In deciding not to fix a maximum mileage limitation for the 203(b)(7a) exemption, we are obviously disagreeing with the contentions of various parties, including petitioners, that shippers and receivers in areas adjacent to cities and communities have the same need for all modes of transportation-rail, express, water, motor vehicle, and air; and that, therefore, the terminal areas of carriers of all modes should be identical. Each mode of transportation has its inherent advantages. Compare Seatrain Lines, Inc., Extension-Savannah, 285 I.C.C. 509, and Schaffer Transp. Co. v. United States, 355 U. S. 83. Various economic and geographic factors sometimes prompt utilization of one mode of transportation over others. In Kenny, supra, we recognized that the modus operandi of air carriers is sufficiently different from that of land carriers as to justify special consideration in the matter of terminal area limits which may or may not be somewhat larger than those of land carriers. Compare Pick-up of Livestock in Illinois, Iowa, and Wisconsin, 238 I.C.C. 671, 248 I.C.C. 385, and 251 I.C.C. 549, and Newtex S. S. Corp., Collection and Delivery Service, 273 I.C.C. 304. Likewise, in the Terminal Areas case, supra, we noted additional reasons why terminal areas for non-land transportation carriers varied from those of motor carriers and freight forwarders subject to the act. Compare Pan-Atlantic, supra.

Some parties argue for an interpretation of section 203(b)(7a) which would allow the performance of exempt motor operations in areas extending up to 125 miles from airports, and some, in supporting a "length-of-line-haul" test or simply a "prior-orsubsequent-movement" test, would have the scope of the exemption extended even further. In our opinion such a theory would be in direct conflict with sections 206 and 209 of the act, and particularly of the national transportation policy, which requires that we recognize and preserve the inherent advantages of each mode of transportation subject to our regulation. We would not be complying with the congressional mandate were we to adopt, in the absence of a clear legislative directive, a regulation which would greatly increase the scope of exempt transportation at the expense of those motor carriers which are subject to the economic regulation of the Interstate Commerce Act.

In general, then, we are here reaffirming the decision in the Kenny case. However, it is clear from the record before us that many airfreight users are establishing plants outside the present terminal zones which air carriers have heretofore been

allowed to establish in tariffs filed with the C.A.B. In recognition of this factor, the C.A.B., in its rule 222.3, reproduced in appendix II, is providing an application procedure whereby air carriers can seek permission to file tariffs offering pickup and delivery service at points beyond 25 miles of the airport or city limits of certificated points. Under the Kenny decision, the geographical limit of the section 203(b)(7a) exemption at a given point would expand automatically should the C.A.B. allow air carriers to extend the area in which they offer terminal services. To permit such expansion without our retaining some control over it would, in our opinion, not be consistent with our statutory responsibility to insure that transportation partially exempt under section 203(b)(7a) is truly "incidental" to transportation by aircraft. We shall, therefore, make available a procedure whereby the geographical extent of the incidental-to-aircraft exemption can be individually determined. To achieve this purpose we will adopt regulations which will reflect the definition of the exemption originally made in the Kenny case but which will further provide that, either upon our own motion or upon petition of any interested person, a proceeding may be instituted looking toward the definition of the geographical extent of the 203(b)(7a) exemption at a particular point. In deciding this question, prior action of the C.A.B. allowing air carriers to publish extended terminal service tariffs would be considered, but would not be determinative.

Emergency transportation.- We come now to a consideration of substituted motor-for-air transportation performed in emergency situations. We think that the approach taken to this problem in the Graff decision and followed since then is sound and should be followed in the future. If the shipping public is to be served, carriers should be in a position to deliver airfreight even if the plane carrying it must, because of bad weather, for example, land at an airport far removed from the scheduled destination, or if a plane, because of equipment failure beyond the control of the direct air carrier, is not available. Consequently, we do not believe that it is advisable to attempt to set any specific mileage limit within which such emergency motor transportation must be performed if it is to fall within the scope of the section 203(b)(7a) exemption. We wish to stress that motor transportation to fall within this category and thus to be exempt from our economic regulation must be truly emergency in character, and the rule to be adopted here will provide that it must be caused

by conditions beyond the control of the air carrier. For example, it is apparent that several of the parties, particularly the air freight forwarders and uncertificated motor carriers, solicit airfreight without regard to the capacity of cargo planes scheduled to depart; and, at times, in total disregard of known capacities. The fact that existing available cargo space has been oversolicited does not constitute an emergency situation beyond the control of the air carrier such as would bring a substituted motor-for-air service within the ambit of section 203(b)(7a). Likewise, the fact that a city is served by an airport which is not equipped to receive jet cargo planes cannot be construed as clothing an operation from or to the nearest jet airport with the character of an emergency.

The decision as to what constitutes adverse weather or an emergency or impractical flying condition, is, in our opinion, one that must be made by the direct air carriers and their officials in the interest of public safety. In any case, whenever air traffic moves in substituted motor-for-air line-haul operations by an uncertificated motor carrier, there must exist some adverse weather or impractical condition or situation as decided by the officials of the direct air carrier, even though the involved traffic is moving on a through air freight forwarder's bill of lading.

Participation of air freight forwarders in air-motor transportation. As was indicated by our supplemental notice of proposed rulemaking, issued October 17, 1963, we are not completely satisfied with the result reached in the Panther case. That decision held that the incidental-to-aircraft exemption applies to the transportation of shipments having a prior or subsequent movement by air freight forwarder only to the extent that the motor movement takes place within the terminal area of the direct air carrier performing the line-haul transportation. Further consideration convinces us that whether a shipment moves under the billing of a direct air carrier or an air freight forwarder should have no effect upon the operation of the examption. The Federal Aviation Act classifies both as air carriers, and an air freight forwarder is considered by the C.A.B. to be an air carrier. Also, the Panther decision may result in the anomalous situation in which an air freight forwarder, given the choice of utilizing one of the two direct air carriers between the same airports would find that a shipment transported by one could move overland in exempt motor service, while a shipment transported by the other could not. The rules adopted herein will

not distinguish between direct and indirect air carriers, and the Panther case, to the extent inconsistent with this conclusion, is overruled.

The Panther case also held that any person "performing the functions of a freight forwarder" and "using" or "employing" motor carrier service between an airport and points beyond the terminal area of a direct air carrier serving that airport is a surface freight forwarder which requires operating authority under part IV of the Interstate Commerce Act. It was not intended by this decision to foreclose completely transportation service in which a shipment moves in part under the responsibility of an air freight forwarder and in part under the responsibility of a motor carrier subject to the act. The Panther holding was directed only to those activities of air freight forwarders which amount to surface freight forwarding under part IV of the Interstate Commerce Act. Some parties to this proceeding, however, have apparently construed this decision as precluding air freight forwarders, under any circumstances, from turning shipments over to or receiving shipments from motor carriers for the performance of regulated transportation. As thus interpreted, the Panther case has unnecessarily impeded freight forwarder participation in air-motor service, and it was the purpose of the supplemental notice of proposed rulemaking to suggest a means of rectifying this situation.

An increasingly large volume of air freight is being handled by air freight forwarders, and a substantial portion of their traffic moves to or from points beyond the published terminal areas of air carriers. In such a situation the shipper normally is charged (1) the air forwarder's rates for service between the air terminal cities, and (2) the motor carrier's published charges for service between the air terminal city and the ultimate origin or destination point. Such air forwarder service is similar to that furnished by direct air carriers through connection with motor carriers, and, as a general rule, it appears that the shipping documentation clearly apprises the consignor or consignee that a connecting service is being performed and that the forwarder has no common carrier responsibility for the shipment while it is under the motor carrier's control. Such operations do not, we think, constitute surface freight forwarding under part IV of the Interstate Commerce Act. See Alaska Freight Lines, Inc., v. Puget Sound Tug & Barge, 94 M.C.C. 376. The considered operations are an integral part of what is

patently a useful service to the shipping public, and as the line-haul surface movements will, of necessity, be performed by regulated motor carriers, we anticipate no adverse effect on such carriers as a result of our conclusions.

The supplemental notice of proposed rulemaking suggested a modus operandi whereby air freight forwarders could receive from or turn over to authorized motor carriers shipments the motor transportation of which does not come within the partial exemption of section 203(b)(7a). These standards appear to reflect the type of operation actually being conducted by some air forwarders, and the operations of others seem to be readily adaptable to their requirements. The regulations which we will adopt herein, and which are substantially the same as those proposed, will restrict air freight forwarders against holding out, in any manner, that they assume or will assume responsibility for any shipment prior to its receipt from or after delivery to an authorized motor carrier for movement beyond the forwarders' terminal area. We will also forbid the receipt by an air forwarder of compensation from shippers for motor carriers for services rendered in connection with the receipt of shipments from or the delivery of shipments to a motor carrier performing regulated transportation. In reaching the conclusion that these limitations on the air freight forwarders' participation in surface transportation are necessary, we should point out that we are fully cognizant of the advantages which might accrue to the shipping public from a forwarding service able to assume complete responsibility from actual origin to ultimate destination. The assumption of such responsibility by air freight forwarders, however, would result in their instituting surface forwarding operations in violation of the licensing provisions of part IV of the Interstate Commerce Act.

ULTIMATE CONCLUSIONS AND FINDINGS

In conclusion, we must deal with the assertion made by several of the parties that this Commission is attempting to regulate air transportation. Congress, through the Interstate Commerce Act, has directed this Commission to maintain a strong and balanced motor carrier transportation system in furtherance of a national transportation policy. A review of the various sections of the Federal Aviation Act and the Interstate Commerce Act which were cited by various parties of record convinces us that the