No. MC-7213 (SUB-No. 2) LESTER C. NEWTON EXTENSION OF OPERATIONS FROZEN FOODS Submitted September 16, 1941. Decided October 20, 1944 Public convenience and necessity found to require operation by applicant, in interstate or foreign commerce, as a common carrier by motor vehicle, (1) of fresh frozen fruits and vegetables, and fresh frozen sea foods, (a) from Exmore, Va., and Bridgeville and Dover, Del., to specified points or areas in Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, and the District of Columbia, (b) between Vineland, N. J., and Exmore, Va., Bridgeville, and Dover, Del.; and (2) of fresh frozen fruits and vegetables from Brockport, N. Y., to Exmore, Va., and Bridgeville, Del., over irregular routes. Issuance of a certificate approved upon compliance by applicant with certain conditions, and application in all other respects denied. Everett B. Lackic for applicant. W. T. Gardner, E. A. Harding, J. W. Cram, C. W. Daneker, W. Edgar Porter, and E. P. Miles for protestants. REPORT OF THE COMMISSION DIVISION 5, COMMISSIONERS LEE, ROGERS, AND PATTERSON BY DIVISION 5: Exceptions were filed by applicant to the order recommended by the examiner. Our conclusions differ from those recommended. By application filed August 3, 1940, Lester C. Newton, of Bridgeville, Del., seeks a certificate of public convenience and necessity authorizing operation, in interstate or foreign commerce, as a common carrier by motor vehicle, of frozen agricultural commodities, and frozen sea foods, between points in Accomac and Northampton Counties, Va., the Eastern Shore of Maryland, Delaware, (all commonly called the Del-Mar-Va peninsula), Pennsylvania, New York, and New Jersey, on the one hand, and, on the other, points in Virginia, Maryland, Delaware, New York, New Jersey, Pennsylvania, Massachusetts, Rhode Island, Connecticut, North Carolina, South Carolina, Georgia, Florida, and the District of Columbia, over irregular routes. Rail carriers in trunk-line and New England terri 43 M. C. C. tories, and various motor carriers and organizations thereof,1 oppose the application. Applicant is engaged in both trucking and farming. In No. MC7213, he was granted a certificate under the "grandfather" clause of section 206 (a) of the Interstate Commerce Act authorizing him to operate as a common carrier by motor vehicle, between certain points in the territory here involved, in the transportation of numerous special commodities, including insofar as pertinent here, agricultural commodities. He is fit, willing, and able, financially and otherwise, to conduct the proposed operation. It should be carefully noted that this application is for authority to transport, among other things, fresh frozen foods, as distinguished from foods merely under normal refrigeration. This distinction is important because all motor carriers under regulation have the right to protect their perishable commodities by use of ice. Applicant, although possessing authority to transport agricultural commodities between certain points within the territory here involved, and also the equipment to move them in a frozen state, questions whether he has authority to transport fresh frozen foods as a common carrier. One issue therefore presented is whether applicant's proposed service in the transportation of fresh frozen agricultural commodities and seafoods comes within the certificate or permit requirements of the Interstate Commerce Act. Section 203 (b) (6) of part II of the act provides in substance 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 motor vehicles used exclusively in carrying fish (including shell fish), and agricultural commodities (not including manufactured products thereof). Fresh frozen fruits and vegetables, as described in this record, are of relatively recent appearance on the market. The fresh agricultural commodities from which they are prepared are brought directly from the farm, or producer, in their natural unprocessed state, to the nearest freezing plant. They are frozen either in an ice manufacturing plant under contract or in the special plant of a company in this new industry. Here the raw produce is variously sorted, graded, washed, sliced, compressed, frozen, packed, and packaged in paraffin cartons, depending on the particular fruit or vegetable and the particular refinements of the processing company. This process retains 1 Victor Lynn Lines, Inc., Horlacher Delivery Service, Inc., Henry H. Hulliger, E. P. Miles, doing business as Flying Cloud Express, Joint Northeastern Motor Carrier Association Highway Transport Association, and Interstate Common Carrier Council. to a great degree the original fresh flavor of the article, and retains the greatest amount of vitamins. Intense cold is used in freezing, and thereafter the frozen product must be continuously kept in subfreezing temperature until ready for actual consumption. In transportation, ordinary refrigeration will not suffice, a constant temperature of 15 degrees Fahrenheit, or below, usually with dry ice (solid carbon dioxide gas), being necessary. One consignee of the frozen products specifies by contract with the carrier a temperature of 5 degrees or under. Foods so processed are termed frozen or frosted, interchangeably. It is not practicable to refreeze any of this food which has been accidentally thawed or defrosted in transit. It is clear that agricultural commodities, frozen in the manner hereinabove described, are subjected to a process of manufacture, and that the finished products are as distinct from agricultural commodities as are canned fruits and vegetables, from which both are manufactured. Fresh frozen goods are also distinguishable from foods merely under refrigeration, such as peaches, watermelons, et cetera, in that they are never prepared by the producer of the agricultural commodities from which made, are packaged, and preserved goods sold under trade brands, and can be placed in cold storage for long periods of time. We conclude that fresh frozen fruits and vegetables are "manufactured products" as that term is used in section 203 (b) (6) of the act, and that the transportation of such commodities is subject to the certificate or permit requirements of part II of the act. As to frozen sea foods, the record is lacking in material facts upon which to base a finding as to whether they are within the term "fish (including shell fish)" as used in the exemption provision of section 203 (b) (6). In any event, since applicant proposes to transport them in the same vehicles that it would use in transporting fresh. frozen fruits and vegetables, the exemption provided for fish (including shell fish) would not apply thereto, and, hence, the vehicles used in their transportation also would be subject to the certificate or permit requirements of the act. The frozen-food industry, although relatively in its infancy, shows signs of expansion, especially in those areas which produce large quantities of fresh fruits, vegetables, and sea foods. There is now an acute shortage of suitable cold-storage space owing to requisition of such space by the United States Government, as a consequence of which shippers frequently are obliged to ship their products from one plant to another. Applicant has three tractors and three semitrailers. Two of the trailers were acquired in 1940 for the purpose of transporting his farm produce, but were thereafter leased to a shipper of frozen foods. Prior to April 1941, applicant had numerous requests from shippers to institute the proposed service. Representatives of John H. Dulaney & Son, of Fruitland, Md., and H. P. Cannon & Son, Inc., of Bridgeville, Del., packers of frozen foods, supported the application. Dulaney is said to handle about five-sixths of the frozen-food business on the Del-Mar-Va peninsula. During 1904, it shipped about 5 million pounds by rail and motor, the bulk of which moved by rail. Its products have been transported from points on the Del-Mar-Va peninsula to Atlanta, Ga., Asheville, Rocky Mount, and Charlotte, N. C., Charlottesville and Norfolk, Va., Salisbury and Frederick, Md., Pittsburgh, Doylestown, and Hanover, Pa., Vineland, Plainfield, and Newark, N. J., Brooklyn, Buffalo, Albany, Rochester, Elmira, Syracuse, and Canajoharie, N. Y., Hartford, Conn., and some other points in Connecticut, and Boston and Cambridge, Mass. It also buys certain frozen vegetables at Brockport, N. Y., which move to Exmore and Bridgeville from which points they are reshipped. About 90 percent of this shipper's products move from Exmore, Va., Bridgeville, and Dover, Del., are sold on delivery to cold-storage plants throughout the territory involved nearest its customer's place of business, and remain in storage until called for by the customer. Some also moves between plants at Exmore, Bridgeville, and Dover, and also Vineland, N. J. About 10 percent of this shipper's products are moved to local markets for immediate consumption. Almost any place in the territory involved is a potential cold-storage point for buyers of frozen foods. In addition to Dulaney, there are about 10 or 12 frozen-food processors and 4 or 5 other shippers on the Del-Mar-Va peninsula. In March 1941, Dulaney purchased three insulated trucks which it uses to transport its products from Exmore, Bridgeville, and Dover to points in the territory involved, and to other points, such as Chicago, Ill., and Columbus, Ohio. It also has been leasing two insulated units from applicant to take care of its overflow traffic. In addition, it has been regularly using the service of Horlacher Delivery Service, on less-than-truckload quantities throughout the Del-Mar-Va peninsula, and to Baltimore, Md., Richmond, Va., Washington, D. C., New York, N. Y., Jersey City and Camden, N. J., and Harrisburg and Philadelphia, Pa. Although Horlacher serves Dulaney's plant at Exmore daily with dry ice, and has solicited its truckload traffic, Dulaney has refused to give Horlacher this business, partly because of Horlacher's rates, and further because Horlacher does not serve all points within its trade territory. It desires to continue the use of its own trucks when economical to do so, and to lease other trucks, if and when per Hereinafter called Dulaney. missible. Dulaney does not intend to use common-carrier service if the charges therefor are higher than the cost of transporting its products in its own or leased equipment. On small shipments, Dulaney has used a small container service offered by Victor Lynn Lines, in conjunction with rail service. This service, so far as it goes, has proven satisfactory. Rail service is available throughout the territory here involved, but it has not met with satisfaction by this shipper because of advance notice required by the carrier and the time consumed in properly preparing their refrigerated equipment for service. The other shipper who supported the application has been shipping its entire output of frozen foods from Bridgeville to Camden since 1939. It has used only trucks leased from one individual, who at the date of the hearing had transferred his activities to Florida. This shipper has not been solicited by common carriers. Its representative professed lack of knowledge of the existing services of other carriers. In No. MC-60580 (Sub-No. 1), Horlacher was granted a certificate authorizing it to transport, among other things not pertinent here, general commodities, except those requiring tank truck or special equipment, over regular routes, between (a) Baltimore, Md., and Cape Charles, Va., (b) between Dover, Del., and Salisbury, Md., and (c) between New York, N. Y., and State Road, Del., and various intermediate and off-route points. Pursuant to its "grandfather" application, now pending, this carrier is engaged also in the transportation of a wide variety of commodities between certain points on the eastern seaboard extending from New York City to the southern part of Virginia. At the time of the hearing, it owned and had in operation six completely refrigerated units which it used in transporting shipments of frozen commodities, principally in truckload lots. During June or July 1940, which is the normal shipping season, it had stationed at Salisbury, Md., two refrigerated units for the purpose of handling frozen foods from points on the Del-Mar-Va peninsula. During such time, it had no calls for such service. Thereafter, these units were put into service between other points. This carrier can furnish suitable equipment to shippers on the Del-Mar-Va peninsula upon 5 or 6 hours' notice. The examiner recommended denial of the instant application. Applicant's exceptions urge that the evidence adequately shows a need for the proposed service between all points in the territory involved, particularly between points not served by existing motor carriers. He contends, among other things, that the examiner failed to give due weight to the testimony of a shipper witness to the effect that the shipper was obliged to purchase the type of refrigerated equipment |