No. MC-138279 CONALCO CONTRACT CARRIER, INC., CONTRACT Decided August 26, 1976 Operation by applicant as a contract carrier by motor vehicle, of specified commodities, between specified points, on the one hand, and, on the other, points in the United States (except Alaska and Hawaii) found to be consistent with the public interest and the national transportation policy. Issuance of a permit approved upon compliance by applicant with certain conditions and application in all other respects denied. Robert L. Baker, A. O. Buck, and David A. Sutherland for applicant. R. Edwin Brady, Elliott Bunce, A. Doyle Cloud, Jr., Gary L. Johnson, E. V. Kowalewitz, John V. Luckadoo, Ronald J. Mastej, Stan McCormick, Keith G. O'Brien, Roland Rice, Richard R. Sigmon, and Donald B. Sweeney, Jr., for protestants and interveners. REPORT OF THE COMMISSION Division 1, Commissioners Murphy, Gresham, and Christian MURPHY, Commissioner: By application filed August 3, 1972, as amended, Conalco Contract Carrier, Inc., of Jackson, Tenn., seeks a permit authorizing operations, in interstate or foreign commerce, as a contract carrier, by motor vehicle, over irregular routes, of (1) tile, clay and earthenware, glazed and unglazed with and without backing; tile facing and flooring; quarries, flooring, paving and promenade tile; china bathroom fixtures; adhesives and accessories used in the installation of all of the above-described commodities; and equipment, materials, and supplies used in the manufacture and distribution of all of the above-described commodities (except commodities in bulk); between the manufacturing and warehouse facilities of American Olean Tile Company located at or near Olean, N.Y.; Lansdale, Pa.; Quakertown, Pa.; Jackson, Tenn.; Lewisport, Ky.; Cloverport, Ky.; and Roseville, Calif., on the one hand, and, on the other, points and places in the United States (except Alaska and Hawaii), under a continuing contract or contracts with American Olean Tile Company; and (2) aluminum and aluminum articles, products composed there of and products manufactured and/or distributed by Consolidated Aluminum Corporation, and materials, equipment, and supplies used in the manufacture of the above commodities (except articles of unusual value, classes A and B explosives, household goods as defined by the Commission and commodities in bulk); between the manufacturing and warehouse facilities of Consolidated Aluminum Corporation located at or near Jackson, Mich.; Matteson, Ill.; North Adams, Mass.; Madison, Ill.; Shelbina, Mo.; Murphysboro, Ill.; Benton, Ky.; Carrollton, Ky.; Newbern, Tenn.; New Johnsonville, Tenn.; Columbia, Tenn.; Jackson, Tenn.; Iuka, Miss.; Florence, Ala.; Hendersonville, N.C.; Lake Charles, La.; Valley Park, Mo.; St. Louis, Mo.; and Covington, Ga., on the one hand, and, on the other, points and places in the United States (except Alaska and Hawaii), under a continuing contract or contracts with Consolidated Aluminum Corporation. The application was set for oral hearing. By initial decision entered December 30, 1974, the Administrative Law Judge recommended granting the application substantially as filed.' Exceptions were filed (1) by the Regular Common Carrier Conference of American Trucking Associations, Inc., intervener in opposition, (2) by protestant T.I.M.E.-DC, Inc., (3) by protestant Red Ball Motor Freight, Inc., (4) jointly by protestants Bowman Transportation, Inc., McLean Trucking Company, Inc., Thurston Motor Lines, Inc., and Bush Motor Freight, Inc., and (5) jointly by protestants Associated Truck Lines, Inc., Consolidated Freightways Corporation of Delaware, Interstate Motor Freight System, Key Line Freight, Inc., and Ryder Truck Lines, Inc. Applicant filed a reply to the exceptions. Exceptants generally contend that the decision permits conversion of private carrier operations to contract carrier operations contrary to precedent and sound transportation policy. They argue that applicant does not qualify as a contract carrier under either of the alternative criteria of section 203(a)(15) of the Interstate Commerce Act, although the Administrative Law Judge found that applicant met both criteria. Error is assigned to the 'No need was found to serve Consolidated Aluminum Corporation at Matteson, Ill., or St. Louis, Mo. findings that the supporting shippers submitted sufficient evidence to indicate where the involved traffic would actually be moving. The evidence, the initial decision of the Administrative Law Judge, and the pleadings have been considered. While we disagree in part with the discussion, conclusions, and ultimate findings of the Administrative Law Judge we find his statement of facts to be correct in all material aspects, and except to the extent discussed or modified herein, we adopt his findings and conclusions as our own. The pertinent facts will be restated here only to the extent necessary for clarity of discussion. FACTUAL BACKGROUND Applicant now holds no motor carrier operating authority. It is a wholly owned subsidiary of Consolidated Aluminum Corporation, one of the supporting shippers. It is intended that if authority is granted, applicant would perform the functions now being performed by Consolidated's private motor carrier fleet and would take over that fleet of equipment, which would include initially about 36 tractors and 58 trailers. Some of the trailers would be equipped with automatic conveyer equipment to facilitate loading and unloading. Applicant intends to provide certain other service features such as direct, single-line service, stationing of equipment, unlimited stops in transit, expedited service by the use of driver teams, scheduled pickup and delivery, displaying of advertising on equipment, driver familiarity with shippers' products and assistance in loading and unloading, operation 24 hours a day, 7 days a week, and coordination of the traffic of the two shippers to reduce deadhead mileage. Consolidated Aluminum Corporation produces aluminum and aluminum products at 16 plants, all of which are involved in the instant proceeding, and ships these products to points throughout the United States. It makes substantial use of its private fleet both for interplant and customer deliveries. Consolidated believes that it must substitute contract carrier operations for its private carriage, and its vehicles and personnel would be transferred to applicant upon a grant of this application. A denial of the application would compel shipper to continue utilizing private carriage. It would tender to applicant only that traffic now transported in its private vehicles. This presently amounts to about 19 percent of its traffic. Stated reasons for the need to obtain contract carrier service are projected expansion, increased customer demands, unsatisfactory performance of common carriers, and the economics of shipper's private fleet. Consolidated expresses a need for such service features as direct, single-line service to all its facilities and customers, dedicated equipment, unlimited multiple-delivery service, expedited service, service to meet seasonal production peaks and coordinated with production schedules and storage space, a rate structure which will allow it to eliminate its private carriage and still remain in a competitive position, drivers familiar with the products and able to assist in loading and unloading, spotting of equipment, special unloading equipment, and service flexible enough to meet its changing distribution patterns and customer and supplier locations. About 15 percent of the 4.5 million miles a year traveled by Consolidated's private vehicles are estimated to be deadhead miles. Consolidated believes that the proposed operation would reduce this percentage to about 8 percent and thus improve the efficiency of its transportation service. The improved efficiency would apparently result from coordination of its traffic with that of American Olean, the other supporting shipper, in particular because Consolidated does not have sufficient traffic moving out of the Northeast to balance its traffic moving to that area. American Olean Tile Company, Inc., manufactures and distributes ceramic tile and related products from facilities at seven named points to distributors, distribution centers, contractors' business locations and jobsites throughout the United States. It also ships materials between its plants. In 1972, Olean served over 2,800 customers located at numerous points in 44 States. It furnishes production figures for each of its facilities in 1972. Service features which it claims to require, and which it states it has not received consistently, include unlimited stops in transit for loading and unloading, c.o.d. service, and shorter transit times (resulting from single-line service). In addition, it expects applicant's proposed service to provide it with service on a 24-hour-a-day basis, a communications system which would enable it to monitor the movement of its shipments, timed deliveries, sufficient and suitable equipment, and a level of rates which would enable it to remain competitive in the industry. If the application is granted, Olean will continue to use other forms of transportation, such as common carriage, but a denial of the application would assertedly force it to resort to private carriage. Service at the Lansdale and Quakertown, Pa., facilities is needed only as a supplemental service and for an anticipated increase in traffic. Protestants are basically general-commodities carriers, operating over regular routes, generally operating under tariffs restricting the number of stops in transit for partial loading or unloading. They set forth evidence indicating their authority in conflict with that sought by applicant. DISCUSSION AND CONCLUSIONS Several points raised by exceptants warrant discussion. The Regular Common Carrier Conference and several protestants complain that the initial decision runs contrary to the ruling in Geraci Contract Carrier Application, 7 M.C.C. 369 (1938), in which the Commission, Division 5, determined that a private motor carrier could not simultaneously operate as a for-hire motor carrier. It is argued that Geraci and the line of cases following it amount to a policy of protecting regulated carriers from the incursion of private carriers seeking to obtain an unfair advantage. While this may be true, there is nothing in the Geraci line of cases compelling a denial of the instant application. As the Administrative Law Judge pointed out, applicant here is a separate corporate entity proposing to operate as a regulated carrier, and it has not been uncommon for the Commission to approve the issuance of contract carrier permits where the applicant is owned by one of its supporting shippers. The only condition is that the applicant actually be a separate entity, so that the carrier is in fact in the business of transportation rather than manufacturing and shipping. Exceptants emphasize that private carriers should not be aided at the expense of regulated carriers, and that section 209(b) of the act charges the Commission with the duty, promulgated in the national transportation policy, to "promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers," by which, they stress, is meant regulated, public carriers. However, applicant will not be a private carrier; upon a grant of the application it would become solely a regulated contract carrier in the business of serving its contracting shippers, in the manner of any other contract carrier. We have here, insofar as the Consolidated portion of the application is concerned, simply an attempted conversion of private carriage into contract carriage. What is actually being argued on exceptions is that the Commission should deny such conversions on policy grounds where the private carrier operations have been extensive and where part of the |