Jurisdictional Statement — Milk Transport, Inc. v. United States

i nn Ca al ae |X"

ei

e

go

rs

a4

e

Opinion and Judgment Below

Grounds ef Jurisdiction

Questions Presented by Appeal

Statement of the Case

The Questions Presented Are Substantial

Certificate of Service

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

<

a

x

®

wee = ~

“octet nN wen

ms te

x

AUTHORITIES CITED

CASES: Page

Determination of Exempted Agricultural Commodities, 52 M.C.C.

611, 5561 11

Determination of Exempted Agricultural Commodities, 74 M.C.C.

549 9

East Texas Motor Freight Line v. Frozen Foods Express (1956),

351 U.S. 49, 76 S.Ct. 574, 100 L.Ed. 917 6. 9, 20.11, 13

Erickson Transport Corp. Extension — Madison, So. Dak., 78

M.C.C. 707 (1957) 12,13

Frozen Foods Express v. U. S., 148 F.Supp. 399, affirmed 355

U.S. 6 ' 12,13

Inland Motor Freight Grandfather Application (Oct. 7, 1960), 14

Fed. Carr. Cas., par. 35,004 (CCH Reports) 10

Milk Transport, Inc.—Extension—Bulk Commodities, MC 113255

(Sub No. 3), 78 M.C.C. 335 SNAG Ss

Milk Transport, Inc.—Extension—Citrus Juices, Frostproof, Fla.,

MC 113255 (Sub 15) 11

Schaffer Transportation Company v. U. S, 355 U.S. 83, 78 S.Ct.

173, 2 L.Ed.2d 117

United States, et al., v. Pierce Auto Freight Lines, Inc., et al., 327

U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821 2

Watkins Motor Lines, Inc.—lInterpretation, 64 M.C.C. 455 (1955)

12,13

ts

STATUTES:

72 Stat. 573

5 U.S.C.A., Sec. 1009

28 U.S.C.A., Secs. 1253 and 2101(b)

28 U.S.C.A., Seca. 1336, 1398, 2284 and 2321-2325

49 U.S.C., Sec. 303(b)(6)

~ 49 U.S.C.A., Sec. 305(g)

49 U.S.C.A., Secs. 301-328

MISCELLANEOUS:

1.C.C. Practitioner’s Journal, February, 1961, page 602

-enwwn ww Ww

~

i

IN THE

Supreme Court of the Anited States

OcTOBER TERM, 1961

MILK TRANSPORT, INC.,

Appellant,

vs.

UNITED STATES OF AMERICA and INTERSTATE

COMMERCE COMMISSION,

Appellees,

and

ALTERMAN TRANSPORT LINES, INC., and

REFRIGERATED TRANSPORT CO., INC.,

Intervenors.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MINNESOTA, THIRD DIVISION

a

JURISDICTIONAL STATEMENT

OPINION AND JUDGMENT BELOW

The opinion of the three-judge District Court, filed De-

cember 21, 1960, is reported in 190 F. Supp. 350. The opin-

ion is included here as Appendix A.

The decision of the Interstate Commerce Commission, here

involved, has not been printed in the official reports, but

appears here as Appendix B.

This suit was brought by Appellant, Milk Transport, Inc.,

to set aside the Order of September 4, 1959, of the Appellee,

Interstate Commerce Commission, in No. MC 113255 (Sub

No. 8) and No. MC 113255 (Sub No. 9), Milk Transport, Inc.,

“Grandfather Application” and Milk Transport, Inc., “In

terim Application.” The action was commenced before a

three-judge court in the District of Minnesota pursuant to

Sec. 205(g) of the Interstate Commerce Act, 49 U.S.C.A.,

Sec. 305(g), Sec. 10 of the Administrative Procedure Act,

5 U.S.C.A., Sec. 1009, and §§ 1336, 1398, 2284 and 2321-2325,

inclusive, of the Judicial Code, 28 U.S.C.A., §§ 1336, 1398,

2284 and 2321-2325. Milk Transport, Inc., in addition,

sought a mandatory injunction requiring the Interstate

Commerce Commission to hear and determine Milk Trans-

port’s applications for a certificate to transport citrus juices,

in bulk, in tank vehicles, under the provisions of §7(c) of

the Transportation Act of 1958, 72 Stat. 573 (Appendix E).

The Commission had, by its Order of September 4, 1959, dis-

missed Milk Transport’s applications without a hearing.

The judgment appealed is dated December 19, 1960, and

was entered December 21, 1960. The notice of appeal was

filed February 17, 1961, in the United States District Court,

District of Minnesota. The time for docketing this case in

the Supreme Court was subsequently extended to May 18,

1961, by Order of the District Court dated April 6, 1961.

The jurisdiction of the Supreme Court to review this de-

cision by direct appeal is conferred by §§ 1253 and 2101(b)

of the Judicial Code, 28 U.8.C.4., $$ 1253 and 2101(b).

A number of cases sustain the jurisdiction of the Supreme

Court, among them, Schaffer Transportation Company v.

U. 8. 355 UuS. 83, 78 S.Ct. 173, 2 L.Ed.2d 117; United States,

et al., vr. Pierce Auto Freight Lines, Inc., et al., 327 U.S. 515,

66 S.Ct. at 687, 90 L.Ed. 821.

QUESTIONS PRESENTED BY APPEAL

(1) Are the “grandfather” and “interim” provisions of

$Ti¢) of the Transportation Act of 1958 applicable only to

applications for certificates to transport the 11 specified

commodities in the second proviso of $71a) of the Trans-

portation Act of 1958, as was decided by the lower court, or,

ure said “grandfather” and “interim” provisions applicable

to applications for certificates to transport all commodities

“made subject to” Part I] of the Interstate Commerce Act

by both the first and second provisos of $7(a) of the Act

of 1958, including citrus juices?

(2) Was the transportation of citrus juices i“exesapt”

under §203(b) (6), Part II, Interstate Commerce Act, prior

to its amendment by §7(a) of the Soeeepertin Act of

1958?

The Interstate Commerce Commission held in the negative

on question (2) and dismissed appellant's applications for

that reason. The three-judge court held question (2) to be

immaterial,

STATEMENT OF THE CASE

This proceeding affords the first opportunity for this Court

to interpret the provisions of $7(¢) of the Transportation

Act of 1958 (not codified in the United States Code). In

addition, the resolution of the issues presented herein in-

volves the interpretation of $203(b)(6) of Part II of the

Interstate Commerce Act (49 UUS.C. $308(b)(6)). both

before and after its amendment by $7(a) of the Transporta-

tion Act of 195s.

On December 10, 1958, Milk Transport, Inc., the appel-

lant, filed with the Interstate Commerce Commission two

applications for a certificate to transport citrus juices, in

bulk, in tank vehicles, from points in Florida and Texas to

4

points in Minnesota, Wisconsin, Illinois, North and South

Dakota and Iowa. The applications were filed specifically

for determination and handling under the “grandfather” and

“interim” clauses of §7(c) of the Transportation Act of

1958, and were filed within the 120-day period prescribed by

the Act of 1958."

The “grandfather” provision of §7(c) reads as follows:

«e * * if any person * * * was in bona fide opera-

tion on May 1, 1958, * * * in the transportation of

property for compensation by motor vehicle made sub-

ject to the provisions of Part II of that Act by para-

graph (a) of this section * * * the Interstate Com-

merce Commission shall without further proceedings is-

sue a certificate or permit * * *.”

The phrase “Part II of that Act” refers to Part II of the

Interstate Commerce Act, (49 U.S.C.A., §§ 301-328). The

phrase, “paragraph (a) of this section” refers to §7(a) of

the Transportation Act of 1958, which amended §203(b) (6)

of Part Il of the Interstate Commerce Act, the agricultural

commodity exemption clause of the Federal Motor Carrier

Act. ,

Sec. 203(b)(6) of Part II exempts carriers engaged in

the transportation of non-manufactured agricultural com-

modities from the necessity of obtaining Certificates of Pub-

lic Convenience and Necessity authorizing such transporta-

tion pursuant to §206 of Part II of the Interstate Commerce

Act. Sec. 7(a) of the Act of 1958 extensively amended $203

(b) (6), (see Appendix ID) and as a result of §7(a), many

commodities which were formerly “exempt” under $203(b)

(6), as interpreted by this Court, became suddenly “not ex-

empt,” meaning that a certificate had to be obtained in order

1There is a distinction between the “interim” and “grandfather” clauses of

§7(c), but this difference is not material at this point. To simplify the presenta-

tion of the issues, it will be necessary only to discuss the “grandfather” provi-

sion of §7(c).

that a carrier might continue transporting these commodi-

ties. Congress provided a “grandfather” clause in §7(¢) of

the Act of 1958 in order that existing carriers, caught in the

change of law, would be automatically certificated without

the necessity of applying under $206 for a certificate of Pub-

lic Convenience and Necessity. The existing carriers were re-

quired only to file their “grandfather” applications within

120 days after the effective date of the Act of 1958, or by

December 12, 1958.?

The three-judge court stated at 190 F.Supp. at 352:

“All parties agree that a basic requirement of the

right to continue hauling a particular commodity under

the ‘grandfather’ clause is that the commodity must

have been ‘exempt’ prior to the 1958 Act and was made

‘non-exempt’ by the Act.”

To state it in another fashion, the phrase in §7(¢) :

“made subject to * * * Part Il of that Act by para-

graph (a) of this section,”

should be read :

“changed from ‘exempt’ to ‘not exempt’ by $7(a) of the

Act of 19538.”

It was, and is, the contention of appellant, Milk Trans-

port, that, under the law as interpreted by this Court prior to

the Act of 1958, citrus juices were an agricultural commodity

and not a manufactured product thereof within the meaning

of former §203(b)(6) of Part I] of the Interstate Commerce

Act, or were, in other words, “exempt” from the certificate

requirements of $206 of Part I] of the Interstate Commerce

Act. This contention is based primarily upon Haat Teras

Motor Freight Lines v. Frozen Foods Express, 1956, 351 U.S.

49, 76 S.Ct. 574, 100 L.Ed. 917.

2In all respects the procedural requirements were complied with by Milk

Transport, Inc.

It is conceded, of course, that citrus juices are now “not

exempt,” by virtue of the first proviso of §7(a) of the Act of

1958. The first proviso incorporated, by reference, Ruling

107, March 19, 1958, Bureau of Motor carriers, Interstate

Commerce Commission, and declared that all commodities in

Ruling 107 listed as “not exempt” therein, shall be “not

exempt” and similarly commodities listed as “exempt” in

Ruling 107 shall be “exempt.” Citrus juices are now “not

exempt” by statute because they are listed as “not exempt”

on page 6 of Ruling 197.

Therefore, appellant contended, and contends now, that

citrus juices being “exempt” prior to the Act of 1958 and

“not exempt” after the Act of 1958, the legal prerequisites are

present for the applicability of the “grandfather” clause of

$7(c), and the Commission was therefore required to accept

the applications for determination and handling under §7(¢).

The Commission, by order of September 4, 1959, dismissed

plaintiff's applications without a hearing. See Appendix B.

Milk Transport’s Petition for Reconsideration was denied by

the Commission on December 22, 1959. Appendix C.

The Commission’s Order is succinct. The Commission de-

termined siuply that citrus juices were not “exempt” prior

to the Act of 1958 under former §203(b) (6), and that there

had not been, therefore, the requisite change of status from

“exempt” to “not exempt” for the “grandfather” clause of

§87(c) to apply.

At this point, then, the only issue was whether the Com-

mission's decision was correct for the reason given.

The plaintiff, on April &, 1960, commenced proceedings be-

fore the three-judge Court in the District of Minnesota for

review of the Commission’s Order of September 4, 1959.

The United States and the Interstate Commerce Commis-

sion did not defend the Order of the Commission upon the

grounds invoked in the Order. The claim was made that the

7

issue of the “exempt” status of citrus juice prior to the Act

of 1958 was immaterial.

Instead, the appellees contended, and the lower Court

agreed, that, even though citrus juices may have been “ex-

empt” prior to the Act of 1958, Milk Transport was, never-

theless, not entitled to secure a certificate under the lenient

“grandfather” clause of $7(¢).

The appellees and the lower court reasoned that the lenient

provisions of the “grandfather” clause of $7(¢) were applie-

able only to the 11 specified commodities in the second pro-

viso of §7(a) of the Act of 1958*, and since citrus juices were

not one of those commodities, it made no difference that cit-

rus juices may have been “made subject to” Part [I of the

Interstate Commerce Act by the firat proviso of §7(a) of the

Act of 1958,

The reason assigned by the Commission for dismissing ap-

pellant’s applications and the reason given by the three-

judge Court for sustaining the Order of the Commission are

quite different. The failure of the appellees to defend the rea-

son given by the Commission is a tacit admission of error by

the Commission.

THE QUESTIONS PRESENTED ARE SUBSTANTIAL

I.

The tirst question deals with the correctness of the decision

of the three-judge Court that the “grandfather” rights of

$7(¢) are applicable only to the 11 commodities listed in the

second proviso of $7(a). This is the first case in which this

question has been presented to this Court. The question is a

matter which has major significance in the administration

of the Interstate Commerce Act.

*“Frozen fruits, frozen berries, frozen vegetables, cocoa beans, coffee beans,

tea, bananas, or hemp, and wool imported from ary foreign country, wool tops

and noils, or wool waste (carded, spun, woven, or knitted ).”

The holding of the three-judge Court is submitted to be

erroneous for the following reasons:

(1) The “grandfather” rights secured in §$7(c) are

expressly applicable to property “made subject to the

provisions of Part Il of that Act by paragraph (a) of this

section |$7(a)].” (Emphasis added.) The lower Court

did not decide that only the 11 specitied commodities

were “made subject to’ Part II, but determined that

reyardless of what other commodities may have. been

“made subject to” Part I] by $7(a), only carriers of the

11 specitied commodities would be afforded “grandfath-

er” rights. These 11 commodities are listed in the sec-

ond proviso of §7(a). Citrus juices were “made subject

to” Part IL by the first proriso, $7(a), through the statn-

tory incorporation of Ruling 107. See. T(¢) makes no

distinction between the first and second provisos of §7

”

(a) but simply states “paragraph (a), which means,

obviously, the whole of $7(a). A carrier of any commodi-

ty whose status was changed from “exempt” to “not

exempt” by either the first or second provisos of $7 (a)

is entitled to “grandfather” rights under $7(c¢).

(2) The express language of $7(¢) denies any re-

strictive interpretation limiting its effect to only the

second proviso commodities of $7 ta). Therefore, the

lower court's inquiry into the legislative history is un-

warranted. $7(¢) is unambiguous.

(3) Even so, the legislative history, read as a whole,

indicates only that Congress intended in $7(a) to make

specific, by statute, the status of hundreds of commiodi-

ties in order to prevent the administration of Part IL of

the Interstate Commerce Act from becoming convulsed

in interminable litigation.£ To be sure, the 11 commeadi-

ties listed in the second proviso of $7(a) were accorded

ote a ee =O

.

“yrandfather” rights, but the Committee reports do not

state or even imply, that ov/y carriers of these 11 com-

modities were to be so favored, The decision of the lower

court means that coffee bean carriers, for instance, sur-

vived unaffected by the imposition of the full weight of

regulation, while formerly exempted citrus juice car-

riers were threatened with extinction with the change of

law by the long interruption in operations until they

could obtain a certificate of public convenience and neces-

sity under $206 of Part Il. Carriers with “grandfather”

rights were allowed to continue operations during the

pendency of their “grandfather” applications by the

terms of $7(¢) of the Act of 1958. Such an intention

to discriminate, without a reasonable basis, between car-

riers of coffee beans and citrus juices, cannot be attrib-

uted to Congress,

(4) The lower court has judicially amended $7(¢)

to read: .

“made subject to * * * Part IT * * * by the sec-

ond proviso of paragraph (a) of this section.”

If Congress intended that only existing carriers of the

11 commodities listed in the second proviso of $7(a) were

to have “grandfather” rights under $71¢), Congress

could easily have said so by the addition of only a few

words, but it did not.

(5) The fact that the Commission refused to dismiss

the application for the reasons stated by the Court, con-

stitutes the strongest possible administrative interpre-

tation of $T(e). which is contrary to the interpretation

given by the three-judge court,

‘Due, in large part, to the Commission's reluctance to accept this Court’s

decision in East Texas Motor Freight Line v. Frozen Foods Express, supra.

The Commission has officially expressed its extreme distaste for the East Texas

case. See Determination of Exempted Agricultural Commodities (coffee and

cucumbers), 74 M.C.C. 549. ‘

10

(6) The Commission has itself interpreted $7(c¢) in

a manner contrary to the lower court’s interpretation.

Inland Motor Freight Grandfather Application (Oct. 7,

1960), 14 Fed. Carr, Cas., par. 35,004 (CCH reports) ;

see 10C Practitioner's Journal, February, 1961, page

602. The Commission stated therein that $7(c¢) was in-

tended “to secure to existing carriers their right to oper-

ating authority coextensive with their prior lawful oper-

ations.”

II.

If question (1) is determined favorably to the appellant,

Milk Transport, there nevertheless remains the question of

whether the status of citrus juices was changed from “ex-

empt” to “non-exempt” by §7(a) of the Act of 1958. This

question, in turn, narrows to the issue of whether citrus

juices were “exempt” prior to the Act of 1958, (since they

are concededly “not exempt” since the Act of 1958). The

question must be decided in the light of former $203(b) (6),

as interpreted by this Court prior to the Act of 1958.

Former $203(b)(6) provided simply, in pertinent part :

“8203.

“(b) Nothing in this part, extept the provisions of $204

relative to qualifications in maximem hours of ser-

vice of employees and safety of operation or stand-

ards of eyuipment shall be construed to include

* *# *#

“(6) Motor vehicles used in carrying property consist-

ing of * * * agricultural (including horticultur-

al) commodities (not) including manufactured

products thereof) * * *."

We submit it is self-evident that citrus juices are a basic

agricultural commodity and are not a manufactured product.

The controlling interpretation of former $208(b)(6) is Fast

Texas Motor Freight Live ve. Frozen Foods Er press, 351 US.

49, T6 S.Ct. 574, 106 L.Ed. 917, wherein the principle was

announced ;

11

“At some point processing and manufacturing will

merge. But where the commodity retains a continuing

substantial identity through the processing state, we can-

not say that it has been “manufactured” within the mean-

ing of §203(b) (6).

It ix obvious that citrus juices not only maintain their sub-

stantial identity during extraction process, but remain pre-

cisely identical with the juice as it is first created by nature

within the bost fruit. Extraction amounts to no more than

merely removing the juice from its natural environment.

By consent of the parties there was submitted to the three.

judge court a partial transcript in a proceeding before the

Commission entitled Milk Transport, Inc.—Esrtension—Cit-

rus Juices, Frostproof, Fla, MC W13255 (Sub 15). This

transcript is contained in Appendix ITE of Milk Transport's

brief to the three-judge Court dated July 1, 1960. This testi-

mony establishes that juices (in this case, orange juice) are

extracted by machine, flash-pastenrized and pre-cooled, prior

to transporting in truck-trailers, Nothing more occurs. In

another proceeding, Wilk Transport, Inc.—Ertension— Bulk

Commodities, MC 113255 (Sub No. 3), reported in 78 M.CLC.

335, the process is described by the Commission as follows:

“The juice is prepared for shipment at Frostproof

(Fla.) by a flash-heating process to pasteurize it and in-

hibit the growth of bacteria, after which it is chilled and

shipped in insulated, stainless steel tank vehicles.”

This slight processing is, perhaps, less intense than the

very similar treatment given milk, vet milk has consistently

been held to be a non-omanufactured agricultural commodity

by the Commission, Determination of Exempted Agricultur-

al Commodities, 52 MCC. 511, 551.

In Kast Terax Motor Freight Line vr. Frozen Foods Ex-

press, supra, the Court discussed the considerable processing

which takes place when a chicken is killed and dressed for

market: the Court stated:

Lohintad 8 7 a ee ae |

RE AOA ASS NE A IRI NTR Bl Im iggy ON Me mmm

“But it is no more drastic a change than a change

which takes place in milk from pasteurizing, homogen-

izing, adding vitamin concentrates, standardizing, and

bottling. Yet the Commission agrees that milk so proc-

essed is not a ‘manufactured’ product, but falls under

the meaning of the ‘agricultural’ exemption. 52 M.C.C.

511, a9.”

A numier of decisions have dealt with the “exempt” or

“non-exempt” status, under former §203(b) (6), of commod-

ities which, like orange juice, are created by nature within

a protective covering, shell, or husk.

In Erickson Transport Corp. Ertension—Madison, So,

Dak., 78 M.C.C. 707 (1957), the Commission itself held that

fresh liquid eggs, egg yolks, and egg albumin, removed from

the shell, were non-manufactured and “exempt” under former

$203 (b) (6).

In Frozen Foods Erpresae vr. U. S., 148 F.Supp. 399,

affirmed 355 U.S. 6, the Court held that dried egg powder,

dried egg yolks, and ground shell peanuts, among other

commodities, were “exempt” and not manufactured com-

modities, vet each of these commodities was first removed

from an outer protective shell and then subjected to far

more severe processing than in the case of citrus juices.

The Commission, in the present case, held that) citrus

juices were “non-exempt” prior to the Act of 1958, and based

its decision upon its prior decision in Watkins Motor Lines,

Inc.—I nterpretation, 64 M.C.C. 455 (1955), in which it held

citrus juices to be manufactured commodities. At 64 M.C.C.

at 459, the Commission stated :

“That the extracting of juice from an orange creates

a new form cannot be gainsaid. Instead of a fruit, we

have a potable liquid. The orange enters the extractor

as an agricultural commodity and emerging therefrom

are skins, seeds, pulp, and, in our opinion, a manufae-

tured product of the orange, namely, orange juice.”

— . . ee ee mene A

13

The Watkins decision is premised, falsely, upon the idea

that extraction is a creative process. The Commission’s own

Erickson decision, supra, and Frozen Foods E.rpress v. CU. S.,

supra, sufficiently demonstrate the error of this reasoning.

The Watkins case cannot be reconciled with Fast Teras

Motor Freight Lines v. Frozen Foods E.rpresa, supra.

It is, therefore, apparent that citrus juices were “exempt”

under former $203(b)(6) as interpreted by this Court prior

to the Act of 1958.

It should be noted that $7(a) of the Act of 1958 cannot

have the retroactive effect of making citrus juices “not ex-

empt” prior to its enactment. In deciding this particular

question the Supreme Court must interpret the law as it was

before the enactment of $7(a).

The Court will note that this case involves a complicated

interplay of several controversial statutes, each with a con-

siderable legislative history. This jurisdictional statement,

however, does not permit a complete analysis and argument.

This case is of considerable importance both to the appellant

and to the Commission since it will determine whether the

Commission has been properly administering the “grand-

father” clause of $7te) of the Act of 1958. Tt is submitted

that both the Commission and the lower court have erroneous-

ly interpreted the Federal statutes here involved and, that,

for the reasons given, the questions involved are substantial

and of public importance. Probable jurisdiction should he

noted.

Respectfully submitted,

Perry R. Moorr

DoNxaLp A. MORKEN

CLAY R. Moore, and

MAcKALL. CROUNSE, Moorr, HeLMey & Ho_MBs

1000 Ist National Bank Building

Minneapolis, Minnesota

, Attorneys for Appellant

14

I, Perry R. Moore, one of the attorneys for appellants here-

in, and a member of the bar of the Supreme Court of the

United States, hereby certify that, on the 16day of May,

1961, I served copies of the foregoing document on the sev-

eral parties hereto, as follows:

1.

to

On the United States, by mailing copies thereof in duly

addressed envelopes, with mailing postage prepaid, to

the Solicitor General, Department of Justice, Washing-

ton 25, D. C., Robert A. Bicks, Assistant Attorney Gen-

eral, Department of Justice, Washington 25, D.C., and

John H. OU. Wigger, attorney, Department of Justice,

Washington 25, D.C., and by mailing a copy thereof

in a duly addressed envelope postage prepaid to Miles

Lord, United States Attorney, Federal Courts Build-

ing, St. Paul, Minnesota.

On the Interstate Commerce Commission, by mailing

copies thereof, in duly addressed envelopes, with air-

mail postage prepaid, to Robert W. Ginnane, General

Counsel, and Fritz R. Kahn, attorney, Interstate Com-

merce Commission, Washington 25, D.C.

On the intervenors, by mailing a copy thereof, in a

duly addressed envelope, with airmail postage prepaid,

to Frank B. Hand, Esq., and Daniel B. Johnson, Exq.,

Transportation Building, Washington 6, De.

/s’ Perry R. Moore

eG Eee TO - ~ a ~~ WwW

ae 15

APPENDIX A

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

3-60-Civ-S82

MILK TRANSPORT, INC.,

Plaintiff,

vs.

INTERSTATE COMMERCE COMMISSION and

UNITED ‘STATES OF AMERICA,

Defendants,

and

ALTERMAN TRANSPORT LINES, INC., and

REFRIGERATED TRANSPORT CO., INC.

Intervening Defendants.

MEMORANDUM & ORDER

Mr. Clay R. Moore and Mr. Donald A. Morken, Minne-

apolis, Minnesota, attorneys for plaintiff.

Mr. Robert W. Ginnane, General Counsel, and Mr. Fritz

R. Kahn, atterney, Washington, [). C., attorneys for Inter-

state Commerce Commission.

Mr. Robert A. Ricks, Assistant Attorney General, Mr.

John H. D. Wigger, Attorney, Washington, DD. C.. and Mr.

Fallon Kelly, United States Attorney, St. Paul, Minnesota,

attorneys for United States of America.

Mr. Frank BR. Hand, Jr., and Mr. Daniel B. Johnsen, Wash-

ington, 1b. C., attorneys for intervening defendants.

Refore Sanborn, Circuit .udge, Nordbve and Devitt, Dis-

trict Judges.

16

This is an appeal from an order of the Interstate Commerce

Commission dismissing plaintiffs applications for certifi-

cates to transport citrus juices, in bulk, in tank vehicles,

under the “grandfather” and “interim” clauses of the Trans-

portation Act of 1958. Plaintiff asks this statutory three-

Judge Court, 28 U.S.C. 2325, to set aside the order and

enjoin the Commission by mandatory injunction to hear and

determine plaintiff's applications.

This controversy stems from plaintiffs submission of See-

tion Tic), T2 Stat. 572, “grandfather” and “interim” applica-

tions to the Interstate Commerce Commission seeking author-

ity to transport citrus juices in tank vehicles from points in

Florida and Texas to points in several northern states. The

applications were dismissed by an order dated September 4,

1959, withont a hearing. Plaintiffs petition for reconsidera-

tion was denied by the Commission on December 22, 1959.

The broad issue ‘« whether an interstate commerce motor

carrier in bona fide transportation of .citrus juices prior to

the 1958 Transportation Act has an absolute right, under the

“grandfather” clanse of that Act, to continne transporting

citrus juicer without obtaining a Certificate of Public Con-

venience and Necessity from the Commission.

A short explanation of the issne in the light of the undis-

puted facts may be helpful.

The Interstate Commerce Act provides in Part TI, 49

U.S.C. 301-328, for comprehensive regulation of motor car-

riers operating in interstate commerce. Basic to the Act

is the prohibition contained in Sections 206 and 207 (19

T.R.C, 206, 307). against motor carriers operating in inter

state commerce without holding a Certificate of Public Con-

venience and Necessity. This certificate requirement is

waived in the situations set forth in Section 2083(b), (49

T.8.C, 208(b)). The exemption involved in this contro-

versy relates to agricultural commodities and as pertinent

reads ax follows:

“Rec, 203

“(hy Nothing in this part, except the provisions of

- Rection 204 relative to qualifications and maximum

hours of service of emplovees and safety of operation er

standards of equipment shall be construed to include

ee @

A A PRE RS neni Ss ae hina Ae

3 17

“(6) Motor vehicles used in carrying property con-

sisting of * * * agricultural (including horticultural)

commodities (not including manufactured products

theevef), © * 9”

Much litigation developed over the years ax to whether cer-

tain products were agricultural commodities and hence “ex-

empt” from the certificate requirement or were “manufac-

tured products thereof” and thus “non exempt” from the re-

quirement. The principal question involved the determina.

tion of how much processing could be done to an agricultural

commodity before it changed to a “manufactured product

thereof.”

Section 7(a) of the 1958 Transportation Act amended

Section 203(b) (6), (49 U.S.C. 303(b)(6)), and made more

specific the provisions concerning the “exempt” or “non

exempt” status of many commodities. The pertinent parts of

the amended section are contained in the footnote. Citrus

juices are listed as “non exempt” in Commission Ruling 107

incorporated in the amended section. They have therefore

been “non exempt” commodities since the 1958 Act became

law. Consequently, a motor carrier operator who now de-

sires to transport citrus juices in interstate commerce is re-

quired to have a Certificate of Public Convenience and Neces-

sity from the Commission unless the carrier can prove that it

wax in bona fide transportation of citrus juices prior to the

'“(b) Nothing in this part, except the provisions of Section 204 relative to

qualifications and maximum hours of service of employees and safety of opera-

tion or standards of equipment shall be construed to include * * *

“(6) motor vehicles used in carrying property consisting of ordinary live-

stock, © © °, of agricultural (including horticultural) commodities (not. in-

chiding manufactured products thereof), * * *

“Provided, That the words ‘property consisting of ordinary livestock. * * °,

or agricultural (incliding horticultural) commodities (not including manufac-

tured products thereof)" as used herein shall inchide property shown as ‘Ex-

empt’ in the ‘Commodity List’ incorporated in ruling numbered 107, March

19. 1958, Bureau of Motor Carners, Interstate Commerce Commission. but

shall not include property shown therem as ‘Not Exempt’; Provided further.

however, That notwithstanding the preceding proviso the words ‘property

consisting of ordinary livestock, * © © or agricultural (including horticul-

tural) commodities (not including manufactured products thereof)’ shall pot

be deemed to include frozen fruits, frozen bernes. frozen vegetables, cocoa

beans, coffee beans, tea, bananas. or hemp. and wool unported from any for-

eign country. wool-tops and noils, or wool waste (carded. spun, woven, or

knitted. © © ©

RPP! TERA Ot 2 rte SHINS

18

1958 Act and that it has a right to continue transporting

citrus juices by virtue of the “grandfather” clause enacted

in Section 7(c) of the 1958 Transportation Act. The perti-

nent provisions of that section read as follows:

“e * © if any person * * * was in bona fide opera-

tion on May 1, 1958, * * * in the transportation of

property for compensation by motor vehicle made subject

to the provisions of Part II of that Act by paragraph (a)

of this section, * * * the Interstate Commerce Com-

mission shal] without further proceedings issue a certifi-

cate or permit. * * *” [Emphasis supplied. ]

It is undisputed that plaintiff was a bona fide transporter

of citrus juices prior to 1958. All parties agree that a basic

requirement of the right to continue hauling a particular

commodity under the “grandfather” clause is that the com-

modity must have been “exempt” prior to the 1958 Act and

was made “non exempt” by the Act.

Plaintiff contends since there’s no dispute that it was a

bona fide hauler of citrus juices prior to 1958, the only issue

for this court is whether citrus juices were “exempt” com-

modities prior to the 1958 Transportation Act amendment

of Section 203(b)(6). If citrus juices were exempt. plain-

tiff claims the Commission must under the “grandfather”

clause issue plaintiff a certificate without proof of public

convenience and necessity. Plainti? argues that even thongh

the Commission had held citrus juices to be “non exempt”

prior to 1958 in Watkine Motor Linea, Inc., Interpretation,

64 M.C.C. 455 (Div. 1, 1955), later U.S. Supreme Court and

Federal District Court cases, see East Teraa Motor Freight

Tinea vr. Frozen Food Ernvress, 351 U.S. 49 (1956), Frozen

Foods Express vr. United States, 148 F. Supp. 399, aff. 355

U.S. 6 (1957), L.C.C. vr. Kroblin, 113 F. Supp. 599 (1953),

make it clear that citrus juices would have been declared

“exempt” had an appropriate controversy reached the courts.

The defendants contend the issne of whether citrus juices

were “exempt” prior to 1958 is not relevant to this proceed-

ing. Thev argue that “grandfather” rivhts were conferred

only on the eleven commodities’ specifically listed in Section

2“Frozen fruits, frozen berries. frozen vegetables, cocoa beans. coffee beans.

tea, bananas. or hemp. and wool imported from any foreign country, wool tops

and noils, or wool waste (carded, spun. woven. or knitted)”

(coe Mentor eq eety eae : ene fb ~

19

7(a) as now being “non exempt.” Defendants argue that the

wording of Section T(¢) plus the Congressional intent as evi-

denced by committee reports indicates that only the eleven

commodities listed were “made subject to” the certificate re-

quirement of Part I] of the Act, and consequently “grand-

father” rights were given only to carriers of those specific

commodities. Since citrus juices were not included in the

commodities specifically listed in Section T(a), they sub-

mit the question of whether citrus juices were “exempt”

prior to 1958 is irrelevant.

We agree with the defendants that the first issne to be

met is whether citrus juices were covered by the “grandfath-

er” clause. If citrus juices were not included, we need not

determine whether they were “exempt” prior to 1958.

It is axiomatic that Congress could include or exclude any

commodities from the benefit of the “grandfather” clause.

Congress could have refused to include any “grandfather”

benefits in the 1958 Act. Consequently, assuming that a par-

ticular commodity had been specifically held “exempt” prior

to 1958 and then declared “non exempt” by the 1958 Act,

Congress could have excluded this particnlar commodity

from “grandfather” rights while giving the benefit to other

commodities. We must therefore look to the statute to de-

termine whether citrus juices were accorded “grandfather”

rights.

The essential provisions of Sections Tie) and Tia) have

been previously quoted in this memorandum, The primary

question in resolving this dispute is the determination of

what the words “made subject to” mean in the context of

the statute. Plaintiff contends the phrase means that all com-

modities in Section 7(a), including those in Ruling 107 in

the first proviso are subjected to the requirements of Part

II of the Act. Defendants argue that the only items “made

subject to” Part [I are the eleven specified commodities in

the second proviso. No determination as to the status of

‘several of these commodities had ever been made, but Ruling

107 listed most of the eleven items as having been found

“exempt” by the courts or the Commission, and defendants

contend that these items were being brought back under regu-

lation by Section Tiar. Thev argue that Congress gave

5 AP Reg ait ON he VR RSIS rr Ae at a ee hp $2 age

20

“grandfather” rights only to carriers which had been legiti-

mately hauling these eleven commodities.

We agree with the defendants’ interpretation of Section

7(c). Congress did not have to make the items in Ruling 107

subject to the Act, with the exception of the eleven commodi-

ties which had either been declared “exempt” or on which no

ruling had been made. It is perhaps true, as plaintiff argues,

that Congress would have specifically afforded “grandfather”

rights to citrus juices had they been declared “exempt” in any

appropriate controversy which reached the courts. Remem-

bering, however, that Congress could limit “grandfather”

benefits as it chose, it matters only that Congress gave its

approval t» the Commission's characterization of citrus juices

_ as “non exempt” commodities. Citrus juices had been held

“non exempt” prior to 1958 by the Commission, Watkins

Motor Lines, Inc., Interpretation, 64 M.C.C. 455 (Div. 1,

1955), and Congress was providing “grandfather” rights only

for carriers of those eleven commodities which had been

“exempt” and were being specifically made “non exempt.”

Where the terms of a statute are not clear, we may look

to the legislative history in an attempt to determine the in-

tent of Congress. United Statea vr, UAW-CITO, 352 U.S. 567

(1957); Woods vr. Western Holding Corp., 173 F.2d 655, 659

(Sth Cir, 1949). The committee reports clearly indicate

Congressional intent in the enactment of the “grandfather”

clause, The report of the House Committee on Interstate and

Foreign Commerce, H.R. Rep. No, 1922, 85th Cong. 2d Sess.

17 (1958), reads in part as follows:

“This amendment would halt further expansion of the

scope of the exemption, and it would return te economic

regulation the transportation of frozen fruits, frozen

berries, frozen vegetables, coffee, tea, cocoa, hemp, im-

ported wool and certain categories of domestic wool,

* ee @

“Any person engaged on June 1, 1958, in trucking the

aforementioned commodities which are returned to regu-

lation by this amendment would be entitled upon appli-

cation to a certificate or permit * * *." | Emphasis

supplied. |

The conference report, H.R. Rep. No, 2274, 85th Cong., 2d

Sess. 15 (1958), indicates further Congressional intent to

ee A SET Ue URUK QQ Re ahi i li

21

provide “grandfather” benetits only for the mentioned com-

modities as follows:

“Under the conference agreement the agricultural com-

modities exemption is frozen in accordance with ruling

107, referred to above, with the following moditication,

which is a compromise between the Senate and House

provisions: Returned to economic regulation is the trans-

portation by motor vebicle of frozen fruits, frozen

berries, frozen vegetables, cocoa beans, coffee beans, tea,

bananas, hemp, wool imported from any foreign coun-

try, wool tops and noils and wool waste which has been

carded, spun, woven, or knitted. * * *

“Under the House amendment any person engaged on

June 1, 1958, in trucking the aforementioned commodi-

ties which are returned to economic regulation by this

amendment would be entitled, upon application to a cer-

tificate or permit allowing him, under regulation, to con.

tinue the transportation of the same commodities within

the same areas or between the same points. The Senate

bill used the date January 1, 1958. The conference

agreement uses the date May 1, 1958." [Emphasis sup-

plied. ]

It is clear from this language that Congress intended only

the eleven specified commodities, and not ineluding citrus

juices, to have “grandfather” benefits.

Plaintiff also argues that the Commission itself, /n/and

Motor Freight “Grandfather” Application; No. MO39077

(Sub. No. 33), 14 Fed. Carr. Cas., Para, 35,004 (ClCH)

(Div. 1, Oct. 1960), determined that the words “made sub-

ject to” should not be read in a restrictive sense, That deci-

sion relates solely to the situation where an otherwise “ex-

empt" commodity loses its exemption when hauled with a

“non exempt” commodity in the same vehicle at the same

time. The /nland case is not applicable to this controversy.

Plaintiff lastly contends that the scope of review is limited

to a consideration of the grounds set forth in the Commis-

sion’s order for its decision. Plaintiff argues that the Com.

WEL ATE ERASER Se GAN 9 ogee 02 HOS GamTN

22

mission order of September 4, 1959,° dismissed plaintiff's

applications solely for the reason that citrus juices were not

“exempt” commodities prior to the 1958 Transportation Act.

Consequently, plaintiff submits that, under the holding in the

Chenery cases, S.E.C. v. Chenery Corp., 318 U.S. 80 (1943),

and S.E.C. v. Chenery Corp., 332 U.S. 194 (1947), this court

cannot uphold the Commission on grounds other than those

specified in the order

In the first Chenery case, 318 U.S. 80 (1943), the Supreme

Court reviewed an order of the Securities and Exchange

Commission which refused to allow preferred stock acquired

by management officials during a reorganization period to

participate in the reorganization on an equal footing with all

other preferred stock. The corporation involved was regis-

tered under the public Utility Holding Company Act and the

Commission had to determine whether the terms of the new

stock issuance were “fair and equitable” or “detrimental to

the interest of investors” within the meaning of the Act. The

Commission based its order on principles of equity as an-

nounced by the courts, but the Supreme Court held that the

authorities cited were not sufficient to sustain the order and

the case was remanded to the Comnrission.

The first Chenery case did hold that a reviewing court must

judge an agency order only on the grounds on which the order

was based, but the court limited this rule to determinations

which the administrative agency alone is authorized to make.

The court, 318 U.S. 80, 88, used these words:

“Tn confining our review to a judgment upon the valid-

itv of the grounds upon which the Commission itself

based its action, we do not disturb the settled rule that,

s“@ ¢@ © It further appearing, That in Watkins Motor Lines, Inc., Inter-

pretation of Certificates, 64 M.C.C. 455, it was found that the term ‘agricul-

tural commodities (not including manufactured products thereof)” as used in

Section 203(b)(6) of the Interstate Commerce Act does not inchide citrus

juices;

And it further appearing, That as citrus juices, in bulk, in tank vehicles,

was not included in the term ‘agricultural (including horticultural) commodi-

ties (not including manufactured products thereof). as used in Section 203

(b)(6) of the Interstate Commerce Act prior to the Transportation Act of

1958:

It ts ordered, That the applications * * * be, and they are hereby. dis-

ina

23

in reviewing the decision of a lower court, it must be

aftirmed if the result is correct ‘although the lower court

relied Upon a wrong ground or gave a wrong reason,’

Helvering v. Gowan, 302 U.S. 288, 245. The reason for

this rule is obvious. It would be wasteful to send a case

back toa lower court to reinstate a decision which it had

already made but which the appellate court concluded

should properly be based on another ground within the

power of the appellate court to formulate. But it is alse

familiar appellate procedure that where the correctness

of the lower court's decision mecaeinaen a determina-

tion of fact which onty a jury could make but whieh has

not been made, the appellate court cannot take the place

of the-jury. Like considerations govern review of ad-

ministrative orders. If an order is valid only as a deter-

mination of policy or judgment which the agency alone

ix authorized to make and which it has not made. a judi-

cial judgmert cannot be made to do service for an ad-

ministrative judgement. For purposes of affirming no

less than reversing its orders, ay appellate court cannot

intrude upon the domain whieh Congress has exclusive-

ly entrusted to an administrative Agency.”

We are not concerned here with a judgment which only the

Interstate Commerce Commission can make. The expertness

of the Commission does not make it better qualified than this

court to interpret the phrase “made subject to” involved in

this action. The interpretation here is wholly different from

What it is in the case where Congress specifically entrusts

an administrative agency, because of its special competence,

with the task of defining or interpreting general words* or

setting up standards or rules of conduct. We are interpret-

ing the scope of a federal statute and this task is not peentiar

to an administrative ageney,

Having decided that the transportation of citrus juices was

not afforded “grandfather” rights under Section Tie) of the

15S Transportation Aet, we need not determine whether

‘Such as the words involved in the Chenery case—“fair and equitable” or

“detrimental to the interests of investors.”

24 ae

citrus juices were “exempt” commodities prior to 1958.

Plaintiff's complaint is dismissed.

Dated: December _ , 1960. ©

/s/ John B. Sanborn,

Circuit Judge

/s/ Gunnar H. Nordbye,

District Judge

/8/ Edward J. Devitt,

District Judge

APPENDIX B

ORDER

At a Session of the INTERSTATE COMMERCE COMMIS.

SION, Division 1, held at its office in Washington, D. C., on

the 4th day of September, A.D. 1959.

—_— ———_

NO. MC-113255 (Sub-No. 8)

MILK TRANSPORT, INC. '

“GRANDFATHER” APPLICATION

(NO. MC-118255 (Sub-No. 9)

MILK TRANSPORT, INC.

“INTERIM” APPLICATION

It appearing, That in No, MC-113255 (Sub-No. 8), Milk 7’

Transport, Inc., seeks, among other things, a certificate, un- |

der the “grandfather” clause of Section 7(e¢) of the Trans-

portation Act of 1958, to transport citrus juices, in bulk, in

tank vehicles;

It further appearing, That in No. MC-113255 (Sub-No. 9),

Milk ‘Transport, Ine., seeks, among other things, a certificate

of public convenience and necessity to transport citrus juices,

in bulk, in tank vehicles, under the so-called “interim” provi-

sions of Section 7(¢) of the Transportation Act of 1958;

It further appearing, That applicant's position is that

citrus juices, in bulk, in tank vehicles, were exempt com-

medities nnader Section 2684.4) of the Interstate Com-

merce Act prior to its amendment by the Transportation Act

of 1958, and that it was in bona fide transportation of the

commodity on and prior to May 1, 1958, from and to some

points, and prior to Angust 12, 1958, from and to other points, "mint

and that it is entitled to “grandfather” and “interim” rights

under Section 7(¢) of the Transportation Aet of 1958;

It further appearing, That in Watkins Motor Lines, Tne.,

Interpretation of Certificates, 64 M.CLC. 455, it was found

ibciitns

a hei ARE OT Ne AR Re OG»

26

that the term “agricultural commodities (not including

manufactured products thereof)” as used in Section 203(b)

(6) of the Interstate Commerce Act, does not include citrus

juices ; 7

And it further appearing, That as citrus juices, in bulk, in

tank vehicles, was not included in the term “agricultural (in-

cluding horticultural) commodities (not including manu-

factured products thereof),” as used in Section 203(b) (6)

of the Interstate Commerce Act prior to the Transportation

Act of 1958:

It ig ordered, That the applications in Nos. MC-113255

(Sub-No. 8) and MC-113255 (Sub-No. 9), be, and they are

hereby, dismissed insofar as authority is sought therein un-

der Section 7(c¢) of the Transportation Act of 1958 to trans-

port citrus juices, in bulk, in tank vehicles.

By the Commission, division 1.

HAROLD D. McCOY,

Secretary.

(SEAL)

ArPENDIX C

ORDER

At a General Session of the INTERSTATE COMMERCE

COMMISSION, held at its office in Washington, D. C.,

on the 22nd day of December, A.D. 1959.

No. MC-118255 (Sub-No. 8)

MILK TRANSPORT, INC.,

“GRANDFATHER” APPLICATION

(New Brighton, Minn.)

No. MC-113255 (Sub-No. 9)

MILK TRANSPORT, INC.,

“INTERIM” APPLICATION

Upon consideration of the record in the above-entitled pre-

ceding, and of:

(1) Petition of applicant, filed October 19, 1959, for recon-

sideration of the order dated September 4, 1959, by

the Commission, division 1, dismissing the applications

in Nos. 113255 (Sub-No. 8) and M€C.113255 (Sub-No.

%) insofar as authority is sought therein under see-

tion Tic) of the Transportation Act of 1958, to trans-

port citrus juices, in bulk, in tank vehicles;

(2) Reply by Class IT Rail Carriers in Western District,

Protestants, filed October 29, 1959;

and good catise appearing therefor:

It is ordered, That the said petition be, and it is hereby,

denied, for the reasons (1) that the said order of September

4, 1959, was entered in accordance with the law after it ap-

peared that the authority applicant seeks to transport citrus

juices, in bulk, in tank vehicles, properly may not be made

the subject of an application for authority under section 7(¢)

of the Transportation Act of 1958, and (2) that no sufficient

canse appears for vacating the order of September 4, 1959,

or for further considering the portions of the applications

dismissed by that order.

By the Commission.

HAROLD D. McCOY,

(SEAL) Secretary.

APPENt x 0

Section 203(b)(6), Part II, Interstate Commerce ct, as

amended by Section 7(a) of the Transportation ‘t of

1958

“(b) Nothing in this part, except the provisions «. ‘ee-

tion 204 relative to qualifications and maximum hounm. f

service of employees and safety of operation or standards f

equipment shall be construed to include * * *. (6) motor

vehicles used in carrying property consisting of ordinary

livestock, fish (including shellfish), or agricultural (inelud-

ing horticultural ) commodities (not including manufactured

products thereof), if xuch motor vehicles are not used in

carrying any other property, or passengers, for compenst

tion: Provided, That the words ‘property consisting of ordi-

nary livestock, fish tineluding shell fish), or agricultural

(inelnding horticultural) commodfies (not including manu-

factured products thereof)” as need herein shall include prop-

erty shown as ‘Exempt’ in the ‘Commodity List’ incorporated

in ruling numbered 107, March 19, 1958, Burean of Motor

Carriers, Interstate Commerce Commission, but shall net in-

clude property shown therein ax ‘Not exempt’: Provided

further, howerer, That notwithstanding the preceding pre-

vino the words ‘property consisting of ordinary livestock,

fish (inelnding shell fish). or agricultural (ineluding hor-

ticultural) commodities (net including manufactured prod.

nets thereof)’ shall net be deemed to include frozen fruits,

frozen berries, frozen vegetables, cocoa beans, coffee beans,

tea. bananas, or hemp, and wool imperted from any for-

eign country, weel tops and noils, or woel waste tenrded,

spun, woven, or knitted), and shall be deemed to include

cooked or uncooked tineInding breaded) fish or shell fish

when frozen or fresh tbut net including fish and shell fish

which have been treated for preserving, such as canned,

smoked, pickled, spiced. corned or kippered products): * * ac

Tie), Transportation Act of 145s

“(¢) Subject to the provisions of section 210 of the Inter-

state Commerce Act, if any persen (or its predecessor in

interest) was in bona fide operation on May 1. 195s, over any

route or routes or within any territery, in the transporta-

tion of property for compensation by moter vehicle made

subject to the provisions of part Il of that Act by paragraph

(a) of this section, in interstate or foreign commerce, and

has x0 operated since that time cor if engaged in furnishing

seasonal service only, was in bena fide operation on May 4,

1958, during the season ordinarily covered by its operation 4

and hax xo operated since that time). except in either in

stance as to interruptions of service ever which such appl

cant or its predecessor in’ interest had ne control, the Tn

terstate Commerce Commission shall without further pre

ceedings issue a certificate or permit, as the type of operntion

may warrant, authorizing such operations as a commen er

contract carrier by motor vehicle if application is made to

the said Commission as provided in par: I of the Interstate

Commerce Act and within one hundred and twenty davs

after the date on which this section takes effect. Pending

the determination of any such application, the continuance

of such operation without a rertifierte or permit shall be

lawful. Any carrier which on the date this section takes

effect is engaged in any operation of the character specified

in the foregoing provisions of this paragraph, but was nef

engaged in such operation on May 1, 1958. may ander sich

regulations as the Interstate Commerce Commission shall

prescribe, if application fer a certificate or permit is made to

the said Commission within one huvdred and twenty dave

after the date on which this wetion takes effect, continue

such operation withont a certifierte or permit: pending the

determination of such application in accordance with the

provisions ef part Il of the Tnterstate Commerce Net”