# Appendix — Atchison, Topeka & Santa Fe Railway Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1970%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1976 - **Citation:** 426 U.S. 943 ## Text A — Supreme Court, U. §, FiLED APR 13 1976 | | MICHAEL RODAK, JR., CLERK | 75-1476 IN THE Supreme Court of the United States Ocrosper TERM, 1975 THe ATCHISON, TOPEKA, AND Santa FE RalLway CoMPANY, ET AL., Appellants, Vv. UnrtTep States OF AMERICA AND INTERSTATE CoMMERCE CoMMISSION, Appellees April 13, 1976 Press or Byron S. Apams Printine, INC., WASHINGTON, D. C. Appendix Appendix Appendix Appendix Appendix ieee mon B: D: INDEX TO APPENDIX : Statutes ImvOlved ....nccccccceccces Opinion of district court ............ : ICC Deeision and Order of December PPE hicsaeersgbieandeg anda dass ICC Supplemental Report and Order ee PEED 6s ose acer ceeces 2 8g go errr rere l3a la APPENDIX TO JURISDICTIONAL STATEMENT APPENDIX A STATUTES INVOLVED Administrative Procedure Act, § 8. as amended (5 U.S.C. § 557) (a) This section applies, according to the provisions thereof, when a hearing is required to be conducted in accordance with section 556 of this title. (b) When the agency did not preside at the reception of the evidence. the presiding employee or, in cases not subject to section 554 (d) of this title, an employee quali- fied to preside at hearings pursuant to section 556 of this title, shall initially decide the case unless the agency re- quires, either in specific cases or by general rule, the entire record to be certified to it for decision. When the presiding employee makes an initial decision, that decision then be- comes the decision of the agency without further proceed- ings unless there is an appeal to, or review on motion of, the agency within time provided by rule. On appeal from or review of the initial decision, the agency has all the powers which it would have in making the initial decision except as it may limit the issues on notice or by rule. When the agency makes the decision without having presided at the reception of the evidence, the presiding employee or an employee qualified to preside at hearings pursuant to section 556 of this title shall first recommend a decision, except that in rule making or determining applications for initial licenses— (1) instead thereof the agency may issue a tenta- tive decision or one of its responsible employees may recommend a decision; or (2) this procedure may be omitted in a case in which the agency finds on the record that due and timely execution of its functions imperatively and un- avoidably so requires. NE 2a (c) Before a recommended, initial, or tentative decision, or a decision on agency review of the decision of subordi- nate employees, the parties are entitled to a reasonable opportunity to submit for the consideration of the employ- ees participating in the decisions— (1) proposed findings and conclusions: or (2) exceptions to the decisions or recommended de- cisions of subordinate employees or to tentative agency decisions; and (3) supporting reasons for the exceptions or pro- posed findings or conclusions. The record shall show the ruling on each finding, conelu- sion, or exception presented. All decisions, including initial, recommended, and tentative decisions, are a part of the record and shall include a statement of — (A) findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law, or discretion presented on the record; and (B) the appropriate rule, order, sanction, relief, or denial thereof. Interstate Commerce Act, § 15(7), as amended (49 U.S.C. § 15(7)) (7) Whenever there shall be filed with the Commission any schedule stating a new individual or joint rate, fare, or charge, or any new individual or joint classification, or any new individual or joint regulation or practice affecting any rate, fare, or charge, the Commission shall have. and it is hereby given, authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders without answer or other formal pleading by the in- terested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such 3a rate, fare, charge, classification, regulation, or practice; and pending such hearing and the decision thereon the Commission, upon filing with such schedule and delivering to the carrier or carriers affected thereby a statement in writing of its reasons for such suspension, may from time to time suspend the operation of such schedule and defer the use of such rate, fare, charge, classification, regulation, or practice, but not for a longer period than seven months beyond the time when it would otherwise go into effect; and after full hearing, whether completed before or after the rate, fare, charge, classification, regulation, or practice goes into effect, the Commission may make such order with ref- erence thereto as would be proper in a proceeding initiated after it had become effective. If the proceeding has not been concluded and an order made within the period of suspension, the proposed change of rate, fare, charge, classification, regulation, or practice shall go into effect at the end of such period; but in case of a proposed in- creased rate or charge for or in respect to the transporta- tion of property, the Commission may by order require the interested carrier or carriers to keep accurate account in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf such amounts are paid, and upon completion of the hearing and decision may by further order require the interested carrier or carriers to refund, with interest, to the persons in whose behalf such amounts were paid, such portion of such increased rates or charges as by its decision shall be found not justified. At any hearing involving a change in a rate, fare, charge, or classification, or in a rule, regulation, or practice, after the date this amendatory prevision takes effect, the burden of proof shall be upon the carrier to show that the proposed changed rate, fare, charge, classification, rule, regulation, or practice is just and reasonable, and the Commission shall give to the hearing and decision of such questions prefer- ence over all other questions pending before it and decide the same as speedily as possible. da APPENDIX B IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA Civil Action No. 75-201 Tue Arcutson, Topeka AND Santa Fe Ram.way Company, et al Vv. IxverstaTe ComMerce ComMMISSION AND Unirep States or AMERICA Before Van Dusen, Cireuit Judge, and Werxer and Gorsey, District Judges Werner, J. NovEMBER 24, 1975 This is an action brought by several railroad companies to set aside an order of the Interstate Commerce Commis- sion (1.C.C.) cancelling proposed rate schedules which would have provided increased revenues from the trans- portation of fresh fruit and vegetables to the east coast. Jurisdiction of this court was invoked pursuant to 28 l S.C. . 1336(a) and a three-judge court was convened as required by 28 U.S.C. § 2325. Numerous shippers and growers have joined this action as intervening defendants. Briefly summarized. the facts are as follows. In Mav 1974, the railroads filed a series of tarffs and rate sched. ules with the I.C.C., which tariffs were to replace then- existing tariffs covering the transportation of perishable rood products. Subsequently, protests were lodged by ship- pers and receivers, and the newly-filed tariffs were sus- pended and hearings begun pursuant to 49 U.S.C. ¢ 15(7) The hearings constituted Investigation and Suspension Docket No. 8944, Fresh Fruits and Vegetables. Trans-Con- finental and Western Points. Hearings were held across 5a the country at various places and at times until December 20, 1974. On December 20, the presiding administrative law judge set February 3, 1975 as the date by which briefs were to be submitted by the interested parties. On December 30, 1974, the date on which the seven- months period of suspension of rates under investigation was to end, the Full Commission issued an order cancelling the rates, effective thirty days later. As the railroads had not voluntarily agreed to prolong the suspension,’ ad- herence to the previously-set briefing schedule would have resulted in the new tariffs being effective until the I.C.C. rendered its decision. The 1.C.C. order indicated that the Commission had dispensed with the necessity of issuing an initial decision because of the need for a timely final deci- sion and the I.C.C. had found that the filing of briefs was, in light of their findings ‘‘not necessary for a proper dis- position of [the] proceeding.’? A report was issued on March 14, 1975, which fully explained the basis for the December 30, order. The railroads came before this court seeking a tempo- rary restraining order to prohibit the Defendants ‘‘.. . from enforcing by any manner or means th» order of the Interstate Commerce Commission entered .. . on De- cember 30, 1974.’’ Their request was denied on January 27, 1975. The matter is now before the court for finai determination. In their briefs, the railroads have presented several reasons why the I.C.C. order should be set aside. Their ‘A number of the shippers unsuccessfully petitioned the LC C. to strike the new rates prior to the expiration of the period of suspension. The I.C.C. supported a motion by the shippers to obtain a temporary restraining order against the implementations of certain new rates by the railroads. This motion was denied by the United States District Court in Chicago on December 30, 1974. Blue Chip Inc. v. Western Trunk Line Committee, et al., No. 74C 3758 (N.D. Il. 1974). 6a principal contention is that the failure to allow them to submit briefs violated the Administrative Procedure Act (A.P.A.), 5 U.S.C. § 551 et seq., and violated their right to due process of law under the Fifth Amendment. Plaintiffs argue that under §557(c) of the A.P.A., the LC.C. was required to allow the parties to submit briefs and argu- ments. Specifically, § 557(¢) provides: Before a recommended, initial, or tentative decision, or a decision on agency review of the decision of sub- ordinate employees, the parties are entitled to a rea- sonable opportunity to submit for the consideration of the employees participating in the decisions— (1) proposed findings and conclusions, or (2) exceptions to the decisions or recommended de- cisions of subordinate employees or to tenta- tative agency decisions; and (3) supporting reasons for the exceptions or pro- posed findings. Defendants’ briefs state that the hearings conducted by the I.C.C. provided plaintiffs with ample ~pportunity to present their position and, in fact, plaintiffs did fully pre- sent their position through their exhibits. Defendants also argue that the thirty day period before the December 30 order was to be effective afforded plaintiffs the oppor- tunity to submit proposed findings and supporting reasons in the form of a motion for reconsideration.* The United States and the I.C.C. further state that the more rigorous standards of §557 are not applicable, but, rather, that . 553 of the A.P.A. governs investigation and suspension proceedings. * Plaintiffs did, in fact, file a motion for reconsideration. How- ever, that motion was not directed at the merits of the I.C.C. find- ings, but rather was directed at the procedural claims raised here. 7a Section 553 applies generally to rule making proceedings and provides: (ec) After notice required by this section, the agency shall give interested persons an opportunity to par- ticipate in the rule making through submission of written data, views. or arguments with or without op- portunity for oral presentation. After consideration of the relevant matter presented, the agency shall incor- porate in the rules adopted a concise general state- ment of their basis and purpose. When rules are re- quired by statute to be made on the record after op- portunity for an agency hearing, sections 556 and 551 of this title apply instead of this subsection. The government contends that (15(7) of the Interstate Commerce Act requires only that decisions in invé stigation and suspension proceedings be made after ‘full hearing (49 U.S.C. 415(7)), and that the requirement has been satisfied. It is clear that. if basis therefor, on all the material issues of fact, law,. discretion presented on the record ...’’ have been met. Plaintiffs also contend that 49 U.S.C. § 14(1) requires that findings and conclusions be in a more specific form than they were before the I.C.C. That Section re- quires only that the report of the Commission state its conclusions, together with its decision and order. And, under 49 U.S.C. § 15(7) which governs rate suspension pro- ceedings, the Commission is required: . after full hearing, whether completed before or after the rate ... goes into effect, the Commission may make such order with reference thereto as would be proper in a proceeding initiated after it had be- come effective. The record evidences the fact that a full hearing was af- forded the parties. In Alabama G.S.R. Co. v. United States, 340 U.S. 216, 227-228 (1950) the Supreme Court stated that , 14(1) does not require detailed findings of fact, but rather only the essential basis of the Commission’s judgment. And in Kenny v. United States, 103 F. Supp. 971 (D. N.J. 1952), 10a the court held that § 15(7) of the Interstate Commerce Act requires: ... that the interested parties, both the carrier and protestants, shall be afforded an adequate opportunity to be heard on the merits of the controversy; nothing more would seem to be required. Id. at 977. There has, likewise, been no failure to afford plaintiffs due process of law in accordance with the requirements of the Fifth Amendment to the Constitution of the United States. The parties were, as the record shows, accorded a full and fair hearing and, the Commission acted speedily in issuing its December 30 order because it was apparently concerned that allowing the new rates to go into effect for any length of time would significantly disrupt the produce traffic. Thereafter on March 14, 1975, the full opinion of the LC.C. issued. Under 49 U.S.C. § 15(2), orders of the L.C.C. regarding rates are to take effect not less than 30 days after their issuance. Therefore, had the Commission not acted with regard for the potential disruptive effect of the new rates, and issued only its final opinion on March 14, 1975, the rates could not have been suspended until April 14, 1975, and would have been effective for three and one-half months, clearly an undesirable result. We find the contention of plaintiffs that refunds are not appropriate in this situation to be without merit. Section 15(7) of the Interstate Commerce Act, states: .. upon completion of the hearing and decision [the Commission] may by further order require the inter- ested carrier or carriers to refund, with interest, to the persons in whose behalf such amounts were paid, such portions of such increased rates or charges as by its decision shall be found not justified. ° There was evidence submitted by suppliers that in fact the produce traffic was severely disrupted during the 30 day period before the effective date of the I.C.C. order. lla Section 15(7) further provides that the burden of proving proposed new rates to be just and reasonable is on the carrier. Therefore, it is altogether reasonable for the I.C.C., after finding that the requested rates are not just and reasonable, to order the carrier to refund any monies collected as part of the increased rates under investigation. Plaintiffs, in briefs, use the word ‘‘reparations’’, which appears in § 13(1) of the Interstate Commerce Act, a sec- tion dealing with complaints to and investigations by the Commission of violations of law by carriers. This matter is concerned with §15 of the Act, and, more specifically, §15(7) which section deals not with rates which are in use by carriers, but rather with proposed new rates. Here, the Commission’s Order which found the rates not to be just and reasonable was issued December 30, 1974, prior to the expiration of the seven-months suspension period. It is within the Commission’s power to further order that any charges paid pursuant to the new rates be refunded, with interest. For the foregoing reasons, judgment will be entered for the defendants by separate order also dismissing the Com- plaint and affirming the December 30, 1974, order of the Interstate Commerce Commission. 12a IN THE UNITED STATES DISTRICT COURT FOR THE EASTERS DISTRICT OF PENNSYLVANIA Crvi_ Action No. 75-201 Tue Atcuison, TorpeKA anp Santa FE Rarmway Company, et al Vv. INTERSTATE COMMERCE COMMISSION AND Unitrep States or AMERICA Order The Order of the Interstate Commerce Commission is hereby AFFIRMED. The complaint filed by plaintiffs is dismissed and judg- ment is hereby entered in favor of defendants. Ir Is So OrDERED. /s/ Francis L. Van Dusen Francis L. Van Dusen /s/ Cuartes R. WEINER Charles R. Weiner /s/ James H. Gorsey James H. Gorbey Filed November 24, 1975. Joun J. Haroine, Clerk ge Rr D. Clerk — 13a APPENDIX C ICC’s Decision and Orde: of December 30, 1974 2530 At a General Session of the INTERSTATE ComMeERCE Com- MISSION, held at its office in Washington, D.C., on the 30th day of December, 1974. Grorce M. Starrorp, ALFrep T. MacFarLanp, Kenneta H. TuGeLe, Wittarp Deason, Date W. Harpy, Rosert C. GresuamM, A. Dante O’Neat, Cuartes L. Capp, Commissioners. Fresa Frvuirs & VEGETABLES, TRANSCONTINENTAL & WesTERN Pornts I. & S. No 8944* A decision and order in the above-entitled proceeding, approved and adopted. Decision and Order [Service Date Dee. 30, 1974] At a General Session of the InrTerstate Commerce Com- mission, held at its office in Washington, D.C., on the 30th day of December, 1974. INVESTIGATION AND Suspension Docket No, 8944' Fresno Fevuirs & VEGETABLES, TRANSCONTINENTAL & WestTeRN Pornts It appearing, That by order of May 28, 1974, the Com- mission instituted an investigation into and concerning tariff schedules setting forth new increased rates and charges and new rules, regulations and practices affecting * Also embraces Fourth Section Application No. 42830, Fruits and Vegetables from and to Colorado and Utah Points. ' This order also embraces Fourth Section Application No, 42830, Fruits and Vegetables From and to Colorado and Utah Points. eS a ey Se heer eee, eee l4a such rates and charges, applicable on fresh fruits and vege- tables, including onions and potatoes, applying generally on carload movements within the west and between the west and the east and south; It further appearing, That a hearing commencing in Washington, D.C., on September 9, 1974, and subsequently continued in San Francisco, Calif., Washington, D.C., and Dallas, Tex. has been held, and that the extensive evidence adduced has been considered: It further appearing, That respondents have supported the proposed rates by cost data designed to show that the existing rates are unduly depressed, and that the proposed rates are not excessive, and that primary reliance is placed on cost data based on current depreciation and capital costs of mechanical refrigerator equipment and locomotives; It further appearing, That protestants have adduced evi- dence tending to show that: (1) the proposed rates, w .ich represent increases as high as 132 percent over present rates, will seriously disrupt the marketing of fresh fruits and vegetables, will largely eliminate the railroads as a feasible mode of transportation thereof, and will endanger the availability of these commodities, which are indispen- sable for a sound nutritional diet, for large segments of the Nation’s population; (2) certain of the proposed rates are subject to rules providing for penalty payments for late deliveries, while other rates on traffic from similar origins to the same destinations are not subject to such provisions; (3) the rates are not subject to minimum weights appropriate for smaller rail cars and to the tariff circular rule generally known as Rule 66 providing that charges based on a car ordered apply when a larger car is furnished by the carrier; and (4) the proposed TOFC rates are not reasonably related to the proposed carload rates and are excessive; a ee ee es ; j : : 15a Ve find, That due and timely execution of our functions under section 15(7) of the Interstate Commerce Act im- peratively requires the omission of an initial decision. We further find, That this decision is not a major Fed- eral action significantly affecting the quality of the human environment within the meaning of the National Environ- mental Policy Act of 1969. We further find, That the respondents have not shown the proposed rates to be just and reasonable for the follow- ing reasons: (1) The theory of replacement costs of equipment is in- valid, particularly for mechanical refrigerator cars, since much of the movement of these commodities occurs in nonmechanical refrigerator cars. Further- more, the entire theory of replacement costs is a coroilary of reproduction value theory used in cal- culating a fair return on property devoted to trans- portation, a concept not heretofore accepted by the Commission, and should not be adopted with re- spect to only one category of freight. The cost data adduced which is not based on the described replace- ment cost theory does not support the proposed rates. The rates would exceed traditionally com- puted variable and fully distributed costs by wide margins in many instances, which is excessive for the traffic involved (see appendix) ; (2) The proposed rates would largely eliminate the use of railroad transportation on many of the consid- ered commodities with extreme hardship on the producers and consumers of such commodities ; (3) The proposed TOFC rates are not shown to be rea- sonably related to the proposed carload rates; (4) Certain of the proposed rates are violations of the outstanding order of the Commission in Washing- l6a ton Potato & Onion Shippers Assn., Inc. v. U.P.R. Co., 300 L.C.C. 537; (5) The proposed penalty rule does not apply uniformly to all similar movements; (6) Insufficient justification for Fourth Section depar- tures in Fourth Section Application No. 42830 has been presented. And we further find, Tuat in view of the above findings, which will be more fully explained in a report to be issued shortly, the filing of briefs is not necessary for a proper disposition of this proceeding. Wherefore: It is ordered, That respondents be, and they are hereby, required to cancel the proposed schedules upon not less than one day’s notice within 30 days after the service date of this order. By the Commission. Rosert L. Oswap Secretary ( SEAL) l7a APPENDIX Showing revenue /cost relationships developed by re- spondents when costs are computed without the contended for current capital and equipment costs. Commodity> Vegetables and Melons other than carrots, ete. from Imperial Valley and related origins Carrots, ete. from Imperial Valley and related origins Light Loading Vegetables Citrus Fruits Deciduous Fruits Carrots, onions, potatoes Potatoes Potatoes Potatoes, Idaho Range of Variable Rate /Cost Ratios* 1.276 - 1.478 1.389 - 1.544 1.298 - 1.541 1.269 - 1.506 1.111 - 1.378 1.354 - 1.585 1.324 - 1.514 1.085 - 1.446 1.188 - 1.566 Categories of traffic used by respondents *Average for all weight brackets 1Sa APPENDIX D ICC’s Supplemental Report and Order (Served March 14, 1975) INTERSTATE COMMERCE COM MISSION INVESTIGATION AND Suspension Docket No. 8944? Fresu Frvirs & VEGETABLES, TRANSCONTINEN TAL & WesTERN Pornts _- Decided December 30, 1974 Service Date: March 14, 1975 Proposed increased rail rates on fresh fruits and vegeta- bles within west, and between west, east and south found not shown to be just and reasonable. Schedules ordered canceled and proceeding discontinued. : WW, Donald Boe, Donald A. Brinkworth. Leland E. Butler Richard S. M. Emrich, 111, Erie C. Paul, John J. Posies, Richard J. Schreiber and Jol ] a ; i ’ “n MacDe nald S : cae ) Smith for re- Eugene D. Anderson, William J. Augello, Frank C Brooks, Donald G. Dressler, Ernest Fall., Jeffrey Lee Gut- tero, E. J. Hanson, Richard Harrington, Ronald K Kolins Dickson R. Loos, Thomas F’. McFarland, Jr.. Richard D. Maltzman, Larry D. Ripley, Murray S. Simpson and F MH. Tolan for protestants. Clinton EF ture, red . Jeffers for Colorado Department of Agricul- George /] I] f rin for Nor P ; S o * ° 3 , + th Dak te ° . LD i a mi ig ota ublic service /OmM- _ OC : Phi , I ‘Dor é s ' ; l also embr ace . | ut I . cy i | ! i € ti ! e 4° + . ' 6 - l mn A ) wa ! , : } riuits and \ { vetables | rom ) | 1 | " | and To Colorado and 'tah Points. ro 19a Report and Order of the Commission By tHe ComMISsSsION: By schedules filed to become effective on May 31, 1974, and later, the respondent railroads operating throughout the United States published increased rates on fresh fruits and vegetables as more fully described in Appendix B of this report. Upon protest by numerous interests the pro- posed schedules were suspended until December 30, 1974, when they became effective. Hearings thereon were held in Washington, D.C. from September 9 to 13, 1974, in San Francisco, Cal. from Octoder 16 to November 1, 1974, in Washington, D.C. from November 11 to 20, 1974, in Dallas, Tex. from December 9 to 11, 1974 and in Washington, D.C. from December 16 to 20, 1974. The record consists of 5,636 pages of transeript and nearly 200 exhibits. On December 30, 1974, upon concluding that respondents had not sus- tained their burden of proof to show that the proposed rates were just and reasonable, we issued a decision and order requiring the rates to be canceled within 30 days. That decision and order, included here as Appendix A, in- dicated that the findings made therein would be more fully explained in a subsequent report. On January 27, 1975, in Atchison, Topeka & Santa Fe Ry. Co., et al. v. United States and Interstate Commerce Commission, C.A. No. 75- 201, (U.S.D.C.,E.D.Pa.) a motion by the railroads to tem- porarily restrain the order was denied. The rates which be- came effective on December 31, 1974, and were ordered can- celled within 30 days, will be referred to in this report as the proposed rates. The decision and order listed six numbered reasons for our finding that respondents had failed to sustain their burden of proof in this proceeding. These reasons are ex- plained seriatim immediately below. The affected traffic, its origins and destinations, markets, present and proposed rates, contentions of parties, and other matters are dis- cussed in Appendix B. Our analysis of the cost evidence 20a presented by respondents and protestants appears in Ap- pendix C, Costs. The first reason for our burden of proof finding in the decision and order is that the costs offered in support of the proposed rates are invalidly computed. Those costs were developed generally in accordance with this Commis- sion’s Rail Form A formula. However, two significant de- partures from that formula were made. First, depreciation for mechanical refrigerator cars and locomotives was ad- justed to reflect current purchase costs of such equipment. Second, the cost of capital was increased to 13 percent for application to the current purchase costs of the same equip- ment. (On TOFC equipment, a 10-percent cost of capital was used. On the study of movements from Texas, a 13- percent cost of capital was applied to cars only.) To make these adjustments, the depreciation and capital costs applicable under Rail Form A were removed from the studies and costs reflecting the described adjustments were added. In arriving at the 13 percent cost of capital, a debt cost of 9 percent, the approximate interest on recent equipment trust certificate issues, and a current equity cost of 14.65 percent, caleulated from the dividend and price performance of Southern Pacific Transportation Company (SP) stock, were used. From SP’s capital structure of 54.2 percent debt and 65.8 percent equity, a cost of capital of 11.15 percent was derived. To this was added approxi- mately 2 percent as a risk premium, resulting in the ap- plied 13 percent cost of capital. It was determined that an annual cash flow of $154 for ears (with a 25-year life) and $174 for locomotives (with a 15-year life), for each $1000. invested, was required to recover depreciation and the 13- percent return after taxes. Using a current price for a 50-foot mechanical ear with- out the refrigerator unit, of $38,400., and the required cash flow of $154. per $1,000. investment, an annual cash flow of $5,914. for each car was derived. A similar procedure was in. vill : & Zla followed for locomotives, except in the Texas study. These required cash flows were s ‘stituted for the capital costs ; >] > att } ~s and depreciation required by Rail Form A. The latter bases . . . os ~~ oc ~ e S “ © 0 © tes depreciation for equipment on original costs, and calc la cost of capital from current costs of existing debt, imputing — > , . . ae - : f : - : be such debt costs to equity. The original cost of the -_ ' * . - - ac) = - recently acquired mechanical refrigerator cars was F20,00°. ~~ * 6 - P| . 7 = i | : = Current embedded debt cost is about » percent. Although adjustments were developed and in- respondents, they do not con- costs without those troduced into the record by tend that such costs would support the level of rates here proposed, though they do argue that such unadjusted costs demonstrate the depressed leve] of the present rates.’ The following table, showing the present and proposed rates. at the Ex Parte No. 303-A level, the variable costs, as computed by respondents and percentage relationship of costs to proposed rates, with and without the described nts. on movements of vegetables, including lettuce, adjustmen ’ i a, oe + from the west coast to New York. N.Y., illustrates the effect of the adjustments. . - o Per re Presents 1 - , Pee ed = ’ Z mat : : 7; 9° G4 aa 400 11 V9) 450 13% a. vs - —- 14) 480) 102 00 329 $09 357 14) ] ) soon , ony? r 30 02 7 29°) 429 Sy; 140 pa - 700 «3=— 279 394 272 145 369 ; pas, : 7 -*? i~ mi) 9449 355 J46 146 331 ii _ DE 2()2 Os 900 217 326 22¢ }44 302 ] . ina ‘ 7 an , = Per car rates stated in cents per 10U p unds. . . . : 3 : cr a. i | i : - oi ner ; » of ait te nee Ter 100 pounds in less 1°! “ atone «s ‘ . +. are state ] rents we! ve > Rates and « StS ar at n } wise indicate ; : w Farts 7 eration in Ex Parte NX : : Q7? iimw are Protective pervice, 1975. penauibe. are charges shown herein. | * | — } revoc OY d (yet os a . ; or = = 2S & = -—=- = nd r mued. 8 on 4 SIRNA SESE pinot should be cont e to use the RS ‘cient. The =in 4 ’ = i poe re shippers to ge maped oa for that * Soe higher . Z2e2eE588 pony tir pound loads, t : of rates would read the larger q eo & ~- >. om > = - l Bs SRA2t BSB @ > ’ iform scale ble to obta ll = S => 2 = = ate a = nilo > S apie se = = 2¢ $3 &@ Ae eK proposed se ights for shippers loading and able to “€iagRne¢ minimum weigh erator cars for = n+ hanical refrig bo (~ -_-_ + DD SS & mec d rotestants , 22 ¢ £ & ARAN = 2 heavier loads. jections of these p rould be z ct % 18 = 5 rincipal objecti est increases vou . - ——- a ae - N= ¢ . y — ' ¢ ’ sed rates ” t markets, d with : = a the propo to their larges also concerne = = Ssgezes + n movements t. Louis. They are ill have on com- a ¢ SSFRSESHERSE SR ae City, and St. seunl rate scale wi s. It is noted = = - ~ - &, x a) as Pd 0 : ; reas. S252 2 hat the pr ducing a the = ne = 71 N ¢ the effect th bi mong pro osed from =z He ips a are prop h = itive relations increases ; ces. The = — etitive r eater in . me instan re Ss2e P le, that gr daho in so the +S S65 x xample, from Ida hown for , =Sste322 65 for e3 ‘alley than are s - — - —r a aT ° * > ; . ; 8es 4 s ee =|» SStnze se = Red River Va the proposed increa resentative _te emg PSE RREEEE differences in t destinations from ho in the table below. ES = : n 0 = ss = — £ 3 named paige Idaho Falls, Ida Idaho Falls Ce fh = = = ea + ie - : G and Forks y Forks $0,000 Ibs. L -~ “x —_— =F m~ N @ Tv _ Grand 60.000 pounds % inerense =| « S25 2 $9 8 & on . To: From : 5,000 pounds % increase | = ct HN - ~- = benno increase 5.6 i ec 7 15.4 © ess 84.1 24.2 = SeR23sE , 35.7 E S€22eeH 283 | sania alge 99.7 aes - sine SSE5S 28S | | Kansas City, Mo. 90.3 2/88 2 —— St. Louis, Mo. te spread between a © xisting rate inations would = : the e ation iaaecs .& hown that most destin hip. } S g2a-s8é&. 6 ~~ [as . a a Gra ff ected. - a~ . “. = & a oS —“ =f —_ > — e] a e ee ggiiegiiiats! | be adversely a4 -— bm cel ons — — _ > —~ oe ~z = -~ 28 t Bronx, N.Y., also appeared in opposition to the rates. It —— wea ye eee =. EN ele A GW Ere’ het es ee ~ ae a RT eR AIR EE ms OO Om 79a and 2,000 truckloads of products annually. It states that it is experiencing adverse consumer reaction as a result of rapidly rising food costs. It contends that the quality of service being rendered by the railroads does not war- rant increased rates. This receiver gets delivery of its cars near Port Morris. Its deliveries of California shipments are not received until the eighth morning, whereas seventh morning de- livery is provided at nearby Hunts Point. Since both re- ceiving points take the same rates, it contends it is being discriminated against. It also complains of deteriorating rail service and in- creased damage to freight. It further contends that the proposal rates unduly prefer carload traffic to the TOFC traffic. Hills Supermarkets, Inc., Brentwood, New York, (Hills) which operates 69 stores in that area, presented a witness in opposition to the proposed rates. Its receiving yard is located on the Long Island Railroad, The same witness also testified on behalf of the Freight Users Asso- ciation of Long Island, Inc., an association of about 60 Long Island shippers and receivers, and the Shippers National Freight Claim Council, Inc., an association of over 300 shippers and receivers of freight. That associa- tion is concerned with freight loss and damage claims and related policies and carrier practices. Hills receives over 1,000 cars of fresh fruits and vege- tables annually. Formerly, it handled TOFC shipments, but because of excessive damage to the produce occur- ring under this mode of transportation, it has virtually eliminated TOFC shipments. It states that while sched- uled delivery times are published for stations in Brook- lyn none is published for Long Island receivers, It fur- ther contends that the published delivery schedules allow excessive delivery times. 80a The witness states that the previous deplorable service it had been receiving has recently improved. He believes that better service reduces car detention, per diem and interchange costs, and that these reductions should be reflected in the rates. The witness testified that Hills presently uses rail on the majority of produce it receives from western states, but that if the proposed rates become effective, it will divert those shipments to truck, as it is unable to pass the increased rates on to the consumers. It objects particu- larly to the increased TOFC rates and shows instances where the increases in these rates would be as much as 76 percent, without inclusion of the mechanical refrigeration charges. Objection is also made to the failure to include a substitution car rule in the proposed tariff. The witness contends that the proposed penalty rule violates section 20(11) of the Interstate Commerce Act in that it would enable carriers to evade liability for full actual loss, damage or injury. He argues that the pro- posed exceptions to the penalty payments are so numer- ous and broad as to render the rule meaningless. He further argues that the 30-day requirement of the rule violates section 16(3) of the aet, which allows overcharges to be filed within three years from day of delivery. The United Fresh Fruit and Vegetable Association, Bronx, N.Y., claims that the proposed rates are almost double existing rates and the published schedules allow one day longer for delivery that is now being required. It complains of heavy loss and damage claims and de- layed deliveries now being experienced. It does not con- sider the claimed basis for increased rates, namely, to build new equipment to be valid since is questions whether such equipment will in fact be built. It views this pro- posal as an attempt by the railroads to nullify holddowns on this traffic granted in ex parte proceedings by this Commission. Sla It shows instances where the proposed rates would amount to 72 percent on its traffic and asserts any appar- ent reductions proposed at higher minimum weights are non-beneficial because fresh produce cannot be loaded at those minima. Campbell Soup Company, and its subsidiaries, manu- facturers of canned foodstuffs, frozen foods, frozen and non-frozen bakery goods aud packaged pet foods with plants throughout the country, oppose the increased rates. It objects to the increases being applied to fresh fruits and vegetables and not other perishable freight using the same equipment. It caleulates the proposed increases on its shipments of carrots as ranging from 6.7 to 51.7 per- cent. To one plant in Ohio the proposed rates, at the 80,000-pound minimum there would be a reduction for potatoes, but not at lower minima. It complains of delays in delivery and contends that better ear utilization would result in more economical transportation and better ear supply. The National Association of Food Chains states that it does not oppose a reasonable increase on this traffic, but it wants assurance that there will be improved serv- ice. It presented extensive evidence of deteriorating service over recent years. It criticizes the failure of the respondents to make the proposed rates subject to a car substitution rule. It notes that only certain carriers pro- pose to participate in the penalty rule, and requests that unless the rates are coupled with meaningful tariff pro- visions to assure significant service improvements as to both reliability and transit times, the rates be found un- just and unreasonable. 82a APPENDIX C Respondents’ costs are based on Rail Form