate route operation by an existing motor carrier, makes proper a further examination to make sure that the same principles apply.

 Discussion of the controversy should proceed from certain basic principles of public utility regulatory law. The first such principles is that, if there be traffic enough for only one carrier, only one carrier will be certificated. The public interest in that situation is for service. Only if there be traffic enough to support efficient operation by more than one carrier does the public interest require the competitive operation of two carriers. *fn2" In Texas & P. Ry. Co. v. Gulf, Etc., Ry., *fn3" the Supreme Court said that in the Transportation Act of 1920 Congress 'recognized that preservation of the earning capacity, and conservation of the financial resources, of individual carriers is a matter of national concern; that the property employed must be permitted to earn a reasonable return; that the building of unnecessary lines involves a waste of resources and that the burden of this waste may fall upon the public; that competition between carriers may result in harm to the public as well as in benefit; and that when a railroad inflicts injury upon its rival, it may be the public which ultimately bears the loss. *fn4"

 The second basic principle involved in this controversy is that if economies in operation are possible the public interest requires such economies. The public interest is not only in efficient service but is also in reasonable rates for that service. So, if the carrier is operating over an established route, but it appears that it can render the same service or a better service by a shorter or cheaper route, the public interest requires the more economical operation.

 In the practical administration of regulatory measures the two foregoing principles must frequently be adjusted one to the other. Thus the distinguishing terms 'new service' and 'alternate route' have been developed. It is said, in cases, that to obtain a certificate for a new service public need must be established; and it is said that in applying for a certificate for an alternate route it is sufficient to establish operating economies. But these short forms of expression do not eliminate the full applicability of the general principles. Thus, in Interstate Commerce Commission v. Parker, *fn5" upon which the opinion and decision in American Trucking Associations v. United States, supra, were based, the Court pointed out that the Commission made these findings: 'The motor-carrier service proposed by applicant, operated in close coordination with the railroad's service, will effectuate a reduction in cost, and will result in an increase in efficiency in the transportation over the routes herein considered, which will inure to the benefit of the general public. Furthermore, it does not appear that the restricted service would be directly competitive or unduly prejudicial to the operations of any other motor carrier. . .' The Court emphasized the latter phase of the situation; for example, it said: *fn6" 'The public is entitled to the benefits of improved transportation. Where that improvement depends in the Commission's judgment upon a unified and limited rail-truck operation which is found not 'unduly prejudicial' to motor carrier operations, the Commission may authorize the certificate even though the existing carriers might arrange to furnish successfully the projected service. (Italics supplied.) This feature of the Commission's determination is one of the underlying factors in the doctrine of that case, as the later decision in American Trucking Associations makes clear.

 The Commission has applied this doctrine many times. In Greyhound Corp. Extension of Operations- Bangor, Maine, *fn7" the Commission had before it an application by Greyhound for a certificate to operate between Belfast and Bangor over a shore route, it already having a certificate to operate between the same two points over an inland route. Other carriers, principally the Maine Central, operated over the shore route. It was conceded that the operations of the existing carriers over the shore route were adequate. Greyhound urged that the proposed operation would effect substantial operating economies. To that contention Maine Central replied that operating economies for the applicant do not, alone, show a public need for the proposed service, and it emphasized that the applicant had failed to show that the proposed operation would not have an adverse effect upon its (Maine Central's) revenues. The Commission referred to the Dixie Ohio Exp. Co. case *fn8" and said: 'Following the principle in this case, we are of the opinion that there is sufficient evidence of public convenience and necessity to warrant a grant of authority to operate over the proposed routed, providing such operations will not impair the revenues of the existing motor carriers.' *fn9" Examining the evidence the Commission found that during the summer months an extension of applicant's service over the ...


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