imposed will further reduce this figure. We are satisfied that this increase, which will only partially recoup increased labor and material costs, will not produce excessive revenues or result in unreasonable rates and charges.

A significant problem in this proceeding arose from the nonparticipation of the SP System Lines. Without this system of carriers, the expected revenue yield for the participating respondents will be less than $480 million because of the limited revenue yield in the West. This compares with an expected revenue yield of approximately $793 million if the 7-percent increase had been taken with the participation of the SP Lines. The difference in expected realization results because some of the petitioning carriers must compete with the SP and cannot take an increase where lower rate routings are available in whole or in part over the SP Lines. The net result is that under respondents' proposal, the total effective increase for the Nation's railroads will be approximately only 2.9 percent.

The manner in which this proceeding has been handled by the carriers leaves much to be desired. The nonparticipation of the SP, the flagout of the entire western territory in Supplement No. 2, and the subsequent reentry of a limited portion of western territory in Supplement No. 7 has generated much confusion and distress among the Nation's shippers, and has resulted in an extremely complex tariff. Only because of the substantial revenue need shown by the carriers have we granted this increase. We do not believe that, under the financial circumstances presented on this record, the nonparticipation of the Southern Pacific Lines should preclude a finding of a significant general increase revenue need by the remainder of the Nation's railroads.

Although we are satisfied that the authorized increases will not produce excessive revenues or result in unreasonable rates and charges, our findings apply to the general bases of rates and charges and do not preclude interested parties from bringing any maladjustments to our attention for correction. The increased freight rates and charges authorized herein are not considered as prescribed and will be subject to complaint and investigation as provided by the Interstate Commerce Act.

ULTIMATE CONCLUSIONS AND FINDINGS

Upon consideration of the entire record in this proceeding we conclude and find:

1. Respondents are in need of additional revenue from their interstate freight rates and charges to offset recently incurred

operating costs and to provide an improved level of earnings. The public interest and that of the national defense, in a sound, adequate, and efficient transportation system will be adversely affected unless the increased interstate freight rates and charges proposed by respondents in this proceeding, subject to the limitations and exceptions set forth below, are permitted to be continued.

2. Without the additional revenues to be derived from the increased freight rates and charges authorized herein, the earnings of respondents would be insufficient to enable them under honest, economical, and efficient management to provide adequate and efficient railway transportation services consistent with the public interest and the national transportation policy.

3. Respondents' freight rates and charges on interstate traffic may be increased as proposed, except as set forth below in paragraph 4 and in appendix G hereto.

4. In lieu of the general increases proposed in Tariff of Increased Rates and Charges Ex Parte No. 318, as supplemented, rates, and charges may be increased within and between all territories by not more than 7 percent, subject to the additional limitations imposed in appendix G and subject to maxima on specific commodities no higher than proposed by the respondents in the Ex Parte No. 318 tariff, as supplemented.

5. The increased freight rates and charges authorized herein will not exceed a maximum reasonable level, and the revenues derived therefrom will result in earnings and rates of return for the railroads, as a whole and by the usual groupings, not in excess of that required to enable them to render adequate and efficient transportation at the lowest cost consistent with the furnishing of such service.

6. The increased freight rates and charges authorized herein will have no undue adverse effect on the movement of traffic by railroad or upon the environment, as discussed in the report herein and in appendix E.

Our findings as to justness and reasonableness, which are based upon all the evidence before us, including typical evidence as to. rates and charges in and between all territories, will apply to the general bases of rates and charges, and will not preclude interested parties from bringing any maladjustments to our attention for correction. The increased freight rates and charges authorized herein are not considered as prescribed within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S. 370, and will, in all respects, be subject to complaint and investigation as provided by the act.

Appropriate orders will be entered (1) requiring the cancellation of the schedules under investigation herein found not justified; (2) modifying all our outstanding orders necessary to permit the maintenance of the increased freight rates and charges herein authorized; and (3) granting relief from the provisions of section 4 of the act and our tariff publishing rules as may be necessary, including authority to publish and file tariff changes.

COMMISSIONER O'NEAL, concurring:

I agree with the result reached in this proceeding and in most of the analysis behind that result. However, I disagree with the majority's statement in the Discussion and Conclusions that the "manner in which this proceeding has been handled by the carriers leave much to be desired." A major carrier properly exercised its right of independent action not to participate in a general rate increase. The remaining carriers responded to that situation in a constructive fashion by publishing a tariff covering eastern, southern, and part of western territories. While individual problems may exist, neither the Southern Pacific nor the participating carriers should be faulted for their overall efforts in this proceeding

Nor do I think it is accurate to state that this proceeding has caused confusion' and distress among shippers. The record in this case affords no reason to conclude that any greater shipper confusion or frustration attended this proceeding than attended other general revenue proceedings. Indeed, the shippers' pleadings for the most part indicate a clear understanding of their interests and how this increase would affect those interests.

Insofar as is possible, this agency should not allow considerations of administrative convenience to influence public policy unduly.

COMMISSIONER MURPHY, dissenting in part:

Generally I am in accord with the majority's decision herein except to the extent that it concludes that the port equalization orders are not applicable on multiple-car rates on grain movements to the gulf ports. My position in that respect is stated in Corn & Soybeans Midwest to Gulf Ports, 349 I.C.C. 1, 6. See also my separate expression in Soybeans, Midwest to Chicago & Gulf Ports, Export, 335 I.C.C. 883, 893.

355 I.C.C.

APPENDIX A

General exceptions from increase'

The increases in rates and charges provided in this tariff will NOT (Except as noted) apply to:

(a) Charges for demurrage or detention on freight cars and detention charges on mechanically operated refrigerator cars as published in rules 725 and 726, NPFC Tariff 19, ICC 58, except detention charges on heavy duty flat cars;

(b) Amounts paid or allowances made by carriers for drayage or other services performed by shippers or receivers of freight;

(c) Rates and charges at or between points in Canada on Canadian Domestic Traffic, or in Mexico;

(d) Charges for wharfage or handling at ports in Virginia; South Atlantic ports in North Carolina, South Carolina and Georgia; Florida ports; and gulf ports in Alabama, Louisiana, Mississippi, and Texas; or dumping of coke at Charleston, S.C.;

(e) Charges for dumping, leveling, tippling, transferring, or trimming coal and coke at gulf ports;

(f) Charges absorbed, in whole or in part, by carriers;

(g) Switching rates and charges absorbed, in whole or in part, by carriers;

(h) Charges for storage of grain in cars at South Atlantic, gulf and Florida ports; (i) ELIMINATE. Provisions of tariff, as amended, will apply;

(j) Charges for protective service against heat or cold;

(k) Rates or charges applicable from, to, via, or at points on the:

Southern Pacific Transportation Company,

Southern Pacific Transport Company of Texas and Louisiana, or

St. Louis, Southwestern Railway Company

(1) Rates or charges applicable from, to, via, or at points on the Fonda, Johnstown and Gloversville Railroad Company;

(m) Rates or charges applicable from, to, or at points in western territory as described in note 252, except increases in rates and charges provided in this tariff will apply to the extent provided below:

(1) Increases in rates and charges as provided in this tariff will apply at or between points in western territory as described in note 80; also between points in western territory as described in note 80 (other than stations in Illinois Rate Committee Territory as described in note 45) on the one hand, and points in eastern territory as described in note 24, on the other; also between points in Western Terrritory as described in note 85 (other than stations in Illinois Rate Committee Territory as described in note 45) on the one hand, and points in southern territory as described in note 17, on the other. (Provisions of this subparagraph do not apply in connection with commodities as described in items 700 to 760)

'Source: Page 2 of Supplement No. 7 to master tariff Ex Parte No. 318.

'For explanation of this and all subsequent notes, see pages 46 to 65 of tariff, as amended.

(2)3In connection with commodities as described in items 700 to 760, increases in rates and charges as provided in this tariff will apply at or between points in western territory as described in note 90 also between points in western territory as described in note 90, (other than stations in Illinois Rate Committee Territory as described in note 45) on the one hand, and points in eastern territory as described in note 24 and points in southern territory as described in note 17, on the other.

(3)3Increases in rates and charges as provided in this tariff will apply in connection with rates and charges in the following tariffs:

NPCFB Tariff 13-1, ICC 1302,

TCFB Tariff 29-0, ICC (Items 2620 and 2625

series only),

MILW Tariff 17910-G, ICC B-8393,

SOO Tariff 87-Q, ICC 7896

BN Tariff 177-A, ICC 299

from or to stations on BN, CLC, CPW, LPN, MILW, OE, OT, SI, SOO, UP, WIM, AND WMV and only via routes comprised solely of one or more of such carriers.

(4) Increased in rates and charges as provided in this tariff will apply in connection with rates on Pulpwood (STCC 24 114) and Pulpwood Chips (STCC 24 115) in KCS Tariff 661A, ICC 5515.

(n) Rates or charges applying via all routes in which any carrier participates between points where any route is applicable via one or more of the carriers named in paragraphs (k) or (o) herein;

(0) Rates and charges applicable between points in eastern territory as described in note 24, on the one hand, and points in southern territory as described in note 16, on the other, when routed via The Missouri-Kansas-Texas Railroad Company.

These two paragraphs were suspended as result of our order of April 15, 1976, regarding grain

series items.

4.

For explanation of abbreviations, see pages 159 and 160 of tariff, as amended.

355 I.C.C.