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authority were permitted, but not required, to provide a through service by tacking their separate authorities at common service points (gateways), see Gateway Elimination, 119 M.C.C. 170, 179182 (1973). Such tacking operations are now governed by the procedures established in Gateway Elimination, 119 M.C.C. 530 (1974). In operating the Interstate Division, Midwest elected to continue to provide a through service which in some instances required the traversal of a complicated series of gateways requiring vehicles to pass through Wheeling, W. Va. In addition, there were instances where vehicles had to go through both Wheeling and Belmont County, Ohio, by going back and forth across the Ohio River.2

The actual origin of No. MC-C-4201 goes back to September 4, 1963, when the Commission instituted an investigation to determine whether Midwest (1) had performed transportation services in interstate commerce not authorized under its certificates, in violation of section 206(a) of the act; (2) had falsified records in violation of section 222(g); (3) had fraudulently sought to evade regulation contrary to section 222(c); and (4) had violated section 223 of the act and rules thereunder relating to the collection of rates and charges (49 CFR 188, now 49 CFR 1322), and to the lease and interchange of vehicles (49 CFR 207, now 49 CFR 1057). After full and due process under the terms of the Administrative Procedure Act, the Commission, division 3, by report and order of December 28, 1965, found that Midwest had engaged in the enumerated violations and ordered Midwest to cease and desist from such violations, see Midwest Emery Freight System, Inc.-Control and Merger, 101 M.C.C. 19 (1965). In all fairness to Midwest, it must be noted that these violations occurred in 1962 and early 1963 when Midwest was encountering certain operational and procedural problems in connection with its transition from contract to common carriage.

Subsequently, on July 6, 1970, the Commission reopened the investigation proceeding for further hearing under section 212(a) of the act to determine whether Midwest had willfully failed to comply with the cease and desist order of December 28, 1965. In response

?The specific gateway involved here was the subject of a traditional gateway elimination application filed April 9, 1971, in No. MC-114019 (Sub-No. 213). As noted in the initial decision herein that application was granted, but issuance of a certificate was withheld. It was subsequently recognized that no new service was involved and a fitness finding limited to that proceeding should be made. The certificate has now been issued. Midwest is of the view that it had an obligation to continue providing service by lacking prior to gateway elimination because of rep resentations made during the acquisition of the Interstate Division's rights that services provided by the Interstate Division would be continued.

thereto, and pursuant to section 5 of the Administrative Procedure Act (5 U.S.C. 554(c)), Midwest submitted an offer of settlement admitting certain transportation activities and proposing, by way of settlement of the issues, that the Commission enter an order suspending the authority of the Interstate Division of Midwest to engage in trip leasing any and all motor vehicle equipment for a period not to exceed 60 days. In its order of April 16, 1971, the Commission, Division 1, (a) found Midwest to have been (1) transporting property, in interstate, for-hire, motor common carriage, to points not authorized in its certificates and between authorized points without observing gateways, in violation of section 206(a), and (2) failing to maintain compliance with provisions of section 222(g) relating to falsification of records, with provisions of section 222(c) pertaining to fraudulent evasion of regulation provided by part II of the act for motor carriers, with the requirements of section 223 and the rules and regulations thereunder relating to collection of rates and charges (49 CFR 1322), and to the lease and interchange of vehicles (49 CFR 1057), all in violation of the specified statutes and regulations and in willful violation of the cease and desist order of December 28, 1965, (b) ordered the proffered 60-day suspension of trip leasing of motor vehicle equipment at all terminals of the Interstate Division of Midwest, and (c) provided that the order entered therein on December 28, 1965, was to remain in full force and effect.

In early January 1972, the district supervisor of the Bureau of Operations, Interstate Commerce Commission, located at Wheeling, W. Va., undertook a complete survey of the operations of the Interstate Division. His investigation took approximately 6 months and covered the entire scope of Commission regulations.

Subsequent to receipt of the order of June 29, 1972, in No. MC-C4201, but prior to the hearing, Midwest and the Bureau entered into a stipulation of facts in the proceeding which outlined the areas investigated and admitted to specified violations. The stipulation and the evidence of record limited the scope of the inquiry to violations falling within three specific areas: (1) extension of credit for the payment of tariff charges for periods in excess of that permitted by the Commission's regulations, (2) falsification of records in connection with the trip leasing of vehicles, and (3) service between authorized points without observance of required gateways. The Administrative Law Judge's summary of the types of violations and extent of each is reprinted in appendix A hereto. At the hearing Midwest adduced considerable evidence to explain and to mitigate the violations presented by the Bureau and admitted by Midwest in the stipulation. This evidence was well summarized by the Administrative Law Judge in the initial decision and is set forth with minor modification in appendix B hereto.


On exceptions, the Bureau contends that section 212(a) of the act under which this investigation proceeding was instituted specifically provides for revocation of a certificate where “the holder there of willfully fails to comply *** with a lawful order made as provided in section 204(c) ***"; that in an investigation proceeding the burden of proof rests upon the Commission to show that respondent has violated an order of the Commission, and that the Bureau has sustained its burden of proof as evidenced by the record which shows numerous violations of two prior cease and desist orders.

The Bureau emphasizes the differences between the investigate proceeding which is governed by section 212(a) and the fitness issue in the application proceeding which is governed by the provisions of section 207(a). The Bureau argues that the Administrative Law Judge's reliance on Gilbertville Trucking Co. v. U.S., 371 U.S. 115 (1962), was misplaced because the action therein arose under section 5(7) of the act and not under section 212(a) as is the case in the investigation proceeding herein, and that there is a substantial distinction between the wording of section 5(7) and section 212(a). The Bureau, citing Querner Truck Lines, Inc. Investigation, 100 M.C.C. 215, 220 (1965), further argues that language of section 212(a) is much stronger than that of section 5(7) and that under section 212(a) the Commission may tailor its action to the circumstances presented and exercise an “allowable choice" of the proper remedy.

The Bureau contends that in light of Midwest's financial standing as one of the larger carriers in the country, and in light of its long history of violations after repeated warnings, and in the face of two outstanding cease and desist orders, the recommended imposition of a 180-day suspension of Midwest's trip leasing at the terminals of its Interstate Division is inappropriate. The Bureau seeks the revocation of Midwest's authority, or in the alternative, a suspension of all its authority for a stated period of time.

On exceptions, Midwest asserts not only that is it in substantial compliance with the Commission's credit regulations, but also that its collection record is better than the industry average, that it has taken appropriate internal action against the individuals falsifying company records, and that prior to the hearing it had instituted new and more stringent controls to accomplish compliance with all gateway requirements. Midwest cites as error what it considers to be the Administrative Law Judge's apparent reliance upon the Commission's 1965 decision concerning Midwest's fitness and upon the 1971 offer of settlement, the acceptance, and the agreed upon penalties because the facts underlying those determinations are assertedly totally unrelated to the incidents which lead to reopening the investigation proceeding and because the Bureau did not attempt to connect those allegations to the violations which are the subject of this proceeding. Midwest contests the Administrative Law Judge's findings that its representatives failed to implement prior representations to the Commission concerning remedial action or that its actions demonstrate a flagrant, systematic, and willful disregard of Commission rules. Midwest states that it should not have been found in violation of an outstanding cease and desist order nor should it have been found unfit, and that its efforts to comply with Commission rules and regulations. justify at least a contingent grant of authority for a specified term pending the filing by Midwest of a petition to terminate the proceeding in No. MC-C4201. Further, Midwest maintains that the recommended suspension of all Interstate Division trip leasing is not appropriate because the alleged leasing violations occurred only with respect to the trip leasing of exempt vehicles which constitutes but a small percentage of the carrier's trip leasing.


In its reply, the Bureau states that notwithstanding Midwest's attempt to mitigate its credit violations by placing blame on the shippers, it was on notice and under a specific order not to exceed the lawful credit period, but continued to do so. Furthermore the Bureau does not take issue with the fact that different personnel were involved in the falsification of certificates of exemption for trip leasing equipment; rather the Bureau focuses


the responsibility of the employer, a very large common carrier, to ensure that its employees are properly fulfilling their functions in accordance with the law. The Bureau recognizes that Midwest did not stipulate to the truthfulness of the statements made to the district supervisor, but only that said statements accurately reflect the information given to that supervisor.

248-348 0.77.9

In its reply, Midwest contends that the Bureau, and the Administrative Law Judge, overemphasize the period during which the investigation proceeding has been pending in order to reach conclusions which are not supportable on the record. Midwest decries the inference left by the Bureau and the Administrative Law Judge that there have been longstanding, continuing violations by respondent when in fact, the initial decision recognized that substantial progress was made between the 1970-71 investigation of the Interstate Division and the 1972 investigation which also concerned the Interstate Division, both of which having no reference to the 1962 problems.

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Two fundamental issues are involved in these proceedings. In the investigation proceeding the issue is whether respondent's certificates should be revoked or suspended, in whole or in part, for willful noncompliance with the Commission's orders of December 28, 1965, and April 16, 1971. In the application proceeding, the issue is whether Midwest is fit to conduct new operations for which a need was found, a determination of which shall be binding on Midwest's other pending applications for authority.

Turning initially to the issues raised in the investigation proceeding, we must recognize that if certain circumstances are found to exist, the Commission is empowered with authority to revoke or suspend for cause, all or any portion of a carrier's authority upon compliance with certain established procedures. All of these procedures have been followed in this proceeding. Section 212(a) of the act authorizes the revocation or suspension of a certificate issued by the Commission only for “willful failure to comply with any provision of this part, or with any lawful order, rule, or regulation promulgated thereunder, or with any term, condition, or limitation of such certificate ***." Therefore, we must determine whether respondent has willfully failed to comply with the act or with our rules or regulations promulgated thereunder. In United States v. Illinois Central R. Co., 303 U.S. 239, 243 (1938), one of the landmark cases involving the interpretation of the word "willful" in statutory enactments, the Supreme Court quoted with approval language in another decision:


we are persuaded that it I willfully) means purposely or obstinately and is designed to describe the attitude of a carrier, who, having a free will or choice, either intentionally disregards the statute or is plainly indifferent to its requirements.

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