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November 18, 1969

Regular Common Carrier Conference et al., Plaintiffs,
United States of America and Interstate Commerce Commission et al., Defendants.

Miller, Senior Circuit Judge, Tamm, Circuit Judge, and Pratt, District Judge.

The opinion of the court was delivered by: PRATT

This action was filed pursuant to 28 U.S.C. § 1336 (1964) to review the decision of the Interstate Commerce Commission removing "truckload lot" restrictions from all outstanding certificates bearing such restrictions. The gravamen of the complaint is that the decision of the Commission was reached in a rule making, rather than an adjudicatory, proceeding. Removal of Truckload Lot Restrictions, 106 M.C.C. 455 (1968). A statutory three-judge court was convened as required by 28 U.S.C. §§ 2284(1), 2325 (1964). For the reasons stated below, we hold that the Commission properly employed a rule making proceeding to remove these restrictions under the authority of section 208(a) of the Interstate Commerce Act, 49 U.S.C. § 308(a) (1964).


 The "truckload lot" restrictions affected by the Commission's action are conditions imposed upon certain certificated carriers requiring that they transport only full truckloads of property to and from authorized termini. Removal of Truckload Lot Restrictions, supra, 106 M.C.C. at 458. Conceived in 1937, these restrictions have been subject to widely varying interpretations and have presented difficulties of enforcement. Id. at 459-469. Since 1942, these restrictions have been construed as describing "a service in which a shipment substantially filling the carrying capacity of a vehicle is received by the carrier at one time and one place." Id. at 468. However, no such restrictions have been imposed on new licensees since 1943. See Id. at 465, 466. Against this background, the Commission on its own motion convened a rule making proceeding to review its past policy of removing the restrictions on a case-by-case basis after proof that public convenience and necessity so required. Id. at 469. All interested parties were invited to file statements setting forth any arguments and evidence either supporting or opposing the proposed action. Id. at 456-457. Oral hearings were not held. Id. at 480. On January 15, 1968, the Commission issued a thorough, well-reasoned opinion which amended existing regulations to remove all truckload restrictions from outstanding certificates. Id. at 495. The opinion is a model of an administrative agency report and demonstrates the care with which the Commission approached its task.

 The plaintiff Regular Common Carrier Conference is a non-profit trade association with 1300 common carrier members. The other individual plaintiffs are individual common carriers who participated in the Commission proceedings. The United States and the Commission are named defendants. Interstate Motor Freight System is an intervening defendant which is also a member of the plaintiff Conference. Western Gillete, Southwest Freight Lines and Direct Transports, Inc. are other intervening defendants. All intervening defendants operated under certificates of public convenience and necessity containing "truckload lot restrictions" and were respondents in the proceeding before the Commission now under review.

 In this action, the single issue presented by plaintiffs is whether rule making was the proper procedure for the Commission to employ in reaching its result. *fn1"


 In the usual case, court review of a rule making proceeding is limited to the inquiry whether the agency abused its discretion, acted in excess of its delegated powers or failed to comply with procedural requirements. 5 U.S.C. § 706 (Supp. IV, 1969). Here, however, we are reviewing the initial choice of the Commission to employ a particular type of proceeding. We are not called upon to review the result of that proceeding which is before us in the form of an order of the Commission. The decision with respect to the type of proceeding has been held to reside within the discretion of the agency, reviewable only as an abuse of agency discretion. *fn2" This approach has a rational basis and is consistent with past judicial policy and practice governing the review of the action of administrative agencies.


 Plaintiffs argue that the amendment or modification of existing certificates constituted "licensing" and that adjudicatory proceedings to accomplish this result were required under sections 206 and 207 of the Interstate Commerce Act, 49 U.S.C. §§ 306, 307 (1964), *fn4" and under the Administrative Procedure Act, 5 U.S.C. § 551 (Supp. IV, 1969). *fn5" As a corollary they urge that the burden of proving that the public interest and necessity required the removal of the restrictions should have been upon the carriers whose certificates contained these restrictions. *fn6" In essence, plaintiffs ask that the Commission be required to hold adjudicatory proceedings for each of the approximately 250 carriers whose certificates were affected by the instant rule making proceeding.

 In a broad sense, many agency proceedings contain elements of both adjudication and rule making. *fn7" The election between adjudication and rule making may often turn on agency policy decisions and specific agency needs. Courts increasingly are recognizing the validity and necessity of rule making in situations which could support adjudication instead. *fn8" Flexibility in agency proceedings is imperative so that an agency may carry out its policies in the most intelligent, expeditious and efficient manner possible, consistent with the requirements of due process. *fn9"

 More specifically, under the teaching of American Airlines, Inc. v. CAB, *fn10" a rule making proceeding which affects uniformly the interests of a class of licensees or certificate holders is valid. In American Airlines, the Board issued a regulation pursuant to a rule making proceeding which provided that only air carriers moving cargo without passengers were entitled to sell space at wholesale rates when the user reserved a specified amount of space in advance. Air carriers carrying both cargo and passengers were denied this privilege. The Court sitting en banc held that the agency had issued a general ...

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