no assurances of approval by the Commission. The following expression quoted to the above-mentioned congressional committees as evidence of our reception to freight rate experimentation may have led respondent to expect Commission approval: "They the respondents are entitled, as a matter of right, to make the experiment of reduced rates] unless upon this record we can say that their action or its probable results will violate some provision of the act."27 Of course, it was specified that the rates must not violate some provision of the act, but it is interesting to note that in a recent case28 rates were approved which in their relation to out-of-pocket costs were substantially lower than those here found unduly low.

In sum then, I believe the majority report represents, albeit in good faith, an attempt to apportion traffic among the several modes. Competition, I submit, cannot and should not be so limited. Nor should regulatory paternalism replace reasonable managerial judgement.

COMMISSIONER BUSH, dissenting:

Although I am in accord with the views of the majority regarding the issue of "public costs," I am of the opinion that the Southern Railway System has, upon this record, sustained its burden of proving the proposed rates subject to a minimum of 450 tons, 90 tons per car, just, reasonable, and not otherwise unlawful. A resolution of this intermodal controversy must necessarily be predicated upon many factors such as the effect of rates upon the movement of traffic by the carriers; the need, in the public interest, of adequate and efficient transportation service at the lowest cost consistent with the furnishing thereof; the need of sufficient revenues to enable the carriers to provide such service under honest, economical, and efficient management; the effect upon competitive modes of regulated transport in the interest of maintaining a sound transportation system as a whole; and a determination of which mode clearly possesses the inherent advantage to justify our ultimate conclusion.

The evidence of record clearly shows that the subject rates, designed to acquire grain traffic from unregulated motor carriage, will have a beneficial effect upon the Southern through acquisition of increased tonnage and revenues by use of technological

27 Lumber from Pacific Coast to Eastern Points, 210 I.C.C. 317, 346 (1935). 28Coal from Southern Mines to Tampa and Sutton, Fla., 318 I.C.C. 371 (1962).

innovations and achievements. For example, from Evansville, Ind., to Gainesville, Ga., the present rail rate of 890 cents, minimum 100,000 pounds, including accessorial services such as transit, et cetera, produces revenue of $445, whereas $1,476 is derived under the proposal of 328 cents, minimum full visible capacity but not less than 90 tons per car, subject to aggregate minima of 450 tons, applicable only when the grain is shipped at one time on one bill of lading to one consignee at one destination, without transit privileges; connecting line switching charges are not absorbed; and the average agreement rule and other usual domestic demurrage rules and charges do not apply. Moreover, revenue in excess of this latter amount is generally attained, since per car loading of more than 100 revenue tons has been shown by the Southern. The proposal is thus in harmony with the need for sufficient revenues to provide efficient transportation service at the lowest cost consistent with the furnishing thereof in the interest of the public.

Consideration of the record in its entirety leads to the speculative conclusion that any adverse effect of the rail proposal upon regulated, unregulated, and private water carriers is a mere future possibility of economic injury. The absence of sufficient reasonable probability of such injury, causally related to the rail rates, nullifies any theoretical concept that the water competitor will be adversely affected. The record shows that the protestant water carriers are handling grain in increasing annual volume, substantially in excess of that of the respondent railroads, as are unregulated motor carriage, the competitive factor sought to be met. Under such circumstances, there is no valid basis for finding that if the proposed rates are raised to the level approved by the majority, they will not constitue unfair or destructive competition.

In intermodal competitive ratemaking proceedings, it is incumbent upon the protestant bargelines to introduce, among other things, competent and reliable cost evidence to permit our determination that they possess the inherent cost advantage. The fatal deficiencies in their studies of record are so substantial that such evidence cannot be held to be reliable and reasonably representative of the costs of any one or all carriers. Consequently, it cannot be found that protestant bargelines possess the inherent advantage of being the low-cost mode of transport to warrant holding the rates of the railroads up to the level herein judged lawful to protect barge traffic. Moreover, although the

bargelines have also advanced in technological achievements, it is conceded that they have certain inherent disadvantages as compared to the railroads, which militate against "umbrella" ratemaking.

Although the evidence of record does not establish undue preference and prejudice, assuming arguendo the existence of a preferential-prejudicial relationship between the Tennessee River ports and those located thereat, on the one hand, and Ohio and Mississippi River ports, elevators, merchants, and shippers, on the other, I am of the further view that such is not undue so as to bring it within the prohibition of section 3(1) of the act. Preference in favor of competitive points because of unregulated competition which compels reduced rates to those points, below rates charged for shorter distances, is not undue or unreasonable in violation of this section when measured by transportation standards. A determination of this issue requires consideration of not only the differences in charges, but also the convenience of the public, the interest of the carrier, the relative volume of traffic involved, cost and profit, circumstances of the respective parties with reference to each other, as competitive or otherwise, and differences in population and tonnage, and all facts constituting similar or dissimilar conditions as between the respective points. I believe the evidence proves substantial dissimilarities, and weighing all of the foregoing factors leads to the inevitable conclusion that such unlawfulness is nonexistent, nothwithstanding the rate stop of $2.40 for distances up to 346 miles which is not unlawful per se.

I agree intramodal rail carriers should be free to establish rates upon the same basis as the Southern to remain competitive therewith and afford equality of treatment to the users of rail service. However, I am not in accord with the section 3(1) finding by the majority with respect to the Louisville & Nashville and others for the reasons heretofore expressed with respect to the Southern.

In conclusion, I have serious reservation with respect to the administrative finality of the decision in this proceeding, since the majority appears to intend to take further action in the future herein, dependent upon the actual impact of the proposed rates on the approved basis, and the respondents are ordered to maintain car utilization records on the jumbo cars for a year's period so that we may call for a more accurate presentation of their experience. I would render a final decision approving the proposals in their entirety.

APPENDIX A

Intermodal cost comparisons (cents per ton of 2000 pounds)1

APPENDIX B

Out-of-pocket costs and proposed rates in cents per net ton for transportation of grain in 5-car shipments of jumbo hopper cars, minimum weight 450 tons, over Southern Railway System routes, from and to points named in suspended schedules