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INVESTIGATION AND SUSPENSION DOCKET NO. M-29372

PROHIBITIONS AND LIMITATIONS ON
SHIPMENTS OF ARTICLES

Decided October 20, 1977

Proposed rules prohibiting the acceptance of express property in excess of $500 actual value found unlawful. Suspended schedules ordered canceled and proceeding discontinued.

Drew L. Carraway and John S. Fessenden for respondents.
Myron Smith for interested shipper groups.

Peter M. Shannon, Jr., James R. Taylor, and Jack L. Gruenstein for Bureau of Investigations and Enforcement.

REPORT AND ORDER

COMMISSIONERS MURPHY, MACFARLAND, AND CLAPP

BY DIVISION 2:

The modified procedure was followed. Due and timely execution of our functions under section 20(11)' of the Interstate Commerce Act imperatively and unavoidably requires the omission of a recommended decision in this proceeding. Requested findings not specifically discussed in this report nor reflected in our findings or conclusions have been considered and found not justified.

By schedules filed to become effective February 15, 1977, the National Bus Traffic Association, Inc., Agent (NBTA) published on behalf of its member carriers (respondents) changes in rules in its tariff A-600, ME-I.C.C. No. 396, with respect to the acceptance of property for transportation in bus express service. Upon the Commission's own motion, the operation of the proposed schedules was suspended to and including September 14, 1977. The suspension order also directed participation of the Bureau of Investigations and Enforcement (BIE) as a party. By supplement filed September 8, 1977, respondents indefinitely postponed the effective date of the proposed schedules.

'Made applicable to common carriers by motor vehicle pursuant to section 219 of the act.

Under the proposed schedules, a rule prohibiting the acceptance of shipments exceeding $250 in declared or released value (rule 5) would be modified to prohibit the acceptance of shipments exceeding $500 in actual value; another rule conditioning the acceptance of jewelry, magazines, and watches to a maximum declared or released value of $50 per shipment (rule 15) would be modified to prohibit the acceptance of such articles for transportation. A third and related rule (rule 4) would be republished without modification; that rule, subject to the limitations set forth in rule 5, provides that shipments valued at $50 or 50 cents per pound will move under certain basic rates not here in issue, but when the declared or released value exceeds those valuation amounts, charges will be assessed at 25 cents for each $100 of declared excess value.

The new rules were offered by NBTA as its response to the division 2 order entered December 22, 1976, issued in docket No. 36490, Released Value Limitations on Express Service-National Bus Traffic Association, Inc., which ordered NBTA and its members to show cause why the present rule under which carriers refuse to transport single shipments in excess of $250 in declared or released value should not be found unlawful and ordered stricken.2

In support of the proposed rules NBTA indicates that package express is a specific type of freight service, that the transportation of package express by intercity bus is incidental to the transportation of passengers and their baggage for which the transportation equipment and facilities are primarily designed and utilized, that from the time motor carriers were placed under Federal regulation their express tariffs have limited the value, as well as the size and weight of shipments, that the Commission has historically accepted such tariffs without objection, that the proposed rules reflect a continuation and clarification of the carriers' long holding out to the public concerning express service incidental to passenger service, and that such rules neither are nor purport to be limitations of liability.

Testimony of officials of individual buslines stresses the importance of bus express service to both the public and the carriers themselves. Since the volume of passenger service has steadily declined in recent years these carriers must increasingly rely on express revenues in order to maintain the viability of regularly scheduled passenger service. Respondents say that their revenues

'By order entered May 10, 1977, action on the show cause order was held in abeyance until the present investigation is terminated.

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are minimal compared with loss and damage claims. Thus, they claim any added burden placed upon them by a forced discontinuance of the longstanding limitation of the type of shipments accepted for transportation would seriously jeopardize the continuance of both express service and essential passenger service. According to respondents, to require the carriers to accept express shipments of unlimited value would greatly increase the risk of theft or robbery, would impose unnecessary security burdens upon the carriers, would subject passengers to unwarranted hazards from the criminal element it would invite, and would constitute an intolerable interference by the incidental service (package express) with the carriers' performance of their primary service of transporting passengers. Thus, they argue, the very character of the service itself would change so that it could no longer be operated as an incidental service.

Respondents cite Meisinger Stages Common Carrier Application, 1 M.C.C. 471 (1937), Capital Motor Lines Common Carrier Application, 1 M.C.C. 462 (1937), Emporium v. New York Central R. Co., 214 I.C.C. 153 (1936), and Continental Southern Lines Ext.-Pup Semitrailers, 88 M.C.C. 547 (1961), in support of their basic argument that value as an essential limitation has been an implied part of all of the Commission's decisions recognizing the need for appropriate limitations to maintain express service in a subordinate role to passenger service.

The National Small Shipments Traffic Conference, Inc. (NASSTRAC) and the Drug and Toilet Preparation Traffic Conference (D&PTC), associations of shippers and receivers of small shipments, oppose the rules, taking the position that present released value provisions are null and void because the tariff at issue fails to refer to Released Rates Order MC-293 of January 14, 1949 (such order authorized the released rates provisions of the tariff in issue and by its terms requires that such provisions make reference to the authorizing order). They further contend that since actual value rates designate particular commodities-as opposed to released value rates which limit carrier liability-the proposed $500 actual value restriction constitutes an unlawful embargo of service and should be ordered canceled. Additionally, they assert that the

To illustrate, in 1976 the average revenue per shipment was $4.28 and the average claim paid was $80,88. Detailed data are set forth in a tabulation prepared by respondents. However, significance of the data are unexplained.

'The proposed increase in maximum to $500 actual value would, according to one carrier, increase its claim cost by 150 percent; an increase of the maximum beyond $500 could so increase its claim cost as to force discontinuance of express service.

present limitation of liability to $50 per shipment or 50 cents per pound is obsolete, that respondents may be able to justify a maximum level of liability, and that Released Rates Order MC-293 should be reopened and updated based upon current values and demonstrated needs.

BIE, while not disputing respondents' contention that the carriage of express shipments by bus is incidental to the primary service of transporting passengers, nevertheless disagrees that the value of a shipment is a crucial element in determining the extent of such incidental authority. BIE asserts that the cases cited by respondent have nothing to do with value, and that they should be interpreted to require that “incidental" be defined in terms of quantity, size, volume or or weight of the express property tendered for transportation in bus express service.

BIE also disputes respondents' contention that the prohibition against accepting shipments in excess of $500 actual value (proposed rule 5) is merely a "condition of acceptability." The Bureau argues that publication of such a rule is clearly an attempt to limit liability, that it does not permit shippers to choose between two different rates as contemplated by Released Rates Order MC293, and that it is therefore void under sections 20(11) and 219 of the act. BIE adds that the Commission's mere acceptance of tariffs for filing over a long period of time does not reflect on the legality of provisions contained in such tariffs. Finally, BIE argues that respondents' refusal to transport shipments worth more than $500 is a violation of their duty under section 216(b) to establish just and reasonable regulations and practices.

In reply, respondents assert that both the shipper groups and the Bureau misconstrue the nature and purpose of respondents' evidence. Respondents reassert their basic position that the rules in issue do not limit liability, but relate only to the longstanding public holding out of motor passenger carriers to transport freight in express service as an incident of their authority to transport passengers. They state that provisions dealing with liability for shipments accepted for transportation, and the application of rates pursuant to Released Rates Order No. MC-293 are set forth in rule 2 of section C of the tariff and constitute full compliance with the requirements of the order. They emphasize their position that section 216(b) has no application to motor carriers of passengers and that the obligations of such carriers with respect to the transportation of passengers is determined by the provisions of section 216(a) of the act.