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In disposing of the 1963 investigation, division 3 stated that **** A willful violation may result from continuous intentional disregard or indifference to the requirements of law.” Midwest case, supra, 101 M.C.C. 19, 30.
At the hearing and again on exceptions, the Bureau contends that the violations set forth in the stipulation between the parties constitutes willful noncompliance with the cease and desist orders of December 28, 1965, and April 16, 1971. The Administrative Law Judge evaluated the Bureau's contentions and respondent's arguments to the contrary. He concluded that respondent's conduct constituted willful noncompliance and we are like minded.
The regulations relating to the extension of credit to shippers by motor carriers' require the carrier to take precautions sufficient to assure payment within the time specified. Respondent's continued extension of credit to customers who evinced no intent to pay within the allowable time, and upon whom written requests to pay had no demonstrable effect whatsoever, does not evince the taking of sufficient precautions to assure payment of the tariff charges within the credit period specified by the regulations. The evidence regarding credit violations establishes that respondent's level of compliance in this area requires substantial improvement. In our opinion, too much opportunity for unjust discrimination among shippers is present for us to treat this matter lightly. Such unjust discrimination is, of course, improper not only when offered and encouraged by carriers, but also when slow payments at the customer's initiative are permitted by carrier inaction. We think it clear that the substantial number of freight bills which were allowed by respondent to remain unpaid for extended periods of time, were outstanding longer than was caused by mail de lays or other problems advanced in mitigation by respondent. These customers should have been put on a cash basis. Continued extension of credit, notwithstanding delinquent accounts of up to 126 days' duration shows a willful disregard of the credit regulations.
Viewing the evidence of record as a whole, we concur in the Administrative Law Judge's conclusion that the trip leasing arrangements initiated and operations conducted by respondent are
49 CFR 1322.1(a) Extension of Credit. Upon taking precautions deemed by them to be sufficient to assure payment of the tariff charges within the credit period here in specified, common carriers by motor vehicle may relinquish possession of freight in advance of the payment of the tariff charges thereon and may extend credit in the amount of such charges to those who undertake to pay the m, such persons herein being called shippers, for a period of 7 days excluding Saturdays, Sundays, and legal holidays.
not in accord with this Commission's lease and interchange regulations, and are in violation of those regulations and the provisions of the Interstate Commerce Act. Respondent's falsification of records was systematic and without justifiable excuse. Since the violations were committed knowingly by employees of respondent, such acts constitute willful failure to comply with the outstanding cease and desist orders. Respondent attempts to mitigate its failures regarding this type of violation by (a) pointing an accusing finger at certain employees and stating that they have been fired or de moted, and (b) claiming that the violations stemmed from a failure to require and examine additional records. As previously noted, the investigation proceeding has twice dealt with prior violations of essentially the same leasing regulations here under consideration by issuance of a cease and desist order. The 1971 investigation was terminated by an agreement of settlement which neither admits nor denies the guilt or innocence of the parties. Respondent thereby had actual and specific notice of the requirements of the leasing regulations. The operations involved herein constitute a flagrant violation of those same regulations.
The failure to observe gateways while of equal seriousness, also clearly illustrates respondent's attitude toward compliance with Commission regulations. While we recognize that significant strides have been made in the recent past relating to the wholesale elimination, under certain defined circumstances, of the requirement of observing particular gateways, respondent by its own volition elected to provide service beyond that specifically authorized, by tacking its grants of authority and it was incumbent upon respondent to do so only in a lawful manner. Respondent's failure to devise a method to insure the observance of all gateways even after the cease and desist order of April 16, 1971, is inexcusable and we must conclude that the violations were willful in nature.
The record as a whole shows that respondent's conduct, despite the existence of two outstanding cease and desist orders, plainly evinces an indifference to the requirements of those orders as well as the requirements of the act. In the report accompanying its cease and desist order of 1965, the Commission, division 3, in Midwest, supra, 101 M.C.C. 19, at page 30, said:
*** Midwest's long history of violations after repeated warnings, extending not merely to questions of vehicle equipment and maintenance but also into broader
49 CFR 1057.
questions of operation without appropriate authority or in violation of the leasing rules, justifies a finding that the violations have been willful.
The present record fairly establishes that similar violations repeatedly have been brought to respondent's attention through correspondence and otherwise over a period of years. Despite assurances given by respondent that adequate corrective measures would be or had been taken to prevent recurrences, those promises were not kept. Under such circumstances we must conclude that respondent's “long history" of violations has continued to the present time, and that these continued violations despite repeated advice and admonitions and the entry of two cease and desist orders, clearly establishes that respondent's violations have been willful in nature.
Section 212(a) charges us with choosing the proper remedy. Respondent's continuing disregard of regulations despite the imposition of two cease and desist orders and respondent's own offer of settlement, indicates that traditional methods of ensuring respondent's future compliance with the provisions of the act and our rules and regulations thereunder have been unsuccessful. We conclude that based upon the past activities of respondent limiting our action here to the issuance of yet another cease and desist order would be ineffectual and that new and additional means must be devised. Drawing a parallel from a proceeding before the Federal Trade Commission,' this Commission is the expert body to determine what remedy is necessary to eliminate the activities which have been disclosed and we have wide latitude in the exercise of our judgment.
The Bureau urges complete revocation of respondent's authority. We do not believe that such drastic action is warranted at this time, but remedial action of a more comprehensive nature than that recommended by the Administrative Law Judge is necessary. The measures outlined below are designed to give "complete and efficacious effect to the prohibitions of the statute with as little injury as possible to the interests of private parties or the general public," Gilbertville, supra, at p. 130.
We do not wish to deprive the general shipping public, particularly those shippers on whose support respondent was granted authority previous to the institution of these proceedings, of
Jacob Siegel (0 v. Federal Trade Commission, 327 U.S. 608, 612-613 (1946). "The I Federal Trade Commission is the expert body to determine what remedy is necessary to eliminate the unfair or deceptive trade practices which have been disclosed. It has wide latitude for judgment and the courts will not intertere excepi where the remedy selected has no reasonable relation to the unlawtul practices found 10 exist."
a transportation service essential to meet their needs. At the same time, however, we cannot permit any carrier to consistently violate specific sections of the act and our rules and regulations thereunder without fear of sanctions. Service authorized in response to the needs of particular shippers should be permitted to continue. However, in our opinion, specific peripheral and secondary services performed by respondent should be suspended for a stated period. We have determined, therefore, that respondent's right to engage in trip leasing of any kind, that is the trip leasing by respondent of its vehicles to any other carriers, including affiliated carriers, for use by the lessee, or the trip leasing by respondent of equipment from another carrier or other person for use by respondent, regardless of the nature of the commodity previously transported or to be transported under the trip leasing arrangement, shall be suspended for a period of 180 days. We have further determined that for a period of 180 days, to run concurrently with the suspension of trip leasing, respondent shall be prohibited from the interline or interchange of traffic with other motor common carriers including carriers with which it is affiliated or under common control.
We have decided upon these remedies based on consideration of the willfulness of respondent's unlawful activities and on the role of the suspended activities in respondent's overall operations, toward the end of assuring both that future compliance with all rules and regulations will be effected, and that future dealings with this Commission will be on an open and forthright basis. We believe that the reasons for our decision are sufficiently clear so that respondent should have no difficulty in understanding why these remedies were selected. Cf. Gilbertville, supra, Burlington Truck Lines, Inc., v. U.S., 371 U.S. 156 (1962), and Federal Highway Admin. v. Safeway Trails, Inc., 113 M.C.C. 815, 829 (1971).
In determining the sanctions we have imposed herein, we have considered the adverse effect to be absorbed by the shipping public, respondent's affiliated carriers, and its connecting carriers. We feel these remedies are appropriate in view of the large number of continuing violations which persisted over an extended period of time and because of the lack of good faith on the part of respondent in not carrying out its representations and further to impress upon this carrier and all other carriers that the warnings of this Commission are not just rhetoric. It is apparent to us that the less drastic remedy recommended by the Administrative Law Judge
See Robbins v. United Stutes, 204 F. Supp. 78, 80, footnote 2. (E.D. Pa., 1962.)
would not prove to be effective in the elimination of similar violations.
In numerous proceedings we have held that the purposes of section 212(a) of the act are not punitive. Thus, our power to act thereunder must not be used to punish an offender for his misdeeds, but rather to assure that he will not repeat them. Toward that end and to ensure strict future compliance with all applicable rules and regulations, we have found it necessary to suspend a portion of respondent's operating authority for a stated period. Another method of assuring compliance is the entry of a cease and desist order. We do not view either action as mutually exclusive. While the suspension will be a temporary measure, issuance of a cease and desist order, not subject to vacatur, will be a permanent method of assuring future compliance.
Because we deem compliance by respondent to the sanctions imposed in this proceeding to be of utmost importance, we shall make specific provision for continuing this proceeding for an indefinite period, during which time the Bureau of Enforcement on its own initiative may under section 222 of the act institute criminal proceedings against respondent or appropriate officials there of who are deemed responsible for future violations. Thus, pressure is brought on those who own and operate carriers to see to it that their agents abide by the law. By continuing the investigation proceeding, a vehicle for final revocation of respondent's certificates would be in existence and repetition of extended procedural requirements already accomplished herein would not be necessary in order to take further action.
In the application proceeding, we must now determine whether Midwest is fit to provide the services for which a need has been shown. In a proceeding of this nature, the burden of establishing its fitness properly to perform a proposed transportation service, in keeping with the applicable statutory and other regulatory requirements, is upon the applicant seeking motor carrier authority. See Kroblin Refrigerated Xpress, Inc. v. United States, 197 F. Supp. 39, 47 (N.D. Iowa, 1961).
In determining applicant's fitness, we are required to consider the nature and extent of the violations, and the mitigating circumstances, if any, whether applicant's conduct represents a flagrant and persistent disregard of the provisions of the act, whether applicant has made a sincere effort to correct its past mistakes, and whether applicant had demonstrated its willingness and ability to comport in the future with the applicable rules and