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relying on a letter which had been sent to MP by the Rock Island. Upon objection that, under the "best evidence" rule, oral testimony regarding the contents of a letter may not be admitted if the letter itself is available and is not offered in evidence, that testimony was not allowed. Rock Island declined to offer the letter into evidence because it insisted that it contained information which Rock Island believed was confidential," fearing that shippers might try to use the divisions information as rate comparisons in succeeding cases. Then, in response to a question whether the divisions offer was on the same percentage basis which had existed for several years, the Rock Island witness responded "Yes" without further elaboration. Asked by the Administrative Law Judge whether the witness had anything he was prepared to offer in evidence in support of his answer, the witness responded, "No, I do not." Additionally, MP and SP stipulated that they rejected the divisions offered by the Rock Island because the total revenues to be derived would be less than under the present rates and because the proposed divisions would be below variable costs for their portion of the movement.

Portestants have argued that the Commission has power to correct a violation of section 3(1) by prescribing that the reduced rates be applicable to all the involved ports under section 15 of the act. They also submit evidence that these rates would be reasonable. SP and MP oppose prescription on the grounds that reduced rates cannot be prescribed unless they are no lower than the maximum reasonable rate. Moreover, they claim prescription of reduced rates would leave them with a noncompensatory division of revenue. SP and MP also object to the entry of any order which would require them to join in reduced rates because they were given insufficient time to prepare a statement of position after they were added as parties in this proceeding; and ask that protestants' statement concerning prescribed rates, dated September 27, 1977, be struck or rejected.

DISCUSSION AND CONCLUSIONS

In this proceeding, the statutory burden of proof is on the carriers to show that the considered rates are lawful. To support a finding that section 3(1) has been violated, as alleged by protestants, the evidence must disclose (1) that there is a rate disparity; (2) that the complaining party is actually or potentially competitively injured; and (3) that the carriers have common control of the rates to both "It was not asserted that the Commission did not have the right to require the information.

the preferred and prejudiced ports. The carriers may refute these contentions or affirmatively establish that the rate disparity is not justified by transportation conditions. See Chicago & Eastern Illinois R. Co. v. United States, 384 F. Supp. 298, 300-01 (N.D. Ill. 1974), affirmed 421 U.S. 956 (1975).

The facts demonstrate that a rate disparity of 0.1 to 0.6 cents exists, depending on the origin involved. There has been no argument that a difference in transportation conditions justified the higher rate to Corpus Christi. Moreover, even considering the only evidence offered which could possibly support a finding of transportation differences, it appears that no difference has been established. While Union alleges that motor competition is a motivating factor in the rate reductions, it does not allege that competition does not exist to Corpus Christi. Furthermore, while Rock Island states that the reductions were partially in response to reduced rates by the Atchison, Topeka & Santa Fe Railroad, which rates are not effective to Corpus Christi, this will not support a defense of substantial dissimilarity of transportation conditions. MP also has reduced rates from the origin area which do apply to Corpus Christi. "It is well settled that a carrier may not pick and choose the competition it will meet if the effect thereof is to create under preference and prejudice." Grain in Multiple-Car Shipments-River Crossings to So., 321 I.C.C. 582, 610 (1963); Mississippi Cotton Seed Crushers Assn. v. A., B. & C. R. Co., 238 I.C.C. 87, 100 (1940), affirmed 251 I.C.C. 643, 662 (1942).

Turning to the issue of common control, we note that in prior cases the Commission has found that where the origin carrier proposed an equal joint rate to Corpus Christi, and made an offer of divisions of revenue to a connecting carrier to Corpus Christi, but the connecting carrier did not concur in the joint rate, that the origin carrier was found not to have "control" over the rate to Corpus Christi. I. & S. 9132, Wheat, Kansas and Oklahoma to Gulf Port, supra, footnote 2; I. & S. 9052, wheat, New Mexico and Texas to Texas Ports, 355 I.C.C. 237 (1976); Corn & Soybeans Midwest to Gulf Ports, 349 I.C.C. 1 (1974).' The Commission has not previously inquired into what divisions were offered. However, if an origin

"Appeal docketed sub nom. Nueces County Navigation District No. 1 v. Interstate Commerce Commission, No. 76-4490, 5th Cir.

'Appeal docketed sub nom. Nueces County Navigation District No. 1 v. United States, No. CA3-74-1253-D, N.D. Tex.

carrier is not required to show that it has made a good faith offer of divisions, it could always evade a finding of common control by predicating a lower joint rate upon a division of revenues which substantially reduces the share of the connecting carrier. The connecting carrier would naturally refuse to concur, and the Commission would have been left with no alternative but to find that the carrier did not have common control. Accordingly, in its order of September 7, 1977, in this proceeding the Commission announced that it would require the origin carrier to establish that it had made a good faith offer before it could claim that nonconcurrence of the connecting carrier deprived it of common control.8

Our concern that a good faith offer of divisions may not have been made could be alleviated if it were shown that there was a genuine attempt by the origin carrier to arrive at divisions agreements with connecting carriers, and not to prevent agreement by making an offer significantly lower than customary without justification. Accordingly, it was suggested in the Commission's order dated September 7, 1977, that good faith could be shown through comparison of the divisions actually offered with the amount and proportion of established bases of division for identical commodities and routes comparable to those at issue in this proceeding. It was also suggested that the origin carrier could support its case by use of cost data. If it appeared in light of evidence submitted that a reasonable offer was made, then good faith would be shown.

Protestants have argued that divisions are irrelevant to this proceeding. However, common control is a concept designed to insure that the carrier or carriers causing violation of section 3(1) has an actual alternative to raise or lower the rates at issue, so as to restore parity. Texas & Pacific Ry. Co. v. United States, 289 U.S. 627, 650 (1933). Thus, the carrier or carriers must effectively participate in both the prejudicial and preferential rates. But if two carriers refuse to act in concert to set a joint rate to a port which they can only serve jointly, because of a genuine divisions dispute, they cannot reasonably be said to be in control of the joint rate. Our inquiry into divisions in this proceeding extends from a concern that

"Following open Commission conference in I. & S. 9052, Wheat, New Mexico and Texas to Texas Ports, and I. & S. 9052 (Sub-No. 1), Corn and Sorghum Grain, New Mexico and Texas to Texas Ports, this policy was announced by order dated September 7, in that proceeding and in the present case.

such a dispute could be deliberately induced, as described above. If so, the carrier making an offer in bad faith should not be able to claim that it lacks common control.

While in other cases cited by protestants it has been stated that divisions are of no concern to a shipper, these cases do not deal with the situation involved here. Rather, they deal mainly with reasonableness of a rate. In this regard, it has been stated that a shipper's only interest is that the rate as a whole be reasonable; not that an individual carrier's share of that rate must be reasonable. Great Northern Ry. v. Sullivan, 294 U.S. 458, 463 (1935); Louisville & Nashville R. Co. v. Sloss-Sheffield Co., 269 U.S. 217, 234 (1925). Our inquiry in this proceeding is not in derogation of that rule. There is no allegation that the divisions themselves are prejudicial or preferential, but only that the rates occurring as a result of a divisions dispute are.

9

We are troubled by the Administrative Law Judge's ruling that, despite Rock Island's claim that confidential information was involved, it must nevertheless disclose all evidence it wished to introduce to all parties, or else the evidence would not be admitted. While it is certainly necessary to protect the rights of opposing parties to inspect evidence and to answer it by cross-examination or rebuttal evidence, it is equally necessary to protect a party's right to avoid disclosure of confidential information. Often Administrative Law Judge may be able to devise a means of accommodating the legitimate interests of all parties, such as by excising certain data from the documentary evidence, by disguising names or figures, or similar means. Since the documents Rock Idland sought to introduce are not physically before us, we cannot determine the extent of its confidentiality and whether an accommodation would have been possible in this case. Thus, while we believe it would have been appropriate for the Administrative Law Judge to examine the material in camera and determine whether an accommodation was possible before ruling that full disclosure should be required, we are not prepared to say that this ruling constituted reversible error. In this connection, we would note that the parties were less than cooperative with regard to this problem. Both sides adopted extreme positions, urging either total "See, for example, the Commission report in Ex Parte No. 320, Special Procedures for Making Findings of Market Dominance as Required by the Railroad Revitalization and Regulatory Reform Act of 1976, served August 23, 1976, discussing the confidentiality of tonnage information, sheets 90-92. There it was indicated that access to the information could be withheld from the public, under certain circumstances, but must in any event be divulged to other parties.

10

disclosure or total in camera treatment, rather than attempting to suggest a reasonable approach which might satisfy the legitimate interests of all parties. In any future cases (or in any further proceedings that might be conducted in this case) we will expect the possibilities of an accommodation to be fully explored.

It should also be noted at this point that Rock Island made little effort to assist in developing the record. In several instances, at oral hearing, the Rock Island stated it would "present no evidence, recognizing that the Commission has the alternative to compel us to cancel the rates."

The second procedural matter that requires resolution is the ruling on the motion to strike oral testimony on division negotiations, based on the best evidence rule. The granting of the motion to strike was overly technical. While the testimony was not the best available evidence of the contents of the letter, this deficiency relates to the weight it should be accorded as evidence, and does not necessarily foreclose its admission and consideration by an administrative body. See Martin-Mendoza v. Immigration & Naturalization Service, 499 F. 2d 918 (9 Cir. 1974), cert. denied 419 U.S. 1113 (1975), reh. denied 420 U.S. 984 (1975). See also rule 73 of the Commission's Rules of Practice (49 CFR 1100.73). We have considerable discretion in the area of admission of evidence and have concluded that the oral testimony should have been received, and we will consider that evidence in our decision.

We are constrained to conclude however that the very sketchy testimony which was given and then stricken is not sufficient to constitute a prima facie showing of a good faith offer of divisions. More than a general assertion that the same percentages were offered as had previously existed on this movement is required. As above indicated, the connecting lines stipulated that the offered divisions did not meet variable costs for their portion of the movement. In this state of the record, we cannot find that Rock Island has carried its burden of proof on the issue of good faith. Were it not for statutory deadlines, we would consider reopening the matter for further hearing. However, a final decision within 10 months is required under section 15(8)(a) of the Interstate Commerce Act. In this circumstance, we believe we are obligated to

10 The Administrative Law Judge may also have been misled by the order of this Commission of September 7, 1977, which may be susceptible of interpretation as requiring full disclosure of divisions evidence to all parties. We did not intend, by that order, to preclude the possibility that some information be accorded confidential treatment, if this were shown to be feasible and appropriate.

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