addition to the suggested justification data. We emphasize that other relevant evidence submitted in lieu of the suggested justification data must equally continue to provide the Commission with a meaningful basis for analysis.

We emphasize that the adopted regulations provide that, if the carrier proposing the separate rate for a distinct rail service does not have market dominance, as that term is defined in Ex Parte No. 320, the Commission will not entertain complaints that the resulting charge is unreasonably high. For purposes of clarity, the subparagraph entitled "Market Dominance" has been changed so as to take into account any previous submission of this type of data. In such instances, a notation to that effect placed within the initial statement would be sufficient."7

In regard to the subparagraph entitled "Effect," we believe the objectives stated in section 15(18) should be taken into account when considering the reasonableness of a distinct rail service rate. However, we have changed this subparagraph to note that a statement in regard to the effect of the distinct rail service rate need show only how the rate promotes one or more of the objectives stated in section 15(18).

With respect to the word "annualized" in the subparagraphs entitled "Revenues" and "Outputs," we see no reason to define this word. Its commonly understood meaning is applicable in the context of the language used in these particular subparagraphs.

We have taken into consideration comments made by RR and Penn with respect to time limitations for filing an initial statement. However, in view of the severe time constraints of amended section 15(8) making necessary the possible rendering of two decisions in the 7-month period, initial statements must be filed within 20 days from service of the procedural order. This requirement of prompt filing of the initial statement and for prompt filing of exhibits relied upon if oral hearing is directed is applicable to all proceedings instituted under section 15(8) not only those involving distinct rail services. This requirement has been eliminated from the regulations here adopted, but will be incorporated in the revised rules of practice.

Penn also objects to the Commission according priority to distinct rail service proceedings and assigning them, to the extent feasible,

"For those participants who question at what particular stage in a proceeding market dominance information should be submitted, we refer them to the Commission's interim and final report in Ex Parte No. 320, Special Procedures For Making Findings of Market Dominance As Required By The Railroad Revitalization and Regulatory Reform Act of 1976 (1976).

to modified procedure. We point out that the Commission will be promoting the congressional objective of expeditiously publishing a distinct rail service rate when it accords such proceedings priority. This should not be interpreted as meaning that other types of proceedings will not be handled as expeditiously as possible. We also point out that the use of modified procedure is not made mandatory in the regulations. Further, we see no merit to the contention that assigning such proceedings to modified procedure would violate due process requirements or the Administrative Procedure Act.

The Commission fully recognizes the importance of providing sufficient notice to the shipping public that distinct rail service rates are proposed or contained in the particular tariff in which they are published. We believe that the adopted regulations, sections 1109.15(c) and (d), satisfy this need. In the NPRO a letter of transmittal was required to bear a specific notation that a new or changed rate for a distinct rail service was contained within the tariff publication. In order to achieve uniformity in the regulations and facilitate identification of such publications, the adopted regulations have been changed to require that the specific notation be placed on both the letter of transmittal and title page. The title page notation would serve as notification to the receivers of that publication. The receivers of the publication include the subscribers thereto. Thus, section 1109.15(e) of the proposed regulations is unnecessary and has been deleted. We see no further need to consider suggested modifications of this section. With respect to section 5b of the act, we note that it applies only to rates filed collectively by two or more carriers. Obviously, if 5b procedures are followed, the shippers will have additional notice and an opportunity to make their views known to the carriers prior to the filing of the actual tariff schedule with the Commission.

Under section 202(g) of the 4R Act, the Commission is required to transmit to Congress, by October 5, 1977, an evaluation of the effect of section 15(18) on the development of an efficient and financially stable railway system in the United States. The information requested under section 1109.5(i) of the adopted regulations will be sufficient for that purpose. This information is now required to be submitted by the rail carriers on July 30, 1977. However, we recognize that an annual reporting requirement could discourage rail carriers from publishing separate rates for distinct rail services under section 15(18). Thus we have modified section

1109.15(i) of the adopted regulations by eliminating the annual reporting requirement.

Section 1109.15(f) of the adopted regulations requires that protests to a tariff must be verified. This requirement is in accordance with section 202(e)(2) of the 4R Act, now section 15(8)(d) of the act. There is no statutory requirement that replies to a protest be verified. However, a comprehensive revision of the Commission's General Rules of Practice is now being undertaken. 18 This investigation is considering changes to section 1100.42(e) of the Commission's General Rules of Practice, and a requirement that a reply to a protest be verified may be adopted in that proceeding.

8. GRAIN

Much concern has been expressed by a number of participants about the effect publication of rates for distinct rail services could have on the movement of grain and grain products. A number of these arguments, such as those pertaining to the definition of distinct rail services and the Wichita Doctrine, have been considered in various sections of this report together with the general concerns of other participants. In this part of the report we consider their argument and request that the rate structure on grain and grain products either not be disturbed or excluded from the implementation of the regulations herein adopted.

Enid Board of Trade and Oklahoma Grain and Feed Association (Enid, et al.) argues that the publication of separate rates for distinct rail services would cause havoc in the present system of the orderly marketing of grain and grain products in this country. It asserts that transportation costs must be a fixed or known factor in the transaction or sale of grain if a buyer and a seller is to determine the trading price or value of a particular lot of grain. Enid requests the Commission to exclude grain and grain products from this proceeding.

Union, K C Board, and Far-Mar-Co, Inc. (FMC) request that the present rate structure on grain and grain products not be disturbed. Union emphasizes that the present grain rate structure helps provide for the orderly marketing of grain, encourages safe storage at inland terminals, and protects investments in inland terminal elevators. K C Board argues that if carriers were allowed to disassociate from linehaul charges the portion presently incorporated therein for switching, transit, inspection, et cetera, and publish rates separately,

This proceeding is Ex Parte No. 55 (Sub-No. 24), Revised Rules of Practice.

it would do nothing but create disorder in the buying, selling, and trading of grain. FMC insists that grain rates under which the grain industry and the related grain products industry operates today, and as they have operated for many years, must be maintained in their present form to meet the needs of the grain industry.

Idaho advances similar arguments. It also recommends that the Commission adopt the position that a separate rate for a distinct rail service not be allowed where an affected shipper can show that no reasonable or practical alternative exists to the shipper's reliance on the distinct rail service as an essential part of the line-haul transportation service.

DOT has expressed its opposition to exemption of grain and grain products from the rules promulgated herein. It notes that Congress did not exclude grain from the coverage of the reform provisions of the 4R Act. Furthermore, it argues that less regulation of railroads and greater reliance on competition to set appropriate prices would not harm the farmers. It asserts that the grain market functions in an orderly manner today notwithstanding the fact that a large proportion of grain products move by unregulated truck or barge. DOT also maintains that Idaho's recommendation is misplaced. It contends that the alternative service issue should be considered only in connection with a market dominance determination.

Conclusion. The concerns of those participants, who maintain that the present grain rate structure should not be disturbed or that grain and grain products should be exempted from the regulations adopted herein, are premature. If the present grain rate structure operates as well as these participants maintain, there is no reason to believe that the railroads would seek publication of separate rates for distinct rail services so as to create disorder in the grain industry. We emphasize that the railroads are not required under section 15(18) or the regulations adopted herein to publish such rates. We further note that distinct rail services are defined as "those railroad transportation services separate from the line-haul transportation services necessary for the movement of freight." We also recognize that change might be necessary and could be accomplished by the publication of distinct rail service rates, so as to balance the needs of both the railroads and the grain industry alike. Furthermore, as noted by DOT, Congress did not exclude grain from the provisions of the 4R Act. Thus, we find that grain and grain products are subject to section 15(18) and the regulations adopted herein. We further find that Idaho's recommendation raises an issue pertaining to the implementation of the market dominance

concept and the problems which it notes should be addressed as the cases arise employing that concept.

Summary. A purpose section was added to the regulations to express the Commission's policy of encouraging separate publication of distinct rail service rates. It is intended that this policy result in increased competition in the transportation industry as well as increased investment in rail and rail-related facilities. Another rationale behind the creation of this section was to clarify our intent as to the use of the term "negotiate" in the NPRO. What we were referring to was merely the occasion where a shipper makes a suggestion to a rail carrier concerning some transportation service. We did not in the NPRO intend to promote or sanction contract

rates.

The definition of distinct rail services involves several difficult issues. Complementary to our encouragement of increased use of separate publication for distinct rail services, we found that an even broader interpretation than proposed in the NPRO would be appropriate. Similarly, we felt that a list of services to be included in (or excluded from) such a definition could create the impression that the listing was conclusive and thus limit the interpretation of distinct rail services. Consideration was also accorded those comments expressing concern over the dissolution of all-inclusive rates. These rates provide a full-service package in industries and regions where such services are an integral part of the line-haul movement. We also expressed our intent to encourage innovative ratemaking and experimentation in this area and to foster the interrelationship between the railroads and their customers in the development of such rates. The definition offered in the NPRO was appropriately modified to express these concerns.

We felt that the issue of contract rates required consideration, and it has been discussed in a separate part of this report. Thus, in part 3 we noted our purpose in the use of the term "negotiate" and also restated our position with regard to the concept of contract rates. Reference was made to the report in Ex Parte No. 324 for a discussion of recent decisions by the Commission as lawfulness of such rates.

to the

Further definitional problems were dealt with in part 4 of the report. The terms "cash-outlays" and "demand" were introduced into this proceeding by the Congress in section 202(d) of the 4R Act. For this reason we felt that these terms should be analyzed separate and apart from other definitional issues. Furthermore, it was believed that this discussion should be segregated from an