mission is limited to addressing legal wrongs. The Bureau appeals the Administrative Law Judge's findings on these matters.

We affirm the findings and conclusions of the Administrative Law Judge. We should accord much weight to her ultimate judgment that the evidence on solicitation and related practices was "unpersuasive" and "speculative." The Administrative Law Judge was present to observe witnesses and evaluate testimony, and her findings are amply supported by the record.

Clinchfield lease decision conditions.-The defendants maintain that the Administrative Law Judge erred in failing to pass upon contentions relating to the conditions imposed in Clinchfield Ry. Lease, 90 I.C.C. 113 (1924). They aver that the special conditions imposed on the lease decision require the Clinchfield to be maintained as an open route for overhead traffic, but do not require the Clinchfield to consent to being short hauled on traffic originating at or destined to stations on its own single-entity line. We agree with the Administrative Law Judge that the Clinchfield conditions are not properly before us on the record here. The correct interpretation and scope of those conditions were not a subject of the instant investigations, and those matters were not adequately addressed in these proceedings. Below we will detail our changing policy on the standard routing and the traffic conditions. Reduced rates over restricted routings.-The defendants contend that the Administrative Law Judge should have expressly held that the DT&I conditions do not preserve "paper" or "phantom" routes, i.e., theoretical routes (generally under class rates) existing in the tariffs but unused for the movement of traffic. They proffer a construction of SAL/ACL condition 1 that would protect only what they term "a viable commerical channel of trade'-that is, (i) a specific point-to-point joint commodity route or (ii) a class rate route that is actually moving traffic in a given commodity."

Southern responds that the Commission has enforced conditions similar to SAL/ACL condition 1, even though the particular traffic in question had not moved over the previous class-rate routes. Proof of actual traffic movement is irrelevant, it contends. Southern maintains that the defendants are asking us to overturn longstanding policy to give them license to prevent Southern from offering competitive service to captive shippers and receivers on the defendants' lines.

As Southern points out, the Commission has long enforced the same or similar traffic conditions, even in the absence of traffic movements over prior class-rate routes. See e.g., No. 36652, Sand

from Marston, NC, to Wyoming, IL (not printed), initial decision entered November 28, 1977, affirmed division 2, 359 I.C.C. 98 (1978), affirmed sub nom. Seaboard C.L.R. Co. v. United States, 599 F.2d 650 (1979); Sodium from Evans City, Ala., to Foley, Fla., 299 I.C.C. 641 (1957); Salt Cake from Bessemer City, N. C., to Foley, Fla., 298 I.C.C. 544 (1956).

The Administrative Law Judge indicated that circumstances have changed since approval of the SAL/ACL and L&N/Monon mergers. She also noted that a railroad subject to standard traffic and routing conditions cannot offer lower rates based on obtaining its long haul because the Commission has traditionally viewed a restrictive routing as a route closing in violation of those conditions. She concluded that, while cushioning competitors from the impact of mergers is reasonable, protecting them indefinitely is not.

We concur with the Administrative Law Judge's determination that circumstances have changed sufficiently to warrant modification of the conditions imposed in the SAL/ACL report and the L&N/Monon report. The rationale for this conclusion and the modifications are detailed below.

A MENDMENT

Negotiation for reciprocal conditions.-We agree with the Administrative Law Judge's analysis for the standard routing and traffic conditions. The quotation from the Rail Merger Study is apropos to the rail systems involved in this proceeding (initial decision pp. 52-53). The standard routing and traffic conditions were designed to cushion the impact of rail consolidations on competitors and were not intended to provide protection for all time. In addition, we adopt her conclusion that currently the Southeast is served by two strong competitive rail systems, the Southern system and the Family Lines. Many of the smaller carriers protected by the merger conditions imposed in the SAL/ACL report now constitute integral parts of the Family Lines or the Southern system.

We agree with her analysis that the effect of the DT&I conditions has been to keep railroad rates artificially high. A railroad subject to these conditions cannot offer lower rates to obtain the long haul, because of the traditional Commission approach that a reduced rate on a restricted routing is a commercial closing which violates the conditions. We agree with her conclusion that:

This traditional approach is unsuited to today's environment which is characterized by high inflation and a trend which has the railroads moving a declining share of total intercity traffic. At this time and under present competitive conditions, all railroads should, with certain safeguards in the public interest, be allowed to use their assets to the fullest to provide the cheapest, most efficient transportation service possible. [Initial decision p. 52.]

Concluding that the SAL/ACL and L&N/Monon conditions had been in effect long enough for competitors to adjust to the mergers, the Administrative Law Judge directed defendants and Southern to negotiate whether the standard traffic and routing conditions should continue to apply to the Family Lines on a reciprocal basis with the Southern system. She provided that if the parties could not reach an agreement within 120 days, the Commission would settle the matter by arbitration. Southern has appealed the requirement to negotiate reciprocal conditions.

Although we agree with the Administrative Law Judge's conclusion that changed circumstances warrant adjustment of the SAL/ACL and L&N/Monon conditions, we differ with her in the manner of accomplishing such amendment. A settlement between the contesting parties would be a settlement of questionable validity, since induced under administrative agency duress. Cf. Olson v. Westerberg, 2 Ill. App. 2d 285, 119 N.E. 2d 413 (App. Cf. 1st Dist. 1954) (where a court undertakes settlement, litigants are not free agents but act under "judicial duress"). Further, we could not directly modify traffic conditions applicable to the Southern system absent appropriate reopening of the proceedings in which those conditions were imposed.

We have here a complete record respecting the SAL/ACL and L&N/Monon conditions and the need for modification as the public interest may require. The evidence in this record shows that there is no longer a need for the rate equalization features (i.e., the prohibition on reduced rates on restricted routings) of the standard routing and traffic conditions imposed in the SAL/ACL and the L&N/Monon proceedings. However, the evidence does not establish that the conditions should be removed entirely. The conditions provide certain operational protections which are still needed (for example, keeping the Jacksonville gateway open). Rather than requiring negotiation, we will amend those conditions in a manner consistent with the present competitive situation in the Southeast. Accordingly, the routing and gateway provisions will no longer be construed to preclude the establishment of reduced rates subject to restricted routings. The SAL/SCL conditions shall be modified by

adding as condition 15, and the L&N/Monon conditions shall be modified by adding as condition 9, the following provision:

After February 1, 1979, the prescribed routing and gateway conditions shall not be construed by the Interstate Commerce Commission as precluding the establishment of reduced rates subject to restricted routings consistent with the provisions of subtitle IV of title 49, United States Code.

We take this opportunity to clarify that changed conditions require that we reassess our view of the DT&I conditions. We must adapt our regulation to this era of inflation and declining rail traffic and revenues. The policy we are adopting toward the DT&I conditions was enunciated in our 1978 Rail Merger Study. We are now further considering whether the standard routing and traffic conditions should be imposed routinely, and if imposed, whether they should be used only to provide limited protection for a limited period of time. Accordingly, we will entertain petitions by railroads seeking removal of the DT&I conditions or requesting similar modifications.

We acknowledge that the railroads are a highly interdependent network and that open routings, gateways, and interchanges are essential. In the past we have used the DT&I conditions to prevent the closing of routes and gateways and to prohibit discrimination at interchanges. We now believe that this practice is overly broad, in view of the changes in the industry's structure over the last 15 years. The Interstate Commerce Act provides the needed protections of particular interchanges and services, and in the future, we will enforce the statutory provisions to assure open routing, gateways, and interchanges. See 49 U.S.C. 11101 (formerly section 1(4)), imposing the common carrier obligation to provide service and to establish reasonable through routes and rates; 49 U.S.C. 10741 (formerly section 3(4)), requiring equal interchange facilities; and 49 U.S.C. 10705 (formerly sections 15(3) and (4)) authorizing the Commission to establish through rates, joint rates and the division of joint rates. Evidence relating to the need for protection against predatory or unfair competitive practices can be submitted with a complaint filed under these provisions.

SAL/ACL condition 8.-The defendants object to the Administrative Law Judge's failure to order removal of condition 8 of the SAL/ACL report." They contend that the Commission

8. Seaboard Coast Line Railroad Company shall, as to all traffic (except traffic restricted by the terms of the existing Hardeeville-Jacksonville trackage agreements), be required to maintain, in connection with the Southern and its affiliates to and from the Jacksonville gateway, joint rates (footnote continued on next page)

imposed the condition to provide retaliatory routes on Florida peninsular traffic over Jacksonville to western carriers as compensation for the preference that SCL would probably show its affiliate, L&N. The defendants insist that condition 8 has merely thrown open the Jacksonville gateway to Southern, creating a windfall for that carrier. They assert that, although the Commission did not impose condition 8 for Southern's benefit, that railroad has exploited the provision to its great benefit, without ever offering the retaliatory routes in conjunction with its westerly connections, as contemplated by the Commission.

Condition 8 of the SAL/ACL report is essentially a equalization provision and our discussion above is equally applicable to this condition. Removal of this condition was addressed in this proceeding and the evidence of record supports the conclusion that the protection it was designed to provide is no longer needed. Accordingly, we amend the conditions in the SAL/ACL merger to remove condition 8.

EXTENDED REGULATION OF SCLI

Under section 5(4) of the act, the Commission has the discretion to consider a noncarrier holding company as a carrier, and require special and periodic reports to be filed under section 20 and to acquire the holding company to seek approval under section 20a before issuing securities.

The Administrative Law Judge concluded that SCLI should be subject to Commission regulation because the holding company controls carriers whose operations have a substantial impact on national transportation. However, she found that SCLI should not be required to seek Commission approval before issuing securities which relate to or affect the carrier subsidiaries, since the carriers themselves are subject to our jurisdiction and assertedly the application would only result in duplication and delay. (Initial decision p. 54.)

The Administrative Law Judge concluded that the focus of the Commission's regulation should be to protect the assets of the carriers from improvident action by the holding company. To accomplish this goal, she added four conditions to condition 8 of the

(footnote 34 continued)

or any

no higher than the rates applicable over the lines of the merged company through other, gateway: Provided, however, that Southern and its affiliates will extend similar ciprocity to the merged company with respect to all traffic interchanged by Southern or its aftates at the Jacksonville gateway." 320 I.C.C. 267-8.