The opinion of the court was delivered by: MATTHEWS, JUDGE.
The plaintiff herein, Midwest Truck Lines, Ltd., seeks to set aside an order of the Interstate Commerce Commission denying the contract carrier authority applied for by plaintiff, and to have the Commission directed to issue to plaintiff the permit sought in its application. This three-judge court was convened pursuant to 28 U.S.C. §§ 2284, 2321-2325.
On May 11, 1963, plaintiff made an application to the Interstate Commerce Commission pursuant to Section 209(b) of the Interstate Commerce Act
for a permit to operate as a contract carrier by motor vehicle over irregular routes. As a Canadian trucking corporation, plaintiff for over 25 years has transported fish from Canada to various midwestern cities in the United States, and in its mentioned application seeks to operate as a contract carrier for Motor Coach Industries, Inc., a manufacturer of buses with a plant located at Pembina, North Dakota, near the Canadian border. In such capacity plaintiff proposes to use its trucks on their return trips to Canada to pick up parts usable in the manufacture and assembly of buses from various suppliers of said manufacturer at 15 points
in the midwest, and to haul these parts to the manufacturer's plant at Pembina, North Dakota.
As ground for the relief sought here plaintiff asserts that the evidence supports its application and meets all criteria which the Commission was called upon to consider, and that the denial of its application was contrary to the evidence and the applicable law, and was arbitrary and capricious, and not consistent with the public interest and the national transportation policy.
An Examiner for the Commission held a hearing on plaintiff's application at Chicago, Illinois, on October 21, 1963, the application being opposed by six protestants.
The Examiner recommended that the application be denied. On October 11, 1965, Division One of the Interstate Commerce Commission issued its report and order denying the application, one Commissioner dissenting. 99 M.C.C. 697. Thereafter, on November 8, 1965, plaintiff filed a petition seeking a finding of "general transportation importance" which would serve to put the case before the entire Commission. The petition was denied November 19, 1965. This action followed on April 19, 1966. The protestants have not sought to intervene herein.
There is no material dispute as to the facts. The Commission, with one exception,
adopted the Examiner's statement of facts as its own. As background for the present controversy, the facts will be related.
The Pembina manufacturer, Motor Coach Industries, Inc., herein called Motor Coach, is a Delaware Corporation and a wholly-owned subsidiary of the Greyhound Corporation of Chicago, Illinois, which also has a Canadian subsidiary corporation known as the Greyhound Lines of Canada, Ltd., which, in turn, has a wholly-owned subsidiary known as Motor Coach Industries, Ltd., of Winnipeg, Canada. The latter-named company has a plant at Winnipeg for the manufacture of complete buses, which mainly are sold within Canada, but the demand has become greater than its production capacity. To meet demands outside of Canada, Motor Coach was created and a new plant was constructed at Pembina, North Dakota, but the "bus shells" will continue to be manufactured at the Winnipeg plant and then moved by private carriage to the Pembina plant for assembly as completed buses for sale in the American market. The buses manufactured by Motor Coach at Pembina are offered for sale to any bus-operating company that wishes to buy them. Other reasons for the construction of the plant at Pembina were to provide for the shortest possible haul of bus shells from the Winnipeg plant to the Pembina plant, and to reduce the travel distance for the managerial staff between Winnipeg and Pembina.
Completed in May 1963, the plant at Pembina has modern shop facilities and is fully conveyorized. It is designed to produce one bus each working day, or five buses per work week of five days. The total area of the plant is 25,920 square feet. The assembly and test lines take up 85 per cent of the area space, and the remaining 15 per cent is used for storage, rest rooms, heating plant, etc. The plant was arranged with the preconceived plan (1) that its many suppliers at their respective plants would utilize their own storage space to keep the supplies ordered for the Pembina plant until such time as they are needed in Pembina, and (2) that thereby Motor Coach would be able to reduce its initial and continued capital investments in both the use of storage space and the maintenance of large inventories, and thereby ultimately reduce completed-bus costs.
At the hearing before the Examiner, Motor Coach asserted (and it is without dispute in the evidence) that its factory is designed on a continuous flow principle whereby materials coming from suppliers must move in a constant stream through general storage, preassembly, testing and final assembly; that at any one time the Pembina plant's own storage area can accommodate only enough major components for five buses; that Motor Coach purchases supplies in large quantities from suppliers who keep them in their own storage facilities available for transportation in small lots to the Pembina plant as they are required; that to achieve full production, and to keep its assembly line moving, Motor Coach requires delivery of supplies no later than four days from the time of pickup at the initial origin point; that absent such delivery, costly delays in the assembly process will result; and that the transportation of parts from the plants of suppliers to the plant at Pembina is an integral and vital part of Motor Coach's total operation.
Each bus manufactured by Motor Coach has many optional facilities. Each purchaser may select various options offered by Motor Coach through its literature. As orders come in from bus operators, Motor Coach will require different items of optional equipment, and the delivery of such optional equipment must be closely tied with its production line. Its requirement for these various types of optional equipment varies from week to week and month to month.
When the hearing took place before the Examiner in October 1963, the Pembina plant was new and was going through a so-called "shakedown" process, that is, a preliminary period of training new employees and generally working out problems existent in any new operation. Motor Coach desired to ascertain whether existing common carrier service would be sufficient to satisfy its needs, and during a five-month trial period from May to October 1963 used such service. The existing common carriers were unable to provide the four-day service to Pembina which Motor Coach requires to produce its planned one bus a day and to prevent a shutdown of its assembly line. The common carriers, according to the Examiner, "from the time of picking up shipments have taken from 5 to 13, or more, days for delivery at Pembina."
During the twelve-month period prior to October 1963, plaintiff had at least one truck available for every day of the year at Chicago, Detroit, Cleveland, Toledo, Akron or Columbus. The method of operation proposed by plaintiff if its application is granted is as follows: Plaintiff will devote at least nine tractor-trailer units, each consisting of a two-man sleeper-cab tractor and a van trailer, to Motor Coach's exclusive use for transportation from the origin points involved in plaintiff's application to Pembina, North Dakota. Plaintiff will advise Motor Coach of the time of departure of each unit from Winnipeg. Upon the arrival of a unit at its destination in the United States the driver will receive instructions from Motor Coach for the return movement of the unit. Plaintiff will provide multiple pickup service at various points involved in its application designed on a reasonable routing basis. Plaintiff will devote its northbound transportation exclusively to meeting the rigid delivery requirements of Motor Coach, and will co-ordinate the movement of its equipment with Motor Coach's production schedule. The plaintiff will assure Motor Coach of delivery within four days from the time of pickup at the initial origin point, and will enter into a continuing contract with Motor Coach for this purpose. The plaintiff employs 22 drivers and has a spare list of 6 drivers.
In a proceeding for contract carrier authority, the applicant must first establish that it meets the statutory definition of a "contract carrier by motor vehicle" contained in Section 203(a)(15) of the Interstate Commerce Act.
Under such definition a contract carrier by motor vehicle is one who engages in transportation "under continuing contracts with one person or a limited number of persons" either (a) by assigning vehicles for a continuing period of time to the exclusive use of each person served or (b) by furnishing transportation services designed to meet the distinct need of each individual customer.
Meeting this definition, the contract carrier is to be issued the permit for its proposed operation if pursuant to Section 209(b) of the Act
it appears that such operation is consistent with the public interest and the national transportation policy.
In making such determination, the Commission must consider five criteria. They are: (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 on the protesting carriers, (4) the effect which denying the permit would have upon the applicant/or its shipper, and (5) the changing character of that shipper's requirements. 49 U.S.C. § 309(b).
THE COMMISSION'S DECISION
In denying the plaintiff's application, the Commission, Division 1, found that plaintiff had failed to establish that its proposed operation would be consistent with the public interest and the national transportation policy.
In issue here are certain portions of the Commission's decision. For convenience, some of these portions are quoted elsewhere herein, the remainder being as follows:
"We do not believe that the supporting shipper-consignee's limited storage space at Pembina and its requirement that its assembly parts be delivered in accordance with a predetermined schedule constitute, in the circumstances shown here, a distinct need which applicant's proposed service could be said to be designed to meet. Nevertheless, applicant proposes, instead, to furnish such service only to Motor Coach Industries, Inc., through the assignment to the exclusive use of such shipper-consignee of those of its vehicles not being used in exempt transportation. There is some question whether the practical aspects of applicant's proposal are repugnant to an assignment of equipment as defined in section 203(a)(15) of the Act. Various questions relative to the assignment of equipment presently are under consideration in No. MC 125230, DeVon Owens Contract Carrier Application, [100 M.C.C. 34], and, in view of our ultimate conclusions herein, it will be sufficient to assume, without deciding, that applicant's proposal does not abridge the concept of assignment of vehicles. We note that applicant has not been prejudiced by the examiner's conclusion to the contrary, inasmuch as he found the proposed operation to be contract carriage and considered the merits of the proposal in the context of its consistency with the public interest and the national transportation policy.
"As noted, only one shipper-consignee will be served, but applicant has not shown that such person has a distinct need for a type of service not ordinarily offered by common carriers. The service proposed, apart from the assignment-of-vehicles characteristic and the incidental fact that multiple pickups would be attempted by applicant in order to achieve an economically feasible load factor, does not differ substantially from that offered by common carriers generally and by protestants herein. Although it is true that in most cases protestants must join their operations in a two-line haul in order to serve the supporting shipper-consignee at Pembina, such service need not be less expeditious than the proposed single-line operation, because the latter would be subject to significant delays in making several stops at the widely scattered origin points sought. We agree with the examiner that it is unrealistic to compute anticipated transit time on the basis of applicant's arriving at each origin during loading hours in view of the long distances between most of the origins. " 99 M.C.C. 697 at 702, 703.
PLAINTIFF'S CLAIM THAT STATUTORY STANDARDS WERE NOT PROPERLY EMPLOYED
The threshold test as to any proposed contract carrier operation is whether it meets the contract carrier definition in 203(a)(15). Plaintiff asserts that the Commission did not make this test in conformity with 203(a)(15). In this regard, some background is necessary.
A contract carrier by motor vehicle is defined in 203(a)(15) as one who engages in transportation 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 * * * to the exclusive ...