Trailer Train board is guided by the statement of basic rate policy in both the car contract and the proposed pooling agreement which indicates that rates for pool car use are to be maintained at the lowest level possible while allowing Trailer Train to meet all necessary expenses and to establish a financial position providing for the financing of car acquisitions on the best possible terms and the maintenance of the flatcar fleet in proper condition for efficient operation. This policy includes a provision for an adjustment refund to be determined by the Trailer Train board at the beginning of each year to apply to the previous fiscal year and to be expressed as a percentage of the amount by which all car-hire compensation paid to Trailer Train during that past year exceeds expenses plus net earnings to be retained for that year. (The reply statement of the railroad applicants indicates that the authoritative adjustment refund language is that contained in the Trailer Train pooling agreement and is not that of the older car contract, whereby adjustment refunds are to be determined at the beginning of each year for that year.) Such refund shall be paid to all participating railroads as an adjustment of the total charges owned to Trailer Train and shall be apportioned among the participating railroads on the basis of proportionate car utilization as expressed by the ratio of the total amount paid to Trailer Train for car-hire compensation by the individual participating railroad to the total car-hire compensation received by Trailer Train in the year under consideration.

Should a participating railroad certify to Trailer Train that a pool car is at a particular point on its line and is not in transportation service for the applicable period of time specified in the car contract (neither under load nor in movement empty or loaded), the participating railroad will be relieved from per diem charges after expiration of the notice period. If a car is so certified for 5 consecutive days, the participating railroad may request from Trailer Train directions for disposition of said car, and, if a car is so certified for 15 days, Trailer Train may, on its own initiative, direct its disposition; the participating railroad must comply with such a directive.

Each participating railroad is fully responsible (including charges and all other duties) for all Trailer Train cars as if they were on its own lines from the time of acceptance of those cars from Trailer Train or another participating railroad until they are redelivered to either Trailer Train or a participating railroad, except in those particular circumstances which the car contract specifies. If a participating railroad fails to meet any of its obligations under the

car contract or becomes bankrupt, Trailer Train has the right, on 30 days' written notice, to take possession of all Trailer Train cars on its lines and to terminate the car contract.

In turn, Trailer Train is obligated to maintain all pool cars, and the participating railroads cannot make more than ordinary running repairs without Trailer Train's consent and are entitled to reclaim for per diem on cars. unfit for service. Responsbility for loss, damage, or destruction of pool cars is to be divided between Trailer Train and the participating railroads according to the Association of American Railroads' applicable Code of Rules, and Trailer Train cannot be held liable for trailers, containers, or other shipments loaded on pool cars unless any loss or damage is attributable to negligent repair or maintenance of the car or its parts. Trailer Train will ultimately bear all taxes. Trailer Train will also provide full technical advice and assistance to participating railroads in terms of flatcar operations. Trailer Train retains the first option to purchase at current book value, stock held by the participating railroads, and any such railroad must offer stock to Trailer Train upon termination of the car contract.

The Form A car contract has a term of 15 years and may thereafter be terminated by either party upon 12 months' notice. Such a contract may also be terminated within its first 3 years upon 12 months' notice by either party, at which time Trailer Train may require the terminating participating railroad to purchase those pool cars used principally on that railroad's lines during the previous 6-month period or the participating railroad whose car contract was terminated by Trailer Train may purchase those cars if it chooses. Prior to termination all disputes arising under a car contract shall be subject to arbitration.

The Form BX car contract, which will govern utilization of cars in the Railbox pool, is derived from the existing Trailer Train contract and is similar to it in form and policy. Only substantive differences in the car contracts will be noted herein, and unless specifically noted as deleted, all Form A provisions may be considered to be included, in substance, in the Form BX contract. This car contract specifies certain conditions for use of pool cars including the requirement that pool boxcars are to be "freerunning" and cannot be assigned by a participating railroad to a particular shipper. The participating railroads are to perform all movement and switching of cars between connections, to or from Trailer Train home points or storage, or under disposition instructions or movement directives from Railbox expeditiously and without charge to Railbox, but Railbox will reimburse the

participating railroads for movement of new pool cars from the manufacturer to the lines where they are to be put in service, and the participating railroads will be entitled to a reclaim on charges levied on movements of empty cars to or from repair under Railbox directive which that railroad does not appropriate for its own use. Railbox may issue car disposition instructions governing the movement of new cars from the manufacturer, cars from repair, or surplus cars, but any participating railroad moving such cars may appropriate those cars for its own use, though cars moving to repair must be moved expeditiously and lack of compliance may result in a financial penalty. A participating railroad must accept empty cars, whether or not under Railbox directive, unless it has given advance notice to Railbox that it is unwilling to accept empty cars from connections. A participating railroad may deliver any pool cars which are surplus to its operations to any connecting participating railroad, unless the connecting railroad has given such notice of its unwillingness to accept empty cars.

If a participating railroad is unable to find a connecting participating railroad willing to receive its surplus cars, has received no disposition instructions for such cars, and has given Railbox at least 5 days' notice of their surplus status, no further car-hire charges will be levied on those cars. When such cars have been designated as surplus for 5 days, Railbox may issue disposition instructions, and the participating railroad must, at its own expense, deliver such cars to the specified connections or to storage. Should the participating railroad develop a need for the surplus cars after issue of a disposition instruction directing them to another participating railroad, the initial participating railroad cannot appropriate the surplus directed cars to its own use. If Railbox does not provide disposition instructions for surplus cars, they are subject to storage under the following storage responsibility formula: (1) a participating railroad may be required to store at maximum the percentage of total surplus cars which is equal to that participating railroad's percentage utilization of the total of cars owned and leased by Railbox, and (2) a participating railroad shall pay to Railbox $5 per day for each car, within the above-established quota, which it refuses to store, and Railbox shall pay that amount to the participating railroad which stores such refused cars in excess of its quota.

The Form BX car contract does not reiterate either the Railbox basic rate policy or the adjustment refund provision which are established in the Railbox pooling agreement discussed below and

which are identical to those of Trailer Train. The Railbox car contract does provide that both per diem and mileage charges will be levied on all cars on the lines of participating railroads, that each participating railroad is fully responsible for a pool car from the time it is received from a participating railroad or from Railbox until it is delivered to either Railbox or another participating railroad, as if the car were on its own lines, and that the originating participating railroad is responsible for any deficiencies in payments when a pool car in road haul is on the lines of a nonparticipating railroad. As with Trailer Train provisions, all Railbox rates and charges are subject to change by the board of directors with 60 days' written notice to the participating railroads, but should Railbox be in default on rent, principal, or interest in relation to its equipment obligations, the president or any vice president of Railbox may change rates or charges upon 10 days' notice from the first day of any month.

The Form BX car contract fully incorporates Trailer Train's newly developed "100% Billing System," which, along with a computer auditing system for car-hire reports, is intended to alleviate previous problems with car-hire collection. Under this system Railbox will bill each participating railroad at the end of each month for estimated charges established by car movement records submitted by the participating railroads and by the average of the mileage charges from the actual reports filed for the previous 4 months; such bill will be withheld subject to conference should the amount vary more than 20 percent from the actual bills in the 4 prior months. These car-hire bills are payable by sight draft 1 month and 10 days from the close of the service month, and should the draft not be honored, interest will be charged from that time until payment. Each participating railroad shall be required to forward per diem reports to Railbox within 1 month and 10 days from the end of each service month, accompanied by a sight draft for any amount over the actual bill for that month which said report indicates is owned. Within 5 months from the end of each service month, Railbox shall submit to each participating railroad its actual claim for car-hire compensation for that month based upon full reports and prior payments. Six more months are then allowed for verification and adjustment of claims by each participating railroad, at which point Railbox will make a preliminary settlement and refund, if necessary, including interest. Any claims still unsettled at that time may be allowed to run for 5 more months, at which point Railbox may submit a sight draft in the amount of the claim and the matter' may become an issue for arbitration.

The Railbox car contracts are binding upon the parties for 15 years and may only be terminated thereafter upon 12 months' written notice by either party. Amendments to most sections of the contract (except those on rates and termination) may be approved with the written consent of Railbox, for which the affirmative vote of two-thirds of its board of directors is required, and the written consent of those participating railroads whose aggregate car utilization (measured by car-days on line) is equal to one-half of the entire utilization of pool boxcars during the prior calendar year.

All administrative and other services which Railbox is obligated to or agrees to perform will actually be performed by Trailer Train under an Administrative and Technical Services Agreement (exhibit A to the application in Finance Docket No. 27589). Under this agreement operation and direction of the boxcar pool will benefit from the accumulated experience and expertise of Trailer Train, costly duplications in administrative effort and personnel will be avoided, and coordination in policy between Trailer Train and Railbox will be made possible.

The subject agreements.-The Railbox and Trailer Train pooling agreements are essentially identical and are basically complementary to the previously described car contracts. As such agreements are generally typical of agreements providing for the pooling of car service and the division of earnings derived therefrom, only the principal provisions will be noted herein.

All participating railroads (including railroads not now signatories which may later become participants if they so choose by fulfilling specified requirements) shall seek standardized cars of improved utility, economy, and service (1) by pooling experience, information (including data on present and future car needs), and research and development, (2) by participating in joint car purchasing programs, (3) by jointly obtaining favorable financing for equipment purchases (including individual guarantees of equipment obligations), (4) by providing for pooled management, control, and accounting for cars, and (5) by pooling the cost of ownership, operations, and maintenance of cars. No participating railroads shall be prevented from satisfying its car needs outside of the pool.

The basic rate policy of Railbox and Trailer Train requires that all user charges be established by their respective boards of directors to divide all costs equally among the participating railroads, with regard for return on investment, and yet to maintain such charges at the lowest level possible while meeting ordinary and necessary costs and expenses and maintaining for Trailer Train and