Petition — Adhesives & Sealant Council, Inc. v. Interstate Commerce Commission

IN THE

ICHAEL RODAK, JR., CLERK

Supreme Court of the ni rs

OCTOBER TERM, 1976

No. 35-1290

THE ADHESIVES AND SEALANT COUNCIL, INC.

THE ADHESIVES MANUFACTURERS ASSOCIATION

NATIONAL CONFECTIONERS TRAFFIC CONFERENCE

NATIONAL PAINT AND COATINGS ASSOCIATION, INC.

NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC.

HERSHEY FOODS CORPORATION,

Petitioners,

v.

INTERSTATE COMMERCE COMMISSION

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

CHARLES J. McCARTHY

DANIEL J. SWEENEY

1750 Pennsylvania Ave., N.W.

Washington, D.C. 20006

Counsel for Petitioners

SS AS RETRO SACI A ET EE

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TABLE OF CONTENTS

Page

OPINION AND DECISION BELOW ........... 2

ere ele en Se aid oid wm ow Oe Oe © 2

i te et eh ees 2

STATUTORY PROVISIONS INVOLVED ........ 2

DECGeen GE BUGS wt tc tee cee eee 4

I eNO ee Ee o 6s oes 6 le ow ow nee 8

I. This Case Involves a Serious Error of Statutory

Construction with a Pervasively Adverse Effect on

Shippers and Comoumeems 2. www tt tt 8

Il. The Court of Appeals’ Erred in Holding That

Shippers Are Not Entitled To A Judicial Review

of The Commission’s Construction of Statutes In

A Rulemaking Proceeding .............. 11

ee a a ee ee ee ee 13

TABLE OF AUTHORITIES

CASES:

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) .

Assoc. Truck Lines v. U.S., 304 F.Supp. 1094 (W.D.

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Columbia Broadcasting System v. United States, 316

eg ee ee ee ee ee

Frozen Food Express v. United States, 351 U.S. 40

CORE 5 kk cna oe 6 ak baw

Mid-Western Motor Freight Tariff Bureau, Inc. v.

Eicholz, 4 M.C.C. 755 (1938) .........2-.

National Furniture Traffic Conf. v. Assoc. Truck

oy fe | eee Sie ee

Restrictions on Service by Motor Common Carriers, .

See Sede Eee GED |. aos 6-0 6 Ore en

Travenol Laboratories, Inc., Petition for

Investigation, 121 M.C.C. 588 (1975) ......

United States v. Storer Broadcasting Company, 351

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STATUTES:

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1976

No.

THE ADHESIVES AND SEALANT COUNCIL, INC.

THE ADHESIVES MANUFACTURERS ASSOCIATION

NATIONAL CONFECTIONERS TRAFFIC CONFERENCE

NATIONAL PAINT AND COATINGS ASSOCIATION, INC.

NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC.

HERSHEY FOODS CORPORATION,

Petitioners,

INTERSTATE COMMERCE COMMISSION

UNITED STATES OF AMERICA,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners, The Adhesives and Sealant Council, Inc., ef

al., respectfully pray that a writ of certiorari issue to review

the judgment and memorandum opinion of the United States

Court of Appeals for the District of Columbia Circuit entered

in this proceeding on December 17, 1976.

ee NE ER ES RT LS Ac a

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OPINION AND DECISION BELOW

The Judgment and Memorandum opinion of the Court of

Appeals are not reported and are attached as Appendix A

hereto. The Report and Order of the Interstate Commerce

Commission are reported at 121 M.C.C. 588 and are attached

as Appendix B hereto.

JURISDICTION

The Judgment of the Court of Appeals was made and

entered on December 17, 1976. This Court’s jurisdiction is

invoked under 28 U.S.C. § 2350.

QUESTIONS PRESENTED

Whether motor common carriers, who are required by

certificates issued under the Interstate Commerce Act to

provide adequate transportation for all commodities, may

elect not to handle commodities subject to freezing or to

damage from extreme heat.

Whether the Court was correct in holding that the

shippers are not entitled to judicial review of a statutory

construction made by the Commission in a rulemaking case

‘but can only do so after filing and préjcessing a subsequent

complaint proceeding.

STATUTORY PROVISIONS INVOLVED

Interstate Commerce Act

§ 208(a) [49 U.S.C. § 308(a)]

(a) Any certificate issued under section 306 or

307 of this title shall specify the service to be

rendered and the routes over which, the fixed

termini, if any, between which, and __ the

intermediate and off-route points, if any, at which,

and in case of operations not over specified routes

or between fixed termini, the territory within

which, the motor carrier is authorized to operate;

and there shall, at the time of issuance and from

time to time thereafter, be attached to the exercise

of the privileges granted by the certificate such

reasonable terms, conditions, and limitations as the

public convenience and necessity may from time to

time require, including terms, conditions, and

limitations as to the extension of the route or

routes of the carrier, and such terms and conditions

as are necessary to carry out, with respect to the

operations of the carrier, the requirements

established by the Commission under section 304(a)

(1) and (6) of this title: Provided, however, That no

terms, conditions, or limitations shall restrict the

right of the carrier to add to his or its equipment

and facilities over the routes, between the termini,

or within the territory specified in the certificate, as

the development of the business and the demands

of the public shall require.

§ 216(b) [49 U.S.C. §316(b)]

(b) It shall be the duty of every common

carrier of property by motor vehicle to provide safe

and adequate service, equipment, and facilities for

the transportation of property in interstate or

foreign commerce; to establish, observe, and enforce

just and reasonable rates, charges, and

classifications, and just and reasonable regulations

and practices relating thereto and to the manner

and method of presenting, marking, packing, and

delivering property for transportation, the facilities

for transportation, and all other matters relating to

or connected with the transportation of property in

interstate or foreign commerce.

STATEMENT OF THE CASE

In September of 1971, Travenol Laboratories, a

manufacturer of pharmaceuticals, filed a petition asking the

Interstate Commerce Commission to investigate the practices

of certificated motor carriers of general commodities so as to

define their obligation to transport commodities which require

some protection against freezing or extreme heat. Travenol’s

primary concern was the growing refusal of the carriers to

transport intravenous solutions during the winter months.

Such solutions are composed primarily of water and are in

glass bottles. As such, they are subject to freezing if the

shipping temperature is allowed to reach a normal freezing

level in transit. Travenol’s position was that the carriers are

obligated by their certificates and the statutory law to

transport all commodities covered by such certificates.

| The Commission published notice of Travenol’s petition

in the Federal Register and asked for comments from the

public and from carriers. Thereafter, the Commission issued a

Notice of Proposed Rulemaking and Order on May 23, 1972,

Docket No. MC-C-7599, initiating the administrative

proceeding here involved.

Representations were filed in that proceeding by shipper

interests, including these Petitioners, representing a broad

range of commodities subject to freezing or heat damage from

the normal range of temperatures prevalent throughout this

country, unless the carriers supply insulated trailers or some

other form of protection against extreme temperatures. The

shippers’ representations indicated that they experience

substantial difficulty in obtaining suitable amounts of

temperature control trailer equipment; and the motor carriers

of general commodities took the position that they are not

obligated to provide protection against freezing or extreme

heat (App. B, p. A-9).

The record made before the Commission illustrated the

broad spectrum of commodities which are subject to freezing

or heat damage unless afforded appropriate protection in

transit. Petitioner Adhesives and Sealant Council’s members’

products require protective service from freezing and

consequent damage in transit. A shipper of soaps and

shampoos has been forced to use air freight, with 100 percent

higher freight costs, because of unavailability of protective

service against freezing from motor carriers. An association of

food chain. stores stated that its members had not been able

to obtain needed protective service against heat and freezing

from motor carriers. A paint manufacturer of water-based

paints showed that unless they are protected from freezing in

transit during the winter months the paints freeze and become

worthless. Other affected commodities requiring protection

from freezing or extreme heat include: citrus fruits,

margarine, certain chemicals, pharmaceuticals, plastics, efc.

Because of problems in obtaining protection from the carriers,

shippers have been forced to provide private carriage; and

pharmaceutical companies have had to advise hospitals to

stockpile vital products in amounts sufficient to see them

through the winter (App. B, pgs. A-15 et seq.)

On their part, the carriers contended that general

commodities carriers, to the extent of their abilities, are

providing reasonably adequate service on these commodities;

and they urged that the criteria announced by the

Commission in Mid-Western Motor Freight Tariff Bureau, Inc.

v. Eicholz, 4 M.C.C. 755 in 1938, are proper today and

should govern the interpretation of the carriers’ statutory

duty to provide protection against extreme heat and freezing.

In Ejichoilz, the Commission had ruled that, because of

equipment limitations, motor carriers do not have available at

all times and places trailers equipped to transport perishables;

that tariff rules could be published requiring shippers to first

ascertain the availability of an equipped vehicle from the

carrier before tendering the shipment; and if such equipment

is available the carrier must transport the shipment.

The Commission made its decision in the instant

proceeding on April 17, 1975, as Travenol Laboratories, Inc.,

Petition for Invest., 121 M.C.C. 588 (App. B hereto).

Notwithstanding the extensive criticisms from the shippers

and the service problems disclosed of record by a survey made

by its own Bureau of Enforcement', the Commission

concluded that the protective services provided by all motor

carriers if considered collectively, are generally adequate. That

broad conclusion of fact, though highly questionable, was not

brought into issue before the Court of Appeals. Nor is it in

issue. What is in issue is the Commission’s new statutory

interpretation of the carriers’ obligation to transport

commodities concededly embraced in their certificate.

As for that statutory issue, the Commission first

correctly framed the issue:

The issue is whether a carrier subject to part Il of

the act can be required by this Commission to

provide the full service specified in its certificate.

(App. B, p. A-28)

'The Bureau’s study showed one-third of the shippers “had

problems” obtaining protective service (App. B, p. A-31).

It then noted the statutory mandate to certificated carriers:

the provisions of section 216(b) require every motor

common carrier “***to provide safe and adequate

service, equipment and facilities***”. Section

208(a) also provides that this Commission shall

“***at the time of issuance and from time to time

thereafter,***” attach such conditions and

limitations to the exercise of operating authority

granted to a motor carrier pursuant to the

provisions of part Il of the act. (App. B, p. A-28)

After discussing the Eicholz case, the Commission noted

that this proceeding raises questions unanswered in that case:

The matter now before us, however, raises two

additional questions: (1) whether a motor common

carrier authorized to transport general commodities

is or can be required to maintain at least some

protective equipment; and, if not (2) whether at

any given time, when equipment suitable for the

transportation of a given commodity is not

available, either by carrier design or otherwise, the

duty to serve is thereby lessened and properly may

be reflected by appropriate tariff provisions. (App.

B, p. A-32)

Answering those questions, the Commission thus reached

the following conclusions which are the focus of this review

proceeding:

Based on the record in this proceeding we

cannot conclude that it is unreasonable or

inconsistent with the public interest for

general-commodity carriers to elect not to acquire

and maintain temperature-control equipment.

Accordingly, we believe that it is lawful for them to

decline to provide transportation when they are

tendered commodities which they cannot transport

safely at that time without such equipment. (App.

B, p. A-33)

Thus, the Commission concluded that certificated carriers,

which are required by statute to provide adequate

transportation service for all the commodities authorized in

their certificates, are not really required to handle all

commodities but may completely exclude from their service

any commodities requiring protection from extreme

temperatures.

Petititions for reconsideration were filed by shipper

interests, including these petitioners, and were denied by the

Commission’s Order of September 29, 1975, thereby

exhausting the available administrative remedies. A petition

for review was then filed with the Court of Appeals which

took jurisdiction under 28 U.S.C. §§2321 and 2342. That

court entered. its Judgment and Memorandum opinion on

December 17, 1976, affirming the Commission’s decision and

orders.

ARGUMENT

1. This Case Involves a Serious Error of Statutory

Construction with a Pervasively Adverse Effect

on Shippers and Consumers.

The Interestate Commerce Act provides a_ balanced

Statutory scheme whereby, on the one hand, motor

transportation is placed in the exclusive hands of certificated

carriers, and, on the other, those carriers are given the

corresponding obligation to provide service for all the

commodities covered by their respective certificates. Thus, 49

U.S.C. §308(a) provides that the certificate shall specify the

commodities and routes (i.e., “‘service’”) authorized to each

carrier and 49 U.S.C. § 316(b) imposes a “duty” on each

carrier “to provide safe and adequate service, equipment, and

facilities for the transportation of property” as described in

the certificate.

In the past, the Commission, the carriers, and the

shippers have been aware that the commodity and route

descriptions in each certificate bear with them a.concomitant

duty to provide that same service. It was well settled that a

certificate for the transportation of “general commodities”

imposed a duiy to handle all commodities; and that particular

commodities could not be shunned. National Furniture Traffic

Conf. v. Assoc. Truck Line, 332 LC.C. 802, aff'd Assoc.

Truck Lines v. U.S., 304 F. Supp. 1094 (W.D. Mich., 1969),

Restrictions on Service by Motor Common Carriers, 111

M.C.C. 151, 167 (1970).

Of course, there has been a practical limitation of the

limits of a carrier’s ability to serve, such as in Eicholz where

the Commission authorized a procedure whereby the shipper

would first ascertain the immediate availability of protective

equipment from a particular carrier before tendering a

shipment requiring protection from extreme elements. But

here, for the first time, the Commission has misinterpreted

the statute as allowing an election on the part of each carrier

as to whether it will transport any of these commodities at

all. The Commission has thus ruled that the carrier can relieve

itself from its statutory duty by a simple self-dispensation

whereby it would proclaim that it no longer will handle any

such freight.

It strains beyond the bounds of reasonable statutory

construction thus to hold that Congress has created a

monstrosity whereby the shippers of this country are limited

by law to shipping only via a certificated carrier but that the

certificated carrier is vested with the right to elect not to

handle an important part of the freight requiring

10

transportation. The Commission’s decision, affirmed by the

Court of Appeals, does violence to the statute and must be

corrected to avert a void in transportation in this country.

Whereas Travenol had asked the Commission to toss it a

lifeline to aid in its efforts to obtain transportation of

life-support commodities during the winter months, the

Commission has instead provided an anchor. And, by

converting what had been recognized as a duty into an

election, it has seriously impaired the ability of other shippers

to obtain service during the winter and summer months.

The importance of this statutory misconstruction is

pervasive. From a commodity coverage standpoint, the ruling

affects not only critical items such as intravenous solutions,

blood, and a broad range of pharmaceuticals whose

effectiveness is destroyed if subjected to freezing in transit,

but basic items such as foods, margarine, candy, paints,

plastics, chemicals, efc. Walk through the aisles of any

grocery, general store, drug store, efc., and one is surrounded

by hundreds of items which are adversely affected by freezing

or extreme heat. Is the statutory mandate of adequate

equipment and service to be construed as inapplicable to these

common everyday items?

From a geographic standpoint, the impact of this ruling

on the nation’s commerce is also all-inclusive. It would be

difficult to locate a section of the country where freezing

temperatures are not encountered at some period of the year.

And, if one were found, it would be a section where

protection from extreme heat is badly needed by many

commodities. Moreover, there are many sections of this

country where freezing temperatures occur during nine

months of the year. It can fairly be said that the statutory

interpretation made in this case will have on impact on every

person in this country in terms of availability of commodities,

their condition at time of use, and the total distribution cost

included in the prices charged.

11

Beyond the direct impact upon the range of commodities

affected, this ruling also has broad implications for other

commodities generally. Until now, the statutory standard of

adequate service and equipment has consistently been

interpreted as a duty. If it were allowed to stand as merely a

matter of each carrier’s election, then that construction could

be used to support a whole serics of elections as to other

commodities which the carriers seek to avoid for various other

reasons.

Il. The Court Of Appeals’ Erred In Holding That

Shippers Are Not Entitled To A Judicial

Review of The Commission’s Construction Of

Statutes In A Rulemaking Proceeding

The Court of Appeals declined to pass on Petitioners’

contention that it was error for the Commission to hold that

motor common carriers with general commodities certificate

may “elect not to acquire and maintain temperature-sensitive

equipment” (App. A pp. A-3-4) The court held that the statu-

tory construction issue was not ripe for review on the ground

that the Commission’s ruling would not foreclose a shipper

from: filing a complaint with the Commission challenging the

reasonableness of the service provided by an individual carrier.

This decision conflicts with the principles laid down by

this Court in Columbia Broadcasting System v. United States,

316 U.S. 407 (1942); Frozen Food Express v. United States,

351 U.S. 40 (1956); United States v. Storer Broadcasting

Company, 351 U.S. 192 (1956); and Abbott Laboratories v.

Gardner, 387 U.S. 136 (1967).

12 13

The instant decision of the Commission issued in a

rulemaking proceeding designed to define carriers’

responsibilities in this area, establishes the principle that a

carrier of general commodities is under no duty to acquire

and maintain adequate equipment for temperature-sensitive

commodities. That ruling now controls the services made (or

not made) available by carriers would be controlling in a sub-

sequent proceeding against an individual carrier. The observa-

tion in Columbia, supra, that:

CONCLUSION

For these reasons, a writ of certiorari should issue to

review the judgment and opinion of the Court of Appeals.

Respectfully submitted,

.the injury can not be avoided, as_ the

Commission suggests, by appellant’s intervention in Charles J. McCarthy

proceedings upon applications for renewal of Daniel J. Sweeney

licenses by its affiliates or in proceedings to cancel

their licenses if and when such proceedings are Counsel for Petitioners

instituted ... (p. 423)

is equally inapplicable here. The injury cannot be avoided by March 17. 1977

subsequent institution of proceedings against carriers which '

take advantage of the authorization granted by the

Commission to disable themselves to carry

temperature-sensitive commodities by electing not to acquire

or maintain temperature-controlled equipment. Also, as noted

in Gardner, supra, at pages’ 148-149, the effects of the

Commission’s order are “felt in a concrete way by the

challenging parties” and the Commission’s ruling, therefore, is

ripe for review. The Court of Appeals was wrong in suggesting

that the Commission’s ruling in the instant rulemaking

proceeding was somehow not binding and that a shipper could

only test that ruling by a specific complaint against a

particular carrier in futuro and not by a review of this

proceeding.

APPENDIX A

Al

MOT TO SBE PUBLISUED - SEE LOCAL RULE 8 (f)

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 75-2156 September Term, |9 7

The Adhesives and Sealant Council, Inc., et al., Petitioners

United Stetes Court of Appeals

fer to District of Cohandia Circuit

FILED DEC 17 1975

} R

GEORGE A. FISHE

Ae2

MEMORANDUM

In 1972 the Interstate Commerce Commission initiated,

by notice of proposed rulemaking, a general investigation into

the adequacy of the protective services provided by al! modes

of surface transportation. A particular concern, however, was

with motor common carriers of general commodities, since

the Commission had received complaints that carriers of this

class had been failing to provide adequate protective service in

the case of commodities which required, not continuously but

at certain seasons of the year, special protection against

extremes of either heat or cold. The provision of such

protection requires the availability of special equipment with

temperature controls.

The Commission’s investigation elicited numerous

statements from _ interested parties, both private and

governmental. On the basis of the administrative record in

rulemaking so compiled, the Commission made a finding that

“the provision of protective services by motor common

carriers of property subject to part Il of the act is reasonably

adequate;” and it, accordingly, discontinued the investigation.

121 M.C.C. 588 (1975).

Petitioners in this proceeding have sought review of this

‘action. In doing so, however, they have explicitly disclaimed

to us any purpose to challenge the finding, either as

unsupported by the record or for any other reason. They also

state that they have no quarrel with the Commission’s

reaffirmation in the course of its opinion of its so-called

Eicholz rule (2 Mid-Western Motor Frt. Tariff Bureau vy.

Eicholz, 4 M.C.C. 755 (1938)) to the effect that motor

common carriers of general freight may, by the publication of

appropriate tariffs, place an obligation on shippers to ascertain

the availability of suitable protective equipment before

tendering shipments thought to require it—a rule which

Ac3

certainly appears to contemplate that a motor common carrier

may on occasion be privileged to decline to accept shipments

requiring special protection. Finally, petitioners assert that

they do not make what they characterize as the unreasonable

claim that every motor common carrier must be equipped to

handle all of the freight seasonally requiring protective service

that is tendered.

Given these representations on the part of petitioners,

the court found it difficult to know exactly what relief they

were seeking in this proceeding. At oral argument counsel for

petitioners stated that its problem lay in certain observations

in the Commission’s opinion which were subject to the

construction that no motor common carrier certificated to

carry general commodities would, should it elect not to do so,

be required to provide any special equipment whatsoever

capable of protecting shipments against seasonal extremes of

either heat or cold. Petitioners contend that any such policy

on the part of the Commission would nullify the common

carrier responsibilities envisaged by the general commodity

certificates and would, in particular, set a naught the

statutory oblibation of motor common carriers “to provide

safe and adequate service, equipment, and facilities for the

transportation of property in interstate or foreign commerce;”

49 U.S.C. § 316(b). In response to the court’s questions,

counsel purported to be concerned that any complaint

proceeding against a particular motor common carrier for

failing to furnish adequate service in this respect would be

rejected ad initio by the Commission by reference to this

language in its opinion.

As it intimated in the course of the oral argument, the

court conceives that, given the unchallenged aspects of the

Commission’s action under review, the question of whether a

particular common carrier is living up to its obligations under

its certificated authority is one that can be meaningfully

expiored only by reference io that carrier’s individual actions

and circumstances. The court does not read the Commission’s

opinion as meaning that under no circumstances would it

entertain for investigation and appropriate action a complaint

that a particular common carrier is unreasonably and

arbitrarily failing to supply the service required of it by the

statute and the terms of its certificated authority. Certainly

counsel for the Commission appearing before us declined an

invitation to represent that this was the case. The finding by

the Commission in its general investigation that the service

presently being provided is “reasonably adequate” does not

appear to us to foreclose inquiry by the Commission in

appropriate circumstances into the alleged deficiencies of a

particular carrier.

APPENDIX B

Ac5

Served May 7, 1976

——— oS —ESEEeaB=>SEaEaEaE]=]E—eSeEeeeee————ee—_—_—ee

M-1 2664

INTERSTATE COMMERCE COMMISSION

No. MC-C-7599

TRAVENOL LABORATORIES, INC., PETITION FOR

INVESTIGATION—PROTECTIVE SERVICE

No. MC-C-7599

TRAVENOL LABORATORIES, INC., PETITION FOR

INVESTIGATION—PROTECTIVE SERVICE

Decided April 17, 1975

Upon petition, investigation and consideration of views, arguments, and

representations of the parties, protective services offered and provided by

common carriers by rail and motor found in general to be reasonably adequate.

Duties imposed upon motor common carriers of general commodities by the

provisions of their certificates and section 216(b) of the Interstate Commerce Act

to provide protective services found to be in need of clarification. Adoption of

certain interpretations proffered by petitioner concerning the obligation of

general-commodity common carriers to provide protective service found not

justified on the present record. Petition denied and proceeding discontinued.

S. R. Brittingham, Jr., L. C. Cypert, William C. Harris, William J.

Monheim, Roger M. Shaner, Lawrence T. Sheils, F. J. Steinbrecher,

and Douglas C. Wynn for motor carriers.

Peter T. Beardsley, R. Edwin Brady, Drew L. Carraway, Nelson J.

Cooney, Rex Eames, John S. Fessenden, Jon F. Hollengreen,

Brenda P. Murray, Dabney T. Waring, Jr., James E. Wilson, and F.

L. Wyche for motor carrier associations.

Charles W. Burkett, Jr., James I. Collier, Jr., and Howard E. Roos

for railroad interests.

Robert E. Born, Francis P. Desmond, Michael Gallagher, Robert

G. Gawley, William Kenworthy, Thomas M. Knebel, F. Houston

Lynch, Jr., J. Michael May, John W. McFadden, Jr., George D.

Michalson, Norman Powell, Bryce Rea, Jr., J. A. Royal, and John

Wormack for tariff associations.

Eugene D. Anderson, Thomas G. Baranski, John M. Cleary,

Richard B. Cortland, Leslie M. Cox, John F. Donelan, Thomas C.

Dorsey, J. A. Dupont, Vincent B. Emanuele, W. F. Geach, James F.

Hickcox, William Q. Keenan, Ronald K. Kolins, C.°R. Looney,

Dickson R. Loos, W. L. McCracken, Clarke J. Munn, Allen W.

Pinkerton, Barry Roberts, Gerald R. Russell, and K. J. Whelan for

shippers’ interests.

121 M.C.C.

A7

John E. Curley and Bernard A. Gould for the Bureau of

Enforcement, Interstate Commerce Commission.

Harold M. Carter, Paul L. Mills, Kenneth H. Vail, and Ronald P.

Vail for Commodity Credit Corporation, United States Department

of Agriculture.

REPORT OF THE COMMISSION

By THE COMMISSION:

Many of the commodities relied upon by the citizens of this Nation

for survival require during their transportation special protection

from the climate. As an example, certain medical supplies being

transported to hospitals require both expedition and protection

against freezing because if such supplies freeze, they no longer can

accomplish the lifesaving function for which they were

manufactured. Americans also depend on surface transportation to

transport foods to local retail stores. Many foods move under

refrigeration; others must be protected from the cold. The question

confronting this Commission at this time is whether carriers subject

to our regulatory jurisdiction are providing adequate and reliable

protective services required in the interstate movement of these

and other commodities. If not, the questions are what can and

should be done about it.

BACKGROUND

By petition filed September 20, 1971, Travenol Laboratories,

Inc., of Deerfield, Iil., sought the institution of this proceeding for

the purpose of investigating the practices of motor common carriers

with respect to the provision by such carriers of protective services.

In particular, the petitioner seeks to have answered the question of

whether protective service’ is a required duty of a motor common

carrier authorized by this Commission to transport general

commodities.

Travenol is a producer of pharmaceutical supplies (including

intravenous solutions), most of which are packaged in glass. It

asserts that general-commodity carriers have historically handled

such products both in the summer and winter months, the latter

service being provided to the best of the carriers’ ability at no

additonal charge. Petitioner contends that each year more and more

carriers are refusing to handle these products during the winter

months; and that these refusals are based on the claim, among other

‘Although petitioner eliminated refrigerated service from the scope of its request, such services”

have been included within the ambit of the present investigativa.

12) M.C.C.

A8

things, (a) that the carriers do not lave the equipment available; (b)

that they handle single-line traffic only; (c) that they will not accept

shipments subject to freezing on Thursday or Friday; or (d) that they

simply do not desire the business.

Travenol maintains that unofficial embargoes have been placed

on commodities that are susceptible to freezing. It asserts

specifically that carriers in the Detroit, Mich., area embargoed such

items between December 19, 1969, and January 5, 1970, and that

acceptance of such traffic was continued only on an erratic basis

through January 1970. Petitioner further argues that in many parts

of the country it is required to remove its request for protective

service from a bill of lading and ship at its own risk in order to have

urgently needed medical supplies moved during cold weather

periods.

In support of its petition, Travenol submits as exhibits (1) the

National Classification Board's “Proposal For Change In The

National Motor Freight Classification” form, containing question 7

-{p) which reads: “Does commodity require heat

refrigeration ”; (2) correspondence with the

Michigan . Public Service Commission allegedly reflecting futile

attempts to obtain protective service within Michigan; (3) an

Eastern Central Motor Carrier Association docket, assertedly

indicating that protective service will not be provided unless the

carrier agrees to render such service;* (4) several bills of lading

demonstrating the shipper's risk in shipping commodities subject to

freezing; and (5) a letter from a carrier demonstrating difficulties in

obtaining protective service.

In conclusion, petitioner avers that motor common carriers’

willingness to transport the involved type of commodities during the

summer months and their refusal to handle the same commodities

during the winter months, under the same certificate of public

convenience and necessity, is a violation of the principles

established in Ex Parte No. MC-77, Restrictions on Service by

Motor Common Carriers, 111 M.C.C. 151 (1970). (The Restric-

tions case.)

Notice of the filing of the above-mentioned petition was

published in the Federal Register on October 29, 1971, and

*Trevenol asks that this Commission investigate the practices only, and not the charges, of

motor Common Carriers with respect to providing procective service. It rawes the tariff issue only

to demonstrate that certain rate conferences asseriedly insend to have their member carriers

furnish protective service oaly at the carrier's option.

"The regulation adopted in Ex Parte No. 77 (49 CFR 1307.27 (k)) was construed in Ex Parte

No. 77 (Sub-No. 1), reported at 119 M.C.C 691 (1974). Che effective date of the latter report bas

been stayed indefinitely peading final disposition of petitions ive reconsideration.

121 M.C.C.

Ad

interested persons have submitted their views and comments on the

matters raised in the petition. Shippers generally agreed with the

assertions of Travenol and contended that an investigation

proceeding by this Commission is necessary in order to improve the

quality of protective services offered by carriers operating under

our economic jurisdiction. These shippers complained that there

are an increasing number of motor common carriers of general

commodities which do not offer protective services; that they lose

sales because they cannot obtain protective services from motor

carriers; that they will present complete evidence on these matters

if an investigation proceeding is instituted; and that they cannot

obtain pickup services either on items subject to freezing on

Thursday or Friday or on such shipments requiring interline

movements.

The petition was opposed by motor carrier interests which

contend that protective service is not a required duty of a general-

commodity carrier. M-F and Poplarville urged us to reexamine our

decision in Mid-Western Motor Frt. Tariff Bureau, Inc., v. Eichholz,

4 M.C.C. 755 (1938),* in light of our recent decision in the

Restrictions case, supra. These carriers believe that the Eichholz

rule represents the best solution to the problem because it

assertedly provides for an adjustment of equities between carrier

and shipper. But these two carriers also urged a complete

investigation into the area of protective services if this Commission

entertains doubts as to the validity of the Eichholz decision. Carrier

interests also pointed out that “heater service” can cause damage to

other lading and that, in the case of connecting carriers, one may

provide protective services while its connecting carrier doe: not.

These problems, which have been spotlighted by the opponents of

the involved petition, served in our judgment to emphasize the need

for an investigation into this field of service.

After carefully considering the petition and the representations,

we issued a Notice of Proposed Rulemaking and Order on May 23,

1972 (see 37 F.R. 11400). It was there concluded that the public

interest requires a complete investigation into the responsibilities of

all carriers subject to our regulation to provide protective services.

We stated that although special attention will necessarily be focused

“1c was noted in the Eichholz case that, because of equipment limitations, motor carriers do act

have available at all times and places vehicles equipped to transport perishabies. Therefore, it

was found nat tariff rules concerning provective services should provide that the shippers must

ascertain whether property equipped vehicles are available before tendering & shipment to \

particular casrier; and thus if the equipment is so eveilabie, the carrier must accept the shiper. at

for transportation.

121 M.C.C.

A-10

upon the responsibilities of motor common carriers of general

commodities to provide such protective services pursuant to their

duties as certificated carriers, an investigation of protective services

available to the shipping public would be incomplete without

studying the services offered by all carriers subject to our regulatory

jurisdiction. The said notice and order (a) named all railroads,

express companies, motor carriers, water carriers, brokers, and

freight forwarders of perishables, subject to the Interstate

Commerce Act respondents in this proceeding, (b) directed the

Bureau of Enforcement of this Commission to participate herein,

and (c) invited comments from any interested persons. Those

persons filing representations in this proceeding are listed in the

appendix to this report and will be referred to by their appropriate

short titles.

REPRESENTATIONS

The representations indicate that shippers on occasion cannot

obtain adequate amounts of suitable temperature-control

equipment; that motor carriers of general commodities do not feel

obligated to provide protective service; and that the major problem

herein involves the transportation of smaller shipments requiring

temperature control.

INITIAL STATEMENTS

Motor carriers.—Continental, a large motor contract carrier

operating in all 48 of the coterminous United States, contends that

no useful purpose will be served by including contract carriers in

this investigation because such carriers do not serve the general

public. It asserts that subjecting contract carriers to general rules

which might be adopted in this proceeding would endanger the

close working relationship required between such carriers and the

shippers they serve.

McAdams, a certificated motor common carrier, operates trailers

equipped with mechanical refrigeration. It states that the cooling

unit is attached to the trailer and is susceptible to damage, and that

in the event of failure of the cooling unit, it is possible to lose by

spoilage a complete trailer load of the commodity being

transported. It contends that general-commodity carriers, which do

not operate mechanically refrigerated equipment, use charcoal or gas

heaters placed in the body of the trailer with the freight being

121 M.C.C.

A-11

transported; that the flame and fumes cause a problem in the

transportation of mixed shipments of general commodities; and that

these same carriers frequently require that a refrigerant (such as dry

ice) be included in a shipment requiring refrigeration at the expense

of the shipper. McAdams maintains that regular-route, general-

commodity motor carriers generally restrict their holding out to

render protective service to certain seasons or days of the week; and

objects to the fact that these nonspecialized carriers often protest

McAdams’ applications for authority to transport commodities

requiring refrigeration and are often successful. It states that many

shippers have suffered the penalties of using such regular-route

services, while many others have established private carriage

operations to assure themselves of the availability of protective

services. McAdams notes that the regular-route, general-commodity

carriers participating in the National Motor Freight Classification

A-12 MF-I.C.C. No. 14, generally do not hold themselves out to

render a protective service.

M-F, operating over regular routes, and Poplarville, operating

' over irregular routes, are both motor common carriers of general

commodities which transport, among other commodities,

pharmaceutical supplies and intravenous solutions (for petitioner),

candy, and chemicals. They assert that general-commodity carriers

must perforce tr=nsport a large volume of less-than-truckload (LTL)

traffic and must, therefore, consider the needs of all their

customers, not merely those of a select type; that the provision of

heater service for an LTL shipment of pharmaceuticals might

damage confectionery being carried in the same trailer; and that

most of the freight they handle does not require temperature-

controlled trailers. They argue that a general requirement that all

carriers provide protective services would result in uneconomical

use of such equipment and claims problems on interline and

especially intermodal shipments. M-F and Poplarville contend that

shippers utilizing such services should bear the costs of these

services. They note that this Commission has determined that

protection from heat [Dairy and Packing House Products—lowa,

Nebr.-Chicago, $1 M.C.C. 77 (1949)] and cold [Heater Service

Charge From Chicago to East, 61 M.C.C. 473 (1953)] are separate

services for which separate rates or charges must be stated in the

tariff.

M&N, a motor common carrier operating over irregular routes,

specializes in the transportation of foodstuffs. It provides protective

services and must do so to continue in business. All of its equipment

121 M.C.C.

Acl2

is furnished with mechanical temperature-control devices, and

protective services are offered every day of the year. M&N believes

that specialized carriers such as itself should not be included in this

investigation. Colonial and Refrigerated are also specialized motor

common carriers offering extensive protective services.

Refrigerated offers LTL services on perishable foods and does not

believe that refrigerated service should be included in this

investigation.

Santa Fe, a motor common carrier engaged in the transportation

of general commodities, provides protective service on shipments

requiring such service throughout its system. It states that shippers

utilize specialized common or contract carriers by motor vehicle, or

private carriage, for volume shipments and offer regular-route

carriers only that traffic which is inconvenient or uneconomical for

the other carriers to handle. It suggests that we enter an order

setting standards for packaging of LTL shipments of perishables by

shippers in a manner sufficient to withstand damage from extremes

of heat or cold during transportation by common carrier.

Motor carrier associations.—ATA takes the fundamental position

that a common carrier's duty to transport property is subject to

reasonable limitations. It notes that some motor carriers of general

commodities have extensive facilities for handling traffic requiring

protective services because they transport these commodities on a

large scale, while other such carriers do not have refrigerated

trailers because their business does not justify them. ATA reports

that there are currently in operation approximately 200,000

refrigerated trucks and combinations, plus another 100,000

insulated but not refrigerated trucks and trailers. According to ATA

most general-commodity carriers refuse to accept freight when they

know they lack equipment or storage facilities to protect it from

damaging weather conditions and that in many circumstances,

carriers and shippers that work together on a year-round basis will

arrange for the traffic to move as soon as practicable after a break in

the weather. ATA claims that motor carriers, which lack

temperature-controlled vehicles or storage facilities, avoid pickups

on Thursday or Fridays because they do not want to have freight in

their possession over weekends when deliveries are usually

impossible, thus increasing the opportunity for damage to the

lading; that carriers often request prior notice where the shipper

needs protective service to assure that the type of equipment

needed will be available at the appropriate terminal for dispatch to

the shipper's facility; that general-commodity carriers widely

121 M.C.C.

—_—-

Acl3

circulate’ their equipment lists and operational bulletins on

perishable traffic so that the public will be aware of the service they

offer; and that this practice of the carriers is in keeping with their

common carrier obligation to furnish service to the limit of their

capacity.

ATA states that the cost of a refrigerated trailer runs from

$12,000 to $16,000 while the cost of operating refrigerated tractor-

trailer unit is estimated at $150 to $175 a day and that as a

consequence, a refrigerated trailer is not the most economic way to

move general-commodity freight. It represents that shippers have

available the services of specialized carriers, including some 89

motor carriers which specialize in providing temperature-control

service. ATA, therefore, seeks retention of the Eichholz rule. It

argues that it is possible that shippers want general-commodity

carriers to be required to provide protective service in hopes of

obtaining transportation of perishables at rates lower than those of

the specialized refrigerated carriers; that the problem described by

petitioner refers to those sporadic demands for protective service

on commodities not normally requiring such service when extreme

weather conditions exist and that such irregular demand for special

equipment is not sufficient to show a need for additional service;

and that the facts do not warrant a finding by this Commission that

all motor common carriers have a duty to provide on call protective

service.

HGCB states that its members, motor common carriers of

household goods, encounter virtually their only demand for

protective service when transporting sensitive electronic

equipment. Its members have special charges for such “Climatic

Control Service.” It con’ends that while household goods carriers

were not intended by petitioner to be subject to this investigation,

HGCB studied these matters in a spirit of cooperation, as they

pertain to the household goods industry, and discovered that 40

vans were equipped with temperature control out of a total of

10,000 vans operated by the 16 major moving firms. HGCB states

that its members handled all traffic requiring such protection

service without complaint.

NBTA submits that any conclusions we reach in this proceeding

with respect to the provision of protective service should not be

applicable to the intercity motorbus industry and that motor

common carriers of passengers should be dismissed as respondents

to this proceeding. Its members do not and cannot offer protective

service on shipments of property.

121 M.C.C.

Arl4

MCCFEA is an association =f 42 motor common carriers of general

commodities. While petitioner described the practices of many

general-commodity carriers during the winter months, this asso-

ciation contends that when temperatures reach levels below 10°F.

to 15°F. such protective service may properly be interrupted

temporarily because of the unreasonable risk that such low

temperatures would impose upon the lading notwithstanding the

efforts of the carrier to protect such lading. It submits that the best

interests of the public are being protected by the carriers which

determine at the time of tender whether or not freezable traffic can

be protected against the prevailing elements of weather and with

the equipment then available. It explains that this proceeding is

concerned mostly with LTL traffic which requires that trailer doors

be frequently opened, thus constantly exposing the contents to the

weather; and that the use of portable heaters might damage or ignite

certain other lading. MCCFA asserts that carriers generally consult

with their customers regarding winter services and shippers with

such advance notice as to the days of the week that their carrier

provides protective service on LTL traffic should have little

difficulty in avoiding any emergency or shortages of goods. It is

opposed to the adoption by this Commission of any rule which

would require all motor common carriers to operate mechanically

refrigerated vehicles.

Tariff associations—NMFTA, et al., represent thousands of

motor carriers under an agreement approved by us pursuant to

section Sa of the Interstate Commerce Act. These associations

contend that no statutory duty exists which requires motor common

carriers to provide protective services or which permits this

Commission to require such carriers to perform this service. They

rely on the Eichholz case to support this contention; and they assert

that the provisions of part I of the Interstate Commerce Act

vesting in this Commission jurisdiction over protective servici

furnished by the railroads [sections 1(3)a), 1(14)(b), and 20(6)]}, are

conspicuously absent from part II of the statute, and that sucl

jurisdiction, therefore, does not exist over motor carriers.

Southern argues that any rule that might require that a relativel:

small portion of the shipping public be accorded a type of servic:

requiring an extensive investment in motor carrier facilities woul

place an unfair burden upon the general public, and that general

commodity carriers then would have to maintain temperature

controlled equipment and storage facilities, which would result i

121 M.C.C.

AS

higher shipping costs to the general public. It avers that

incompatible temperature-control commodities cannot be

transported in the same vehicle, and if separate vehicles are

required, the result is wasted equipment space; and that part I of the

act requires railroads to provide some protective services, whereas,

part II does not require motor carriers to do so. Southern contends

that because many commodities require protective service only at

certain seasons, any requirement that carriers maintain certain types

of equipment would result in unused facilities; and that in the

absence of discrimination, this Commission is without power to

compel a carrier to furnish any particular type of equipment, citing

United States vy. Pennsylvania Railroad Co., 242 U.S. 208, 221

(1916). Southern requests that we adopt the rule assertedly followed

at common law that “a common carrier is not bound to accept for

transportation®** a commodity which it knows it cannot safely

deliver to destination without damaging it.” R.C.A. Truck Lines,

Inc. v. Georgia Rug Mill, Inc., 88 Ga. App. 658 (1953). Central &

Southern elected not to discuss the issues involved in an initial

statement.

Shipping interest.—A & SC is an organization of manufacturers of

adhesives and sealants and of the products used in the manufacture

of adhesives and sealants. These products at times throughout the

year require protective service in the form of heat to prevent

freezing and damage in transit. A & SC supports the position of the

petitioner and contends that common carriers are obligated to

accept for transportation all commodities not otherwise restricted

by their certificates and to handle and deliver such articles in a safe

and undamaged condition. It asserts that restrictions against the

acceptance and transportation of commodities requiring protective

service, by tariff item, amount to an embargo or failure on the part

of the carriers to perform the transportation services authorized by

their certificates (citing Ex Parte No. MC-77, supra). The Council

reports that parce! post and United Parcel Service do not provide

protective service, that REA Express will not accept freezable

shipments during winter months, that rail carload protective service

is virtually curtailed during the winter months; that most motor

carriers will provide protective service on volume shipments

subject to advance notice and suitable equipment being availabie;

and that protective service un LTL shipments rcquires | to 3 days’

notice and proper equipment is less available for such smaller ship-

ments. It notes that many tariffs have provisions limiting protective

services, such as “protective service provided, subject to carrier's

121 M.C.C.

Acl6

estimation of weather conditions,” “provided on shipments picked

up on certain days of the week,” “subject to weight limitations,”

“limited to local traffic or single-line service,” and “limited to

specific origins and destinations.” A & SC asserts that certain motor

carriers like Knox Motor Service offer protective service in one

tariff, but eliminate protective service in other tariffs. It avers that

motor carriers should distribute public announcements explaining

in more detail the conditions under which protective service will be

provided. Another problem facing A & SC members involves the

attitude of carriers which do not publish restrictions against the

furnishing of protective service, but which accept freezable ship-

ments and later deny liability when goods are damaged. It proposes

that carriers be allowed to publish rules requiring that bills of lading

carrying notations and packages clearly marked in such a manner to

indicate that protective service against freezing is required or

requested and that the carrier be relieved of liability for damage

caused by freezing unless such bills of lading are so noted and

packages so marked. .

AHSC is a manufacturer of products used in the health-care field.

Some of its products which must be protected against freezing are

intravenous solutions, chemical reagents, chemical controls, and

blood-typing serums. It states that many motor common carriers

such as Roadway Express offer no protective service, while others

offer protective service on Monday, Tuesday, or Wednesday only;

thus this service is further limited by the fact that most carriers

refuse to handle freezables when the temperature falls below 10°F.;

and that some of its freezables are flamabies and cannot be

transported in trailers using butane-type heaters which have an open

flame. It avers that many carriers will not accept joint-line

shipments of freezables, while those shipments which are accepted

involve delays at the interchange point because connecting carriers

do not have heated trailers. AHSC represents that motor carriers

are obligated to provide protective service on its commodities.

Armour-Dial ships meats, soap, and shampoos, among other

things, which require protection from freezing. It states that the

most significant problen: involves the movement of LTL shipments;

and that it has turned to airfreight as an alternative, but this

increases costs by over 100 percent It asserts that common carriers

are obligated to transport its commodities under all weather

conditions. Armour and Company's meat shipments require

refrigeration, as well as protection from freezing, and it has found

that truckload service is readily available, but that LTL service is

121 M.C.C.

Acl7

undependable or is provided at prohibitive rates. It states that joint-

line service on LTL perishables is virtually unavailable.

Blue Anchor, a farmer cooperative, markets fresh perishable

agricultural commodities. Its statement pertains solely to railroad

freight transportation. It states that during the period from 1966 to

1971, railroads have lost 42 percent of their California fresh fruit

traffic because of poor service and increasing rates; that there is a

continuing decline of available refrigerated equipment and an

increasing failure properly to maintain present equipment, and that

another cause for failing rail service is the withdrawal by the eastern

carriers from the “guaranteed” through schedule that took place in

June 1964. Blue Anchor avers that continued movements of fresh

fruits cannot be economically marketed in the railroads’ new larger

equipment

Continental produces fresh bread, cake, candy, and a complete

line of frozen foods. It has found refrigerated common carrier

service to be adequate. It states that the cost of refrigeration is

included in the freight rate.

Land O'Lakes manufactures dairy products which require

protective: service against both heat and cold. Because rail

refrigerated equipment was hard to obtain, it used the ice bunker

car, but in 1973, the railroads were permitted to phase out that serv-

ice. It states that motor carrier service is inadequate on LTL

shipments.

MPTA is an association of meat producers. Meat requires

protection from both heat and cold, and MPTA contends that its

members cannot obtain adequate amounts of suitable rail or motor

equipment upon reasonable notice. It asserts that general-

commodity carriers usually lack refrigerated equipment while

specialized carriers have more authority than their equipment can

handle; and that TOFC shipments are often rejected because of

delays in transit and TOFC equipment is generally in poor

condition. It suggests that this Commission revoke and restrict

grants of motor carrier operating authority consistent with the

rendering of service. It also proposes the granting of trackage rights

to railroads providing refrigerated services so they may avoid

problems of diversions, per diem, and the abuse of equipment by the

destination line.

NAFC is a trade association representing food chains throughout

the Nation. Food chains purchase large quantities of foodstuffs,

meats, and frozen foods. NAFC asserts that rail service is

deteriorating because the railroads seek to use only a 50-foot

121 M.C.C.

Acl8

mechanically refrigerated car and seek to charge only per-car rates;

that motor carrier service is particularly inadequate in regard to

LTL shipments; and that carriers should be found to be obligated to

transport in a safe manner all commodities for which they have

authority.

NITL is an organization of shippers and shipper associations. It

submits that clearer definitions of what is meant by the terms

“perishable commodities” and “protective service” are necessary,

and that the free flow of commerce requires damage-free

transportation. The Lincoln Chamber of Commerce adopts the

statements of NITL.

PPG manufactures glass and industrial chemicals, coatings, and

resins. There has been an increase in the need for protection of

paint from cold during the winter because of the accelerated use of

water-based paints. Once this type of paint is frozen, PPG considers

it worthless. It has had difficulties shipping commodities requiring

protective service in joint-line service, in LTL shipments weighing

less than 5,000 pounds, and in situations where the temperature falls

below 10°F. PPG ships products which cannot be shipped in a

vehicle with an open flame (butane heater), and it objects to

shippers having to coordinate their schedules to those of the

carriers. It states that there is a need for more uniformity in the

freezable rules utilized by motor carriers.

Sunkist is a cooperative marketing association of citrus fruits

which require protection against heat as well us cold on a continuing

basis. It states that section 1(3) of the act obligates rail carriers to

provide protective service, whereas, the motor carrier

transportation of citrus fruits in truckload lots is exempt from this

Commission's regulation. It stated that ice bunker cars were an

effective instrument for handling perishable food products; that the

capacity of refrigerated cars has been diminishing; and that the

railroads are not acting to prevent a car shortage. Sunkist contends

that there is an increasing shift from rail to motor transportation

which may increase air pollution and traffic congestion and

adversely affect the quality of the human environment.

Swift and its affiliates ship various commodities such as margarine

and adhesives which require protective service. They assertedly

have found LTL protective service inadequate and have been forced

to use private carriage to serve their customers.

Travenol contends that this investigation should not be broadened

to include contract carriers, water carriers, brokers, or rail carriers.

It defines a product requiring protective service as one which does

121 M.C.C.

eR ae oe tr ee ee ee:

Ort meen

Acl9

not experience damage when carried under normal service within a

range of temperatures (from about 32°F. to 90°F.). On the other

hand, it defines perishable service as that which prevents the

deterioration of a product able to withstand a very narrow range of

temperatures (such as between 35°F. and 50°F.). Petitioner asserts

that many motor common carriers follow practices which affect the

movements of small shipments, and that these include such policies

as no pickups on Thursday or Friday, single-line service only,

service available on shipments weighing in excess of 5,000 pounds,

service at shippers risk, and no service below a specified

temperature. Travenol complains that many large carriers purchase

smaller carriers and discontinue protective services and that certain

carriers will only accept the involved lading when it is shipped at

the shipper’s risk. It alleges that carrier services are inconsistent,

and as an example states that Roadway Express accepts shipments

from southern points for northern destinations, but will not accept

shipments from Morton Grove, Ill. Petitioner no longer sees a need

for new regulations or legislation because it contends that these

issues have been decided and need only affirmation. It suggests that

this proceecing be left open for shippers to file protective service

complaints without the necessity of filing a separate formal

complaint each time a carrier fails to perform; and that emergency

temporary authority should be granted to any person who applies to

_haul products requiring protective service.

Upjohn’s Polymer Chemicals Division produces chemicals and

synthetic plastics which require temperature control in transit. It

represents that more than 99 percent of its temperature-controlled

products move in truckload quantities because of the unavailability

of protective service on LTL quantities. To obtain adequate

protective service, Upjohn successfully supported Trans-Cold

Express for appropriate authority. It states that it has not been able

to receive adequate service from Ryder and Brown in control of

Spector and that Consolidated Freightways, Lee Way Motor

Freight, and Yellow Freight Systems ceased their protective service

operations. Upjohn has found rhat there are insufficient numbers of

temperature-controlled equipment available from existing carriers;

and that 1OFC protective ‘service is inadequate because of the

carrier's inability to serve many destinations, of failure to provide

proper protective service in transit, and of damage to lading. It

contends that all gereral-commodity carriers should be required to

provide protective services.

121 M.C.C.

A-20

Western is a trade organization of California and Arizona growers

of fresh vegetables, potatoes, melons, and strawberries. Its members

ship over 200,000 carloads of these commodities a year by rail. It

contends that rail carriers are statutorily obligated to provide

protective services, that the railroads are permitting their

refrigerator space to diminish; and that the railroads may be able to

speed up their service (ie., the railroads now are said to average

only 21.4 miles per hour on a cross-country haul).

Governmental interests.—The Bureau of Enforcement presented

information obtained from an investigation and survey of the

protective services offered by 24 railroads, 78 motor carriers, REA

Express, 9 forwarders, 6 water carriers, and 6 brokers. It found that

of the latter 21 entities, only 4 forwarders, 2 water carriers, and 2

brokers rendered any protective service of any nature. In addition, it

surveyed 68 shippers and receivers of perishables. The Bureau

reports that this Commission's 76 field offices throughout the

Nation received a total of 48 protective-service complaints during

the first 6 months of 1972; that none of these complaints involved

brokers, forwarders, or water carriers; and that in practically every

instance, the complaint was registered against a certificated motor

carrier and involved small shipments of foods, medicines, and drugs.

It appears that every shipment involved weighed less than 5,000

pounds. The Bureau reports that about half of these involve alleged

delays in transit rather than a lack or shortage of protective

equipment. It submits that the shippers have weeded out those car-

riers that have refused to provide protective service and no

longer consider those carriers in their search for service. The

Bureau reports that rail carriers provide practically no LCL service,

but do provide protective services in carload lots although they

usually require between 24 and 48 hours advance notice. It states

that field reports indicate that the railroads have no tariff

restrictions against protective service, that no refusals were noted,

that all requests were promptly filled, and that the railroads provide

an adequate and reliable level of protective services.

The Bureau asserts that specialized motor carriers handle most of

the protective-service traffic now moving by motor carrier, and that

these carriers appear to discourage LTL traffic. Equipment

shortages were found to be rare by the Bureau and to occur mostly

during the weather extremes. When such shortages do occur,

however, the carriers give preference to their regular customers.

The Bureau submits that field reports establish that the greater the

protective care needed for a product, the greater the inclination by

121 M.C.C.

—

A-21

the shipper towards private or contract carriage; that on shipments

requiring heat, even specialized carriers cut back on service when

the weather goes below freezing as portable heaters are not

practical or effective in below freezing weather conditions; and that,

as described by petitioner, many tariffs fix rates for protective serv-

ice subject to suitable equipment being available. Carriers reported

to the Bureau that they would refuse perishable shipments requiring

interlining unless such interline arrangements with a connecting

carrier for delivery have been made in advance; and that carriers

providing heaters encounter difficulties in obtaining their return

from connecting carriers. According to the Bureau, this Commis-

sion’s field staff reports describe existing levels of protective serv-

ices as generally adequate. Outright refusals of service and delays in

response to shipper requests are traceable mainly to LTL shipments

and, then, to shipments that involve multiple-line service.

The Bureau found that domestic water carriers neither offer nor

are they called upon by the public to render protective service to

any significant extent, and that brokers are not a significant element

in the area of protective service because they depend on motor

carriers to provide this service. As indicated earlier, freight

forwarders and REA were shown to provide a very limited amount

of protective service.

Of the 68 shippers surveyed by the Bureau, 44 stated that they

encountered almost no difficulty in obtaining protective services

from carriers whether on carload, truckload, or LTL shipments. The

other 24 shippers reported infrequent refusals, delays, or other

difficulty in obtaining protective services in connection with carload

and truckload shipments, except in instances of subfreezing weather

when heated equipment shortages occur. These shippers expressed

greatest dissatisfaction with LTL services and multiple-line service.

Most shippers seek other carriers when an LTL shipment is refused

(eight resort to private carriage, two curtail operations, and six use

airfreight in an emergency). Fifteen shippers of drugs, medicines,

and blood plasma were interviewed and 10 of these shippers

reported almost no difficulty in securing protective service. The

remaining five shippers reported difficulties related to LTL

shipments and the unavailability of heater equipment during cold

weather periods. Two shippers reportedly urge hospitals to stockpile

vital products in anticipation of winter and include discounts to

customers on volume orders.

The Bureau contends that all entities holding appropriate

operating authority have the obligation to furnish or provide for

121 M.C.C.

Ae22

protective services; that the full service regulation adopted in the

Restrictions case applies to motor common carrier protective

service, and that it should be extended to apply to other regulated’

carriers in this respect. The Bureau also suggests that we propose

legislation as we have done in the past, to amend section 216(c) of

the Interstate Commerce Act so as to require motor common

carriers to establish reasonable through routes and joint rates

because of the difficulties encountered by shippers seeking to use

multiple-line services. The Bureau avers that the Eichholz rule is

still viable and should apply to carriers which operate protective

equipment; that tariff provisions seeking to eliminate a carrier's

obligation to provide protective service are unreasonable and

unlawful because they constituté an avoidance of a common

carrier's fundamental legal obligation; and that such tariff provisions

are unjustly discriminatory and unreasonably prejudicial to

shipments requiring protective service. It asserts that tariff provi-

sions for protective service by railroads which condition

performance to the availability of suitable equipment were

condemned by the decision in Swift & Co. v. B. & O. R. R. Co., 21

1.C.C. 241 (1911). It suggests adoption of a regulation which would

require that such tariff publications of all carriers and freight

forwarders be rejected or suspended for investigation.

CCC ships a substantial volume of agricultural products which

require protective service. It has on occasion encountered difficulty

in obtaining protective service by rail. It complains of added costs

when the railroads provide water-ice cars instead of mechanically

refrigerated cars, and represents that water-ice cars do not cool as

effectively es refrigerated cars. It states that railroads must expand

their mechanically refrigerated car fleet or face more serious car

shortages in the future.

RePLy STATEMENTS

Motor carriers.—Colonial contends that the initial shippers’

statements are vague and generally fail to refer to the role of

specialized motor common cariers. It represents that although

general-commodity carriers have demonstrated a general lack of

interest in temperature control traffic Colonia! has had applications

denied on the alleged availability of the general-commodity carrier's

service. It agrees with the position of MCCFA that this Commission

has no jurisdiction to require motor carriers to offer a full protective

service. Colonial asserts that it offers truckload and LTL pune

121 M.C.C.

" eit nut nian aiht.

Ae23

services to points within the scope of its authorities; that ITT,

Continental, and Blue Anchor, major shippers of perishables, have

noted no inadequacies in existing motor carrier protective service;

and that certain shippers are supporting this petition in an attempt

to obtain lower rates. Continental reasserts its position that motor

contract carriers should not be included in this investigation.

M-F and Poplarville contend that we should hold that motor

common carriers are subject to the rule of the Eichholz case and are

not required to provide protective service to meet the obligations

imposed upon them by their certificates. It states that the shippers

have not demonstrated that existing services are inadequate; and

that it is illogical and unreasonable to expect a carrier to accept a

shipment that the carrier knows will be damaged and the carrier will

be liable for its value. Such tariff rules should not be construed as

limitations upon available service according to M&N.

Motor carrier associations.—ATA believes that the initial

statements support its position that general-commodity carriers, to

the extent of their abilities, as well as specialized refrigerated

carriers, are providing the public with reasonably adequate motor

,Carrier service on commodities which occasionally, because of

extreme temperatures, require protective service. It points out that

Refrigerated has established regularly scheduled LTL services on

perishables whenever such service has been found to be responsive

to the needs of the shipping public. ATA asserts that shippers make

varying demands for protective service without regard to the

efficiency and economy of a carrier's operation and without any

degree of uniformity with other shippers requiring protective

service. For example, AHSC ships blood serum at a temperature

between 35° and 40°, while Swift ships shortenings at 50° to 70°. This

diverse traffic is difficult to handle in LTL quantities, but ATA

states that the shippers do not attempt to improve packaging to

protect the lading better or to consolidate like shipments. It is

averred that the Bureau's statement demonstrates that carrier

practices are not having an adverse effect on the movement of

freight or the interest of shippers, receivers, and ultimate

consumers; and that relatively few shippers have thought this

problem significant enough to participate in this proceeding.

Common Carrier Conference-Irreguiar Route, which has about

500 motor carrier members, contends that existing irregular-route

motor common carriers are fulfilling their responsibilities and,

therefore, no reason exists for this rulemaking proceeding as to

them. It asserts that a relatively small number of shippers’ '

121 M.C.C.

Ae24

statements were filed, that a number of these shipper statements had

no complaints regarding motor carrier service, that the Bureau's

study shows service to be adequate, that the Eichholz criteria should

continue to govern, that difficulties can be handled on an individual

carrier basis, that only a small segment of transportation is involved,

and that the shipper statements submitted in this proceeding lack

specifics. The Conference submits that shipper assistance in the area

of better insulation in packing small LTL perishables would not be

out of order.

MCCFEA states that the shippers in their initial representations

expressed concern with the area of protective services necessitated

by temporary weather extremes during winter and especially when

LTL traffic requiring interlining is invoived. It argues that the

record supports a finding that general-commodity carriers provide

an adequate service on the involved traffic during the first 3 or 4

days of each week except when the temperature declines to below

10° to 15°. It avers that when extreme temperatures occur, the use of

portable heaters in trailers is not sufficient to offset the rigors of the

temporarily unusual winter conditions, that the shipping interests

have not presented sufficient evidence to permit an evaluation of

any inconvenience or economic dislocation caused by existing

protective-service programs; and that the Bureau's survey supports

the position that existing services are adequate.

NBTA reasserts its prior position that any rule that motorbus

operators offer “protective service” would impose upon these

carriers a legal obligation in direct conflict with their primary

obligation of transporting passengers and their baggage.

RCCC, with a membership of approximately 1,100 general-

commodity motor common carriers which operate generally over

regular routes, contends that the problems presented are very

narrow operational matters and can best be left to the carriers and

shippers to work out among themselves. It asserts that shippers have

shown only an occasional difficulty with LTL services; that existing

services of regular-route carriers are reasonable; and that these

carriers should not be required to finance a massive conversion of

carrier fleets to temperature-controlled equipment and construction

of “warm rooms” at each terminal. It contends that the demands of a

few shippers should not be allowed to overshadow carrier

responsibility to the general public as a whole.

Railroad interests.—AAR contends that the Bureau's survey

indicates that the railroads have diligently been attempting to

provide reliable protective services, and that those disagreeing with

121 M.C.C.

Ae25

the Bureau's statement have failed to substantiate their allegations.

Union Pacific and Southern Pacific filed a joint statement asserting

that rail service is adequate, that Travenol did not intend this

investigation to include rail services, and that railroads should be

excluded from any rules adopted in this proceeding

Tariff associations.—NMFTA, et al, aver that carriers are

providing adequate services and that this is borne out by the

negligible number of shippers’ statements filed, and by the statement

of the Bureau. They argue that the difficulties posed by temperature-

sensitive commodities are a unique transportation problem and not

a part of the overall “small shipments problem”; that the lawfulness

of a tariff provision which states that a carrier is not obligated to

provide refrigerator or heater service is in question in Docket No.

35498;* that the Bureau is wrong in saying that motor carriers have

the same duty to provide protective service under part II of the act

as the railroads have under part I; and that the intent of section 208

of the statute is to preserve in the motor carriers the managerial

discretion to determine the amount and type of equipment needed

in the performance of their services.

Southern states that shippers’ complaints as to protective service

concern seasonal demands, LTL service, and interline service; and

that the complaints arise primarily because of the nature of the com-

modities requiring that service. It seeks reaffirmation of the

Eichholz rule and asserts that generakcommodity carriers should

not be expected to make tremendous outlays of capital to serve a

few shippers on an inconsistent basis. It questions the lack of action

by shippers to alleviate this problem, and suggests exploring means

of insuring proper packaging insulation.

Shipping interests.—NSSTC, et al, contend that technology is

available to carriers to solve the involved problem in that cargo-safe

devices are available to heat trailers without the danger of fire. They

aver that many motor carriers offer no protective service or a very

limited protective service. They list points throughout the Nation

which have normal January minimum temperatures below freezing

including Reno, Nev., Albuquerque, N. Mex., Amarillo, Tex. St

Louis, Mo., Little Rock, Ark., Cincinnati, Ohio, and Washington,

D.C., but do not suggest that every certificated general commodities

‘In an initial decision in No. 35498, which was served October 25, 1974, and became effective

by operation of law on December 24, 1974, an Administrative Law Judge found that item 810

appearing in the National Motor Freight Classification, A-12, MF-ICC 14, was meaningless and

misleading and, therefore, should be canceled. Item 810 provided as follows: “C lasses applicable

to freight requiring protection from heat or cold do not include the cost of providing such protec-

tion and do not obligate the carrier to provide refrigeration of heater service.”

121 M.C.C.

Ae26

carrier in the Nation should be required to provide protective

service. They insist: (1) that the shipping public is entitled to know

which carriers are available to provide protective service, and (2)

that certificates should be restricted against the provision of

protective service where none is being provided. They assert that

new carriers should be certificated in circumstances where general-

commodity carriers are not providing protective services. They aver

that Eichholz is bad law insofar as regulation of protective service is

concerned and, if necessary, should be overruled.

Swift states that it has instituted private carriage operations

between Nashville, Tenn, and Atlanta, Ga, because adequate serv-

ice is not available. It contends that all restrictions against

protective service should be removed from tariffs of motor common

carriers.

Travenol points out that the Eichholz decision was issued in 1938,

at a time when the railroads offered less-than-carload service and

any other decision would have caused financial ruin to the

depression-hit trucking industry. It argues that section 208(a) of the

act does not prohibit specifying the type of equipment needed to

serve the public, citing Campus Travel, Inc., Common Carrier

Application, 43 M.C.C. 421 (1944); and that if general commodities

do not include products that require protective service, then such

carriers should cease hauling these products. It estimates that over 2

billion pounds of freight subject to freezing will have been tendered

to common carriers with general-commodity authority in 1972. It

contends that specialized carriers do not serve the public generally

because (a) they do not handle LTL freight expeditiously, (b) they

do not offer heater service and refrigerated service at the same time,

and (c) they are not interested in short-haul traffic. Travenol

suggests that we order all restrictions against protective service

removed from the tariffs of motor common carriers.

PRELIMINARY MATTERS

Certain persons suggest consolidating this proceeding with No.

35498, Drug and Toilet Preparation Traffic Conference vy. Admiral

Merchants Motor Freight, Inc., or Ex Parte No. 284, Investigation

Into the Need for Defining Reasonable Dispatch (Perishable Com-

modities). As noted in footnote 5 the proceeding in No. 35498 has

been concluded. Ex Parte No. 284 generally involves the time

required to transport perishable commodities and not the refusal of

carriers to accept such shipments. Consolidation of this proceeding

121 M.C.C.

Ae27

with that proceeding now pending before this Commission is not

warranted. |

Land O'Lakes requests that we subdivide this proceeding into

groups representing the varying problems of the diverse shippers

herein and assign each portion of the subdivided proceeding for

separate hearing. It appears, however, that the participating shippers

have expressed many common views. Land O’ Lakes has not

suggested what additional evidence might be introduced were its

proposal adopted. It is our judgment, therefore, that the evidence

already presented is sufficient to support a proper determination.

Land O° Lakes’ request is hereby denied.

DISCUSSION AND CONCLUSIONS

In our notice of proposed rulemaking, we stated that we intended

to investigate the quality of protective services offered by carriers

subject to our regulatory jurisdiction and, if necessary, to

promulgate regulations to assure the public of efficient and adequate

protective services.

Statutory authority.—Certain parties to this proceeding question

the statutory authority of this Commission to promulgate regulations

requiring carriers subject to parts II, III, and IV of the act to provide

protective services. Most of the parties who commented on the

matter of our jurisdiction concede, however, that we have the power

to require rail carriers to provide protective services and in that

respect only a brief comment is required.

Section 1(4) of the act states that “It shall be the duty of every

common carrier subject to this part (part I) to provide and furnish

transportation upon reasonable request therefor, ***.” Section

1(3a) of the act which defines the term “transportation,” includes

“ventilation, refrigeration or icing” in that definition. And section

1(11) provides that it is the duty of railroads “*** to furnish safe and

_ adequate car service and to establish, observe, and enforce just and

reasonable *** practices with respect to car service; ***.”

Based on the quoted provisions of part I of the act we think it is

clear that we not only may, but must, require rail carriers :o provide

protective services. Moreover, that we have the requisite authority

to do so is further substantiated by other provisions of part I. For

exaiiple, the Transportation Act of 1920 (41 Stat 476) specifically

added the word “supply” to the definition of car service contained in

section 1(10). It also added section 1(21) which authorizes this

Commission to order a carrier by railroad to provide itself with

121 M.C.C.

A-28

adequate facilities for the provision of car service. Accordingly, we

conclude that we have the statutory authority to require the

preparation for and the provision of protective services by railroads

subject to part | of the act.

Turning next to the matter of our statutory power to require the

provision of protective services by part II carriers, we note that we

have the undisputed authority pursuant to section 204 of the act to

issue reasonable rules and regulations with regard to motor carriers

and brokers operating in interstate or foreign commerce. Traf. at or

Near U.S.-Can. Boundary Lines, 110 M.C.C. 730 (1969). Also,

compare Special Relief for Motor Carriers, 112 M.C.C. 323 (1970).

Respondent motor carriers argue that section 208(a) of the

act prohibits this Commission from imposing terms, conditions,

or limitations upon certificates that have the effect of restrict-

ing the rights of carriers to add to their equipment and facilities.

However, the issue in this proceeding is not whether we might

restrict their ability to cdd to their equipment Clearly a prohibition

against that is contained in the final provision of section 208(a).

Rather, the issue is whether a carrier subject to part II of the act can

be required by this Commission to provide the full service specified

in its certificate.

Under section 207 of the act we issue certificates only to qualified

applicants. The willingness of applicants for authority properly and

fully to perform the services they propose must be affirmatively

established before a grant can be made. That the certificate must be

specific is required by the first provision of section 208(a). Further-

more, the provisions of section 216(b) require every motor common

carrier “*** to provide safe and adequate service, equipment, and

facilities ***.” Section 208(a) also provides that this Commission

shall “*** at the time of issuance and from time to time thereafter,

***”" (emphasis added), attach such conditions and limitations to the

exercise of operating authority granted to a motor carrier pursuant

to the provisions of part II of the act.

Our jurisdiction here is different than in the case of railroads

subject to part I. Nevertheless, we are satisfied that this

Commission has ample authority, by reason of the sections of the

Interstate Commerce Act referred to above, to consider the issues

presented on this record insofar as part II carriers are concerned.

For reasons set forth later herein, we need not discuss the scope

of our authority over the services of those respondents subject to

parts III and IV of the act

Adequacy of existing services.—No significant dissatisfaction was

expressed by the shipping interests participating in this proceeding

121 M.C.C.

——

Ae29

«

with the services of water carriers, brokers, freight forwarders,

motor contract carriers, and motor common carriers of passengers

and household goods. This is explained in part by the fact that these

respondents are not generally relied upon by the shipping public to .

provide protective services of the type under consideration.

Protective services are required by shippers in two instances. In

the first, shippers requiring the transportation of perishable com-

modities rely generally on railroads and specialized motor carriers

capable of providing temperature control on a year-round basis.

Determining the adequacy of services available to these shippers is

not complicated. -

In the second instance, shippers which produce commodities that

normally can be shipped without any temperature control require

protective service for their products during periods of temperature

extremes. Commodities in this category, such as chocolate and

paint, consistently are shipped via motor common carriers of

general commodities which, for the most part, maintain only limited

amounts of temperature-control equipment.

Representations filed by Armour-Dial, American Flospital Supply

Corporation, Midwest Packers Traffic Association, and Swift, urge

us to find that services generally provided by railroads and motor

common carriers of property on shipments requiring protective

service are inadequate. They point out that certain major carriers,

such as Roadway and UPS, provide no such service; others provide

it on a limited basis only; and one shipper, Upjohn, claims it ships

99 percent of its products requiring protective service in truckload

lots because such service is unavailable on LTL quantities. The

representations of Land O’ Lakes, NAFC, Sunkist, and Western

Growers Association draw attention to the phasing out of ice

bunker service by railroads and that the number of mechanically

refrigerated cars could, in time, possibly prove to be inadequate.

Other shippers complain that rail rates are increasing, that the avail-

ability of refrigerated equipment is declining, and that the

remaining refrigerated equipment is being poorly maintained. On

the surface these assertions suggest that the absence of more fully

responsive protective services in the overall services provided by

railroads and motor common carriers of property renders their serv-

ices inadequate. This, however, upon closer consideration, does not

appear to us to be the case.

In Icing Services, U. S. Railroads, 343 1.C.C. 67 (1973), we found,

by virtue of the fact that ice refrigeration in railcars is becoming

obsolete, that railroads should be permitted to cancel ice bunker

121 M.C.C.

A-30

services. Such permission could not there have been granted,

however, had the record in that proceeding not established to our

satisfaction that such services were being replaced by cars equipped

to provide mechanical protective service. Rate increases received

by the railroads in recent years have been necessary to permit them

to continue to operate in an efficient and economic manner and to

replace faltering equipment with the latest technological

innovations. We fully expect railroads to increase their supply of

needed equipment to meet future increases in demands and we shall

continue to monitor their performance in that regard.

It also is important to note that insofar as railroads are concerned,

the Bureau reports that this Commission's field offices have

received no complaints regarding the refusal of any railroad to

provide temperature-control equipment in a timely manner. The

Bureau received 48 complaints over a period of 6 months. About

half of these related to delays in transit None, however, related to a

refusal to provide service. In light of these facts, coupled with the

volume of perishable traffic railroads continue to handle, such serv-

ice cannot properly be characterized as inadequate.

Certain shippers of perishable commodities have available to

them the services of motor common carriers specializing in the

transportation of commodities requiring temperature control. These

shippers work on a year-round basis with specialized carriers. A

majority of such shippers interviewed by the Bureau described the

services they receive as generally satisfactory. One of the parties,

Continental, stated that it found no inadequacies in such service.

Specialized carriers usually rely on their regular customers for large

volumes of traffic each year. Thus, they are willing to accommodate

a shipper’s special needs in order to retain its traffic. This portrays a

generally healthy and competitive climate for the traffic of such

shippers and serves to explain, in part, their general satisfaction with

the services they are provided.

Another circumstance we believe accounts for a generally satis-

factory level of service to such shippers is the fact that a shipper can

support a new or competing carrier seeking authority whenever a

specialized or other carrier's service proves to be inadequate: Thus,

whenever.an existing carrier does not consistently have available

adequate amounts of suitable equipment, a shipper in need of

protective services has the alternative of seeking the services of

other authorized carriers or supporting the licensing of additional

motor carriers through appropriate application proceedings. See

Querner Truck Lines, Inc., Ext.—Plainview, 115 M.C.C. 304 (1971).

121 M.C.C.

A-31

On the basis of the foregoing we are persuaded that the availability

of protective services on those commodities which normally require

temperature control throughout the year is generally adequate.

Service during periods of temperature extreme.—The manu-

facture of commodities such as water-base paints, intravenous

solutions, margarine, adhesives, chocolate, and others, which

require protective services in transit only under certain climatic

conditions, has expanded immensely since this Commission

rendered the decision in the Eichholz case, supra. Certain shippers

of such commodities allege that the protective services they now

require are nct available in sufficient quantity from motor common

carriers of general commodities.

It is generally argued by respondents authorized to transport

general commodities that for periods of extreme heat or cold,

adequacy in the transportation of certain commodities will not be

achieved in an economically sound manner by requiring general-

commodity carriers to purchase and have on hand temperature-

controlled equipment, that when such commodities require

temperature control, they are not conducive to handling by general-

commodity Carriers; that the nature of general-commodity regular-

route service is a multiple-pickup and delivery service involving

LTL quantities of various commodities; and that such service

requires numerous openings of trailer and truck doors which upset

temperature control and may cause damage to perishable lading.

They further maintain that the record amply demonstrates that a

temperature level needed to protect one commodity may be such as

would cause damage to another commodity.

The Bureau's study reveals that although two-thirds of the

shippers interviewed found no difficulty in obtaining either LTL or

trackload protective service, the remaining one-third had problems

during periods of extreme temperature.

The provision of protective services by motor common carriers of

property has been evaluated since 1938 largely on the basis of the

principle established in the Eichholz case. As indicated in footnote

4, that decision stands for the basic proposition that tariff rules

concerning protective services properly may impose a duty on

shippers to ascertain the availability of suitable equipment

Common Carrier Conference-Irregular Route and SMCRC

believe the Eichholz rule should be reaffirmed and the Bureau

agrees. The Bureau notes, however, that the rule applies only to

carriers which operate protective equipment It believes that tariff

provisions designed to limit such a carrier's obligation to provide

121 M.C.C.

A32

protective services are unlawful and discriminatory. On the other

hand, petitioners, NSSTC, et al, and others characterize the

Eichholz principle as either bad law or an anachronism because (1)

it was enunciated when rail service on commodities requiring

protective service was more adequate than it is today, (2) the

trucking industry, then in its infancy, was in the process of

recovering from an economic depression, and (3) when general-

commodity carriers maintain no protective equipment, the current

validity of the rule is, as a result of this Commission's decision in the

Restrictions case, supra, placed in doubt

Current effect of the Eichholz rule.—Petitioner estimated that

over 2 billion pounds of property subject to freezing would be

tendered in 1972 to motor common carriers with general-com-

modity authority. This need for protective services is expanding

Moreover, the variety today of commodities which during certair

seasons require only occasional temperature control in transit in

order to maintain their quality is considerably broader than it was

several years ago. It also is true, however, that insulation material,

refrigeration, and heating equipment are more efficient, effective,

economical, and widely available than was the case when the

Eichholz principle was first announced. These are factors, therefore,

which must be kept in mind as the current appropriateness of the

Eichholz rule is examined in light of the Restrictions case.

The rationale of the Restrictions case is that carriers holding

operating rights are dutybound fully and fairly to render the services

authorized by their certificates. They cannot limit the duty by

publication in their tariffs of provisions which restrict the avail-

ability of service. In essence, the Eichholz case recognized that

shippers should not expect carriers to have protective equipment

available at all times and at all places. In our opinion, the

underlying reasons for that are as valid today as they were in the

1930's. When suitable protective equipment is available there is no

question but that, under the rule, a motor common carrier of

general commodities is obligated to provide fully its authorized

services with respect to commodities that are tendered to it.

The matter now before us, however, raises two additional

questions: (1) whether a motor common carrier authorized to

transport general commodities is or can be required to maintain at

least some protective equipment; and, if not (2) whether at any given

time, when equipment cuitable for the transportation of a given

commodity is not available, either by carrier design, or otherwise,

the duty to serve is thereby lessened and properly may be reflected

by appropriate tariff provisions.

121 M.C.C.

A-33

The great preponderance of traffic typically offered to general-

commodity carriers does not require transportation to be performed

in vehicles equipped to maintain controlled temperatures and the

cost of acquiring and expense of maintaining infrequently utilized

equipment eventually must be born by the shipping public, many

members of which would never derive any benefit therefrom.

Obviously, the safe transportation of a commodity which requires

protection only from extreme heat or cold presents a peculiar

provlem. In fact, it presents a situation in which the requirements

for safe transportation cannot accurately be predicted and which

can even change after service has been initiated. The record

discloses that shippers of such commodities are generally informed

in advance of seasons when extreme weather conditions occur and

of the carriers’ transportation policies in regard to the provision of

protective services. We believe that is reasonable as long as the

policies announced are fairly applied.

Based on the record in this proceeding, we cannot conclude that

it is unreasonable or inconsistent with the public interest for

general-commodity carriers to elect not to acquire and maintain

temperature-control equipment. Accordingly, we believe that it is

lawful for them to decline to provide transportation when they are

tendered commod.ties which they cannot transport safely at that

time without such equipment.

We find no support in the Restrictions case for the argument of

certain shippers that unless general-commodity carriers provide

protective service on a year-round basis, their authority to transport

such commodities when protection is not required should be

canceled. To the contrary, we are convinced that the Eichholz

principle continues to be a valid basic standard against which the

duty of motor common carriers of general commodities to transport

perishable commodities ought to be measured.

It is impractical, in our judgment, to measure service adequacy by

literally interpreting the term general commodities and applying the

duty to serve without regard to extreme fluctuations in temperature.

To do so would ignore the practicalities of providing transportation

services, especially those required of regular-route carriers.

The effect of temperature extremes on certain commodities and

the ability of responsible carriers safely to transport them under

adverse conditions must be weighed against the economic feasibility

of requiring the provision of complete service. Motor common

carriers of general commodities should not, in our opinion, be

expected to meet every conceivable transportation requirement of

121 M.C.C.

A34

every imaginable commodity without regard to the circumstances

under which the transportation must be performed. Accordingly, we

find that the principle enunciated in the Eichholz case, insofar as it

pertains to limiting the duty to serve when suitable equipment is

unavailable, is valid.

Tariff provisions.—We turn now to the second question dealing

with the current effect of the Eichholz principle. As noted, the

Restrictions case holds that motor common carriers of property

cannot be permitted to publish provisions in their tariffs which

limit the duty to serve. And the Eichholz decision is based

on the rationale that tariff rules concerning protective service

should provide that shippers must ascertain when suitable equip-

ment is available for the transportation of perishable commodities.

These decisions might appear to conflict However, we do not

believe that they are inharmonious.

The indiscriminate holding out of service to the public is the

dominant characteristic of motor common carriage. Section

203(a)(14) of the act defines the term “common carrier by motor

vehicle” as any person which holds itself out to engage in the trans-

portation by motor vehicle in interstate commerce of property or

any class or classes thereof for compensation. Traffic selectivity by

common carriers cannot be condoned by this Commission and that,

in essence, is what we said in the Restrictions case. On the other

hand, however, while the legal duty of a common carrier approaches

that of being absolute, it is not without its exceptions.

Each certificate of public convenience and necessity is granted

upon the condition that the motor common carrier to which it is

issued will render reasonably continuous and adequate service to the

public pursuant to the authority granted. In our opinion, the

shipping interests which argue that publication of a tariff provision

of the type suggested in Eichholz now would amount to an embargo

on certain types of traffic, have overlooked the reasonableness

qualification that is a traditional part of the duty to serve.

For a motor carrier to accept.a shipment which it has reason to

believe would be damaged in transit would not be in the public

interest. It is important to note that petitioner and certain other

shipping interests, such as the NSSTC and those organizations which

join in its statement, readily admit that a motor carrier should not

accept a shipment which it cannot adequately and safely transport

They also agree that not all carriers of general commodities should

be required to provide protective services. However, their

contention that general-commodity carriers should be responsible

121 M.C.C.

Sede Rae ate Bea ne ne ee ey ae EE eee

Ae35

for transporting all commodities they are authorized to transport

and that they should be required by us to provide appropriate

equipment therefor fails to take into consideration the situation in

which such. inflexibility amounts to unreasonableness.

The reason some general-commodity carriers will pick up

commodities susceptible to temperatures damage only on Mondays,

Tuesdays, and Wednesdays is because they do not possess storage

facilities safely to keep commodities requiring temperature control

over a weekend. They should not be expected to accept shipments if

the temperature is extreme or if interlining is required and

connecting carriers are unable safely to transport the involved com-

modities. In our opinion, these limitations on service, as they are

referred to by petitioner, do not constitute an attempt by the

involved motor carriers to be selective in the traffic they will

handle. The record before us is sufficient to conclude that motor

common carriers of general commodities are providing adequate

services.

Limited exceptions to the duty to serve were recognized in the

Restrictions. case, 111 M.C.C. at 167, 168. There the following was

quoted from the: decision in National Furniture Traffic Conf. v.

Assoc. Truck, 332 1.C.C. 802, affirmed sub nom., Associated Truck

Lines, Inc. v. United States, 304 F. Supp. 1094 (W.D. Mich. 1969):

*** (Motor common carriers] are obligated to accept and transport all freight offered

to them in accordance with the provisions of their certificates, and this duty is, with

limited exceptions, an absolute one. *** Motor common carriers are engaged in what

has always been regarded as the public's business, and must, to the best of their

abilities, serve all who seek their service, and serve them equally and fairly. [Emphasis

added. ]

Similarly, the provisions of section 216(d) of the act declare

unlawful only those practices of motor common carriers which

cause “undue or unreasonable preference or advantage” to be given

to any shipper or description of traffic.

We are of the opinion that it is reasonable for motor common

carriers to publish tariff provisions such as those suggested in the

Eichholz decision. Furthermore, it is manifestly reasonable, in our

judgment, for them to decline to transport commodities which, at

the time of tender cannot safely be transported because of climatic

conditions wholly beyond their ability to control. We believe that,

as argued by M-F and Poplarville, the continued application of the

Eichhoiz principle will provide an opportunity for shippers and

“ Ae36

For the reasons given above, we conclude that the Restrictions

decision does not proscribe publication in the tariffs of motor

common carriers of general commodities having no or only limited

amounts of temperature-control equipment and facilities,

reasonable rules with respect to the services provided. Such rules

may impose on shippers a duty to ascertain before tendering a

shipment whether suitable equipment is available for the trans-

portation of commodities which are subject to deterioration or

‘amage during periods of temperature extremes.

Environmental considerations.—Sunkist contends that increased

rail rates and charges are causing shifts in the transportation of

perishables from rail to truck. The question of the reasonableness of

rail rates is not an appropriate subject herein and should be raised

by Sunkist in a relevant rate complaint proceeding.

In view of the foregoing, our order discontinues this investigation.

FINDINGS

Upon consideration of the record herein, we find:

(1) That the Interstate Commerce Commission has jurisdiction

under sections 1(3)(a), (4), (10), (11), and (21), 204, 208(a), and

216(b) and (d) of the Interstate Commerce Act of conduct the

investigation undertaken herein and to make findings thereon;

(2) That the provision by railroads subject to part I of the act of

facilities and of protective services upon request is reasonably

adequate;

(3) That the provision of protective services by motor common

carriers of property subject to part II of the act is reasonably

adequate;

(4) That the provision of protective service by water carriers,

brokers, freight forwarders, motor contract carriers, and motor

common carriers of passengers and household goods is not generally

required by the shipping public, has not been the subject of any

public dissatisfaction, and is, therefore, found to be reasonably

adequate;

(5) That this decision is not a major Federal action significantly

affecting the quality of the human environment within the meaning

of the National Environmental! Policy Act of 1969; and

_ (6) That this proceeding should be discontinued. An appropriate

order will be entered.

COMMISSIONER CORBER Concurring in the result.

Pe eee

Ae37

APPENDIX

Initial representations

Motor carriers

Colonial Refrigerated Transportation, Inc. (Birmingham, Ala)

Continental Contract Carrier Corp. (City of Industry, Calif)

B. J. McAdams, Inc. (North Little Rock, Ark.)

M-F capress, Inc., and Poplarville Truck Line, Inc.

Michigan & Nebraska Transit Co., Inc. (Kalamazoo, Mich.)

Refrigerated Food Express, Inc.

The Santa Fe Trail Transportation Company

Motor Carrier Associations

American Trucking Associations, Inc. (Washington, D.C.)

Household Goods Carriers’ Bureau (Arlington, Va)

Motor Carriers Central Freight Association (Lansing, Mich.)

National Bus Traffic Association, Inc. (Chicago, IIL)

Tariff Associations

Central & Southern Motor Freight Tariff Association, Incorporated (Louisville, Ky.)

National Motor Freight Traffic Association, Inc., National Classification Committee, —

Central and Southern Motor Freight Tariff Association, Inc., Central States Motor

Freight Bureau, Inc., The Eastern Central Motor Carriers Association, Inc., Middle

Atlantic Conference, Middlewest Motor Freight Bureau, The New England Motor

Rate Bureau, Inc., Niagara Frontier Tariff Bureau, Inc., Pacific Inland Tariff Bureau,

Rocky Mountain Motor Tariff Bureau, Inc, Southern Motor Carriers Rate Con-

ference, and Southwestern Motor Freight Bureau, Inc.

Southern Motor Carriers Rate Conference, Inc.

Shipping Interests

Adhesive and Sealant Council (Parkridge, IIL)

American Hospital Supply Corporation (Evanston, IIL)

Armour-Dial, Inc., and Armour and Company (Phoeniaz, Ariz)

Blue Anchor, Inc. (Sacramento, Calif.)

ITT Continental Baking Company, Inc. (Rye, N.Y.)

Land O'Lakes, Inc.

Lincoin Chamber of Commerce (Lincoln, Nebr.)

Midwest Packers Traffic Association

National Association of Food Chains

National Industrial Traffic League (Washington, D.C.)

PPG Industries, Inc. (Pittsburgh, Pa)

Sunkist Growers, Inc.

Swift & Company, Inc.

Travenol Laboratories, Inc.

The Upjohn Company (Kalamazoc, Mich.)

Western Growers Association (Los Angeles, Calif.)

Governmental Interests

Bureau of Enforcement, Interstate Commerce Commission

Commodity Credit Corporation, United States Departmen of Agriculture

121 M.C.C.

A38

Replies

Motor Carriers

Colonia! Refrigerated Transportation, Inc.

Continental Contract Carrier Corp.

M-F Express, Inc., and Poplarville Truck Line, Inc.

Michigan & Nebraska Transit Co, Inc.

Motor Carrier Associations

American Trucking Associations, Inc.

Common Carrier Conference-Irregular Route

Motor Carriers Central Freight Association, Inc.

National Bus Traffic Association, Inc.

Regular Common Carrier Conference

Railroad Interests

Association of American Railroads

Union Pacific Railroad Company and Southern Pacific Transportation Company

Tariff Associations

Nationa! Motor Freight Traffic Association, Inc., Nationa! Classification Committee,

Central and Southern Motor Freight Tariff Association, Inc., Central States Motor

Freight Bureau, Inc., The Eastern Central Motor Carriers Association, Inc., Middle

Aulantic Conference, Middlewest Motor Freight Bureau, The New England Motor

Rate Bureau, Inc., Niagara Frontier Tariff Bureau, Inc., Pacific Inland Tariff Bureau,

Rocky Mountain Motor Tariff Bureau, Inc., Southern Motor Carriers Rate Con-

ference, and Southwestern Motor Freight Bureau, Inc.

Southern Motor Carriers Rate Conference, Inc.

Shipping Interests

National Small Shipments Traffic Conference and Drug Toilet Preparations Traffic

Conference, and. The Eastern Industrial Traffic League

Swift & Company

Travenol Laboratories

121 M.C.C.

A39

ORDER

At a General Session of the INTERSTATE COMMERCE

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

17th day of April 1975.

No. MC-C-7599

TRAVENOL LABORATORIES, INC., PETITION FOR

INVESTIGATION—PROTECTIVE SERVICE

Investigation of the matters and things involved in this proceeding

having been made, and this Commission, on the date hereof, having

made and filed a report herein containing its findings of fact and

conclusions thereon, which report is hereby made a part hereof:

It is ordered, That said proceeding be, and it is hereby,

discontinued.

By the Commission.

ROBERT L. OSWALD,

(SEAL) Secretary.

A-40

From ATA Reply to Petitions for Reconsideration

-ll -

potentially handle goods requiring protective service and would not

guarantee that other carriers would fill the service void.

It is more logical for a shipper that is having legitimate service

problems with a motor common carrier to give its business to a campeting

carrier or support another carrier seeking new authority. This suggestion,

made by the Comission herein, is not an empty one, as petitioners sug-

gest. Firstly, the evidence of record shows that there is no shortage

of protective equipment even among general freight carriers vis-a-vis

§

the volume of the traffic to be handled, and that most shippers are

having their protective service needs adequately met. Secondly, support

of a carrier for new operating rights is not a vain gesture. The Con-

mission's Annual Report for 1973 shows that 5,240 applications for new

authority were received that year, and 4,299 were granted in whole or

in part. (Interstate Commerce Commission, 87th Annual Report 31)

3. Application of The Eichholz Rule is Not

Contrary to The National Transportation Policy.

Contrary to petitioners’ claims, the Commission's decision

herein is encouraged by the National Transportation Policy and not con-

demmed by it. The policy goals of fostering safe, adequate, economical

& Figures gathered oy the ATA Research and Transport Economics

Department revealed that in 1970,578 of 632 Class I general

freight carriers owned protective service equipment and that

by 1972, 214 of these carriers owned 7,201 pieces of refrig-

erated equipment. Moreover, there existed general inventory

of some 200,000 reefer units and 100,000 insulated pieces of

equipment in 1972. (See ATA Initial Statement at 12)

A-41

eam, OCT § 1975

At c Ger.eztal Session of the INTERSTATE COMMERCE COMMISSION,

hele at its office in Washington, D.C., om the 29th

day of ‘September , 1975.

Ho. MC-C-7599

TRAVENOL LABORATORIES, INC., PETITION FOR INVESTIGATION

cneding.

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

PROTECTIVE SERVICE

consideration of the record in the above-enticled pro-

and of:

Petition of Travenol Laboratories, Inc., filed Jume 30,

1975, for reconsideration;

Petition of the Adhesive & Sealant Council, Inc., filed

July 7, 1975, for reconsideration;

Petition of Hershey Foods Corporation, filed July 7,

1975, for reconsideration;

Petition of the Nacional Industrial Traffic League, filed

July 7, 1975, for reconsideration;

Joint petition of Nacional Snall Shipsencs Traffic Con-

ference and Zastern Industrial Traffic League, filed

July 7, 1975, for reconsideration;

Reply by Southern Motor Carriers Rate Conference, Inc.,

filed July 25, 1975, to che peticions in (1) chrough

Reply by Regular Common Carrier Conference, filed

July 28, 1975, to the petitions in (2) through (5) ahove;

perly by Motor Carriers Cencral Freight Association,

“33° August 9, 1975, to che petitions in (1) chrough

a bove;

Joint reply by Nacional Motor Freight Traffic Associacicn,

Inc., and Nacional Classificacion ttee, ct al.,

filed Auguse 11, 1975, to the peticions in (1), (2),

(4), and (5) above;

Reply of American Trucking Associations, Inc., filed

august 11, 1978, to the peticions in (1) through (5)

ove;

and good cause appearing therefor:

be, an

. That the petitions in (1) through (5) abov:

ey are hereby, denied, for the reason chat che pleading:

present no new or material caccers of fact or law noc adequately

considered and properly disposed of by the Commission in its ceperc

and order of April 17, 1975, in the above-encicled procecding, wihicr.

findings are in accordance with the evidence and che applicable

lew, end that no sufficient or proper cause appears for grancin;

the relief soush:.

By the Commission.

ROBERT L. OSWALD.