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GATEWAY ELIMINATION

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The Society of the Plastics Industry, Inc.-The Society is comprised of over 1,000 member firms that supply raw materials, and manufacture or process plastics or plastic products, as well as members in other plastic-related fields. It supports the elimination of gateway requirements and believes that such action would lower costs of service, reduce transit times, conserve gasoline and tires, and reduce air pollution and traffic congestion. It asserts that economic hardships which may befall carriers because of new competition are inconsequential when compared to the environmental, economic, and social benefits to be derived; and that a case-by-case approach is impossible because of the devastating number of proceedings which would result. The Society contends that the initial step in adopting an appropriate regulation is the issuance of a staff-prepared impact statement. As an alternative to the complete elimination of gateways, it favors a 2-year experimental suspension of gateways with the burden placed upon those who would seek the reinstitution of the requirement.

IV. Motor carrier groups:

Central Freight Association and 39 members.-They assert that petitioners are seeking to expand the competitive character of their existing operations through an asserted concern for the existing fuel shortage and various environmental considerations. They note that no “needed” improvement in motor carrier service is asserted by petitioners. Central, et al., state that they are equally concerned with the state of the environment, but do not believe that this concern should be utilized on a wholly irrational basis to disrupt the regulation of the motor carrier industry which is founded upon public considerations of great importance. They contend that carriers would be able to institute entirely new operations between points where none exists today if gateways are eliminated, and that this is contrary to the policy of this Commission as enunicated in Service Trucking Co., Inc., Ext.—Frozen Pies & Pastries, 88 M.C.C. 697 (1962). It is asserted that gateways should be eliminated in individual application proceedings so that this Commission has a full record before it regarding the possible effects on competing carriers. Central and its members believe that all of their traffic would be subject to diversion if all gateways were eliminated.

Regular Common Carrier Conference of American Trucking Associations, Inc. RCCC contends that the elimination of gateways would disrupt the pattern of motor carrier operations developed in response to the demonstrated needs of the shipping public and upset the competitive balance within the industry. It asserts that the proposal would lead to wasteful redundancy in transportation service and deprive established carriers of property rights without due process of law, that no need has been shown for granting the relief sought; that its benefits would accrue to a limited number of carriers at the expense of others; and that the proposal is no more than another deregulatory effort in the area of motor carrier entry control. It notes that removal of the gateway requirement would result in the introduction of numerous new competitive operations, unwarranted by any change in general transportation requirements. These new operations, it is asserted, would attract the lucrative volume traffic and leave the nonremunerative small shipments to the regular-route carriers. RCCC points out that while irregular-route carriers may tack separate grants of authority, they are not compelled by section 216(b) of the Interstate Commerce Act to provide adequate service when combining authorities, that destructive competition will depreciate the value of the investment of existing carriers and would be no less a deprivation of property rights than the outright seizure of carrier facilities and equipment, and that section 207 of the act declares that new authority will be granted 119 M.C.C.

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only upon a showing that the present or future public convenience and necessity require the proposed service and that only the Congress may change this standard. RCCC submits that petitioners have couched their pleadings in speculative terms without documentation; and that environmental values can be most carefully meshed with more traditional patterns of regulation in individual application proceedings. It opposes limiting the gateway removal to a specified group of carriers because it raises the question of discrimination among shippers and carriers. RCCC contends that potential diversion cannot possibly be documented, but is expected to be substantial.

V. Motor carriers:

Akers Motor Lines, Incorporated.-Akers transports general commodities over both irregular and regular routes. It tacks regular-route authority in Georgia and North Carolina with irregular-route authority at points within 25 miles of Gastonia to provide service between points in South Carolina, on the one hand, and, on the other, points in Georgia and North Carolina. It presents data demonstrating that it could save 125 miles on trips between Columbia, S.C., and Atlanta, Ga., by the elimination of its gateway restriction; 183 miles on trips between Augusta, Ga., and Columbia; and 200 miles on trips between Savannah, Ga., and Columbia. It submits comparable data for other points it presently serves via its North Carolina gateway, as well as information to demonstrate its active participation in the transportation of traffic between these points. For the period January through March 1973, a reduction of mileage on 426 trips by the elimination of gateways would have saved Akers 72,422 miles, 15,188 gallons of diesel fuel, and over $30,000. Akers has received no complaints regarding fuel emissions and noise pollution. It represents that favorable action here will increase carrier and transportation efficiency, decrease highway congestion and carrier costs, improve service to shippers, and lessen fuel consumption.

Alleghany Corporation, doing business as Jones Motor, and R. F. Post, Inc. Alleghany and Post are commonly controlled carriers operating over both regular and irregular routes. They observe gateways at Danbury, Conn., Boston, Mass., and points in Massachusetts within 30 miles of Boston, Roanoke, Va., points in a specified portion of Virginia, Wilmington, Del., Allentown, Ill., and points within 50 miles thereof, and Breezewood, Scranton, and Erie, Pa. For the first 3 months of 1973, they handled approximately 152,869 shipments through these gateways in 5,835 trips. They estimate a savings of 289,725 miles, 63,989 gallons of fuel, and almost $145,000 by the elimination of these gateways. Alleghany and Post received three complaints in 1973 regarding defective exhaust systems on equipment leased from owner-operators. They believe that motor carriers should be permitted to eliminate gateways where the mileage via the gateways does not exceed 130 percent of the direct mileage if the gateway were eliminated. They aver that the reduction of circuitous mileage would, in many instances, eliminate gateways in densely populated urban areas where air and noise pollution, susceptibility to theft or hi-jacking, and accident frequency are of increasing public concern. Alleghany has filed an application for the elimination of its gateways, and both carriers suggest that we examine the requirement that regularroute carriers return to the appurtenant regular route after serving an off-route point. Allied Van Lines, Inc.-Allied has nationwide nonradial irregular-route authority to transport household goods. It fears a substantial diversion of traffic by new competitors if the relief sought herein is granted, and states that this would diminish the value of the operations established by Allied's agents. Allied labels the petition herein a subterfuge to obtain indirectly authority which petitioners could not acquire 119 M.C.C.

Re S. 2589.

Hon. HENRY M. JACKSON,

STATE OF WASHINGTON,

OFFICE OF THE GOVERNOR,
Olympia, November 13, 1973.

Chairman, Senate Committee on Interior and Insular Affairs,

Senate Office Building,

Washington, D.C.

DEAR MR. CHAIRMAN: Thank you for the opportunity to discuss the abovecaptioned bill with you yesterday. As I mentioned, the States have a vital interest in the terms of this measure and the ways in which emergency procedures may be devised and implemented in the energy field.

Under the terms of the Regulations issued for Allocation of the Middle Distillates, every State has been asked to establish procedures for administering a hardship reserve. This has meant setting up machinery, recruiting personnel and making offices and special telephone lines available to carry out our responsibilities. At this point in time, it is impossible to estimate exactly how much will be required in each State to carry forth the responsibilities for Middle Distillates. I can only tell you that the costs are being borne out of emergency State funds and, in most cases, personnel and facilities dedicated to other purposes have been diverted to this task.

In addition to the burdens involved in the allocation program, most States have also become active in the quest to conserve energy. From Washington to Florida and from California to Connecticut, States have invested their funds and personnel resources to devise and implement programs of conservation. These have been innovative and effective. They have included prohibitions on outdoor lighting, lowering of speed limits, revisions of temperature settings in public buildings, encouragement of revisions of shopping hours in commercial establishments and provisions to make it easier for home owners to increase insulation and installation of storm doors and windows. Public awareness programs have been undertaken and research for new energy sources and wiser use of existing resources have been underwritten in whole, or in part, by dozens of States.

I have recited the foregoing record to illustrate the desirability of inclusion of provisions in the above-captioned bill for financial aid to the States so that they can play the most effective role in the effort to bring supply and demand into some rational balance. A spot check of the States indicates that in moderate sized States such as Maryland and Georgia, the total personnel complement committed directly to the allocation and conservation programs will total about 20 clericals and 10 professionals per year. This approximates $350,000 a year per State in direct salaries and at least 25 percent more in indirect costs for this complement a total of more than $400,000 a year. This outlay comes in a period when State legislatures have not met and before any new responsibilities are entrusted to the States under the terms of the above-captioned bill and S. 1540 and the regulations which the Administration will issue pursuant to them.

I am in the process of canvassing the States to determine more closely the personnel complement each of them anticipates under existing programs and can only guess at the ancillary costs of such programs as reducing speed limits and enforcing other conservation measures. This is all over and above the research efforts at State academic institutions and those coordinated by science advisors to the Governors and the State legislatures. I would note that the Western Governors have not only not shrunk from the responsibilties this crisis has thrown on their shoulders but they have sought a voice in the program for allocation of propane.

It is also safe to assume that the President will delegate additional responsibilities and duties to the States under the terms of Section 5(b) of S. 1570 as reflected in the Conference Report for that bill (House Report 93-628). The States do not seek to avoid such new responsibilities-they readily accept them because the States have a unique capacity to identify vital needs and priorities in their own jurisdictions and to make the decisions which will carry forward the purposes of an allocation and imaginative conservation program.

Although there is broad authorization given to the President to draw up Regulations we would like some assurance that States could have a set-aside of Middle Distillate fuels to use for emergency assistance. The existing procedures preclude States from purchasing fuels for resale or arranging for suppliers to hold back some fuels to respond to emergencies. Informal coopera

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Bair Transport, Inc.-Bair observes gateways at Philadelphia, Pa., Wilmington, Del., New York, N.Y., and Passaic County and Ft. Lee, N. J. For the 3 months ending March 31, 1973, Bair transported 3,680 shipments through its gateways. Elimination of the gateway restriction allegedly could have saved Bair 27,714 miles, $29,048, and 4,619 gallons of fuel. It has received complaints from the city of Wilmington for noise and by toll collectors at the Lincoln Tunnel and George Washington Bridge because of exhaust fumes.

Barrett Mobile Home Transport, Inc.-Barrett observes only one gateway at Birmingham, Ala. For the 3 months ending March 31, 1973, it transported 35 shipments through this gateway, and contends that it could have saved 6,107 miles, 200 hours driving time, $3,307, and 1,215 gallons of fuel during this period if this gateway were eliminated. It believes that elimination of gateways will result in less damage to mobile homes which are unable to withstand long-distance hauling, without adversely affecting the carriers or the shipping public.

Berger Transfer & Storage, Inc., Fernstrom Storage and Van Company, Anderson Trucking Service, Inc., and E. L. Murphy Trucking Co.-Berger opposes the petition for the asserted reason that the relief sought would substantially change the competitive situation relating to the transportation of new furniture. It contends that limiting its ability to tack will substantially curtail Berger's services. Berger can offer a coast-to-coast service via gateways in Minnesota and Nebraska which require about 200 to 250 additional miles. It notes, however, that it could offer service from New York to Florida via these same gateways but because of the large amount of circuity does not hold out such service to the public. If the petition is granted, Berger would be able to render service in 48 States. Berger states that it does not have the equipment or financial means to render such a service, and asserts that economics will prohibit inefficient and environmentally damaging operations which are unduly circuitous.

Fernstrom has 48-State nonradial household goods authority. It represents that responsive service to the public requires the placing of a small shipment or shipments on vans going in a general direction with deviation en route to drop off and pick up additional shipments; and that, as a consequence, the elimination of gateways alone will not eliminate excess miles or automatically result in fuel savings. It suggests that before circuitous carriers should be allowed to eliminate gateways to save fuel, they be directed to refrain from handling such traffic for a period of 1 year. After the year, a study could be made as to whether or not household goods shipments are being moved in a direct manner by all carriers. Anderson transports granite, marble, slate, and stone. It opposes the elimination of all gateways and the imposition of tacking restrictions in its existing authorities. Murphy is a motor common carrier of size-andweight commodities. About half of Murphy's revenues are derived from authorities which are tacked with very little circuity. It does not accept traffic between St. Louis, Mo., and Memphis, Tenn., because it requires observing a gateway in Minnesota. Murphy fears added competition on its existing traffic and regulatory chaos.

These carriers suggest permitting irregular-route carriers to eliminate gateways upon a showing that substantial traffic is being handled through the gateway, that the carrier is operating in good faith, and that a new service which would improve a carrier's competitive position will not result. They propose easing the requirement that a carrier must show that each commodity it is authorized to transport is being moved through a particular gateway; and that we should order carriers to refuse shipments requiring more than 10-percent circuity for a period of 1 year and then study the results of this experiment. They assert that if this Commission concludes

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that some immediate relief is required, then any blanket lifting of gateway restrictions should be temporary with the requirements that carriers file "grandfather"-type applications alleging specifically the traffic that has been handled through the gateway to be eliminated.

Bison Freightways, Inc.-Bison supports the petition. It observes a gateway at Hancock, N.Y. During the 3 months ending March 31, 1973, it transported 360 shipments through this gateway which, had it been eliminated, could have saved Bison 44,640 miles traveled, 7,200 gallons of fuel, and $10,740. It has been warned by local police about noise pollution approximately 50 times.

Blue Ridge Transfer Company, Inc.-Blue Ridge must travel an average of 193 extra miles a trip when originating traffic at specified points in North Carolina, observing a Martinsville, Va., gateway, and proceeding to points in South Carolina, Alabama, Florida, and Georgia. It transported 328 LTL shipments through this gateway during the 3-month period ending June 30, 1973. It estimates saving 3,474 miles every 3 months if its Martinsville gateway were eliminated, as well as 328 gallons of fuel and $1,044. It supports the involved petition because the potential savings in fuel alone would be of great public value.

Brada Miller Freight System, Inc.-Brada operates through gateways at Gary, Portage, and Kokomo, Ind., Detroit, Mich., and Toledo, Ohio. It transported 2,252 shipments through these gateways during the first 3 months of 1973, and estimates traveling 804,692 excess miles because of gateway observations in 1973. It believes it could save $62,368 and 178,192 gallons of fuel in 1973 if it did not have to observe its gateways. It received three complaints regarding fuel emissions from the Wayne County (Mich.) Pollution Control Board. Brada states that there are too many pitfalls in rejecting shipments for circuity reasons, such as the loss of existing profitable business and new carrier entries into the field supported by disgruntled customers. Brally-Willett Tank Lines, Inc., Central Transport, Inc., Lemmon Transport Company, Inc., Matlack, Inc., and P. B. Mutrie Motor Transportation, Inc.-These motor carriers transport bulk commodities and often tack their separate authorizations to provide service. They assert that the complete elimination of gateways would destroy the competitive picture in the area of bulk transportation. They note that elimination of gateways would result in (1) a reshuffling of freight rates, (2) free entry into competition, and (3) issuance of authority without proof of public convenience and necessity. They demonstrate how they would be affected by new competition by utilizing the authority of American Bulk Transport Co., to illustrate how that carrier would be able to institute services not competitively possible at this time. For example, American must travel 1,207 miles because of gateways to originate a shipment at Dallas, Tex., destined to Oklahoma City, Okla. (a direct distance of 214 miles). They assert that tacking is a privilege and that the elimination of gateways would be a granting of operating rights in violation of section 207 of the act; and that the existing method of securing the elimination of a gateway should be retained. These carriers reject petitioners' proposed alternatives. They argue that the elimination of gateways exceeding a certain specified percentage of circuity would be impossible to enforce and would engender the filing of many complaints by carriers. They oppose an experimental temporary elimination because they might lose customers to a new competitor and then be expected to step back in after the trial period is over and resume serving the customers as if nothing had ever occurred. They refute any suggestion which would place the burden of proof on a protestant to show that its ability to serve will be impaired when the burden of proof rightfully should be 119 M.C.C.

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