No. 34822 LAKE CARRIERS' ASSOCIATION, ET AL v. THE NEW Decided July 29, 1977 Upon reconsideration, prescribed unit-train rates on coal from certain Ohio mines to Toledo, Sandusky, Lorain, and Ashtabula, Ohio, for subsequent movement by lake vessel to Detroit, Trenton, and Essexville, Mich., which make another railroad intermediate between the originating railroad and the lake carriers, found consistent with both the Commission's statutory authority, and the terms of the remand from the United States District Court for the Northern District of Ohio. Scott H. Elder and Charles J. McCarthy for complainants. Richard W. Kienle, Richard J. Murphy, and Charles C. Rettberg for defendant railroads. John Guandolo, David G. Macdonald, and A. T. Udrys for intervener Consumers Power Company. REPORT AND ORDER OF THE COMMISSION ON RECONSIDERATION BY THE COMMISSION: This proceeding began in 1967 when the Lake Carriers' Association (association) filed a complaint seeking prescription of unit-train service and rates over defendants' lines from coal mines in Ohio to the Lake Erie ports of Toledo, Sandusky, Lorain, and Ashtabula. In Lake Carriers' Assn. v. New York Central R. Co., 343 I.C.C. 491 (1973), the Commission dismissed the association's complaint. The association sought relief in the courts, and, in Lake Carriers' Assn. v. United States, 399 F. Supp. 386 (N.D. Ohio 1975), a three-judge district court vacated the Commission's order and remanded the proceeding to the Commission for prescription of reasonable joint or proportional rates between the mines and the ports as prescribed by law. Pursuant to the court's remand, an Administrative Law Judge prescribed unit-train rates from the mines rates from the mines at Egypt and Speidel/Lafferty to the ports of Toledo, Ashtabula, Sandusky, and Lorain, and from the mines at Sunnyhill, Georgetown, Nelms (Miller), and Powhatan to the ports of Toledo, Astabula, and Sandusky. Defendants filed exceptions to the Administrative Law Judge's decision, but the Commission, Division 2, affirmed and adopted it by decision and order served February 28, 1977. In response to a petition filed by defendants the Commission, by order served April 4, 1977, designated this proceeding as one involving an issue of general transportation importance on the limited issue of: whether a railroad, which originates coal at mines involved in these cases, and which can transport that coal from those mines to its own coal-dumping facilities at ports on Lake Erie, should be required to short-haul itself by making another railroad intermediate between itself and the lake carriers. A petition for reconsideration was filed by defendants, and replies were filed by the association and Consumers Power Company (consumers), intervener. In their petition for reconsideration, defendants urge the Commission to reject prescription of rates from each mine to each port in favor of single-line rates from each mine to the port served by the railroad which originates the traffic at the mine. Four arguments are presented to support this alternative to the Commission's prescription, the first being that the court remand does not require prescription of rates which cause defendants to short-haul themselves between the mines and the ports. Defendants reason that the court's remand requires elimination of unfair competition and discrimination caused by each railroad, and that the single-line rates they offer would provide unit-train service to each port, while eliminating the unlawfulness created by each railroad. Defendants note that the Commission's prescription requires ConRail to open up new routes via railroads which are not parties to ConRail's all-rail unit-train rates to the generating plants. Defendants' second argument is that prescription of single-line rates is necessary in this case to resolve a partial conflict between the policy favoring the originating carrier's long haul expressed by section 15(4), and the water carrier exception of that section which allows short-hauling when necessary to establish rail-water routes. Defendants' cite Missouri Pac. R. Co. v. United States, 343 U.S. 549 (1951), and Chicago, M., St. P. & P. R. Co. v. United States, 366 U.S. 745 (1961) in support of this argument. This position forms the basis for defendants' third assertion that the statutory policy against short hauling is particularly applicable here, because the railroads each require single-line rates to protect their substantial investments in transfer facilities at the ports. Defendants note that the railroads have traditionally maintained single-line rates on lake-cargo coal. Defendants' final argument is that the broadly prescribed rates, which are not required by the court's remand, would place the lake carriers in a more favorable position than is attainable on other traffic. In this regard defendants assert that the association did not seek rates from each mine to each port in its original complaint. Defendants also assert that the court did not require defendants to relieve operational difficulties at the various ports, but rather required only that the railroads give the lake carriers an opportunity to compete despite the operational problems. Defendants claim that the prescribed rates give the lake carriers complete freedom of choice as to the ports at which they will receive traffic, regardless of the financial effect on the originating railroad, and that this result far exceeds the requirements of the court remand. The association's reply first confronts the definition of the issue of general transportation importance by asserting that the real controversy is narrower and concerns only the question of whether the association is entitled to proportional rates from Sunnyhill and Freeport to Sandusky. The association argues that Sandusky is the logical port for shipping coal to the generating plants. Although Sandusky and Ashtabula both have modern transloading equipment, routing via Astabula is more circuitous and expensive than routing via Sandusky. After this general statement, the association argues that (1) the court remand requires prescription of joint rates from Sunnyhill and Freeport to Sandusky, and (2) regardless of the court remand, sections 6(11)(b) and 15(3) entitle the association to rates from those two mines to Sandusky. The association begins its arguments on the requirements of the court remand by asserting that the issue of joint rates to Sandusky has been present in this proceeding from its inception, and refers to the original and amended complaint to show that the association sought prescription of joint rates from Freeport and Sunnyhill to Sandusky. The association also cites the Commission's first report, 343 I.C.C. 491, to show that the Commission made a finding on the issue of joint rates from Sunnyhill and Freeport to Sandusky. The argument is then made that the court's remand to prescribe rates to all of the lake ports is evidence that it understood the broad nature of the Commission's finding. The association further asserts that there was no evidence before the court to indicate that N&W served any of the named origins. Thus, the remand with instructions to prescribe rates to Sandusky was necessarily an instruction to prescribe rates to the ports embracing the lines of more than one railroad. The association concludes its argument concerning the requirements of the court remand by stating that because the court decided the case on the broadest possible bases by relying upon the national transportation policy and section 3(1) of the act, there is no reason to find that the remand required relief any narrower than that sought by the association. The second portion of the association's reply argument concerns the independent authority for the Commission's prescription provided by sections 6(11)(b) and 15(3) of the act. Despite its argument that the limitations in section 15(4) are not applicable here because of the presence of water carriers, the association confronts the public interest issue. It asserts that Sandusky and Ashtabula are the only ports with modern transloaders which would allow effective coordination with unit-trains, and that much of the lake-cargo coal moved through Sandusky prior to the publication of the all-rail unit-train rates. Rates to Sandusky are assertedly necessary to regain some of that lost traffic. Regarding defendants' argument concerning the short hauling which the prescribed rates would allegedly impose, the association states that some originating railroads could obtain a longer haul to the ports by participating in rates with other railroads. The association goes on to say that the limits on short hauling contained in section 15(4) do not apply here because of the exception when one of the carriers is a water line, and that adopting defendants' argument for single-line rates to the ports would undermine the policy behind that exception. Finally, the association asserts that even if the restrictions in section 15(4) were applicable here, prescription of proportional rates to Sandusky would still be required, because the route from Sunnyhill to Essexville via Ashtabula is unreasonably long as compared with the route via Sandusky. The reply of intervener Consumers Power Company (Consumers) states that in some cases, the rail-lake rates may be lower than allrail rates to Essexville, and that some of the prescribed joint unittrain rates to lake ports are lower than single-line rates to the other lake ports. When the rail-lake movement would be the low-cost route, Consumers states that it would seriously consider the use of those routes to move a portion of its coal to Essexville. DISCUSSION AND CONCLUSIONS The petition for reconsideration is granted. The limited issue now before us involves the Commission's authority to prescribe the rates in controversy, as well as the exercise of the Commission's discretion within the limits of that authority. The court's remand is inseparably involved with both of these issues. We begin with a discussion of the Commission's authority to prescribe the rates, for if that authority is established, the question then becomes whether there exist any reasons why the authority should not have been exercised to the extent it was in this proceeding. The proportional rates at issue in this proceeding were prescribed under the authority of section 6(11)(b) of the act. This section gives the Commission the authority to establish proportional rates, or maximum, or minimum, or maximum and minimum proportional rates, by rail to and from the ports to which the traffic is brought, or from which it is taken by the water carrier ***. This power is broad, and is not subject to the limitations which section 15(4) places on the Commission's authority to prescribe through routes and joint rates. The broad scope of section 6(11)(b), and the inapplicability thereto of the limits of section 15(4) has been stated clearly by both the Commission and the courts. For example, in Baltimore & Carolina S.S. Co. v. A.C.L.R.R.Co., 49 I.C.C. 176 (1918), defendant railroads contended, citing section 15 of the act, that the Commission was not empowered to establish through routes and joint rates between rail and water carriers where the effect was to short haul the rail carrier, and that the same general results could not be attained by requiring the rail carriers to establish proportional rates to and from the port in connection with such water carriers. The Commission rejected that contention, stating that: The limitation in section 15 refers specifically to railroads and apparently was intended to insure to the originating rail line as large a share as possible for the movement of freight by rail. That the limitation should be projected into section 6 so as to force a shipper to move his property by rail when he wishes to send it a portion of the way by water is utterly inconsistent with the policy of the Congress manifested in the passage of the Panama Cannal act [section 6(13)] ***[49 I.C.C. at 184.] We note that this statement was made prior to the 1920 additional to section 15 of the specific exception for water carriers now found in the first sentence of section 15(4). In White Star Line v. N. Y. C. R. R. Co., 83 I.C.C. 473 (1923), defendant railroads opposed prescription of joint rates with a steamship company operating from Detroit, on the ground that it |