Motion to Affirm — Milk Transport, Inc. v. United States

INDEX

Statement dt io oy

Argument... -.

Conclusion.

CITATIONS

Cases:

Citrus Fruit Juice to Central and Mudwest) Territories,

306: 30¢". $32

Coffee Beans Other Than Cron, 308 1A. 495

Consolidated Truck Service, Ine. vt nited States, 144

F. Supp. S14

Cooked Veuetables and Jurces Between Points im US,

3090 LOC. 46

Kast Teras Motor Freight Lines, Ine. vo Frocen been!

Er press, 351 ULS. 49

Frozen Food Express v. United States, 148 Fo Supp

399, affirmed sub nom... Akron, Canton de Youngstown

R. Co. v. Frozen Food Express, 8354 US. 6

Greqy Cartage Co. vy. United States, 3160S 74

Home Transfer & Storame Co. vy. Croted States, VAL F.

Supp. 599, affirmed, 352 US. Ss4

Inland Motor Freight “Grandifather™ Application, SS

MCC": 640

MeDonald v. Thompson, 305 US. 263

Piedmont & Northern Ry. Co. vo Interstate Commeres

Commaisston, 286 Us. 209

Premier Peat Moss ¢ Orpen. United States, ATF Supp

169, affirmed, 355 US. 13

Prudential Insuranes Coy Renjganon, '28 008 tos

Ruth Kikhorn Coats, Twe vo Mitehidl, PAS Fo 2d 635

Securities Gnd Erelhanau Commission vo Chenery Cor-

poration, 3S ToS. se

Taine and Crude Lithher bene ry Pras port fran €or

pang, SVL LCC 226

Various Commodities Between Points and L’laes <u

i. Sete 8. FS.

Wotkons Motor Lines, Ine. Inte rpre tation of Cart feat,

4 NEC! 455

601211—61 (1D)

te

Bs

n~

44

—

ee ae

Statutes:

Interstate Commerce Act: Page

Section 203(b)(6), 49 U.S.C. (1952 ed.) 303(b) (6) -- 2,

3, 4, 5, 6, 7, 8,9

Section 203(b) (6), 49 U.S.C. 303 (b)(6)-..-.-..-. 3,9

Transportation Act of 1958, 72 Stat. 568:

SET LES CR NE an ae a 3, 5, 6, 8,9

a FES GaSe ce ase aaa Bue eemuns 1, 3,4, 5

Miscellaneous:

NSIS ETE en ne 9

H. Rep. No. 1922, 85th Cong., 2d Sess... _-_-...---- 7,8

H. Rep. No. 2274, 85th Cong., 2d Sess... __.. .._--- # 9

S. Rep. No. 1647, 85th Cong., 2d Sess._.__._._.__-- 9

Yn the Supreme Court of the Wnited States

OcToBER TERM, 1961

No. 95

MiLk TRANSPORT, INC., APPELLANT

v.

UNITED STATES OF AMERICA, ET AL.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF MINNESOTA

MOTION TO AFFIRM

!

Pursuant to Rule 16, paragraph 1(c) of the Re-

vised Rules of this Court, appellees United States of

America and Interstate Commerce Commission move

that the judgment of the district court be affirmed.

STATEMENT

This is a direct appeal from a final judgment of a

three-judge district court dismissing a complaint seek-

ing to set aside an order of the Interstate Commerce

Commission. The Commission order dismissed, with-

out a hearing, applications for interim and ‘‘grand-

father’’ operating rights filed under Section 7(c) of

the Transportation Act of .958 by a motor carrier.

(1)

The Statutory Background and Provisions.—Prior

to the Transportation Act of 1958, Section 203(b) (6)

of the Interstate Commerce Act (49 U.S.C. (1952 ed.)

303(b)(6)) exempted from the certification require-

ments of the latter Act motor vehicles used in

carrying “agricultural ¢ineluding horticultural) com-

modities (not including manufactured products

thereof).’’ In 1956, this Court held that fresh and

frozen dressed poultry are “agricultural’’ commodi-

ties and not ‘‘manufactured’’ products thereof within

the foregoing exemption, and that certificate authority

was therefore not required to transport those com-

modities. East Texas Motor Freight Lines, Inc. v.

Frozen Food Express, 351 U.S. 49. The Court stated

(p. 54) that ‘‘where the commodity retains a continu-

ing substantial identity through the processing stage

we cannot say that it has been ‘manufactured’ within

the meaning of. §203(b)(6)’’;’ and that ‘‘manufac-

tured’’ could not be “expand[ed] * * * to include

such incidental processing as is involved in dressing

and freezing a chicken.” Following that decision,

several district courts held that various ugricultural

products which the Commission had _ previously

deemed non-exempt manufactured products were ex-

empt non-manufactured products.’

On March 19, 1958, the Commission’s Bureau of

1 Consolidated Truck Service, Inc. v. United States, 144 F.

Supp. 814 (D. N.J.): Home Transfer & Storage Co. v.

United States, 141 F. Supp. 599 (W.D. Wash.), affirmed, 352

U.S. 884; Premier Peat Moss Corp. v. United States, 147 F.

Supp. 169 (S.D. N.Y.), affirmed, 355 U.S. 13: Frozen Food

Express v. United States, 148 F. Supp. 399 (S.D. Tex.), af-

firmed sub nom. Akron, Canton & Youngstown BR. Co. v.

Frozen Food Express, 355 U.S. 6.

3

Motor Carriers issued Ruling No. 107, which placed

various agricultural products in either the ‘‘exempt”’

or the ‘‘non-exempt”’ category. Among the products

listed as ‘‘non-exempt’’ were citrus juices; the Com-

mission had held three years earlier, before this

Court’s decision in the Fast Te.ras case, supra, that

such juices were non-exempt, @.e., manufactured.

Watkins Motor Lines, Inc., Interpretation of Certifi-

cate, 64 M.C.C. 455.

Tn Section 7(a) of the Transportation Act of 1958 (72

Stat. 573), Congress amended the agricultural exemp-

tion in Section 203(b)(6) by adding two provisos. It

provided that the words ‘‘agricultural * * * commod-

ities (not including manufactured products thereof )”’

(1) ‘‘shall include property shown as ‘Exempt’ in the

‘Commodity List’ incorporated in ruling numbered

107, March 19, 1958, Bureau of Motor Carriers, In-

terstate Commerce Commission, but shall not include

property shown therein as ‘Not exempt’ ’’; and (2)

that, notwithstanding the foregoiny proviso, the words

shall not inelude, inter alia, the following eleven agri-

cultural commodities: frozen fruits, frozen berries,

frozen vegetables, cocoa beans, coffee beans, tea, ba-

nanas, hemp, imported wool and certain types of

domestie wool. 49 U.S.C. 303(b). Section 7(c) of

the 1958 Act (72 Stat. 573) provided “grandfather

rights’? for any person who was in bona fide opera-

tion on May 1, 1958, ‘‘in the transportation of prop-

erty for compensation by motor vehicle made subject

to the provisions of [the Interstate Commerce] Act

by paragraph (a) of this section * * *.”’

The Facts of this Case-—Appellant is a certificated

common carrier by motor vehicle, which is primarily

“

4

authorized to transport milk and milk products.

Since November 1957 it has from time to time also

transported citrus juices. The latter transportation

admittedly is not authorized by its certificate.

On December 10, 1958, appellant filed, pursuant to

~ Section 7(c) of the 1958 Act, a grandfather applica-

- tion for a certificate to transport citrus juices and an

application for interim authority to do so. It con-

tended that, in view of the court decisions subsequent

to the Commission’s Watkins decision holding that

citrus juices are not exempt (pp. 2-3, supra), the

transportation of citrus juices was within the agricul-

tural exemption on May 1, 1958; and that its trans-

portation of the product on that date therefore

constituted a bona fide operation which gave it grand-

father rights.

The Commission (Division 1) dismissed the appli-

cations without a hearing, on the ground that prior to

the critical grandfather date under the 1958 Act,

citrus juices were not exempt agricultural commod-

ities under Section 203(b)(6) (J.S. 25-26). The

full Commission denied reconsideration (J.S. 27-28).

The appellant then filed a complaint in the district

court seeking a reversal of the Commission’s order

and a direction to the agency to ‘‘hear and deter-

mine’’ the applications (J.S. 16). The district court

dismissed the complaint (J.S. 24). It held (J.S. 15-

24) that the transportation of citrus juices was not

given ‘‘grandfather’’ rights by Section 7(c) of the 1958

Act, and that it was accordingly unnecessary to con-

sider whether such juices were exempt agricultural

commodities prior to that Act.

._——

5

ARGUMENT

This case involves a narrow issue relating to the

construction of the ‘‘grandfather clause’’ of Section

7(¢e) of the Transportation Act of 1958, 72 Stat. 573.’

That clause applies to the carriage of commodities

which had previously been exempted from the certifi-

cation requirements of the Interstate Commerce Act

by the agricultural commodity clause of Section 203

(b) (6) of the Act, but which were ‘‘made subject’’ to

the Act by Section 7(a) of the 1958 Act. The specific

issue is the applicability of the clause to a commodity,

citrus juices, which prior to the 1958 Act has been

expressly found by the Commission to be ‘‘not ex-

empt,’’ but which, under the rationale of several court

opinions construing the agricultural exemption with

respect to other commodities, allegedly might have

been classified as exempt if the issue had ever gone

to litigation.

Section 7(a) of the 1958 Act added two provisos to

the agricultural commodity clause of Section 203(b)

(6), the first of which expressly froze the status of

a large number of commodities as ‘‘exempt’’ or ‘‘not

exempt’’ in accordance with Ruling 107 of the Com-

mission’s Bureau of Motor Carriers issued shortly

before the Act was passed. Appellant contends that

Section 7(a) ‘‘made subject’”’ to the Act all commod-

? Of the ¥50 applications for grandfather rights filed within

the 120-day period specified in Section 7(c) of the 1958 Act,

nearly 850 have been disposed of. None of these cases involved

subsequent court action raising the question presented here,

although it is involved in two actions pending in the district

courts arising out of Commission suspensions of tariffs filed by

persons claiming grandfather rights.

ities which, under a proper interpretation of the prior

language, would have been held ‘*exempt’’ but which

were classified as *‘not exempt’ by incorporation of

the Commission ruling into the Act. As we show

below, however, the district court properiy construed

the grandfather clause as applying solely te the par-

ticular commodities expressly “‘returned to regu-

lation”? (see infra, p. 8) by the second proviso

added to Section 203(b)(6) by Section 7(a) of the

1958 Act.

1. It is axiomatie that since a **grandfather clause

confers a special privilege, * * * [it] is to be held te

extend only to carriers plainly within its terms.”

Giregg Cartage Co. v. United States, 316 U.S. 74, 83;

see also McDonald vy. Thompson, 305 U.S. 263; Pted-

mont & Northern Ry. Co. v. Interstate Commerce

Commission, 286 U.S, 299. Moreover, as the district

court pointed out (J.S. 19), the granting or with-

holding of ‘‘grandfather”’ rights is purely diseretion-

ary with the Congress. Even if citrus juices had

been previously exempt from regulation and were

now being brought under regulation for the first time,

there was no necessity for Congress to confer grand-

father rights upon the carriers of that product. Cf.

Prudential Insurance Co. v. Benjamin, 328 U.S. 408,

434. The district court was thus clearly correct in

looking first to the language and history of the grand-

father clause to determine whether it had any ap-

plication to commodities other than those expressly

referred to in Section 7(a) of the 1958 Act.

In view of the clear legislative history that only the

commodities specified in the second proviso were given

7

grandfather protection (fra, pp. 8-9), appellant is

per foree required to claim that the language of the

grandfather clause is so unambiguous as to preclude

resort to legislative history. Its argument is that the

operative language—*‘transportation of property * * *

made subject to the provisions of [the Interstate

Commerce] Act by paragraph (a) of this section”—

applies to both of the provisos added to Section 203

(b)(6), and not just to the second. The flaw in this

argument is that the first proviso, unlike the second,

does not purport to subject any type of previously

exempt transportation to Commission regulation. It

merely continues the status as exempt or non-exempt

of various commodities previously classified by the

Commission on the basis of then controlling inter-

pretations of the Act." The first proviso can thus be

said to have ‘tmade’’ particular commodities **sub-

ject” to the Act only to the limited extent that the

commodity was erroneously classified as *‘not exempt”

in the Commission Ruling No. 7 and erroneously con-

firmed as such by the Congress. Assuming arguendo

that this interpretation (which would require analysis

of the application ef the prior language of Section 203

(b)(6) to each of the many products classified as

**not exempt’” by the Commission) is a possible read-

‘The Commission's Bureau of Motor Carriers in Ruling No.

107 took cognizance of existing court interpretations of Section

203(b) (6). It did so not only with respect to the particular

commodities involved, but also with respect to a number of

other commodities which the Bureau considered controlled by

these decisions, despite prior unreviewed determinations by the

Commission to the contrary. See H. Rep. No. 1922, 85th Cong..

2d Sess., pp. 36-37.

ing of the grandfather clause, it is patently not so

clearly correct as to make resort to the legislative

history unnecessary or inappropriate.

2. The legislative history of the 1958 Act removes

any doubt that the grandfather clause is limited to the

particular commodities listed in the second proviso

of Section 7(a). The House Report on the bill de-

scribes the effect upon the regulatory scheme of the

various judicial decisions broadly interpreting the

ugricultural commodity clause of Section 203(b) (6),

and recognizes that ‘‘it is conceivable that a consider-

able number of other commodities will be held to be

exempt” (H. Rep. No. 1922, 85th Cong., 2d Sess., p.

17). It then goes on to state (tbid.):

It is important that this trend be halted before

the position of the regulated carriers is more

seriously impaired. The committee, therefore,

recommends a freezing, with a small rollback,

of the agricultural exemption in accordance

with ruling No. 107 * * *. This amendment

would halt further expansion of the scope

of the exemption, and it would return to eco-

nomic regulation the transportation of frozen

fruits, frozen berries, frozen vegetables, coffee,

tea, cocoa, hemp, imported wool and certain

categories of domestic wool * * *.

Any person engaged on June 1, 1958, in

trucking the aforementioned commodities which

are returned to regulation by this amendment

would be entitled upon application to a certifi-

cate or permit allowing him, under regulation,

to continue hauling the same commodities

within the same areas or between the same

points. [Emphasis added. ]

See also S. Rep. No. 1647, 85th Cong., 2d Sess., p. 23;

H. Rep. No. 2274, 85th Cong., 2d Sess., p. 15; 104

Cong. Ree. 15528.

It is thus clear that Congress extended grandfather

rights only to the specific commodities whose pre-

viously exempt status was expressly rescinded by the

second proviso of Section 7(a); and that only these

commodities were considered to have been ‘*thade sub-

ject”’ to the Act by Section 7(a). Other commodities,

including citrus juices, were frozen by the first pro-

viso of Section 7(a) in the ‘not exempt’? category

they might otherwise have been able to escape through

future litigation. But they were not thereby ‘re-

turned to regulation’’ and thus **made subjeet’” te

the Act.

3. The other points raised by the appellant require

no extended discussion, The present determination

is fully consistent with the Commission's uniform in-

terpretation of the grandfather clause of the 1958

Act sinee its enactment,‘ and nothing in /nland Moter

Freight “Grandfather” Application, 8% M.C.C. 543

(J.S. 19) is to the contrary. That case, as the court

below pointed out (J.S. 21), involved the question

whether commodities, otherwise exempt from regula-

tion under the provisos to Section 203(b)(6), lose

their exemption when carried in the same vehicle as

non-exempt commodities. The case does not suggest

~ # See Tirine amd Crude Rubher—Emery Transportation Com-

pany, 311 LC.C, 226° (Div. 3, 1960); Various Commoditir«

Between Points and Places in US. 309 LCC. 573 (Div. 3,

1960); Cooked Vegetables and Juices Between Points in UN..

309 L.C.C. 46 (Div. 3, 1959); Citrus Fruit Juice to Central and

Midwest Territories, WR LCC. 552 (Div. 3, 1959): Cor,

Beans Other Than Green, 308 LC.C. 495 (Div. 3, 1959).

10

that grandfather rights are to be extended to com-

modities considered non-exempt both before and after

the 1958 amendment. Nor is it relevant that the

Commission denied petitioner grandfather rights pri-

marily upon the ground that citrus juices were not

exempt from regulation under the pre-1958 language

of the agricultural commodity clause. For since the

issue whether appellant had grandfather rights is

solely one of law, rather than a matter committed

to agency discretion, the district court was justified

in itself deciding that appellant had no grandfather

rights—even though its ground for decision was not

that given by the Commission. Ruth Elkhorn Coals,

Inc. Vv. Mitchell, 248 F. 2d 635, 638, n. 4 (C.A.D.C.) ;

ef. Securities and Exchange Commission v. Chenery

Corporation, 318 U.S. 80, 88.

CONCLUSION

The decision below is correct, and this appeal pre-

sents no question warranting plenary review by this

Court. The judgment of the district court should be

affirmed.

Respectfully submitted.

ARCHIBALD Cox,

Solicitor General.

LEE LOEVINGER, 3

Assistant Attorney General. -

Ricuarp A. SoLomon,

Attorney.

Rosert W. GINNANE,

General Counsel,

Fritz R. Kann,

Attorney,

Interstate Commerce Commission.

JuLy 1961.

, ae