No. MC-C-3437

MOTOR TRANSPORTATION OF PROPERTY INCIDENTAL TO TRANSPORTATION BY AIRCRAFT

Decided May 4, 1964

Upon notice of proposed rulemaking, regulations adopted prescribing1. The circumstances under which motor transportation of property, in interstate or foreign commerce, is transportation incidental to transportation by aircraft within the partial exemption of section 203(b)(7a) of the Interstate Commerce Act.

2. The manner in which air freight forwarders (indirect air carriers) holding authority from the Civil Aeronautics Board may participate in intermodal air-motor transportation in which the motor movement is not within the scope of section 203(b)(7a).

Peter T. Beardsley, F. G. Freund, Bryce Rea, Jr., and Richard R. Sigmon for petitioners.

Robert C. Londerholm for the State Corporation Commission of Kansas.

Tyre W. Burton, E. L. McClintock, William Barton, Frank J. luen, and Frank W. May for the Missouri Public Service Commission.

J. Raymond Clark for the Port of New York Authority.

Frank Kesler for the Oklahoma City (Okla.) Chamber of Com

merce.

Paul A. Smith, Max W. Young, Robert C. Dryden, Harry Pohlad, Hugh T. Matthews, M. M. Emery, J. E. Hall, Louis P. Haffer, Harry F. Gillis, C. C. Boyd, August W. Koehler, P. J. Campbell, Joe G. Fender, James J. McNulty, Russell S. Bernhard, Harold S. Shertz, R. E. Fitzgerald, Mert Starnes, Richard A. Stuart, Robert DeKroyft, Drew L. Carraway, John S. Fessenden, Frederick S. Hill, James D. Mann, Robert J. Corber, R. K. Fillingame, Harry D. Pugsley, Albert F. Beitel, G. H. Dilla, and Edward H. Pollaci, Jr., for themselves, motor carriers, air carriers, or other interested persons.

BY THE COMMISSION:

REPORT OF THE COMMISSION

This rulemaking proceeding, instituted October 4, 1961, by division 1 on its own motion, brings before us for determination the circumstances under which, and the areas within which, motor transportation of property, in interstate or foreign commerce, is transportation incidental to transportation by aircraft, and therefore exempt from the economic regulation of this Commission by the terms of section 203(b)(7a) of the Interstate Commerce Act. Our order instituting this proceeding followed closely upon the institution on August 26, 1961, by the Civil Aeronautics Board (C.A.B.) of a proceeding in its Economic Regulation Docket No. 12951, 26 F. R. 8037, looking toward establishment of the limits of zones within which air cargo pickup and delivery services may be provided by air carriers pursuant to appropriate tariffs filed with that agency under the Federal Aviation Act. That proceeding originally contemplated expansion of air terminal areas to include points within 50 miles of the principal cities served by a given airport. It was terminated by the adoption by the C.A.B., on April 28, 1964, of the regulations contained in appendix II hereto. Also considered in instituting the instant proceeding was a joint petition filed September 25, 1961, by the 5 trade associations, including the American Trucking Associations, Inc., (ATA) and the 40 motor carriers named in appendix I hereto. Excluded from this proceeding is the transportation of passengers when incidental to transportation by aircraft, which is the subject of another similar proceeding.

On October 17, 1963, we issued a supplemental notice of proposed rulemaking reopening the proceeding and expanding its scope so as to define the appropriate role of air freight forwarders (indirect air carriers) in intermodal air-motor transportation. It was pointed out that information acquired during the course of Commission and staff level meetings with C.A.B. personnel, as well as from representations previously filed herein, indicated that there were substantial barriers against effective air forwarder participation in the considered intermodal carriage. This situation was described as being at least partially attributable to our holding in Panther Cartage Co. Extension-Air Freight, 88 M.C.C. 37, and the supplemental notice proposed to eliminate the distinctions made in that decision between shipments moving on the billing of air freight forwarders holding authority from the

1No. MC-C-4000, Motor Transportation of Passengers Incidental to Transportation by Aircraft.

C.A.B. and those moving on the billing of direct air carriers. It also contained proposed rules which would have allowed an air freight forwarder, subject to certain conditions, to receive from or deliver to an authorized motor common carrier consignments moving from or to points beyond the territorial scope of the incidental-to-air exemption without being considered as being a surface freight forwarder subject to part IV of the Interstate Commerce Act. These proposed rules are essentially the same as those being adopted herein and contained in part B of appendix III.

The order instituting this proceeding and the supplemental notice both provided for participation by motor and air carriers, or any other interested persons, 2 through the submission of written statements of facts, views, and arguments, all of which have been considered. They further stated that such representations would be a part of the record herein, and that no hearings would be scheduled for the receiving of oral testimony unless a need therefor should later appear. The Film Carriers Conference of the ATA, Air Dispatch, Inc., and the National Film Carriers, Inc., in their joint statement, contend that insufficient facts upon which to predicate any regulations are presented, but these parties have not requested oral hearing. Requests for such a hearing are embraced in the responses of the State Corporation Commission of Kansas and Direct Airport Service, Inc., to the supplemental notice. In our opinion, and after examination of the numerous submitted statements, we conclude that an oral hearing is unnecessary.

HISTORICAL BACKGROUND

Section 203(b)(7a) was made part of the Interstate Commerce Act by section 1107(j), under the "Amendments and Repeals" provisions, of the Civil Aeronautics Act of 1938. It provides that "Nothing in this part, except the provisions of section 204 relative to qualifications and maximum hours of service of employees and safety of operations or standards of equipment shall be construed to include *** the transportation of persons or property when incidental to transportation by aircraft ***." A review of the legislative history of that section sheds little light on the limits or extent of the partial exemption provided by

2 Appendix I contains a list of the persons filing representations.

section 203(b)(7a). See Sky Freight Delivery Service, Inc., Com. Car. Application, 47 M.C.C. 229; and Hatom Corp. Common Carrier Application, 91 M.C.C. 725, which contains a discussion of the section 203(b)(7a) exemption insofar as it relates to the transportation of passengers.

The early decisions of this Commission in which a prior or subsequent movement of property by air was involved, 3 do not discuss the scope of the partial exemption in any great detail.4 With respect to certain applications of the Railway Express Agency, the reports merely concluded that the transportation of air express shipments by motor vehicle was not within the exemption, holding that the service involved a line-haul operation, 5

The first extended discussions of the meaning of the section 203(b)(7a) exemption did not appear until 1947 when the Sky Freight case, supra, dealing with the transportation of property, and Teterboro Motor Transp., Inc., Com. Car. Application, 47 M.C.C. 247, dealing with the transportation of passengers, were decided. In these two cases, decided on the same date, it was found that transportation, whether of passengers or property, must involve traffic having an immediately prior or subsequent movement by air; that the length of the motor movement is not the sole determining factor particularly in the New York metropolitan area; and that, because of the differing circumstances present at various airports, no definite territorial limit to the exemption could be prescribed.

In the Sky Freight case it was held that it is that transportation rendered in the performance of collection, delivery, or interline transfer of airfreight within what is a reasonable terminal area for the line-haul air carrier which is "incidental" to the transportation by air. However, it was stressed there that when a particular motor service takes on the character of a connectingcarrier line-haul service and becomes a part of what is essentially a through interline service by connecting carriers of independent

8All cases hereinafter discussed or cited concerned the transportation of property unless otherwise specified.

4Port Columbus Cab Co. Contract Carrier Application, 24 M.C.C. 287; Railway Exp. Agency, Inc., Ext.-West Unity Middletown, 81 M.C.C. 868, 366; and Railway Exp. Agency, Inc., Ext.-Clarksburg Buckhannon, 81 M.C.c. 700, 702. The latter two cases merely refer to the West Warwick case, oited in footnote 5, in finding the operations there in question were not within the partial exemption of section 208(b)(7a).

Railway Exp. Agency, Inc., Extension-West Warwick, R. I., 81 M.C.C. 882, 885 (12 miles); and Railway Exp. Agency, Inc., Extension-Bristol, R. I., 81 M.C.C. 885, 890 (15 miles).

status, it cannot any longer be said to be subordinate to, an adjunct of, or "incidental" to any prior or subsequent transportation by aircraft.

In Golem biewski Common Carrier Application, 48 M.C.C. 1, 5, division 5, in following the Sky Freight decision, concluded:

We repeat, however, our admonition in that case, that such considerations as door-to-door rates and air-carrier billing and responsibility are not necessarily controlling and would not require a finding of an exempt operation should it appear that the motor-carrier service involved was so extensive as to constitute, in fact, a line-haul part of a through interline service, rather than a bona fide collection or delivery service incidental to air-carrier service.

This admonition in Golem biewski was repeated in Peoples Exp. Co. Extension of Operation-Air Freight, 48 M.C.C. 393. In that case, a portion of the service proposed was substantially similar to that with which the Sky Freight and Golembiewski cases,6 were concerned. In addition, applicant therein contemplated a more extensive service from and to the Newark Airport, with some of the points to be served being over 100 miles from the airport. It was held that the service proposed for the northern portion of New Jersey, particularly in the immediate vicinity of New York City, came within the scope of the exemption and was bona fide transportation "incidental to transportation by aircraft," but that the service proposed for southern New Jersey was not. Division 5 stated, 48 M.C.C. at 396:

Motor operations conducted as those proposed which extend so far as to reach into the territory adjacent to, and served primarily by, another airport clearly take on the character of interterminal line-haul service in substitution for, rather than incidental to, air transportation. Emphasis added]

Noting the particular problems involved therein, division 5 concluded that, as a public need existed for the proposed service, it was unnecessary for it to determine to what extent the proposed operations were beyond the scope of the exemption. An exception to the above-quoted conclusion in Peoples Exp. Co. was recognized when the traffic in question was emergency in character. Graff Common Carrier Application, 48 M.C.C. 310.7

6These cases, as well as the Peoples Exp. Co. case, involve transportation in the vicinity of New York City.

7 This proceeding involved the transportation of passengers and their baggage, but the principles enunciated there with respect to the emergency movement by substituted motor-for-air service have been followed in numerous proceedings involving the transportation of property having a prior or subsequent movement by air.