Transport Co. v. Champion Transport, Inc.

Citations: 298 Ark. 178; 766 S.W.2d 16; 1989 Ark. LEXIS 103Docket: 88-285

Court: Supreme Court of Arkansas; March 6, 1989; Arkansas; State Supreme Court

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John I. Purtle, Justice, presided over an appeal concerning an order from the Arkansas Transportation Safety Agency, Transportation Regulatory Board, which granted Champion Transport, Inc. a permit to operate as a contract carrier for Fina Oil and Chemical Company. The appellants—Transport Company, Inc., Frank Thompson Transport, Inc., and Miller Transporters, Inc.—contested the ruling, arguing that the Board and circuit court wrongly applied a lesser burden of proof for contract carrier permits compared to common carrier certificates. The court upheld the Board's decision.

Champion Transport's application aimed to transport crude oil, condensate, and casing-head gas within Miller County and beyond, exclusively for Fina. Fina's representatives testified to an urgent need for a contract carrier, citing a financial loss of $7,672.50 due to Champion's lack of authorization to transport their materials. Fina highlighted past dissatisfaction with common carriers regarding service availability, dedicated equipment, and company-trained drivers, emphasizing the necessity for on-demand service and confidentiality.

Thompson Transport noted limited capacity, stating it could only dedicate two pieces of equipment to Fina but not exclusively. Miller Transporters confirmed it could provide extra equipment but did not have dedicated crude oil transport. Transport Company claimed it had sufficient idle equipment and drivers but could not meet Fina's exclusive needs. The appellants' rates for transporting crude oil varied, with Transport Company at $0.445 per barrel, Thompson at $0.538 per barrel, and Miller at $0.710 per barrel.

Transport Company, Inc., identified as a common carrier, was determined by the Board to be unable to operate exclusively for Fina but could allocate some equipment and drivers for that purpose. The court is tasked with assessing whether the Board and circuit court incorrectly established a lesser burden of proof for contract carrier permit applications compared to common carriers. According to Arkansas Code Annotated 23-2-425(b)(3), findings of fact from the circuit court are not binding on the Supreme Court, which retains the authority to review evidence and establish its own facts and legal conclusions.

In previous cases, such as Batesville Truck Lines v. Arkansas Freightways, the court clarified that it is not bound by the circuit court's factual determinations in appeals involving Arkansas Transportation Commission decisions. The court emphasized that it would not overturn the Board's findings unless they contradicted the preponderance of evidence. The Board ruled that the appellee satisfied its burden under the Arkansas Motor Carrier Act and issued a certificate, referencing a precedent from the Interstate Commerce Commission which indicated that the requirement for a contract carrier to "promote the public interest" imposes a lesser burden than the requirement for common carriers to demonstrate "public convenience or necessity."

Neither term is explicitly defined in the relevant statutes. Prior judicial interpretation, such as in Santee v. Brady, established that a certificate cannot be granted if existing service is adequate unless additional service is deemed beneficial to the public, or the current carrier has been given the chance to meet the additional demand. Definitions for common and contract carriers are provided in the code, distinguishing between services provided to the general public versus those offered under specific contracts. The function of a contract carrier is described as focusing its efforts on a limited number of shippers, effectively integrating with the shipper's operations.

Arkansas code provisions mimic federal statutes from the Interstate Motor Carriers Act of 1935, particularly in their definitions and regulatory frameworks for common and private carriers. The Arkansas code stipulates that a permit for contract carriers will be granted to qualified applicants who demonstrate fitness, willingness, and ability to comply with regulations, and whose operations serve the public interest. The Board considers several factors when evaluating permit applications: the applicant's financial condition, existing transportation services, and the likelihood of the proposed service's permanence. The burden of proof for contract carriers is less stringent than for common carriers, reflecting their specialized service to specific contracting parties rather than the general public.

In *Interstate Commerce Commission v. J-T Transport Company, Inc.*, the Court emphasized that existing carriers may not be adversely affected by a permit denial solely based on potential traffic losses. It clarified that the adequacy of current carriers does not solely determine permit outcomes; the impact on applicants and shippers is also significant. The ruling indicated that the interests of protesting carriers should not be viewed as maintaining the status quo but rather considered within a framework that allows for new contract carriers based on demonstrated shipper needs, recognizing the inherent conflict between proposed shippers and existing carriers.

The Board and circuit court determined that granting the permit would not adversely affect the revenue of existing common carriers, as some already transport for Fina and would continue regardless of the permit's approval. The Board thoroughly assessed the competing interests and, while its findings are not mandatory for acceptance, they align with the overwhelming evidence. Following the precedent set in J-T Transport Company, the applicant must first prove that the proposed service is specialized for the shipper’s specific needs. If protestants can show they are capable of meeting these needs, the applicant must then demonstrate superior capability. In this case, a distinct need was established by the shipper, along with the requirement for specialized equipment. Testimony suggested that existing carriers might not adequately provide the necessary services for Fina. The Board also evaluated the available facilities, personnel, and costs to the shipper, noting the shipper's claim that they would cease motor carrier shipping if the application was denied. The Board's expertise in making these determinations is acknowledged, and their decisions must be supported by evidence consistent with statutory criteria. Ultimately, the decisions of both the Board and the circuit court were upheld, affirming the Transportation Board's order.