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NATIONAL TRANSPORTATION POLICY

Vol. I No. 1

5. National transportation policy, in general-

Inherent advantages: The use of open-tariff TOFC services by carriers would not be in contravention of the national transportation policy which states "to provide for fair and impartial regulation of all modes of transportation subject to the provisions of the act, so administered as to recognize and preserve the inherent advantages of each***," when it was found that all TOFC service is inherently bimodal in that its basic characteristic is the combination of the inherent advantages of rail and motor transportation: the railroad's ability to provide efficient line-haul transportation of huge volumes of freight for great distance at high speed; and the motor carrier's ability to provide door-to-door, and if necessary job- or farm-site, pickup and delivery.--Substituted Service--Piggyback, 322 I.C.C. 301 (329)*.

Also TOFC service could even be said to be trimodal, because added to the two factors already mentioned is its ability to combine in a type of container service many small shipments--a type of service which has become associated with the business of the freight forwarder.--Id., p. 329

10. Coordinated service.

Substituted freight service: The Commission concluded in Substituted Freight Service, 232 ICC 683 that the service substituted for common carrier service is itself common carriage and cannot be performed by motor vehicle in the absence of appropriate motor common carrier authority; that the substitution of one form of transportation for another where the shipper otherwise directs would be a breach of the contract of carriage; and that the routes over which substituted service is performed and the parties performing it must be fully set forth in lawfully filed tariffs.-Substituted Service--Piggyback, 322 I.C.C. 301 (331)*.

One carrier may make use of the service which another carrier holds out to the public generally. So long as the first carrier is operating qua carrier and gives the public proper notice through its tariff, it can substitute another's service for its own in this way.--Substituted Service-Piggyback, 322 I.C.C. 301 (335)*.

When TOFC service is offered by a rail carrier to the public generally, there is nothing to preclude its use by rotor or water common or contract carriers, in lieu of their all-highway operations in the performance of authorized transportation between authorized service points, or by forhire carriers engaged in transportation which is exempt from economic regulation. To the extent that this finding differs from that express in any of the Commission's previous decisions, such decisions are overruled.-Substituted Service--Piggyback, 322 I.C.C. 301(336)*.

Trailer-on-flatcar service, generally: There can be no doubt of

the benefit which TOFC service has already rendered the railroads in allowi them to recapture traffic lost to competing modes of transportation and especially to private motor carriage. Also benefiting have been the motor carriers which have been provided with an opportunity, through the use of pl I TOFC service to obtain efficient line-haul transportation and thus to hel themselves even while their business helps their rail competitors; the frei forwarders, which have been afforded an economical means of transporting th small shipments which they consolidate; and most important the shippers and the general public which ultimately reap the benefit of the increased efficiency and economy that are invariably the result of the combination of competing forces so that each operates in the area where it functions best. Substituted Service--Piggyback, 322 I.C.C. 301 (322)*.

The record clearly supports the conclusion that it would be in the public interest to lay down, through formal rules, certain guidelines for TOFC service and practices. These rules would aid in furthering, not restricting, the growth of piggyback, as providing some standarization of industry practices and as a means of insuring that piggyback service is made available to all persons who are able to make effective use of it.-Id. p. 323.

PART I

§1(5). JUST AND REASONABLE CHARGES

402. Proportional rates.--Although the publication of joint intermodal TOFC rates for the movement of commodities the motor transportation of which is exempt from economic regulation is not possible the transportation of such commodities in piggyback service may still be accomplished by a motor carrier through the use of open-tariff rates when they are made available by the railroads. It would also be possible for a rail carrier, even though it may not participate in a joint through rate, to establish a proportional rate on traffic moving in part by a nonregulated motor carrier. Substituted Service--Piggyback, 322 I.C.C. 301(354)*.

$1(14) (a). ESTABLISHMENT BY COMMISSION OF RULES, ETC. AS TO CAR SERVICE

1. Establishment of reasonable car-service rules, regulations and practices.--In judicial review of commission actions, particularly actions taken under authority of the Esch Car Service Act, the court does not weigh evidence adduced before the commission, does not inquire into the wisdom of regulations promulgated, and inquires into soundness of the commission's reasoning only to ascertain that its conclusions have rational support. And in reviewing car service rules prescribed after notice of proposed rulemaking and hearing, the court must observe the differing standard governing review of the commission's exercise of its rulemaking authorit on one hand, and its adjudicatory function, on the other. As stated in 274 US 564, the commission's authority to legislate is limited to establishment of reasonable rules; but in establishing a rule of general application,

it is not essential that evidence of its appropriateness be adduced with respect to every railroad to which it will apply since, like other legislators, the commission may reason from the particular to the general.-United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742 (748-9)*.

Commission findings as to nationwide freight car shortage were based primarily on data submitted by the railroads which, together with a prior finding of inadequate freight car ownership by railroads as a group, depict a gradually worsening ratio of carrying capacity to revenue tons originated. And since evidence and data of record showed that car shortages occurred chronically and that an amazingly low percentage of cars was actually on owning road's lines at any given time, the commission promulgated as its own the two AAR car service rules in question, to require that freight cars after unloading be dispatched in direction of owning road's lines, with sanctions attached for noncompliance. Thus, based on the fact that railroads often were unable to supply shippers with cars and the statistics before it, the commission concluded that an important underlying cause of car shortages was that the railroads did not jointly own sufficient freight cars to adequately serve shippers on their lines, and it reasoned that long-term result of prescribed rules would bring that fact home to those roads who had an inadequate car supply to serve on-line shippers and, without doubt, furnish them incentive to augment their supply of freight cars.-Id., pp. 749-52.

Moreover, while immediate effect of enforcing compliance with the rules would be to disrupt some established car handling and routing practices, and on occasion cause serious inconvenience to both shippers and railroads, the commission's finding as to recurring long periods when there is an inadequate freight car supply to service shippers is supported by substantial evidence. Also, neither the language nor legislative history of the Esch Act indicates that Congress intended that the only crierion which the commission might consider in establishing "reasonable" car service rules was the optimum use of an existing fleet of freight cars, however numerically inadequate that fleet might be. Thus, while the present flexible system of routing cars may have short-term advantages for some shippers and roads, the commission could quite reasonably conclude that it has long-term drawbacks as well and, undoubtedly, it felt that rules designed only for most efficient use of existing car fleet would have little or no effect on the nationwide freight car shortage.--Id., pp. 752-4.

Record before the commission justified its decision that the railroads and shippers were afflicted with an economic illness that might have to get worse before it got better; and that present car service practices tended to destroy any incentive of railroads to acquire new cars, and resulting failure to acquire new equipment contributed to the overall nationwide freight car shortage which prevented the rail industry from adequately serving shippers. And under those circumstances, car service rules which would tend to restore incentive to roads to augment their car supply, even at the temporary expense of optimum use of existing car fleet, conform to the statutory requirement of reasonableness. The commission's conclusions, and the facts of record on which it relied, substantively

support its action under authority of the Esch Act in prescribing the car service rules; and the proceedings being an exercise of legislative rulemaking power rather than adjudicatory hearings, the procedure fully complied with Administrative Procedure Act. District court's judgment that commission order prescribing the rules does not meet statutory requirements of reasonableness, and is invalid, reversed.--Id., pp. 744, 754-8. §2. SPECIAL RATES AND REBATES PROHIBITED

Substantially Similar Circumstances and Conditions

105. In general--Whether two or more transportation services were performed "under substantially similar circumstances and conditions" would be a matter of fact to be determined in each individual case but there is no reason why the fact that the user of a service was another carrier rather than a private shipper would compel the conclusion that dissimilar circumstances and conditions were present. The Supreme Court, in 282 U.S. 740 (753), upheld a finding of the Commission that transportation by railroads of private passenger cars owned by other railroads at other than published tariff rates was unlawful, and refused to recognize any distinction between the transportation of cars owned by railroads and private shippers. The Court noted that all such cars are hauled between the same points, on the same line, in the same or like trains, and in the same manner. This is equally true of the transportation of loaded highway trailers in TOFC service.--Substituted Service --Piggyback, 322 I.C.C. 301 (335)*.

§5(2). UNIFICATIONS, MERGERS, AND ACQUISITIONS OF CONTROL

3. Public interest.--See also Norfolk & W. Ry. Co. and New York, C. & St. L. R. Co. Merger case, n. 7 below.

5. Jurisdiction of the commission.--See also Norfolk & W. Ry. Co. and New York, C. & St. L. R. Co. Merger case, n. 52, below.

7. Competition.--The mere possibility of adverse effect on competition in the New York metropolitan area, important as that area is, would not outweigh the positive advantages proceeding from Norfolk & Western unification in the large heavily industrialized and densely populated 13-state area which would reap the concrete benefits of the new system. Moreover, substantial improvements in service resulting from enlarged surviving carrier's system should attract new industry to the territory involved which, in turn, will benefit railway labor through raising and stablizing employment levels. Furthermore, surviving carrier shall actively solicit routing via Buffalo, N. Y. gateway on lines other than Pennsylvania lines so long as Pennsylvania holds stock interest in Norfolk & Western and Wabash.--Norfolk & W. Ry. Co. and New York, C. & St. L. R. Co. Merger, 324 I.C.C. 1 (15-16, 29).

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