Requests for unit trains are place with the N&W at the beginning of each harvest season, and are not alway filled. Some requests from four of the six grain exporter respondents herein have been denied, while those of shippers who have upgraded their facilities to load 100 car units in not more than four switches have been granted. This upgrading costs from $30,000 to $150,000 for each facility. In the N&W's view, without the consecutive trip requirement its fleet of covered hoppers in unit-train service might be kept busy during harvest time, but not at other times when there would be no duty and little incentive for a train operator to keep the unit train moving as at present. Without another order for a unit train unloading at the ports, trains would have to be broken up and reassembled when an order might come in for one, both of which would be expensive to the railroad.

The N&W emphatically denies ever, in any way, being involved in discounting. Cars are supplied in response to car orders made pursuant to Mandatory Car Service rule 15, and orders for trains pursuant to the published trainload tariff. It know nothing about the terms of grain contracts when orders are received. Although most N&W covered hopper cars are controlled by the grain seller to whom they are supplied, unit trains are supplied both to consignors and consignees. The 10 N&W cars which were discussed by one of the Iowa elevator operators were delivered in September 1973 along with others to the ICG for loading to N&W destinations, as were others supplied to the C&NW. They were distributed by those two railroads and the N&W had no control over them beyond that point. They were not used in unit trains.

Like the Penn Central and the N&W, the Chessie System has enjoyed increased export grain volume since 1970 due to the unit-train rates in effect on trains of 65 cars which are originated on its system and 100 cars handled in interchange from other carriers to the ports of Baltimore and Norfolk which it serves direct. In 1970, the B&O handled 13 trains of 100 cars each in unit-trains service, transporting 127,526 net tons of grain. In 1973, these figures had escalated to 100 trains, in both direct and interline service, consisting of 7,375 cars, transporting 726,378 net tons, and in 1975 the figures were 244 trains, 17,855 cars and 1,749,790 tons. In the latter year, the C&O handled 43 trains, 2,795 cars, and 273,910 tons. In the three-State arca comprised of Illinois, Indiana, and Ohio, the B&O, in 1975, served 141 elevators, while the C&O served 20 in Ohio and Indiana. Thirty-four elevators on the Chessie System have unit-train loading capabilities, and these are operated by 19 different shippers. Better car utilization through faster turnaround times has also been the experience of the Chessie System in unit-train movements of grain compared to grain moving in cars from the general pool. Whereas the latter transported an average of 1.24 loads per car per month in 1974, cars in unit-train service in the same month moved 3.21 loads each per month. If there had been no unit trains operating in that year, based on the above turnaround times, it estimates it would have been able to handled only 16,034 cars instead of the 25,915 cars actually handled.

The CRI&P, as already noted, operates 54-car unit trains and has done so since its tariff went into effect, after being suspended, on June 22, 1971.

Under this rate, corn and soybeans originating in States served by the CRI&P are moved to gulf ports for export. The area for corn includes the State of Iowa and southern Minnesota, which is also the major growing area for soybeans, along with southern Arkansas, served by the CRI&P. The CRI&P serves major winter wheat growing areas, but through trial and error it has found that wheat does not lend itself well to movement in unit trains. The CRI&P is a grain carrying railroad, with 22-percent of its carloadings made up of grain and grain products.

The C&NW's 25/50 car unit-train rate on corn and soybeans from Illionois, Iowa, Minnesota, Missouri, South Dakota, Nebraska, and Wisconsin became effective July 15, 1972, at which time it owned 1,495 jumbo covered hopper cars. (In mid-1976, it owned 3,640 cars of this type.) The various features of the 25/50 car tariff have been discussed at length above. It was specifically designed to enable the C&NW effectively compete with the unregulated bulk barge traffic in the area which it serves. During roughly the first year of its existence (one full harvest) the unit train rate enabled the C&NW to increase its volume of grain handled by 60 percent over the preceding year. In 1973, the Gulf ports to which most C&NW unit trains moved were frequently embargoed, yet despite the delays caused thereby, 18-day turnaround times on unit-grain-train cars from Iowa and Minnesota were experienced. During the same period single cars were taking as long as 45 days to make their turnarounds. In 1974, the C&NW moved 100 million bushels of corn and soybeans in 25- and 50-car unit trains comprised of 28,750 hopper cars. Total grain and soybean movements that year were 163,455 carloads, of which 62 percent, or 101,342, were boxcars.

In 1975, the year in which service No. 1223 was issued, only 15,675 covered hopper cars of corn and soybeans moved in unit trains. While service order No. 1120 hardly touched the C&NW because of its 25 car unit trains, service order No. 1223, requiring the cancellation of the consecutive trip requirement, has a severe impact on the C&NW. On the date the order became effective, October 31, 1975, the C&NW had 1,900 covered hopper cars in 56 unit trains. Of these cars, 677, or 35.6 percent, were of railroad ownership. Twenty-six of the trains had C&NW cars in their consists and had to be canceled with one or more of their five consecutive trips remaining to be operated. The total effect was that 72 trips, or 2,250 carloads, which would have generated $1,406,000 in C&NW gross revenue had to be canceled. To try to salvage something from the idled equipment, the railroad offered shippers one-trip unit trains at the bargain five-trip level of rates. Most shippers contacted were not interested when they learned they could not have the train for five consecutive trips. C&NW succeeded in selling only five 25-car trains which generated approximately $78,000 in gross revenue. The net effect of service order No. 1223 was to idle a major portion of the C&NW's covered hopper fleet. The elevators with grain stored on the ground, whose plight had spurred issuance of the order, had either moved their grain by some other mode or were, for some reason, not interested in using the empty C&NW cars which were available in abundant numbers. The C&NW witness, an extremely

knowledgeable one and one whose testimony is accorded substantial weight because of his credibility, questions whether any real emergency existed such as would warrant a service order embodying the extreme provisions of service order No. 1223. In his experience, certain elevators regularly store grain on the ground every year and make plans ahead of time to do so. The grain remains so stored until such time as the elevator is able to realize the price at which it is willing to sell. Offers of cars to move it before that time are turned down.

The transportation of corn and soybeans each year accounts for approximately 5 percent of all carloadings on the Milwaukee and generates between 5 and 6 percent of its total gross revenues. Its 1973 carloading of corn (40,552) were higher than in any other year between 1960 and 1975, and revenue from that transportation was nearly twice as great as in any previous year. The Milwaukee's 25 and 50-car unit train rates on corn and soybeans took effect on August 28, 1972. In 1973, the Milwaukee loaded 103,309 carloads of grain on line, 37,294 of which were in covered hopper cars. Of the latter number 4,379, or 11.7 percent, were loads moving in 25- and 50-car unit trains. In 1974, the number of carloads in unit trains was 6,663 or 15.1 percent of total covered hopper car loadings, but this percentage dropped back to 10.0 in 1975 when 4,125 of the 41,327 covered hopper car grain loadings were in unit trains. These figures demonstrate that, unlike the C&NW, the Milwaukee's fleet of jumbo covered hopper cars, which during most of the period numbered 2,370, was not tied up in unit-train service despite the opportunity presented by its 25-car train rates for it to escape the restrictions on percentage of cars permitted in unit-train service imposed by service order No.1120. In 1974, the Milwaukee inaugurated a type of shuttle train service, which it calls mini unit trains, which move between grain loading points in Iowa and Minnesota, on the one hand, and barge loading facilities on the Mississippi River on the other. The trains consist of between 20 and 40 jumbo covered hopper cars, pick up cars at elevators along the way, and try to make three round trips per week. The number of trains being so operated varies with demand as does the duration of the trains existence. In all, over its entire system, the Milwaukee serves 1,185 elevators.

The ICG operates over 9,341 miles of track in a 13-State area located between the Great Lakes, the Midwest, and the Gulf of Mexico (New Orleans, Gulfport, and Pascagoula). Grain is transported to the Great Lakes and the gulf pursuant to rates published in a variety of tariffs as described above in detail. Its fleet of jumbo covered hopper cars during the period under investigation ranged in number from 2,372 to 2,754. Under its limited unit-train program, no more than 250 of those cars were in unit-train service between January 1973 and June 1974. In five of the intervening months only 100 cars were in unit trains, while in 5 other months none of its cars were in unit train service. In addition to its fleet of owned equipment, the ICG leases blocks of a cars from car leasing companies and grain companies, from time to time as the need arises, to supplement its fleet. In April 1976, it was again in shortage situation when it obtained the use of 300 covered hopper cars of Santa Fe ownership on standard per diem charges. However, in some months the opposite situation

prevails, when system-owned cars are sitting idle. During the period April through August 1975, the ICG has approximately 400 idle grain hopper cars, and in December of that year, between 300 and 500.

CONTENTION OF THE PARTIES

The Bureau, on brief, points out that the record clearly cites examples of discounting in both railroad and privately owned equipment. The opportunity for the grain merchandisers to engage in this practice, it argues, arose with the consecutive trip provisions in unit-train tariffs and the resultant control over equipment conferred upon grain merchandisers. Discounts, according to the Bureau, constitute a commercial advantage to the unit-train operator amounting to an unlawful rebate under the Elkin Act (49 U.S.C. 1). Each time railroad-owned cars are placed to move grain purchased under a discounted bid a violation of the Elkins Act occurs.

Similarly, with respect to leased cars, the Bureau considers payments in the form of discounts which are in excess of the grain merchandiser's monthly rental costs to be rebates prohibited under the Elkins Act. It is the Bureau's theory that when, in a given month, either through sublease payments or payments in the form of discounts, the monies received by the car lessee exceed the monthly lease payments, the lessee in that month is entitled to no mileage allowance.

As reason why its grain car distribution guidelines are needed, the Bureau refers to the inability of shippers who wanted to operate unit trains under the C&NW the the Milwaukee unit-train tariffs to obtain any cars from those two carriers because the bulk of their dedicated equipment went to the large merchandisers for their use in unit trains. The shortage of equipment thus created caused elevators to pay for the use of such controlled equipment rather than run the risk of incurring penalties for failure to meet contract commitments under seller's equipment contracts.

10

The Milmine case10 recognized that the railroads had been failing to discharge their duty to maintain active control over their equipment and to insure that shippers are being treated equitably. The Bureau applauds the reasoning in Milmine which it would carry to the point of finding unlawful all consecutive trip tariff provisions, but it rejects the holding in that case which it sees as lacking a rational basis and as precluding the railroads from effectively implementing any car distribution plans which they might have. The latter argument is also raised as the basis for denying the right, in the Bureau's proposal, to anyone other than grain elevators to order cars, another point going beyond the holding in Milmine. The Bureau's conclusion in this respect is that the consecutive trip requirement violates both sections 1(11) and 3(1) of the act. It requests us, in this proceeding, to so find, and to order such provisions canceled, whether the unit trains so operated are under the direction of consignors or consignees.

10 Milmine Grain Co. v. Norfolk and W. Ry. Co., 352 I.C.C. 575 (decided February 5,

1976).

The Bureau urges adoption of its distribution plan as the only effective way for the Commission to discharge its responsbility for insuring fair and equitable distribution of railroad-owned equipment, and cites as a further reason the lack of any uniform plan for the distribution of grain cars among the Nation's railroads. Finally, as authority for issuing the distribution plan as modified, the Bureau cites section 1(14) of the act.

The grain company and railroad respondents strongly oppose the adoption of the proposed car distribution rules on several grounds. They claim the rules have not been shown to be needed; that no one but the Bureau supports the rules; that the effect of the rules would be cancellation by the railroads of their unit-train tariffs, which would happen in the face of evidence that unit trains have been credited with tripling grain car utilization, widening the market access for country elevators, and aiding and improving the efficiency of handling grain through the ports.

One feature of the rules with which the grain companies are particularly distrubed is the denial of the right to order cars to anyone except elevator operators even though it has been shown on this record that effective unit-train operators can only be carried out by the exporters themselves. Most unit trains have been operated in this manner, both for the logistical as well as the economic considerations involved. They argue that the Bureau fails to recognize, in urging the adoption of its distribution plan in lieu of presently existing railroad distribution plans, that an ad hoc approach is frequently the best one in solving grain car distribution problems on the local, agency station level. If, they ask, as the Bureau contends, a car distribution plan is mandated under section 1(11) of the act, why, in all the years the section has been in has it never before been found necessary, except in the completely disimilar situation of coal cars, to bring forth such a plan as the one here proposed, and why does this mandate suddenly vanish in times of car surplus when the plan, under the Bureau's modified proposal, would not be in effect.

Opponents of the Bureau's car distribution plan point out that plans for the distribution of grain cars exist on all railroads, and they are working, although they may not be reduced to writing or be as rigid and formalized as the Bureau would prefer. Unlike the Bureau's proposed plan, they were drafted by people knowledgable in railroad operations and familiar with problems likely to be encountered by railroads, and each meets the particular needs and requirements on an individual railroad and its customers. The problem which the rules are meant to correct no longer exists and is not likely to recur. Such problems as might arise in times of car shortage can be adequately handled by the Commission in the exercise of its car service powers without resort to a distribution plan shown to be both uneeded and inadequate and defective in many major respects.

The grain merchandisers sum up their arguments in respect of discounting in their claim that the term "discount" has never been properly defined; that the word is a misnomer for a business practice actually involving compensation paid for assuming the responsibility of supplying equipment; that any economic advantage arising from controlling equipment is available to