Page images
PDF
EPUB

Additionally, it is alleged that there is nothing in the record to establish that independent action will in fact be protected despite the guarantee offered by the agreement. The FTC further maintains that the agreement should define the term "practicably participate," and that the definition should be phrased to limit its scope to include only carriers who could actually participate in the point to point movement. It is alleged that lack of restrictions on the discussion of single-line rates, will have an extremely anticompetitive effect. Finally, the FTC urges that verbatim. transcripts should be required of all rate proceedings to insure that collectively activity is consistent with the requirements of section

5b.

In reply, applicants argue that the statement of the FTC is nothing more than a "conglomerate of unsupported allegations, innuendos and arguments." They reiterate the importance of the activities of the bureau with respect to the development of an effective rail transportation system.

DISCUSSION AND CONCLUSIONS

As previously discussed in Railroads Per Diem, Mileage, Demurrage-Agreement, 353 I.C.C. 673, the Commission is invested with the duty and responsibility of effectuating the congressional mandate to approve ratemaking agreements between and among railroads under section 5b, if approval is not prohibited by that section, and if it finds that the agreement furthers the national transportation policy to the extent that relief from the operation of the antitrust laws is appropriate with respect to the making and carrying out the agreement. Section 5b further authorizes the Commission to prescribe such terms and conditions as are necessary to enable it to grant approval in accordance with the foregoing standard.

In determining whether the proposed agreement should be approved we must first consider whether or not it is prohibited by paragraphs (4) and (5) of section 5b.

The parties do not contend that the agreements violate the requirements of paragraph (4) precluding an agreement with respect to pooling, division, or other matter or transaction to which section 5 of the act is applicable. Paragraph (5) requires that each carrier party be accorded the free and unrestrained right of independent action, and further provides additional prohibitions (not previously contained in section 5a) which preclude participation in agreements with respect to, or any voting on, single-line rates, allowances, or

charges; or permit any carrier to participate in agreements, or to vote on, rates, allowances, or charges relating to any interlinemovement, unless such carrier can practicably participate in such movement; and prohibit any joint action to protest or otherwise seek suspension of an independent action established and filed by a carrier of the same mode. Paragraph (5) further provides that the foregoing prohibitions are not applicable to general increases or decreases provided at least 15 days' notice is given the shipping public and opportunity to present comments thereon prior to tariff filing with the Commission, or to broad tariff changes of general or substantially general application throughout the territory within which the changes are to be applicable.

Applicants have incorporated the foregoing prohibitions in the proposed agreement, but have failed to include the statutory exceptions thereto. The Commission has previously concluded in Section 5b Application No. 7, supra, that the section 5b(5)(b) exceptions must be specifically included within the agreement, and that certain terms such as "general increase or decrease" and "broad tariff change" must be clearly defined in order to provide a basis for Commission approval of any agreement filed pursuant to section 5b of the act.

Concerning the contention of FTC that the term "practicably participate" as it relates to carrier collective action on interline proposals needs to be more definitely defined, it is our opinion that such definition is not necessary. The proposed agreement relates to the collective establishment of charges made by one carrier against another for the use of its equipment, and as such is not an interline charge within the meaning of section 5b(5)(a)(ii).

FTC is also concerned that the agreement fails to place any restrictions upon discussion of single-line charges. The agreement as proposed only relates to compensation among carriers for the use of carrier equipment, and the issue presented by FTC is not germane in this proceeding.

When TOFC movements began, individual railroads had separate agreements regarding rental charges to be paid for the use of one another's trailers. As the total volume of TOFC traffic and number of participating railroads increased, several new and varied TOFC service plans were initiated by the carriers. The increased traffic and carrier participation made the handling of trailer and container rental payments through individual agreements slow, cumbersome, and generally unsatisfactory.

Additionally, the growing demand for trailers and containers, also created a need for the most efficient use of existing equipment. To avoid the regional misallocation of available containers and trailers. and potential situations for discriminatory equipment use charges between and among the various railroads through different rates of compensation for the same equipment, nationwide application of uniform rules became necessary. In 1967 over 150 class I and class II railroads applied for antitrust immunity for the joint consideration and establishment of per diem or mileage rates of compensation, payable among and between themselves for the use of trailers and containers employed in TOFC service. In Section 5a Application No. 97, Association of American Railroads, Per Diem and Mileage Rates of Compensation for Use of Trailers and Containers Agreement, by report and order served February 18, 1969, (not printed), the Commission approved that collective rate making agreement, finding "that the agreement is necessary to the effectuation, and will be in furtherance of the national transportation policy."

In Western Traffic Assn.-Agreement, 276 I.C.C. 183 (1949) the need of carriers and shippers to adjust rates to changing conditions with the degree of promptness and the opportunity for useful compromises that are needed to promote the commerce of the country was recognized. Similarly, in the legislative history of section 5a of the act, Congress expressed the desire to allow collective consideration of rates in order to generate a simple and consistent, stable transportation system free from unjust discrimination or undue preference and prejudice. These standards remain viable for our consideration of carrier collective agreements filed under section 5b of the act.

The Commission recently approved an agreement, somewhat similar to the subject agreement, relating to the joint consideration of, inter alia, the rates of compensation among railroads payable for the use of carrier-owned freight cars in Railroads Per Diem Mileage, Demurrage-Agreement, 353 I.C.C. 673 (1977). The Commission there acknowledged that "the necessity for uniform handling of the matters involved in the proposed agreement on a nationwide basis is firmly established in prior decisions of the Commission." A like conclusion is here warranted involving other types of carrier-owned equipment.

Applicants state that in lieu of the approval of the proposed agreement, the payment of rental fees for the use of trailers and

containers could only be accomplished by individual agreements among the railroad members. Currently the 66 railroad subscribers to this agreement own, lease, or control essentially all of the trailers and containers used in providing TOFC service. Present subscribers own, lease or control some 75,931 of the 86,852 railroad trailers and containers currently in use and assertedly four other railroads which control almost all the remaining trailers or containers will become subscribers. Due to the large volume of TOFC cars moved annually (over 2 million in 1976) and the many railroads that own the trailers and containers, individual treatment of per diem and mileage fees would be difficult and could lead to multiplicity of rates of compensation, preferences and prejudices and discrimination between and among the different railroads.

It has long been the policy of the Commission to encourage the growth of TOFC service, Substituted Service-Piggyback, 322 I.C.C. 301, 322 (1964). In view of the above discussion, we can only conclude that the collective consideration of matters covered by the instant agreement facilitates the fair and impartial exchange of TOFC equipment. Accordingly, subject to the terms and conditions prescribed, we find that the agreement is necessary to effectuation, and would be in furtherance of the national transportation policy and the public interest.

In addition to complying with the provisions of section 5b, any proposed agreement approved must satisfy the standards governing approval of collective ratemaking agreements promulgated by the Commission in Ex Parte No. 297, supra, as well as those which have evolved from Commission experience with collective rate making activities. Review of the agreement in its entirety reveals that in

respects the agreement provisions are incomplete or inconsistent with those standards. For example, the agreement as proposed does not provide adequate notice provisions. It should be specified that notice of all proposals will be given to all subscribers and interested persons within 5 days of receipt of the proposal by the committee. Moreover, the agreement should be amended to provide an opportunity for input from subscribers or other interested persons prior to initial consideration by the general committee. In this regard, internal time limits applicable to committee processing of proposals should be established.

The agreement does not provide that public notice of final action will contain reasons for the action taken. See Ex Parte No. 297, 349 I.C.C. at page 821. In addition, the agreement fails to comply with

finding 9 of Ex Parte No. 297 which requires that formal minutes be maintained of all rate committee proceedings. The agreement procedures should be appropriately amended to reflect the foregoing standards.

We conclude that collective action relating to per diem and mileage charges for railroad trailers and containers, applicable nationwide, is necessary to enable applicant railroads to establish and maintain such charges on a reasonable basis without unjust discrimination and undue preference and advantage; that the collective action provided in the agreement before us, modified to the extent indicated, and properly safeguarded by actions of the parties and the Commission is necessary to the continued and proper functioning of this Nation's essentially competitive transportation rate system; and that the national transportation policy will be furthered by an approval of this agreement when amended in accordance with our views.

FINDINGS

We find that the agreement described herein is within the scope of section 5b of the act and not one with respect to a pooling, division, or other matter or transaction to which section 5 of the act is applicable; that it accords to each party there to the free and unrestrained right of independent action either before or after any determination arrived at through procedures established by the agreement; that the agreement does not permit any carrier to participate in agreements with respect to, or vote on single-line rates or charges; or permit, provide for, or establish any procedure for joint consideration or any joint action to protest or otherwise seek suspension of any rate or charge filed by a carrier of the same mode pursuant to section 15(b) of part I of the act where such rate or charge is established by independent action; and that approval of the agreement is not prohibited by paragraphs (4) and (5) of section 5b.

We further find that the agreement, subject to conditions stated in the report, is necessary to the effectuation of, and will be in furtherance of, the national transportation policy.

We further find that, by reason of furtherance of the national transportation policy declared in the Interstate Commerce Act, the relief provided in paragraph (8) of section 5b should apply with respect to the making and carrying out of the agreement, subject to the terms and conditions hereinbefore stated.

« PreviousContinue »