Groendyke Transport, Inc., Manfredi Motor Transit Co., Miller Transporters, Inc., Superior Carriers, Incorporated, and Trimac Transportation, Inc.Pooling Agreement

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Docket No. MC-F-20941]

Groendyke Transport, Inc., Manfredi Motor Transit Co., Miller

Transporters, Inc., Superior Carriers, Incorporated, and Trimac

Transportation, Inc.--Pooling Agreement

AGENCY: Surface Transportation Board.

ACTION: Request for comments from interested parties and order of

suspension.

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SUMMARY: Pursuant to 49 U.S.C. 14302(c)(3), we are (1) requesting

public comments on an application filed by nine motor carriers of bulk

commodities to pool some of their services, traffic, and revenues and

(2) suspending operation of the pooling agreement pending a final

decision on the application.

DATES: Comments must be filed by March 1, 1999. Applicant's reply to

the comments is due by March 22, 1999.

ADDRESSES: Send an original and 10 copies of any comments referring to

STB Docket No. MC-F-20941 to: Surface Transportation Board, Office of

the Secretary, Case Control Unit, 1925 K Street, N.W., Washington, DC

20423-0001. In addition, send one copy of comments to applicants'

representative: James A. Calderwood, Zuckert, Scoutt & Rasenberger, 888

17th Street, N.W., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1609.

[TDD for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: By application filed on November 20, 1998,

nine motor carriers 1 seek authority to pool some of their

services, traffic, and revenues pursuant to 49 U.S.C. 14302 and our

regulations to implement this provision at 49 CFR 1184. The carriers

are all licensed by the United States Department of Transportation

(DOT) to carry bulk commodities that are often classified as

``hazardous materials'' by DOT. In general, the bulk commodities

transported by applicants are chemical products that cannot be mixed

with other cargo in the same load and require specialized equipment and

handling procedures. The equipment must usually be cleaned after each

delivery.

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\1\ The nine motor carriers are: Groendyke Transport, Inc.;

Manfredi Motor Transit Co.; Miller Transporters, Inc.; Superior

Carriers, Inc., and Central Transport, Inc., both wholly owned

subsidiaries of Superior Carriers, Incorporated, a noncarrier; and

Liquid Transporters, Inc., Quality Services Tanklines, Inc., Trimac

Transportation Services (Western), Inc., and Universal Transport,

Inc., all four of which are wholly owned subsidiaries of Trimac

Transportation, Inc., a noncarrier.

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By their pooling agreement, applicants plan to establish a ``joint

venture corporation'' (JVC) that will (1) coordinate their operations

so as to avoid traffic imbalances and empty mileage and (2) share and

coordinate their acquisition, use, and cleaning of the specialized

cleaning equipment required for their operations. The pooling agreement

has no expiration date. Each of the five owners of the JVC will have a

20% equity interest in it, and representation on the JVC's Board of

Directors will be equal among the five owners.2 Each of the

five owners will make an initial contribution to the JVC to cover

expenses associated with its formation and initial operations. The

JVC's board will hire its own staff.

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\2\ The parent owners will act on behalf of their subsidiary

regulated carriers: see n.1 herein.

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The operations of the JVC can be summarized in their essential

aspects as follows:

1. Load Balancing. Each carrier will regularly notify the JVC about

the points where it will have empty equipment or need loads and the

points where it cannot handle the loads offered to it. The JVC will

endeavor to reconcile available equipment with needs ``in a fair and

equitable manner.'' Not less than monthly, the JVC will report to its

carrier members as to ``the number of loads transported under the joint

venture corporation arrangement along with the volumes and points

served.''

2. Cleaning equipment. The carrier members will assist each other

in the provision of cleaning equipment, make cleaning facilities

available on an equal basis, establish procedures for the use and

cleaning of such equipment, and share information and compile records

concerning such use. In addition, ``[m]ember carriers owning or

controlling particular cleaning facilities will be responsible for the

safe and efficient operation of such facilities * * *''

3. Funding. The JVC may establish charges to its member carriers to

fund its operations.

4. Participation. A carrier member may terminate its participation

by giving 30 days notice, subject to fulfillment of its prior

obligations, and, if its permit is revoked by DOT, its operational

participation will be automatically suspended.

5. Shippers. The carriers certify that the rates set under the

agreement do not contravene the restrictions on collective ratemaking

in 49 U.S.C. Subtitle IV and our regulations.3 Each carrier

member will deal separately with shippers as to rates, contracts, and

service. Rates will not be set by the JVC or its staff and will not be

subject to discussion or agreements between JVC members.

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\3\ The last sentence of numbered paragraph 7 of the pooling

agreement provides: ``The joint venture corporation will establish a

uniform rate structure applicable to transportation services

rendered through the joint venture corporation.'' We presume that

this provision concerns payment for services that the carriers will

render to each other and would not allow the JVC to provide

regulated transportation services to be billed to shippers.

Applicants should notify us if we are incorrect in this presumption.

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Under the pooling agreement, carriers will sometimes have to

collect charges from their customers for services that will actually be

performed by other carriers. The particular carrier member responsible

for contractual

[[Page 4744]]

arrangements with a particular shipper will collect charges from the

shipper and compensate the carriers that actually perform the services.

The JVC will facilitate such compensation, acting as a clearinghouse

and record keeper.

On January 7, 1999, Schneider National Bulk Carriers, Inc.

(Schneider) filed a letter reply in opposition to the agreement, urging

us to set the matter for hearing. Schneider asserts that the agreement

is too vague; that it would unduly concentrate the market; that it

would allow the participants to function as a de facto rate bureau;

that it would permit improper ``signals'' of price movements; that

uniform equipment costs could improperly influence carrier rates; and

that the agreement would improperly allow division of the market.

Interested persons may obtain a copy of Schneider's letter reply by

contacting counsel for Schneider, Mr. Stephen M. Ferris, Esq., who may

be reached at (920) 592-3896.

On January 15, 1999, Liquid Transport Corporation (LTC) filed a

petition urging us to reject the agreement or to request comments from

the public. LTC asserts that the proposal, which it concludes is not a

pooling agreement but is instead a ``Return Loads Bureau'' and

equipment cleaning service, is of major transportation importance

because it will adversely affect the ability of other carriers to

compete for this traffic; that the proposal will restrain competition

and effectively constitute collective ratemaking; and that any benefits

it may produce will not justify the harm it will cause. Interested

persons may obtain a copy of LTC's petition by contacting counsel for

LTC, Mr. Terry G. Fewell, Esq., who may be reached at (317) 637-1777.

Under 49 U.S.C. 14302(c)(2), the Board must determine whether the

proposed pool is of major transportation importance and whether there

is a substantial likelihood that the agreement will unduly restrain

competition. If we determine that neither of these two factors exists,

we are required to approve the agreement without a hearing. Before we

attempt to make those determinations, we will seek public comments on

the application and on the issues raised by Schneider and LTC.

So that we may issue a final decision on the application after the

comments are analyzed, commenters should also address whether, even if

the agreement is of major transportation importance or there is a

substantial likelihood that the agreement will unduly restrain

competition, the agreement should nevertheless be approved under 49

U.S.C. 14302(c)(3) because it would foster better service to the public

or operational economies.

Because the applicant carriers bear the burden of proof, we will

allow them to respond to the public comments.

Under 49 U.S.C. 14302(c)(3), we are required to suspend operation

of the proposed agreement pending a final decision, and we hereby do

so.

Board decisions and notices are available at our website at

``WWW.STB.DOT.GOV.''

This notice and order will not significantly affect either the

quality of the human environment or the conservation of energy

resources.

It is ordered:

1. A hearing on the pooling application is commenced as described

in this notice.

2. Effective on the date of publication, the operation of the

proposed pooling agreement is suspended pending completion of this

hearing and issuance of a final decision.

3. A copy of this notice will be served on the U.S. Department of

Justice, Antitrust Division, 10th Street & Pennsylvania Avenue, N.W.,

Washington, DC 20530.

Decided: January 25, 1999.

By the Board, Chairman Morgan and Vice Chairman Clyburn.

Vernon A. Williams.

Secretary.

[FR Doc. 99-2224 Filed 1-28-99; 8:45 am]

BILLING CODE 4915-00-P