These are questions and the considerations that reflect on the inadequacies of the division formula from the standpoint of realism. It is, therefore, submitted that the Commission should carefully review the formula with a view to reinstating the more rational tests of the Dixie Ohio case or something akin thereto. It is believed that a return to this principle will also justify the grant sought in the instant proceeding.

CONCLUSION AND PRAYER

We have stated before and now reassert that the report and order of division 5 in this proceeding, and now particulary in the light of the dissent in the Guy Spaulding case, establish elusive, dangerous, inequitable, discriminatory and unworkable criteria for applying to alternate route applications. The report and order also alters and disturbs previous rulings of the Commission in such cases which are solidly based upon the national transportation policy and the other elements of the act that allow for no discrimination between large and small carriers.

Wherefore for these reasons and those cited in our previous petition of March 24, 1955, it is earnestly requested that the Commission reopen docket No. MC-19 (Sub-No. 15, Bingaman Motor Express Co., Inc.-Extension Alternate Routes and reconsider all previous reports and orders in the light of the new grounds asserted herein. Because of the importance of this issue it is stated again that oral argument might be in order and that, in the event the Commission entertains any doubts as to the validity of this written argument or the justification for granting the Bingaman application in view thereof, applicant earnestly requests oral argument.

Respectfully submitted.

I hereby certify that I have this day served the foregoing document upon all parties to this proceeding by mailing a copy thereof to each party of record. Dated at Washington, D. C., this 5th day of November 1955..

JAMES K. KNUDSON.

APPENDIX 3

OPINION OF UNITED STATES DISTRICT COURT, N. D. Iowa, E. D., IN INTERSTATE COMMERCE COMMISSION V. ALLEN E. KROBLIN, INC., 113 F. SUPP. 599 (1953)

CIV. A. NO. 615-JUNE 30, 1953

Action by Interstate Commerce Commission to enjoin defendant from transporting New York dressed and eviscerated poultry in interstate commerce by truck without certificate of public convenience and necessity. The District Court, Graven, J., held that such poultry did not constitute "manufactured products” within Interstate Commerce Act provision exempting agricultural commodities, not including manufactured products thereof, from certificate provisions of Act. Judgment in accordance with opinion.

In action by Interstate Commerce Commission to enjoin defendant from transporting dressed and eviscerated poultry in interstate commerce without certificate of public convenience and necessity, wherein defendant admitted that it was engaged in interstate transportation of property by motor vehicle, defendant had burden of establishing that its activities came within agricultural exemption of the Interstate Commerce Act. Interstate Commerce Act. § 203 (b) (6), 49 U. S. C. A. § 303 (b) (6).

2. Courts 96(1)

Statutes 217.4, 219

Phrases "agricultural commodities" and "manufactured products thereof” as used in agricultural exemption in Interstate Commerce Act, are ambiguous, and. therefore, resort would be had to decisions construing provisions of such exemption and to extrinsic aids of legislative history and administrative interpretation in determining meaning of such phrases. Interstate Commerce Act, § 203 (b) (6), 49 U. S. C. A. § 303 (b) (6).

Under Interstate Commerce Act, application of agricultural exemption, in so far as it relates to trucks operated by farmers themselves and to livestock in agricultural commodities, is mandatory but, to extent that it deals with casual transportation, is discretionary with the Interstate Commerce Commission. Interstate Commerce Act, § 203 (b) (1-9, 4a), 49 U. S. C. A. § 303 (b) (1–9, 4a). 4. Statutes

219

Construction placed by Interstate Commerce Commission upon Interstate Commerce Act is entitled to great weight and is not lightly to be interfered with by the courts. Interstate Commerce Act, § 201 et seq., 203 (b) (6), 49 U. S. C. A. $$ 301 et. seq., 303 (b) (6).

5. Statutes 219

In construing statutes, weight to be given by courts to administrative interpretation thereof is based in part upon theory that a particular agency has expertness in particular field in which it has been entrusted with responsibility by Congress.

6. Commerce 85(3)

New York dressed poultry or eviscerated poultry did not constitute "manufactured products" within Interstate Commerce Act provision exempting agricultural commodities, not including manufactured products thereof, from certificate provisions of Act. Interstate Commerce Act, § 203 (b) (6), 49 U. S. C. A. § 303 (b) (6).

(See publication Words and Phrases, for other judicial constructions and definitions of "Manufactured Products.")

James A. Murray, Associate Chief Counsel, Interstate Commerce Commission, Washington, D. C., Donald R. Partney, Atty., Interstate Commerce Commission, Kansas City, Mo., and Asa Merrill, Atty., Interstate Commerce Commission, New York City, for plaintiff.

Craig H. Mosier, of Mosier & Mosier, Waterloo, Iowa, for defendant.

Charles W. Bucy, Associate Sol., Washington, D. C., Henry A. Cockrum, and Harry Ross, Jr., Attys., Office of Sol., United States Department of Agriculture, Washington, D. C., for the Secretary of Agriculture, amicus curiae.

GRAVEN, District Judge.

The issue in this case is whether or not the interstate transportation by truck of New York dressed and eviscerated poultry is within the scope of the so-called "agricultural" exemption of the Interstate Commerce Act. Section 303 (b) (6) of 49 U. S. C. A.; Section 303 (b) (6) of Title 49 of the United States Code. In the United States Statutes at Large, Chapter 498, 49 Statutes 543, 544, that Section appears as Section 203 (b) (6). In the legislative history that Section is referred to as Section 203 (b) (6). For that reason it will be referred to herein by that number.

[1] In this action the Interstate Commerce Commission claims that the defendant is engaged in transporting New York dressed and eviscerated poultry in interstate commerce without a certificate of public convenience and necessity. The Commission asks that the defendant be enjoined from so doing until he obtains such certificate. The defendant admits that it is so engaged and that it does not have a certificate of public convenience and necessity. It claims that under the provisions of Section 203 (b) (6) it is not required to have such certificate. The defendant having admitted that it is engaged in interstate transportation of property by motor vehicle, the burden is upon it to establish that its activities come within the exemption. U. S. v. Krinvic Bros., D. C. E. D. Pa. 1942, 47 F. Supp. 481; U. S. v. Chadwick, D. C. E. D. Pa. 1940, 39 F. Supp. 204. The Secretary of Agriculture asked for, and was given, permission to appear as amicus curiae. Counsel for the Secretary of Agriculture also filed written briefs and participated in the oral arguments. The position of the Secretary of Agriculture is the same as that of the defendant and is opposed to that of the

Interstate Commerce Commission. The written briefs filed and the oral arguments made in behalf of the plaintiff, the defendant, and the amicus curiae were all outstanding and a credit to the legal profession.

Section 203 (b) (6), above referred to, in its present form exempts from the certificate provisions of the act:

***** (6) motor vehicles used in carrying property consisting of ordinary livestock, fish (including shell fish), or agricultural (including horticultural) commodities (not including manufactured products thereof), if such motor vehicles are not used in carrying any other property, or passengers, for compensation”.

While Section 203 (b) (6) includes fish as well as horticultural commodities, it is commonly and generally referred to as the agricultural exemption.

This particular case is but one engagement of a much larger battle that has been raging for many years. The battle commenced when legislation was proposed granting regulatory powers to the Interstate Commerce Commission as to interstate transportation by motor vehicles and has continued ever since. By the Motor Carrier Act of 1935, now Part II of the Interstate Commerce Act, 49 U. S. C. A. § 301 et seq., Congress granted the Interstate Commerce Commission such regulatory powers. The battle has been, and is being, waged as to what regulatory powers the Interstate Commerce Commission should have as to the interstate transportation by motor vehicles of products generally referred to as agricultural commodities, and as to the exact scope of Section 203 (b) (6). Those engaged in interstate transportation by motor vehicle who operate under certificates of public convenience and necessity issued by the Interstate Commerce Commission under the Act are generally referred to as regulated or certificated carriers. Those who are so engaged without being required to obtain such certificates are generally referred to as unregulated or uncertificated carriers. The battle referred to has been waged on the floors of the House and the Senate, before Congressional Committees, before the Interstate Commerce Commission, and in the Courts. In that battle the regulated motor vehicle carriers and the railroads have, in general, contended for very limited exemptions from the certificate provisions of the Act and for a strict construction of the provisions providing for exemptions. Farm groups, other groups interested in the scope of the coverage of Section 203 (b) (6), the unregulated carriers, and the Department of Agriculture have in general advocated a broad statutory exemption from the certificate provisions of the Act and for a liberal construction of the exemption provision as enacted.

The controversy has largely resolved around the matter of the exemption in favor of commercial truckers engaged in hauling farm and other commodities. There has been little controversy as to the exemptions in favor of farmers who use their own trucks to haul their produce to market and in hauling supplies to their farms.

Chapter 1 of the Motor Carrier Act of 1935 declared the National Transportation policy. This same statement of policy was, by Act of September 18, 1940, c. 722, Title I, § 1, 54 Stat. 899, inserted before Part I of the entire Interstate Commerce Act, 49 U. S. C. A. note preceding section 1, to become the policy of the entire Act. That statement of policy is as follows:

"It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions;-all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy."

It has been and is the view of the Interstate Commerce Commission that since the Motor Carrier Act was remedial legislation the Act as a whole should be liberally construed to carry out its overall purpose and policy. It has been, and is, the position of the Interstate Commerce Commission that a liberal construction of

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the exemptions from the Act would tend to defeat and negative the over-all purpose and policy of the Act and that the carrying out of such purpose and policy requires a strict construction of its exemptions. It is also the view of the Interstate Commerce Commission that the existence of a large number of carriers engaged in interstate transportation who are not subject to the certificate provisions of the Act tends to break down and seriously impair the general regulatory authority and powers assigned to it by Congress.

In 1952 the Senate Committee on Interstate and Foreign Commerce held committee hearings on a number of bills, including S. 2357. That bill as originally introduced provided for a narrowing of the scope of the agricultural exemption. The hearings were reported at pages 371 to 522 of a document entitled "Domestic Land and Water Transportation Hearings Before The Committee on Interstate and Foreign Commerce, United States Senate, Eighty-Second Congress, Second Session." That document will hereafer be referred to as Senate Hearings S. 2357 or as S. H. 2357. At those hearings statements were made which indicate some of the problems presented by the existence of unregulated carriers. In S. H. 2357, on page 403, the following appears:

"Senator Bricker. * * * On the other hand, you have got a competitive situation here between those who have to pay the charges of regulation, who have to be confined to certain routes, who have to enter into contracts, *** with those who have absolutely no regulation, no responsibility to any public authority at all, and it largely comes under the exemption here of agricultural products * * *." It has been, and is, the view of the Department of Agriculture that by enacting the agricultural exemption Congress intended it to be of aid to those engaged in agriculture and such Congressional intent should not be frustrated by administrative and judicial construction and interpretation.

In 1950 under S. Res. 50, 81st Congress, 2d Session, extensive hearings were held by the Senate Committee on Interstate Commerce relating to transportation matters, including the agricultural exemption. The report of those hearings will hereafter be referred to as S. Res. 50.

Ever since the passage of the Act there has been present the "brooding omnipresence" of "trip leasing." "Trip leasing" and matters connected with it are an important part of the background of the general battle that has been waged in connection with the agricultural exemption. That background is also explanatory of some of the attitudes and positions taken by the Interstate Commerce Commission, the Department of Agriculture, and other interested parties.

The movement of agricultural and other exempt commodities is in general a one-way movement. That movement is from the areas of production to the principal market points. In general, there is no substantial movement of exempt commodities from such market points back to the areas of production. Thus, those uncertificated carriers who haul exempt commodities to the market points are confronted with the matter of return loads. Without return loads the original hauling of exempt commodities to the market points tends to be economically unprofitable. In general, only nonexempt commodities are available for return loads, the hauling of which requires a certificate from the Interstate Commerce Commission, which the uncertificated carriers lack. In order to haul return loads of nonexempt commodities, it is necessary for the uncertificated carriers to haul them under the certificate of a certificated carrier. In order to haul such loads under the certificate of a certificated carrier, the practice of trip leasing developed. It should be noted, however, that the practice of "trip leasing" is not confined to uncertificated carriers hauling exempt agricultural commodities. Under the practice of "trip leasing" an uncertificated carrier who had hauled a load of exempt agricultural commodities from the area of production to a market point would at such point, by means of brokers or otherwise, contact certificated carriers whose certificates permitted them to haul certain nonexempt commodities from such market point to points in the vicinity of the area of production. If a certificated carrier had a load available and was lacking in equipment, or could bargain with the uncertificated carrier and secure a rate by which it could profit, an arrangement would be entered into whereby the uncertificated carrier would "trip lease" his truck for the return trip only. Either the uncertificated carrier or one of his employees would act as driver. The vehicle then being under lease to a certificated carrier was eligible to haul nonexempt commodities under the certificate of such carrier. The method of compensating the lessee for the use of his equipment varied. Under the more usual arrangements the owner and lessor of the leased vehicle received a percentage of the freight charged by the certificated carrier.

Ever since the practice of "trip leasing" was initiated, it has been the position of the Interstate Commerce Commission that "trip leasing" gave rise to many of the very evils which originally brought about the passage of the Motor Carrier Act. In Senate Hearing S. 2357, supra, on page 395, the statement is made that most of the unregulated or uncertificated carriers engaged in hauling exempt agricultural commodities are "small owners who perhaps own one or two or three or four trucks at the most." It is indicated that the number of such carriers runs into the thousands. However, in the report on S. Res. 50 it was stated that sometimes a regulated carrier will set up an affiliated corporation to conduct operations which are exempt from regulation under the agricultural exemption. In other places in that report it was indicated that some of the commercial truckers operate a considerable number of trucks in the exempt field. In the course of argument it was stated that the defendant in the present case operated from 10 to 12 trucks in the hauling of dressed poultry. On page 378 of the report of Senate Hearing S. 2357 a witness stated that the agricultural exemption promoted "trip leasing" and the evils connected therewith; that the transient, temporary, and in many cases the loose nature of the arrangements, whereby trucks are "trip leased" to be operated under the certificate of a certificated carrier, make for loose control of such vehicles by the certificated carriers; make for difficulty on the part of the Interstate Commerce Commission in the matter of inspection and regulation, especially in regard to matters of safety; and that the practice resulted in economically destructive rates. In the report under S. Res. 50, on page 1218 thereof, a witness stated that in "trip leasing" some certificated carriers were able to and in fact did exploit the uncertificated or "gypsy" carriers because of the economic necessities of the latter. In the case of American Trucking Ass'ns, Inc., v. United States, 1953, 344 U. S. 298, 73 S. Ct. 307, the United States Supreme Court discusses some of the problems and evils connected with "trip leasing." Fairly soon after the passage of the Act the Interstate Commerce Commission stated in Monroe Common Carrier Application (July 9, 1938) 8 M. C. C. 183 that the agricultural exemption was inapplicable to any vehicle which was being used to haul both exempt and nonexempt commodities even though not hauled on the same load. In other words, the Interstate Commerce Commission made the test for the exemption the use to which the truck was put and not the commodity hauled at a particular time. Such a construction, if upheld, would have for all practical purposes ended "trip leasing" of trucks of uncertificated carriers engaged in hauling exempt agricultural commodities. However, that construction was stricken down by the courts in the cases of Interstate Commerce Commission v. Service Trucking Company, 3 Cir., 1951, 186 F. 2d 400; Interstate Commerce Commission v. Service Trucking Company, D. C. E. D. Pa. 1950, 91 F. Supp. 533; and Interstate Commerce Commission v. Dunn, 5 Cir., 1948, 166 F. 2d 116. These cases will be referred to later in more detail. The Interstate Commerce Commission in the recent case of In re William Blaue, decided on March 25, 1953, followed the rule of the Dunn and Service Trucking Company cases in the construction of the so-called "newspaper" exemption of of the Act, Section 203 (b) (7).

The decisions in the Dunn and Service Trucking Company cases pretty well ended any hope that "trip leasing" could be regulated or stopped by construction of the pertinent statutory provisions of the agricultural exemption.

On January 10, 1952, S. 2357 was introduced in the 82d Congress, 2d session. That bill, as originally introduced, contained inter alia a provision denying the agricultural exemption to motor vehicles hauling any of the commodities referred to therein if such vehicles were used on the return trip or customarily for any other kind of transportation for compensation. That provision, if enacted, would have ended "trip leasing" so far as motor vehicles engaged in hauling exempt agricultural commodities were concerned. The Senate Committee conducting the hearings under S. Res. 50 held extensive hearings on S. 2357 but Congress did not énact it. On May 8, 1951, the Interstate Commerce Commission, acting under rule making authority claimed to have been granted it under the Act, proposed a number of rules relating to the use and exchange of equipment between motor carriers. Ex parte M. C.-43 Lease and Interchange of Vehicles by Motor Carriers, 52 M. C. C. 675. Those rules, among other provisions, provide that where authorized motor carriers enter into leases of motor vehicles which are to be driven by the owners of the leased vehicles or their employees, the lease period must be for a period of not less than thirty days. Suits challenging the legality of the rules were promptly instituted. In those suits the plaintiffs challenged the asserted authority of the Interstate Commerce Commission to promulgate the rules. They further challenged the validity of the rules on a number of