movement of the LPG. Therefore, transportation charges, are absolutely critical to the profit margin of Enterprise Products. LPG generally consists of two main gasses, namely propane and butane. LPG is produced or derived from natural gas. The natural gas stream is dehydrated and various liquids including LPG are stripped out and then stored under pressure at the various natural gas plants. Since these plants are located off-rail, Enterprise Products must arrange for the transportation of the LPG from these plants to its storage facilities and transfer terminal. The pertinent terminal herein is at Realitos, Tex. At Realitos, it is reloaded from tank trucks into tank cars for export and ultimate delivery to the Republic of Mexico through the Texas port of Laredo. The transportation service from Realitos to Laredo, Tex., is performed by Tex-Mex, defandant herein. Enterprise International, as a wholly owned subsidiary of Enterprise Products is the sales arm or marketing agent. It sells the LPG for delivery to the Republic of Mexico and thus is also a vital link in the total service which Enterprise Products performs for the various natural gas plant operators that it serves. The LPG here under consideration, namely that moved from Realitos to Laredo, is sold f.o.b. Laredo, Tex., which means that Enterprise Products absorbs the entire freight charges for this movement. Any damages or excess freight charges suffered as a result of the transportation charges assessed for this movement are in consequence borne solely and directly by Enterprise Products. Hereafter, complainants will collectively be referred to as Enterprise. Prior to December 13, 1973, Enterprise loaded LPG into tank cars at a side track located in Laredo which was leased from Tex-Mex. Subsequent thereto, being obliged to find a terminal facility with a suitable siding, Enterprise transferred its storage and terminal facility to Realitos, Tex., a point on the main line of Tex-Mex. After relocating its operations, Enterprise's first shipments were made on December 13, 1973. As indicated, the natural gas plants served by Enterprise are located off rail sidings. This means that Enterprise must collect the LPG in trucks from the various natural gas plants. The LPG is now picked up by tank trucks at the various off-rail plants and trucked into a gathering and transfer terminal at Realitos, thereafter to be transferred from tank trucks into tank cars, which tank cars are owned or leased by Enterprise. The tank cars are then moved from Realitos to Laredo for export into the Republic of Mexico by Tex-Mex. Tex-Mex switches the facility at Realitos once a day with a westbound or southbound local en route from Corpus Christi to Laredo. Realitos is located approximately 75 miles from Laredo and approximately 84 miles from Corpus Christi. The switching at Realitos is nothing more than a simple pulling and spotting operation. Tex-Mex uses the local engine or way train to do the pulling and spotting. To perform the switching, Tex-Mex locomotive brings the empty tank cars, owned or leased by Enterprise into its siding, places the empties, pulls loaded cars out of Enterprise's loading rack onto the main line, and then places them for movement into the main westbound or southbound train. The empties generally average about the same number per day as the loaded cars per day. It takes only about 15 to 20 minutes to place the empty cars at shipper's rack, and to pull the loaded cars out and put them on the main train. On rare occasions, it could take as much as 30 minutes. The normal average time which this operation generally takes, however, is approximately 15 to 20 minutes. In this operation, Tex-Mex generally stores the empties for its convenience either at Alice or Hebbronville, Tex., and then when, the main southbound or westbound train comes to Alice or Hebbronville, unhooks the engine, picks up the empty tank cars and proceeds to a point about 50 to 75 yards from Enterprise's terminal. It then backs the engine with the empty cars to shipper's rack, hooks up the loaded cars, and pulls them from the loading rack onto the main track. The carrier then uncouples the loaded cars and backs the empties onto the loading rack. As indicated, Tex-Mex stores Enterprise's empty tank cars at Alice or Hebbronville for its operating convenience and not because of any request on the part of Enterprise. There is ample room at shipper's Realitos siding to store the empties. When the loaded cars proceed to Laredo, they are “classified,” and, where necessary, placed on storage tracks awaiting custom clearance. In the case of the considered traffic the delay for each car in Laredo is less than 24 hours. Work at the Laredo yard is performed by yard engines, whereas all the switching between Corpus Christi and Laredo is performed by the way train. Every day the Enterprise dispatcher at Realitos calls Link Petroleum Co. this company makes up the custom papers for Enterprise and acts as its export broker at Laredo, before the loaded cars are picked up. It also gives Enterprise the necessary information to prepare the custom papers, so that all necessary paperwork has been completed before the loaded cars reach Laredo. Enterprise owns or leases 500 tank cars suitable for the transportation of LPG. These cars are specially designed LPG tank cars capable of maintaining 255 PSI (pressure per square inch). All 500 cars are jumbo tank cars, with a capacity of approximately 33,000 gallons per tank car. When tank car shortages arise, Enterprise spot leases other tank cars for its use, including what are generally referred to as smaller tank cars. Tex-Mex compensates Enterprise for the use of the cars at an average of 19.44 cents per mile for a 74-mile haul, or $14.38 per loaded car. The rental is "low" because instead of a per diem charge, Tex-Mex pays only on a mileage basis, which means that if a car is on the Tex-Mex system on a particular day but does not move, there is no payment on that day. Likewise, Tex-Mex only pays for loaded miles, not for empty movements. Although LPG is classified as a flammable compressed gas, there is no excessive special handling in the "switching" and line-haul or road-haul movement of the LPG tank cars by Tex-Mex. There have been no loss or damage claims assessed on this traffic since Enterprise's operations commenced at Realitos in December 1973. Thus, usual care, which would normally be expected of any one experienced in the handling of LPG, is all that is required for the movement of this commodity from Realitos to Laredo. While it is true that the LPG is ultimately destined for export, the custom papers are prepared and ready in advance. While the cars have to be held at Laredo for crossing permission, there are only minor delays and no demurrage has been charged Enterprise on any of its movements from Realitos to Laredo during this entire period. Turning now to the subject of the complaint, it is Enterprise's position that the applicable rates on these movements were and are unjust and unreasonable and more than necessary to return reasonable compensation to the defendant. Table I infra shows, with reference to Texas-Louisiana Freight Tariff 48-S, Items 23718 and 23752, that a base rate of 24 cents was published to apply on jumbo tank cars effective July 1, 1972, with general increases ultimately raising the rate from Realitos to Laredo to 32 cents per hundredweight. The minimum weight for jumbo tank cars has remained at 127,000 pounds. TABLE I APPLICABLE TARIFF RATE AND MIN. WT. TARIFF 48-S RATE SECTION 1-DIVISION G EXPORT RATES ON PETROLEUM PRODUCTS, AS SPECIFICALLY INDICATED Applies only on shipments for export to Mexico; also on traffic to foreign countries (see Item 263) when moving through Mexico (except as noted). RATES IN CENTS PER 100 POUNDS ITEM 23718 LIQUEFIED PETROLEUM GAS, in tank cars, carloads, subject to Notes 1, 2 and 3, also Rule 35 of governing classification and Regulations of the Interstate Commerce Commission, reproduced in Agent R. M. Graziano's Tariff 23, ICC 23. NOTE 1-Freight charges will be assessed on basis of weight determined by multiplying the net gallons at 60 degrees Fahrenheit by a weight of 4.7 pounds per gallon (see Note 2), subject to minimum weights shown in columns below. NOTE 2-The rates also apply for mixing, binding, fractionating (separating), purification, dehydrating and/or adding malodorant agent, or for storage, but only as proportional rates for reshipment to interstate destinations via rail, pipe line or motor common carrier. NOTE 3-Shipper shall show on the bill of lading the number of net gallons at 60 degrees Fahrenheit loaded at point of origin. COLUMN I RATES-Apply on minimum weight 44,000 pounds per car. APPLYING ON LIQUEFIED PETROLEUM GAS, CARLOADS, AS DESCRIBED When Enterprise started its operation at Realitos on December 13, 1973, there was a specific rate in effect applicable on the movement of LPG from Realitos to Laredo for export. As of December 13, 1973, the applicable rate for this movement in jumbo cars had become 26 cents per hundredweight. It continued in effect until January 1, 1974, at which time the rate was further increased to 27 cents, on May 1, 1974, 28 cents, and since June 20, 1974 to the date of the complaint, 32 cents. Enterprise had requested Tex-Mex to publish the 24-cent rate on jumbo tank car movements of LPG as a just and reasonable level for the tremendous volume anticipated, but was merely informed that the published rates were part of an overall rate scale for the movement of LPG. The heavy movement of LPG occurs during the winter months and with no relief in sight, Enterprise had no recourse except to use the existing rates applicable from Realitos to Laredo in December 1973. As of August 2, 1974, Enterprise renewed its request of Tex-Mex that it be given rate relief, using a cursory cost analysis and revenue comparison. That letter read. August 2, 1974 Mr. Bill Weber Vice-President, Traffic Texas Mexican Railroad Company P. O. Box 419 Laredo, Texas 78040 File: 100:110 Dear Bill: As you know, we are shipping a large volume of Liquified Petroleum Gas in 30,000 gallon tank cars from Realitos, Texas to Laredo, Texas. We have recently reviewed the Form A ICC Rail Costs and feel that the present freight rate on shipments in 30,000 gallon tank cars greatly exceeds the Form A costs. These Form A costs are as follows: TABLE III - ZONE V - 1970 COSTS A. Line Haul Constant Expense = 54.9572 cents car mile C. Terminal Expense The present rail rate is 32 cwt. which results in approximate per carload revenue of $448.00 (average carloading is 140,000#). We feel that the difference between your costs and the revenue realized is too great. While you are entitled to a reasonable profit, the present revenues, we feel is substantially in excess of a reasonable rate. We would appreciate consideration and advise us regarding a reduced rate on future shipments and perhaps a reparation on past shipments. Very truly yours, ENTERPRISE PRODUCTS COMPANY Charles K. Hutchinson General Traffic Manager By letter dated September 20, 1974, Mr. Webber replied that, after studying the matter, Tex-Mex would agree to publish a 27-cent per cwt rate, subject to an increased minimum weight of 140,000 pounds, noting that the latter adjustment would have little effect on Enterprise's shipments because its per car load was running 140,000 pounds. This was really a proposed reduction of 4 rather than 5 cents because general increases brought it to 28 cents. For this reason Enterprise rejected the proposed reduction as insufficient and renewed its request for a 24-cent rate which would give Tex-Mex a revenue yield of $336.00 per carload for the 75-mile haul. Next, Mr. Gilbert Parr, an independent transportation consultant, was employed to make a detailed cost study of the movements. His conclusions confirmed Enterprise's view that the contribution (excess of revenue over costs) was unreasonable. Further negotiations were also unsuccessful. Simultaneously, additional general increases raised the effective rate as of June 19, 1975, to 34 cents per cwt and on June 20, 1975, to 36 cents per cwt. The latter figure produces an average carload revenue of $526.00 As an indication of the extent of Enterprise's problem and to show the impressive volume of this attractive traffic Table 2 infra lists the number of both jumbo and small cars shipped by Enterprise from Realitos to Laredo for export between December 13, 1973 and March 31, 1975. 357 I.C.C. |