No. MC-107743 (SUB No. 23)

SYSTEM TRANSPORT, INC., EXTENSION-IRON AND STEEL

Application for a certificate of public convenience and necessity authorizing transportation of iron and steel articles and certain related articles denied.

Gordon L. Roberts and D. Frank Wilkins for applicant. Donald B. Levine, Thomas L. Hilt, Gene P. Johnson, Thomas J. Collins, and Allan C. Zuckerman for protestants.

DECISION AND ORDER

At a Session of the INTERSTATE COMMERCE COMMISSION, Review Board Number 2, Members Boyle, Parker, and Eaton, held at its office in Washington, D.C., on the 22d day of April 1975.

Upon consideration of the application, as amended, and the record in the above-entitled proceeding, including the initial decision of the Administrative Law Judge, (1) the exceptions filed by applicant; (2) the replies to applicant's exceptions in (1) above filed by protestants Ringsby Truck Line, Inc., Ringsby-Pacific Ltd., United-Buckingham Freight Lines, Inc., and Norwalk Trucking Lines, Inc., jointly, and protestants Hilt Truck Line and Sammons Trucking, separately; (3) the petition by applicant for reopening of the proceeding for the receipt of additional evidence; (4) the reply to applicant's petition in (3) above filed by protestant Sammons; (5) the motion to strike a portion of applicant's exceptions in (1) above, filed by protestant Sammons; (6) the reply to protestant Sammons' motion to strike in (5) above, filed by applicant; (7) the motion to strike portions of protestant Sammons' reply in (2) above, filed by applicant; and (8) the reply to applicant's motion in (7) above, filed by protestant Sammons; and

It appearing, That the Administrative Law Judge recommended that the application be denied;

It further appearing, That applicant petitions to reopen this proceeding for the receipt of additional evidence pertaining to applicant's ability to acquire new equipment and to make available suitable equipment for the proposed operations; that rule 101(b) of

the Commission's General Rules of Practice [49 CFR 1100.101(b)] requires that when a petition is filed seeking to introduce additional evidence, explanation must be given why such evidence was not previously adduced; that applicant has failed to make such explanation; that accordingly applicant's petition will be denied; and good cause appearing therefor:

It is ordered, That applicant's petition for reopening this proceeding for the receipt of additional evidence be, and it is hereby, denied.

It further appearing, That protestant Sammons moves to strike a certain portion of applicant's exceptions, referring to the initial decision of the Administrative Law Judge in No. MC-26396 (SubNo. 51), Popelka Trucking Co., Extension-Points in Fifteen States, which raises the question of Sammons' fitness and recommends that a separate investigation proceeding be instituted by the Commission to determine if Sammons' outstanding authority should be revoked as a consequence of abuse of the administrative process by Sammons and any of its officials or employees, and referring to the fitness proceeding concerning Sammons pending in No. MC-124692 (SubNo. 130); that Sammons argues that the objected-to material concerns proceedings to which applicant is not a party, that the issue of Sammons' fitness has not been finally determined, and that this material should be stricken as irrelevant; that the issue of Sammons' fitness and the possible revocation by the Commission of Sammons' operating authority in conflict with the operations proposed herein is relevant to this proceeding; that although we take notice of the above-entitled fitness proceeding concerning Sammons, inasmuch as that proceeding is still pending before the Commission it would be improper for us to make a predetermination of the issues involved therein; that accordingly Sammons will not be prejudiced by our consideration of the objected-to matter and its motion to strike will be overruled; and good cause appearing therefor:

It is further ordered, That the motion of protestant Sammons Trucking to strike a certain portion of applicant's exceptions be, and it is hereby, overruled.

It further appearing, That applicant moves to strike certain portions of Sammons' reply to applicant's exceptions, referring to Sammons' pending application for operating authority in No. MC124692 (Sub-No. 108), on the grounds that Sammons is attempting to introduce evidence of operating authority in conflict with this

application which was not contained in Sammons' protest to the application, was not produced by Sammons during the hearing, and is still pending before the Commission; that an examination of the evidence of record reveals that Sammons specifically referred to Sub-No. 108 in its protest and in the testimony of its witness at the hearing, that as Sammons' application in Sub-No. 108 is still pending it is not a relevant factor in the disposition of this proceeding on exceptions; that, therefore, applicant's motion to strike will be overruled; and good cause appearing therefor.

It is further ordered, That applicant's motion to strike certain portions of the reply to applicant's exceptions filed by Sammons Trucking be, and it is hereby, overruled.

And it further appearing, That the pleadings present no new or material matters of fact or law not adequately considered and properly disposed of by the Administrative Law Judge in his report, and are not of such nature as to require the issuance of a report discussing the evidence in the light of the pleadings;

Wherefore, and good cause appearing therefor:

We find, That the evidence considered in the light of the pleadings does not warrant a result different from that reached by the Administrative Law Judge, and that the statement of facts, the conclusions, and the findings of the Administrative Law Judge in his report, being proper and correct in all material respects, should be, and they are hereby, affirmed and adopted as our own;

And it is further ordered, That said application be, and it is hereby denied.

The statement of facts, conclusions, and findings of Administrative Law Judge Glennon, follows:

This is an application by System Transport, Inc., of Spokane, Wash., filed June 15, 1973, which, as amended, seeks a certificate of public convenience and necessity authorizing operation as a common carrier by motor vehicle, over irregular routes, of (1) iron and steel and iron and steel articles from Chicago Heights, Ill., and points in Michigan and Ohio to points in Idaho, Montana, Oregon, Washington, and California; and (2) iron and steel and iron and steel articles, when transported together with non124 M.C.C.

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ferrous articles, from Chicago, Ill., to points in Washington and California. Since its filing the application has been amended to reflect a restriction: against the transportation of commodities which, because of size or weight, require the use of special equipment; and against the transportation of pipe as described in Mercer Extension-Oilfield Commodities, 74 M.C.C. 459.

In its amended form the application is opposed by Ringsby Truck Lines, Inc., Ringsby-Pacific Ltd., United-Buckingham Freight Lines, Inc., Norwalk Truck Lines, Inc., Hilt Truck Line, Inc., Sammons Trucking, and Ace Doran Hauling and Rigging Co.

The application was heard on May 13, 14, and 15, 1974, in Chicago, Ill., before Administrative Law Judge Frederick G. Smithson, who has since retired and accordingly become unavailable to the agency. The matter has been referred to the undersigned for issuance of an initial decision upon the record.

Applicant is a common carrier engaged primarily in the transportation of lumber in the Pacific Northwest and the Midwest. More specifically it holds authority to transport (1) lumber and related products (a) from and to designated points and areas in Oregon, Washington, Idaho, and Montana; (b) between designated points and areas within the Pacific Northwest; and (c) from those States-with variations and exceptions not significant for purposes of this discussion-to Midwestern States, including Iowa, Wisconsin, Illinois, Missouri, Indiana; and (2) iron and steel tubing from a named plantsite at Green Bay, Wis., to points in a 12-State region extending from Nebraska to California to Washington. At the time of the hearing it also was awaiting issuance of a new certificate that had been granted to it by the ICC to transport lumber and related products from points in Washington, Idaho, and Oregon to points in Ohio and a portion of Michigan.

Its fleet of highway equipment consists of thirty-four 3-axle sleeper cabs and thirtyseven 40-foot flat-bed trailers. These units are leased by applicant from owneroperators under continuing contracts that are cancelable on 30-day notice. All of the trailers are equipped with removable or fold-down sides, with tarpaulin covers, and with chains and binders. This equipment is suitable for the transportation of lumber and iron and steel products.

System Transport's office and shop facilities are located in Spokane from which its operations are managed. It has several agents located in the territory it now serves, and a resident salesman in Portland, Oreg. It also has engaged a commission agent at Chicago, whose facilities include parking space, load transfer facilities, and sleeping quarters for drivers, and whose services include solicitation and dispatching. No real detail is presented as to the precise function of this agent in the conduct of applicant's operations.

Applicant considers itself a specialist in "providing an expedited service" using a single driver and truck from the origin to the destination. Using this method, a single driver can average 400 to 500 miles per day. When a customer so desires, it will provide a "sleeper cab" service with two drivers, which can achieve an average of 650 to 700 miles per day. It was not shown how frequently its shippers request or receive the sleeper cab service. Its drivers are required to follow specific instructions given by its customers on particular loads, such as helping in the unloading process or giving the consignee 24-hour advance notice of delivery.

System Transport describes its operation as an "on-call" or "beck and call" service, professing to be "available for pickup, delivery, or transportation, 24 hours a day, 7 days per week, year round." It makes pickups or deliveries at off-highway jobsites.

In addition to its owner-operator fleet of tractors and trailers, it owns two 30,000pound lift trucks and 80 "container flats." These "flats" are large metal pallets that are used for loading shipments of lumber on rail flatcars. Their precise dimensions are not stated, although applicant avers that they are "the equivalent of 40 additional tractors and semitrailers." They now are used only for lumber movements on the west coast and in Colorado. Applicant says these could be made available to the midwestern shippers of iron and steel, if they should so request, but it does not specify any plans or procedures for doing so.

Drivers are required to check with the Spokane office by telephone each day to advise of their progress and to receive any additional instructions. When the driver has delivered his load, he also calls Spokane for instructions on where to go for his next load.

The basic reason applicant gives for filing this application is to secure a backhaul for its eastbound lumber traffic. It avers that it "now provides a fairly complete service" on lumber from the Pacific Northwest to the Midwest and that, since lumber is a relatively low-rated commodity, it needs a compensatory backhaul. In the past, it has been trying to solve this backhaul problem by trip leasing: leasing its equipment to other motor carriers for a single trip back in the direction of the Pacific Northwest. During 1971, for example, it delivered 433 loads of lumber in the Middle West. In 212 of those instances it moved its equipment back out of the Midwest by trip leasing to other carriers. For the rest of the shipments, it transported exempt commodities. It does not find trip leasing a satisfactory solution. It nets much less revenue thereby than from operating under its own authority. Secondly, it wishes to avoid certain burdensome tax and licensing requirements in the various States that apply in trip-leasing situations. In addition, it loses some control of the equipment during the term of the trip lease with the result that the trip lessee may assign the "best" loads to its own equipment and the “worst loads" to the trip lessor, including assignments not directly back to the Pacific Northwest. System Transport's only operating authority westbound from the Midwest is from a named shipper's plantsite at Green Bay. There is no evidence of record to show the amount of service it performs for the named Green Bay shipper, if any. The plantsite, however, is used with some regularity by System Transport as a point for interlining other traffic from the Midwest to western destinations.

During 1972 and the first 6 or so weeks of 1973, System Transport held temporary authority from the ICC to transport iron and steel tubing from Chicago to several States involved in this application, and conducted operations thereunder. These operations made its business more profitable, and substantially reduced the frequency of trip leases. During this period applicant was forced to trip lease its vehicles back to the West with much lesser frequency-about 21 percent of the time as opposed to nearly 50 percent of the time in 1971-and its business was more profitable. System Transport presented a partial study of deadhead miles operated by its vehicles in moving from delivery locations to reloading locations. The study was developed with a sample of 99 of the 213 loads delivered by the applicant in the States of Illinois and Indiana during 1973. The study calculates the number of dead head miles that could have been avoided in seeking reloads, assuming applicant had authority to originate westbound traffic at Chicago. In 21 of the situations analyzed the study shows no potential deadhead savings, since applicant then did reload in Chicago under the temporary ICC authority it then held. In all other 78 instances, System Transport trip leased its vehicles to other carriers for a westbound backhaul.