quantities of the inbound shipments from country elevators to the mill at Quincy. The unregulated motor carrier rates are substantially lower than the local rail rates. For example, from Edina to Quincy, the local motor and rail rates are 12.5 and 22 cents, respectively. QSC stresses the competitive nature of the soybean processing industry. There is a very narrow margin of profit, and thus a few cents per bushel makes the difference between a profit and a loss on each shipment. Recently, QSC doubled its soybean-processing productive capacity at Quincy.

2

QSC has competitors at several midwestern origins, typical of which is Cargill, Inc. (Cargill), whose principal mill at Des Moines, Iowa, is served by BN and also by the Norfolk and Western Railway Co. (N&W). Cargill receives soybeans from many points in Iowa, including Humeston and Leon, mills them at Des Moines, and transports the meal to destinations in Missouri. QSC objects to the proposed cancellation of transit at Quincy, because the resulting combinations of local rates over Quincy are substantially higher, distance considered, than the present through rates enjoyed by Cargill to the same destinations, as indicated in the following table:

QSC contends that the proposed cancellation of transit privileges at Quincy unduly prejudices that point and the protestant, and unduly prefers its competitors at other points, in violation of section 3(1) of the act, citing Grain from Oklahoma to Memphis, Tenn., 246 I.C.C. 207.

Protestant also refers to the Commission's decision in Great Northern Pac.-Merger-Great Northern, 331 I.C.C. 228, the Merger case, and certain conditions prescribed therein. Condition 5 in the Merger case, set forth at page 352, is as follows:

"The protestant also has a competitor located at Decatur, Ill., but this point is not served by BN.

5. NuCo [now BN] shall do nothing to restrain or curtail the right of industries served by it or the merged and leased lines to route traffic over any or all available routes and gateways.

Protestant argues that this and conditions Nos. 1 and 3 are violated by the present proposal.

BN justifies the proposed transit cancellation because the present through rates via Quincy are allegedly noncompensatory. Prior to the instant proceeding, in early 1974 BN proposed to QSC an increase in the line-haul rates. In a reply letter dated April 11, 1974, QSC objected to the rate increase and called BN's attention to the fact that an average inbound shipment of this traffic weighed 130,000 pounds per boxcar. On this basis, the letter states that the car-mile earnings on a shipment from Kahoka, Mo., to Quincy are 313 cents, and the ton-mile earnings are 48 mills. In view of QSC's opposition, BN abandoned the proposed rate increase and, instead, proposed the cancellation of transit privileges here under consideration.

BN and protestant submitted cost studies which we need not consider in view of our ultimate decision.

DISCUSSION AND CONCLUSIONS

The evidence shows that transit has been permitted at Quincy for over 25 years and that is the normal basis on which soybean processing mills operate throughout the country. Protestant states that it is not unalterably opposed to a higher rate level on soybean meal but that it cannot bear or tolerate, in a business where we are moving a fungible bulk product at a narrow profit margin, *** the selection of our company for cancellation of transit under circumstances where our competition are allowed to retain their transit rights and privileges." Protestant also indicates that, if the proposal takes effect, the present rail movement to transit destinations would cease, because inbound and outbound truck charges would be much less than inbound and outbound local rail rates. BN made no serious effort to show that protestant's soybean meal would continue to move by rail to the present transit destinations on connecting lines if the proposal became effective.

We agree with protestant's contention that transit on joint rates, which has been in effect for years, has become part of the fabric of the basic rate structure on the traffic here considered. In view of the magnitude of the increases resulting from the proposal, we find that the proposal would result in a commercial closing of the routes over

which the present joint rates with transit apply. We further find that such closing of routes would violate condition 5 of the Merger case, supra, in that BN would in fact be curtailing or restraining the right of protestant to route traffic over any or all available routes. In a proceeding involving a condition substantially the same as imposed in the Merger case, the Commission said: "The language is plain; it means that the L. & N. is foreclosed from doing anything which will have the effect of closing, commercially or otherwise, any of the routes which existed at the time of the merger, without our authorization." Enforcement of Conditions in Merger Proceeding, 313 I.C.C. 191, 194. See also I. & S. docket No. 9042, Blackstrap Molasses, Points in Florida to Southern Territory, decided by this board on February 3, 1976 (not printed).

BN's defense to protestant's reliance on condition 5 appears to be based on the assertions that transit is a matter local to the railroad on whose line the transit point is located and that participation in joint rates with carriers that grant transit privileges does not make connecting carriers participants in transit privileges. Accepting these assertions, arguendo, they have no application where, as here, withdrawal of the transit privilege at a point on BN's line prevents application of existing joint rates to points on the lines of connecting carriers and, in fact, results in a commercial closing of the routes over which such joint rates now apply.

Having found the proposal unlawful for the above reasons, it is unnecessary to discuss other alleged violations of the Interstate Commerce Act.

We find that the proposed schedules are unlawful.

We further find that this decision is not a major Federal action significantly affecting the quality of the human environment within. the meaning of the National Environmental Policy Act of 1969.

IT IS ORDERED, That BN be, and it is hereby, notified and required to cancel the schedules described in the order entered in this proceeding on July 31, 1975, by the Commission's Suspension and Fourth Section Board, on or before 35 days from the date of service of this report and order, upon not less than 1 day's notice to this Commission and to the general public by filing and posting in the manner prescribed by the Commission under section 6 of the Interstate Commerce Act, and that this proceeding be, and it is hereby, discontinued.

355 I.C.C.

SECTION 5a APPLICATION NO. 87

(A MENDMENT No. 6)

NATIONAL ASSOCIATION OF SPECIALIZED CARRIERS, INC.-AGREEMENT

Decided August 15, 1977

Proposed amended agreement found not to comply with Ex Parte No. 297 or comport with the essential standards of section 5a of the Interstate Commerce Act. Proceeding held open for a designated period to afford applicants an opportunity to present an agreement in conformity with the conclusions reached.

Robert E. Born for applicants.

REPORT OF THE COMMISSION

DIVISION 2, COMMISSIONERS Hardin, MURPHY, AND CLAPP

BY DIVISION 2:

In the prior report, 323 I.C.C. 714, the Commission, Division 2, approved, subject to terms and conditions, an agreement, under section 5a of the Interstate Commerce Act, between and among motor common carrier members of National Association of Specialized Carriers, Inc. (association), relating to the joint consideration, initiation, change, and publication of rates, classifications, divisions, allowances, rules, regulations, and practices governing the transportation of property between points in the United States, including the District of Columbia, but excluding the State of Hawaii. Upon compliance with the terms and conditions, an order was entered on April 6, 1975, approving the revised agreement. Amendment Nos. 1, 2, and 5 to the agreement were approved on January 24, 1967, March 5, 1969, and September 5, 1972, respectively. There are no amendment Nos. 3 and 4.

By application filed May 10, 1976, under the provisions of section 5a of the act, the association, for and on behalf of itself and the member motor common carriers party to the agreement, seeks approval of further amendments to conform with the standards.

promulgated by the Commission in Ex Parte No. 297, Rate Bureau Investigation, 349 I.C.C. 811 (1975) and 351 I.C.C. 437 (1976). The application is unopposed. No oral hearing was requested and none was held. The agreement consists of articles of agreement, bylaws, and rules of procedure.

The proposed amendments to the bylaws and rules of procedure are as follows: (1) provisions relating to shipper-affiliated carriers (bylaw articles X, XI, XII, and XIII, to comply with finding 11 of Ex Parte No. 297); (2) a provision for a maximum period of 120 days for the processing of proposals to final disposition (article 1 of the rules of procedure, to comply with finding 12); (3) a provision prohibiting the broadening of the territorial or commodity scope of an individual rate proposal (article I of the rules of procedure, to comply with finding 14); (4) provision against association protests of independent action proposals by members (article XVII of the bylaws, to comply with findings 21 and 22); (5) a provision for giving reasons for final dispositions (article I of the rules of procedure, to comply with the requirement of Ex Parte No. 297, 349 I.C.C. 811, at 821); and (6) provisions for special procedures in connection with section 22 quotations on government traffic (bylaws, preamble, and articles IV, V, VI, and XII; rules of procedure, articles I and VI; to comply with finding 16).

Certain of the foregoing amendments embody obvious inconsistencies and others require clarification. Two distinctly different provisions are both designated as new paragraph "1.3" of the rules of procedure (one relates to the 120-day period for processing proposals and the other pertains to section 22 matters). The reference to "section 6.9" cannot be reconciled in the context of paragraphs 6.2 as 6.9 does not pertain to proposals “not requiring docketing procedure." The term "tender" or "tenders" where used separately, or in conjunction with the term "quotations", should be defined to clarify the meaning in the context used and/or as distinguished from the term "quotations." Other terms in need of clarification are: "further and formal action" (6.19), and "next issue of quotations" (6.22).

Moreover, the proposed new section 22 special procedures are not in conformity with section 5a standards or Ex Parte No. 297, supra, and may not be approved. Paragraphs 6.9, 6.10, and 6.11 improperly confer upon the tariff publishing officer authority to approve, disapprove, or permit withdrawal by the proponent carrier of a section 22 proposal. The functions of the association and its tariff publishing officer are to publish, or cause to be published,