No. MC-76032 (SUB-NO. 167)1

NAVAJO FREIGHT LINES, INC., EXTENSION-SILVER

Decided July 9, 1964

1. Transportation of silver bullion found to be beyond the scope of the operating authorities of motor common carriers of general commodities when such authorities are restricted against the transportation of "articles of unusual value." Motions to dismiss overruled. 2. In the title proceeding, public convenience and necessity found to require operation by applicant as a common carrier by motor vehicle, over a described regular route, of silver bullion, from San Francisco, Calif., to Denver, Colo. Issuance of a certificate approved upon compliance by applicant with certain conditions, and application in all other respects denied.

3. In all other proceedings, public convenience and necessity found not shown to require operation by applicants as common carriers by motor vehicle, over described regular routes, of silver bullion, from San Francisco, Calif., to Denver, Colo. Applications denied.

O. Russell Jones, Eugene T. Liipfert, Frank Loughran, Edward G. Bazelon, and Jules Laser for applicants.

Leonard M. Shinn, J. H. Macomber, Jr., and J. E. Moody for intervener in support of the applications.

Francis D. Partlan, Edward K. Wheeler, and Eldon S. Olson for protestants.

REPORT OF THE COMMISSION

HUTCHINSON, Commissioner:

These applications were heard on a consolidated record and made the subject of a single report and recommended order of the examiner. Since they involve related issues, they will be disposed of here in a single report. Joint exceptions to the order recommended by the examiner were filed by protestants, and applicants2 replied. Our conclusions differ from those recommended.

1This report also embraces Nos. MC-42487 (Sub-No. 542), Consolidated Freightways Corporation of Delaware Extension-Silver; MC-33641 (Sub-No. 50), Interstate Motor Lines, Inc., Extension-Silver; MC-70451 (Sub-No. 240), Watson-Wilson Transportation System, Inc., Extension-Silver; MC-263 (SubNo. 141), Garrett Freightlines, Inc., Extension-Silver; and MC-52709 (Sub-No. 177), Ringsby Truck Lines, Inc., Extension-Silver.

2No reply was filed by Consolidated.

By applications filed February 5, March 5, July 5, July 12, July 18, and July 5, 1962, respectively, as amended, Navajo Freight Lines, Inc., of Denver, Colo.; Consolidated Freightways Corporation of Delaware, of Menlo Park, Calif.; Interstate Motor Lines, Inc., of Salt Lake City, Utah; Watson-Wilson Transportation System, Inc., of Omaha, Nebr.; Garrett Freightlines, Inc., of Pocatello, Idaho; and Ringsby Truck Lines, Inc., of Denver, Colo.; hereinafter called by their short names, seek certificates of public convenience and necessity authorizing operation, in interstate or foreign commerce, as common carriers by motor vehicle, of silver bullion, from San Francisco, Calif., to Denver, over routes described in the appendix hereto. General Services Administration, hereinafter called GSA, intervened in support of the application on behalf of executive agencies of the United States Government except the Department of Defense but including the Bureau of the Mint. The applications are opposed by Brinks Incorporated; Armored Motor Service Corporation; Leonard De Lue, D. J. Sebern, T. W. Rinker, and E. L. DeLue, doing business as Armored Motor Service; Loomis Armored Car Service, Inc.; and Protective Motor Service Company, Inc., all armored motor carriers. The examiner found that applicants are not precluded from performing the proposed services by the restrictions in their operating authorities against the transportation of "articles of unusual value" or "commodities of unusual value," provided that silver bullion is tendered to them without a requirement of protective service. He then recommended that the applications be denied. On exceptions protestants jointly assert (1) that no evidence should have been received with respect to applicants' authority to transport silver bullion, inasmuch as adequate notice of that issue was not given to interested parties; (2) that the examiner erred in recommending that the Commission's finding in Wells Fargo Armored Service Corp. Ert.-Denver, Colo., 84 M.C.C. 779, that silver bullion is a commodity of unusual value, be reversed; (3) that existing authorized carriers provide service which is adequate to meet the shipper's reasonable transportation requirements; and (4) that the recommended finding would, if adopted by the Commission, have a seriously detrimental effect upon the operations of armored carriers. They argue further that silver bullion historically has been considered to be an article of unusual value, that allowing general-commodity carriers to transport it or not as they see fit will result in chaotic transportation conditions, that the representations of GSA as to the policy of the Bureau of the

Mint are unsupported and contrary to statements made by witnesses for the mint in other proceedings, that the valuable nature of silver bullion makes security measures such as guards and protected trucks necessary for its shipment, and that the possibility of lower rates, in the absence of any showing that protestants' charges are so high as to constitute an embargo, should not be a persuasive factor in these proceedings. They also maintain that the examiner erred in admitting any evidence of movements of silver bullion by applicants for GSA, contending that because such movements were unlawful, they should be accorded no weight.

In reply applicants3 and intervener collectively urge that the examiner's recommendation be affirmed, contending (1) that the existing authority of applicants, as well as that of protestants, is a proper issue in application proceedings of this type and that the examiner did not err in admitting evidence relating to the question; (2) that even if silver bullion was at one time considered to be "of unusual value," this is no longer true under present-day economic conditions, and that this evolution in the industry is consonant with the situation with respect to minor coins, which at one time were considered to be of unusual value but are presently not so considered; (3) that restrictions against the transportation of commodities of unusual value do not prohibit the transportation of any specific commodity or group of commodities but relate to the transportation of commodities in protective equipment and service; (4) that the testimony of shippers and receivers of silver bullion demonstrates that protective service of the type provided by protestants is not required; (5) that the per-pound value of a commodity is not a true test of whether it is of unusual value as that term is used in transportation parlance, since many articles which are not presently regarded as being of unusual value have a higher per-pound value than silver bullion; (6) that protestants do not have adequate equipment and facilities to meet GSA's reasonable transportation requirements; (7) that GSA should not be forced to utilize a high-cost armoredcarrier service when such service is not actually required; and (8) that protestants have handled little or none of the involved traffic and would not be adversely affected by a grant of authority to applicants or by finding that applicants already hold authority to transport silver bullion.

The evidence adduced, the examiner's recommendations, the exceptions, and the replies thereto have been considered. The

3Interstate and Watson Wilson, separately, and Navajo, Ringsby, and Garrett, jointly.

statement of facts in the examiner's report is complete and accurate and will be adopted as our own. Pertinent facts will be briefly restated, however, for clarity of discussion.

Applicants are all substantial motor common carriers of general commodities operating over systems of regular routes extending, as pertinent, from San Francisco eastward. All except Consolidated hold authority to operate over routes to Denver which are identical or closely parallel to their proposed routes. The certificates held by applicants are restricted, as is customary with general-commodity authority, against the transportation of commodities or articles of unusual value. In the past applicants have transported silver bullion in ordinary van trailers without any type of protective service, and it is their position that their certificates do not prohibit the movement of silver in that manner as long as the type of service rendered is not of a specialized character such as is provided by armored carriers. Their contention is that the involved restrictions relate primarily not to the commodity itself but to the nature of the service required. GSA furnishes traffic management services for the mint, arranging transportation at the lowest cost consistent with the mint's overall requirements. Specifications for the involved movements of 40,000-pound minimum truckloads of silver bullion, which were sent to interested carriers in July 1961, stated that the carrier designated to perform the movement would be required to load the bars on pallets, that the Denver mint would unload, that the carrier or its insurer would be required to assume responsibility for the full value (approximately $540,000) of the lading in each truckload, that no specific volume of traffic would be guaranteed, and that clean, fully enclosed, and secured vehicles would have to be supplied. Of four armored carriers to whom the specifications were addressed, only Armored Motor Service Corporation submitted a bid ($4.07 per 100 pounds) which was in compliance with the requirements. Nine regular common carriers submitted bids ranging from $1.68 to $2.78 per 100 pounds. Since the service of ordinary common carriers had been previously found to be satisfactory, Navajo, the lowest bidder, was awarded the business. Use of its service was terminated in January 1962 when GSA was made aware of the Wells Fargo decision, and the service of REA Express was utilized until May 1962 at a rate of $2.18 per 100 pounds. The furnishing of armed guards and armored vehicles is not deemed necessary by the mint. By "secured" vehicles it is intended only that the trailers be sealed but not necessarily locked.

Until 1961, when the sale of silver by the mint to private persons was terminated, a refiner and processor of gold and silver purchased silver bullion in truckload lots from the mint at San Francisco. The shipments were moved to Bridgeport, Conn., by joint-line common carrier service in ordinary van equipment without armed guards or any other elements of armored-car protective service. The shipper does not consider that any type of specialized protective service is required for the movement of silver bullion, and its reason for shipping silver by armored carriers in intracity service is that they are the only carriers set up for that type of operation. It admitted that the aforementioned silver movement from San Francisco was made subject to a released valuation rate of $0.40 per pound.

A manufacturer of electronic instruments and metallurgical products receives silver bullion at its Indianapolis plant. It utilizes ordinary common carrier service and considers such service to be satisfactory. Protestants4 are all armored contract carriers providing a specialized service for the movement of valuable commodities. They utilize trained drivers, armed guards, armored vehicles, and all of the protective services incidental to such operation. Their authorities to serve the mint between San Francisco and Denver were obtained with the support of GSA, but they have been unsuccessful in their bids to obtain the mint's silver bullion traffic. They would use either ordinary van equipment accompanied by an armed convoy or trailers which are themselves armored. Protestants would not transport silver bullion without protective services and equipment because they believe that the value of the commodities makes such service essential. Brinks regularly transports silver bullion in armored vehicles.

DISCUSSION AND CONCLUSIONS

Protestants contend that the question of whether silver bullion is an article of unusual value is not properly an issue in the instant application proceeding under section 207 of the Interstate Commerce Act. They argue that they were unprepared at the hearing to try that issue, and that the examiner's rulings allowing evidence relating to the question were violative of the notice provision of section 5(a) of the Administrative Procedure Act. We find no 4With the exception of Protective, which adduced no evidence with respect to its operations.