would result in short hauling those defendants reaching Detroit with their own rails. The Commission found this contention untenable as a matter of law, because the "*** authority to require the establishment of through water-rail routes and joint rates is not subject to the limitation as to through routes and joint rates contained in section 15 of the general act." 83 I.C.C. at 477. This basic principle has been repeated in more recent Commission decisions. See Lake and Rail Class and Commodity Rates, 205 I.C.C. 101, 177 (1935); and Georgia Public Service Comm. v. Bush Term. R. Co., 310 I.C.C. 225, 238 (1960). The courts have affirmed the Commission's power to prescribe through rail-water routes which result in short hauling. In Chicago, R. I. & P. Ry. v. United States, 274 U.S. 29 (1927), the Supreme Court considered whether the Commission's order resulted in short hauling the defendants' lines contrary to section 15(4) of the act. The Court did not decide whether the water carriers involved in the case fell within the exception in section 15(4) because it found that the Commission's order could be sustained under "the later and broader provisions of paragraph (13) [now paragraph (11)] of §6.” 274 U.S. at 35. The Court went on to say that what is now paragraph (11) "materially expands the jurisdiction of the Commission in respect of land and water transportation." 274 U.S. at 35. The cases cited by defendants to support their argument that the Commission must give preference to the originating carrier's long haul do not persuade us of the validity of that position. Missouri Pac. R. Co. v. United States, 343 U.S. 549 (1951), involved two railroads and the issue of the definition of "through route" and is, therefore, inapposite. Chicago, M. St. P. & P. R. Co. v. United States, 366 U.S. 745 (1961), also did not involve any water carriers. The Court addressed the issue of whether the protection of section 15(4) extended to two railroads owning a third and the portion of the Court's opinion quoted by defendants concerned interpretation of the words "management or control" contained in section 15(4). This case does not require that the Commission give preference to the originating rail carrier when proportional rates are prescribed under section 6(11)(b) of the act. In view of the considerations discussed above, we find that the Commission can prescribe, under section 6(11)(b) of the act, proportional rates which require railroads originating traffic to short haul themselves between the point of origin and the point of interchange with a water carrier. We further find no conflict between section 15(4)'s protection of the originating carrier's long haul and the provisions of section 6(11)(b) which allow railroads to be short hauled as a result of the prescription of proportional rates. Finally, we find that the rates at issue here were prescribed within the boundaries of the authority conferred by section 6(11)(b) of the act. Given the Commission's power under section 6(11)(b) of the act to prescribe the proportional rates at issue here, the question becomes whether, as a matter of policy, the Commission should have prescribed rates from each origin to each port which require some railroads to short haul themselves between mine and port. As discussed below, we find that the prescription adopted by the Commission is consistent with the requirements of the court's remand, and is in the public interest. The conclusion that the prescribed rates are appropriate is based primarily upon the court's finding that by refusing to offer unit-train rates to the lake ports, the railroads employed monopoly power to eliminate any effective competition by the members of the association and thus acted against the public interest. Rates which permit the lake carriers to effectively compete with the railroads for the traffic to Essexville, Trenton, and Detroit satisfy the requirements of the court's remand which, by its discussion of the railroads' unfair competitive practice, makes it clear that the public's interest in intermodal competition can only be promoted by giving the lake carriers a fair opportunity to recover the traffic lost since the publication of all-rail unit-train rates in 1966. The singleline rates advocated by defendants would deny the lake carriers that fair opportunity by foreclosing the most efficient routings. Analysis of the record reveals Sandusky's key position. Sandusky is closer to the generating plants than all of the other ports except Toledo. More importantly, it possesses modern transloading facilities, including ground storage, which could permit efficient interchange between unit-trains and the lake carriers. The only other port with modern facilities is the more distant Ashtabula. The single-line rates advocated by defendants would only allow access to Sandusky from the Georgetown mine, and would thus force the lake carriers to interchange all of the coal from the other Ohio mines either at the less efficient ports of Toledo or Lorain, or at the more distant part of Ashtabula. Routing via Ashtabula would be more expensive, due to its distant location, than routing via Sandusky. Routing via Lorain or Toledo is much less desirable, due the absence of ground storage at those ports, and there are questions as to its feasibility. The single-line rates advocated by defendants would not give the lake carriers a fair opportunity to compete with the railroads because they would severely limit the lake carriers' access to Sandusky. To compete with all-rail unit-train rates, the lake carriers will need the ability to offer the most efficient routing. That inevitably means access to Sandusky, which the prescribed rates allow. The prescribed rates, however, do not force the railroads to remedy the operational difficulties at Toledo and Lorain, as suggested by defendants. On the contrary, they insure that defendants will not have unrestricted power to cripple the lake carriers' competitive effort by forcing the routing of lake-cargo coal through the inefficient facilities at Lorain and Toledo or through the more distant facilities at Ashtabula. The transfer facilities at Toledo and Lorain are owned by defendants, and the lake carriers have no way to upgrade them. By providing alternative routings, the prescribed rates protect the lake carriers' ability to compete. We are also unpersuaded that the single-line rates are necessary to protect each carrier's investment in its transloading facilities. Since the publication of the all-rail unit-train rates, these facilities have not been used to transload any coal bound for Detroit, and have been used to transload only small quantities bound for Essexville. The prescribed rates at least hold out the possibility that those facilities will once again generate revenue from traffic bound for Detroit and Essexville. The court's remand requires that the lake carriers be given a fair opportunity to effectively compete with the railroads for the coal traffic to the involved destinations. Even the prescribed rates do not guarantee that the lake carriers will recover the lost traffic. The lake carriers are unable to operate all year, as can the railroads, and generally the utilities have been satisfied with the level of service provided by the all-rail routes. Although Consumers has indicated. that it will give serious consideration to some of the rail-lake rates prescribed by the Commission, it is not at all certain that any traffic will actually move under those routes. Because they restrict access to Sandusky, the advocated single-line routes offer significantly less chance that any traffic will eventually return to rail-lake routes than the prescribed rates do. We, therefore, find that the prescribed rates would be more consistent with the court's remand than the advocated single-line routes. Having found that the Commission has the power to prescribe the rates at issue here, and that the prescribed rates are more consistent with the court's remand than the advocated single-line routes, we turn our attention to defendants' remaining arguments against the prescribed rates. Defendants assert that the complaint in this proceeding did not request prescription of unit-train rates to the ports that would short haul the originating railroad. We are unpersuaded by this argument. The original complaint was dismissed by the Commission's order in its first report, 343 I.C.C. 491. The court found this dismissal to be in error and remanded the proceeding for prescription of unit-train rates. The court's remand, while not limiting the Commission's power under section 6(11)(b), was instructive of the kind of rates to be prescribed. Since the rates prescribed are consistent with the remand, it is irrelevant whether those rates were specifically requested in the complaint. In any event, the complaint did seek rates which would have required some railroads to be short hauled by be short hauled by making another railroad intermediate between the originating carrier and the lake carriers. This reasoning also disposes of the argument that the lake carriers would be in an undeservedly better position as a result of the prescription. Defendants also assert that they will suffer substantial financial injury as the result of being short hauled. We note first that the level of that injury is purely speculative at this point. Further, injury could only occur if traffic actually moves under the prescribed rates, and that too is uncertain. Finally, any injury which might occur would result from the divisions of the revenue from the movements. There is now no controversy over the compensativeness of the all-rail rates, and the prescribed rates have been constructed with the same cost/revenue relationship. Thus, the railroads should be able to reach agreement on equitable divisions. Should agreement prove impossible, expeditious procedures for Commission prescription of equitable divisions have been formulated in Ex Parte No. 322, Expeditious Handling of Divisions of Revenue Cases, served July 30, 1976. Summarizing, we find that section 6(11)(b) of the act provides the Commission with the power to prescribe the proportional rates at issue here and that the court's remand requires prescription of rates as broad as those prescribed in this proceeding. The reasons advanced by defendants for prescribing single-line rates do not convince us of the necessity or appropriateness of limiting the prescribed rates. Accordingly, we affirm the prescription adopted by division 2's decision and order served February 28, 1977. |