# Appendix — Nueces County Navigation District No. 1 v. Interstate Commerce Commission

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1982
- **Citation:** 459 U.S. 1035

## Text

OCTOBER TERM, 1962

NUECES COUNTY NAVIGATION DISTRICT NO. 1
Petitioner,
vs.

INTERSTATE COMMERCE COMMISSION, ET AL,
Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

APPENDIX

FRANK C. BROOKS, ESQUIRE |
8300 Douglas Ave., Suite 800
Dallas, Texas 75225
Telephone: (214) 373-9175

Counsel for Petitioner

August 1982

THE CASULLAS PRESS, INC. - 1717 K Street N.W. - Weshingten, 0.C. - 223-1229

Appendix A —

Appendix B —

TABLE OF CONTENTS

Opinion of the United States Court of
Appeals for the Fifth Circuit, May 6, 1982

Report and Order of the Interstate Com-
merce Commission, No. 36491 (Sub-No.

1), Decided December 19, 1977 ..........

Decision of the Interstate Commerce

1980 ee

Order of the Interstate Commerce Com-

mission, No. 31098, January |, 1954 .....

Order of the Interstate Commerce Com-

mission, No. 33447, November 14, 1961 ..

Order of the United States Court of Ap-
peals for the Fifth Circuit, Denying Peti-

tion for Rehearing, June 1, 1982 .........

APPENDIX A

NUECES COUNTY NAVIGATION DISTRICT NO. 1,
et al., Petitioners,

Vv

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

PRODUCERS GRAIN CORPORATION, et al.,
Petitioners,

v.

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

NUECES COUNTY NAVIGATION DISTRICT NO. 1,
et al, Petitioners,

Vv

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

PRODUCERS GRAIN CORPORATION, ¢i al.,
Petitioners,

v.

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

Nos. 78-1348, 79-1816, 80-1842 and 80-1843.
United States Court of Appeals, Fifth Circuit.

May 6, 1982.

TATE, Circuit Judge:

The petitioners, who represent port and shipper in-
terests in Corpus Christi, Texas, seek review of an ad-
judication of the Interstate Commerce Commission that a
rail rate of a carrier was not discriminatory to Corpus
Christi, and of an order of the Interstate Commerce Com-
mission that, inter alia, adopted a new standard of “com-
mon control” to be used in carrier rate discrimination
cases under 49 U.S.C. § 10741(b), and that reopened and
vacated two earlier Commission decisions. We affirm the
Commission’s rule-making and vacation orders, but we
find that review of the Commission’s dis-riminatory-rate
adjudication is now moot.

The underlying central issue concerns the substantive
and procedural propriety of the Commission’s actions in
adopting a new standard or rule of a narrow nature. The
narrow area of the rule focuses on the determination of
whether a common carrier has under 49 U.S.C. § 10741(b)
subjected a port to rates that are unreasonably
discriminatory with regard to those to other ports, in in-
stances where that carrier does not itself provide direct
service but must do so by joint rates issued in conjunction
with a connecting carrier. The new standard requires a
finding that the originating carrier has actually con-
tributed to or controlled the rate insofar as it is
discriminatory. Under the prior or replaced standard, the
originating and connecting carriers were conclusively
presumed to have “common control” of the joint rates —
that, acting in conjunction as a network, they directly and
effectively controlled the rates between the preferred port
and the prejudiced port. For reasons to be stated, we find
the Commission’s adoption of a new rule of decision to be
non-arbitrary and within its administrative discretion and
the statutory limits for that discretion set by Congress.

3a

We should further note that the Staggers Rail Act of
1980, Pub.L.No. 96-448, 94 Stat. 1895 (1980), was not
signed by the President into law until October 14, 1980.
Without intimating that our rationale would necessarily be
affected otherwise, we note that the Act does not apply to
our review of the present decisions of the Commission,
which were docketed (and decided) prior to the effective
date of the Act. Jd. § 706.

Introductory Summary

In the attached appendix, we have set forth the full cita-
tion and nomenclature of the proceedings and parties to
whom we will refer herein. As shown by these pro-
ceedings, the context in which the present issues arise is as
follows:

In 1977, Frisco (a rail carrier) published reduced carload
rates on wheat from origins in Oklahoma and Kansas to
various Texas ports (Houston, Galveston, etc. — “other
Texas ports”), but not to Corpus Christi. Prior to this
publication, the rates had been equal to all Texas ports;
the reduced rates for the other Texas ports were about 3
1/2 cents per hundred pounds less than those for Corpus
Christi. Various Corpus Christi port and shipping interests
protested, including Nueces County (a Texas port district),
Producers (a regional grain marketing cooperative with a
large-volume grain elevator at Corpus Christi), and
Dreyfus (a large-scale shipper of grain that used the Pro-
ducers elevator at Corpus Christi). The basis of their pro-
test was that the rates were unduly preferential of the other
Texas ports, and prejudicial to the Corpus Christi port, in
violation of former Section 3(1) of the Interstate Com-
merce Act, now (in the 1978 recodification) 49 U.S.C.
§ 10741(b).

4a

Frisco had lowered the rates io the other Texas ports to
meet rail and truck rate competition. The reason it had not
done so for Corpus Christi was that Frisco had no direct
line into that port, and the other connecting rail carriers to
that port (MoPac and Southern Pacific) had refused to
concur in a lowered joint rate equivalent to that pub-
lished for the other ports.

In its 1977 decision in Wheat I (see appendix for this and
other citations herein) rejecting these protests, the Com-
mission held that Frisco was not in control of and did not
participate in the disparate rates for Corpus Christi,
because Frisco had made a good faith offer of division of
the joint rates (to divide the lower rates fairly between the
connecting carriers and itself), but these carriers had re-
jected this offer. Due inter alia to the protestant’s conten-
tion that Frisco’s reduced rates to other Texas ports
violated outstanding Commission orders in 1954 and i961
decisions in Corpus Christi I, the Commission reopened
Wheat I. In Wheat II (19795), it then reinstated its holding
that the Frisco rates to Corpus Christi were not
unreasonably discriminatory (for the same reason of
Frisco’s lack of control thereof), but it also ordered the
Corpus Christi I cases to be reopened to determine
whether those decisions were consistent with Wheat 11.

In Corpus Christi I (1954 and 1961), the Commission
had concluded that the joint rates of various carriers
transporting grain from the Midwest were unduly pre-
judiciai to Corpus Christi and unduly preferential of the
other ports. In so finding, the Commission relied upon a
presumed network “common control” of joint rates, so
that — if the joint rate was discriminatory — each of the
carriers joining in it was held to participate in the
discriminatory rate. Accordingly, the Commission entered
“alternative orders,” which were still in effect at the time

Sa

of Wheat I (1977) and Wheat II (1979). (By an alternative
order issued to correct discriminatory rates, the offending
carrier(s) are ordered to abate the discrimination by rais-
ing one rate, lowering the other, or altering both. See,
e.g., Texas & Pacific Ry. Co. v. United States, 289 U.S.
627, 650, 53 S.Ct. 768, 776, 77 L.Ed. 1410 (1933).)

Pursuant to Wheat II, after service, notice was pub-
lished in the Federal Register reopening the Corpus Christi
I cases (1954 and 1961). Wheat II, then before this court
on petition for review, was on motion remanded to the
Commission for its further consideration. In the resulting
Corpus Christi II, decided in 1980, the Commission ex-
pressly abandoned its former presumed “common control”
of joint rates and held that, in the determination of
discriminatory rate issues under § 10741(b), it would in the
future utilize an analysis of actual control by the

originating carrier (applying the good faith order of divi-
sions test enunciated in the Wheat cases).' It therefore

'In Wheat Ii, the Commission discussed in detail how the actual
common control-good faith offer of divisions test operates.

According to the Commission, “the protestant has the initial burden
of proving that the originating carrier could serve both the preferred
and prejudiced parts either by itself or by means of connecting car-
riers, acting as a network or otherwise.” 359 1.C.C. at 603. In Wheat
II, the Commission noted that Frisco serves the preferred ports direct-
ly and can serve Corpus Christi indirectly by means of Southern
Pacific or MoPac. Id.

Once the protestant has satisfied its burden of showing that the
origin carrier could serve both points, the burden shifts to the origin
carrier (or to the connecting carriers if they too, have actual control,
see 364 1.C.C. at 275) to rebut the protestant’s evidence of common
control by showing that the respondent has made a good faith offer of
division of revenues to the connecting carriers, but was unsuccessful
in obtaining a concurrence. If the respondent can show that it did
make this good faith offer, the Commission contends, “it demonstrates
that [the origin carrier] has no actual control of the rates to the ports
which it does not serve directly.” 359 1.C.C. at 603.

6a

vacated the decisions in Corpus Christi I and reaffirmed
its holdings in Wheat I and Wheat II.”

Wheat Adjudications Moot

Before discussing the viable issues under review, we note
of our own motion that the Wheat adjudications (that
Frisco’s grain rates to Corpus Christi are not shown to be
unreasonably discriminatory under § 10741(b) are moot.

2In the Wheat adjudications, the Commission likewise rejected the
protestant’s alternative request that, even if common control be found
absent, the Commission could prescribe non-discriminatory rates to
Corpus Christi pursuant to 49 U.S.C. § 10704(a)(1), former Section
15(1) of the Interstate Commerce Act. This provision authorizes the
Commission, inter alia, to prescribe a rate (including a maximum or
minimum rate) if, after hearing, it decides that a carrier's rate violates
the Interstate Commerce Act as recodified, Subtitle IV, 49 U.S.C.
$§ 10101 et seq. The Commission found that, absent Frisco’s control
of the disparate rates to Corpus Christi, no discriminatory-rate viola-
tion of the statute was proved.

Prescription of a rate under section 10704 differs from the issuance
of an alternative order under section 10741(b) in that, as the Commis-
sion interprets section 10704, the latter is a remedial section that re-
quires violation of some substantive section of the Act as a predicate
for rate prescription. (Of course, if the Commission had found
unreasonable discrimination under § 10741(b), a substantive viola-
tion, that would have justified issuance of a rate-prescription; but it
did not.) On the other hand, issuance of an alternative order is a
specific response to a violation of section 10741(b), prohibiting
unreasonable rate discrimination.

No claim was made in the present proceedings that Frisco’s rates
were “unreasonable” or violated the statute other than being
unreasonably discriminatory to Corpus Christi, a contention rejected
by the Commission. The Commission expressly noted that its present
decision(s) did not preclude the Corpus Christi interests from further
proceedings under § 10704 that raised such issue.

In view of our determination that the petitions to review the Wheat
holdings are moot, we do not reach this issue. See also note 6, infra.

7a

Following Wheat I, MoPac concurred in a reduced joint
rate to Corpus Christi equivalent to the reduction published
for the other Texas ports. As a result, it is not contested
that Corpus Christi is no longer prejudiced by the Frisco
rates initially complained of. Accordingly, the three peti-.
tions for review that raise issues directed soiciy to the in-
validity of the Wheat dctciminations’ are dismissed‘ as
moot.

No suggestion of mootness is made with regard to the
Corpus Christi II issues presented by the remaining peti-
tion for review. See note 3. That decision’s vacation of the
continuing rate-equalization orders in Corpus Christi I
deprived Corpus Christi interests of a former remedy by
which to attack rail rate disparities; and its adoption by
way of rule-making of a new rule (actual control, rather
than the formerly presumed common control of joint
rates) has obvious continuing effects.

The Issues

The remaining issues presented to us for review may be
summarized as follows:

'These petitions are our docket nos. 78-1348, 79-1816, and
80-1842. The remaining petition, our docket no. 80-1843, raises still
viable issues. See appendix to this opinion.

“Before the Commission, where petitioners conceded that Wheat /
and Wheat I] were moot for the reason noted, they also contended
that the proper remedy was to vacate these decisions rather than to
dismiss them, as was suggested also in oral argument before us.
Whatever merit this procedural approach to mootness has where
issues of res judicata are implicated, see United States v. Munsing-
wear, Inc., 340 U.S. 3%, 71 S.Ct. 104, 95 L.Ed. 36 (1950), the
policies there involved do not apply here; for, among other reasons,
the non-moot Corpus Christi II, see infra, itself vacated the Corpus
Christi I decisions and itself established the new precedential rule con-
cerning “common control” (the harms sought to be avoided by peti-
tioners in having Wheat | vacated instead of dismissed).

I. A _ substantive attack upon the Commission’s
replacement of the former presumed “common control”
rule by the new “actual control” test as an unjustified
abrogation by the Commission of its previously settled in-
terpretation designed to advance the anti-discriminatory
purposes of the Interstate Commerce Act.

Il. A primarily procedural attack upon the Commis-
sion’s vacation by Corpus Christi IT in 1980 of its 1954 and
1961 Corpus Christi I decisions.

I. The Commission’s Replacement of the Presumed
“Common Control” Rule by an “Actual Control”
Test

In the context of the scheme of the Interstate Commerce
Act (“the Act”), where carriers are permitted to establish
rates for their services, the Act provides that no common
carrier may “subject a person, place, port, or type of traf-
fic to unreasonable discrimination.” 49 U.S.C.
§ 10741(b).° It is to be noted that this provision includes

‘Section 10741(b) provides in full:

A common carrier providing transportation or service
subject to the jurisdiction of the Commission under
Chapter 105 of this title [49 U.S.C. §§ 10561 et seq., the
1978 recodification of the Act] may not subject a person,
place, port, or type of traffic to unreasonable discrimina-
tion. However, subject to subsection (C) of this section,
this subsection does apply to discrimination against the

traffic of another carrier providing transportation by any
mode.

In an Act of October 17, 1978, 92 Stat. 1337, Congress recodified
and simplified the language of the Interstate Commerce Act. Section
10741(b) replaces the former section 3(1) of the Act. Section 3(1) for-
bade “undue or unreasonable preference or advantage,” while
10741(b) forbids “unreasonable discrimination.” The recodification
was expressly intended to effect no substantive change in the Interstate

9a

within its scope only whether a given carrier provides
discriminatory rates to a preferred and to a prejudiced
point; it has no application where the rates of a given car-
rier to one point are disparate with those of another carrier
to an equivalent point. Texas & Pacific Ry. Co. v. United
States, 289 U.S. 627, 649-50, 53 S.Ct. 768, 776, 77 L.Ed.
1410 (1933).

With regard to joint rates to a point — those combined
charges for the services of both the originating and the
connecting carriers (with division thereof decided between
the joining carriers) —, the Supreme Court early stated
that

participation in joint rates does not make con-
necting carriers partners. They can be held joint-
ly and severally responsible for unjust
discrimination only if each carrier has par-
ticipated in some way in that which causes the
unjust discrimination . . . . If this were not so,
the legality or illegality of a carrier’s practice
would depend, not on its own act, but on the acts
of connecting carriers.
Central Railroad Company of New Jersey v. United
States, 257 U.S. 247, 259, 42 S.Ct. 80, 83, 66 L.Ed. 217
(1921). As the Court later stated, reiterating the point: “A
carrier or a group of carriers must be the common source

Commerce Act. The Commission has stated in one of the decisions in
the present appeal that “[bJecause there is no substantive change in the
law under the recodified statute and because many of the court and
Commission decision (sic) arose under the former act, we shall use in-
terchangeably sections 3(1) and 10741 and the terms “unreasonable
discrimination” and “undue preference and prejudice.” Nueces County
Navigation District No. 1 v. Abilene & Southern Railway Company,
364 1.C.C. 269, 270 n. 3 (1980) (Corpus Christi I]). The petitioners
concede that the revision made no substantive change in the Act.

10a

of the discrimination — must effectively participate in
both rates, if an order for correction of the disparity is to
run against it or them.” Texas & Pacific Ry. Co., supra,
289 U.S. at 650, 53 S.Ct. at 776. (Emphasis supplied.)*

*The petitioners argue that the later decisions of Ayrshire Collieries
Corporation v. United States, 335 U.S. 573, 69 S.Ct. 278, 93 L.Ed. 243
(1949) and New York v. United States, 331 U.S. 284, 67 S.Ct. 1207, 91
L.Ed. 1492 (1947) somehow modified the holdings in Central Railroad
and Texas & Pacific Ry. Co., supra, that an alternative order to end
rate-discrimination may not be issued unless the carrier(s) effectively
participated in the discriminatory joint rate. We reject this contention.
As the Commission noted, Wheat IT, 359 1.C.C. at 597-98, these deci-
sions explicitly did not refer to a situation where an alternative order
is the appropriate relief. See, e.g., Ayrshire, supra, 335 U.S. at 593-94,
69 S.Ct. at 289.

A stronger argument is made by the petitioners, however, that these
decisions indicate that, even if an alternative order is not appropriate,
the Commission is entitled to prescribe rates if the joint rates are
unreasonably discriminatory (i.e., even in the absence of joint con-
trol). We have previously noted that the mootness of the Wheat ad-
judications precludes our reaching the specific demand for prescribed
rates in those cases. See note 2.

Nevertheless, we recognize that a strong argument could be made
that the Commission’s view as to when rate-prescription is ap-
propriate (rather than an alternative order) in discriminatory rate
cases, as enunciated in Wheat I and Wheat II, could be regarded as
non-moot rule-making in Corpus Christi II; there, in reaffirming the
Wheat cases, the Commission specifically modified its Wheat “discus-
sion of rate prescriptions in the absence of common control.” 364
L.C.C. at 279. We decline to so characterize the Wheat rate-
prescription “discussion” and its modification in Corpus Christi II.
While it is difficult to disagree in the abstract with the Commission’s
view that under present circumstances Ayrshire and New York do not
permit rate prescription unless a rate is both unreasonable and
discriminatory — and that a rate cannot be discriminatory under the
statute unless the carrier effectively participates in it — we do not feel
it appropriate to rule upon the propriety of the Commission’s views on
the matter upon a record devoid of factual data suggesting how the
rates at issue could be unreasonably discriminatory in violation of sec-
tion 10741(b), even though no individual rate at issue is either
unreasonable or a violation of section 10741(b).

By way of further background, a rate-discrimination
case, § 10741(b) is established by showing (1) that there is
a disparity in rates, (2) that the complaining party is com-
petitively injured, actually or potentially, (3) that the car-
riers are the common source of both the allegedly pre-
judicial and preferential treatment, and (4) that the
disparity in rates is not justified by transportation condi-
tions. The complaining party has the burden of
proving the presence of the first three factors, and the car-
riers have the burden of justifying the disparity, if possi-
ble, in connection with the fourth factor. See, e.g.,
Chicago & Eastern Illinois Railroad Company v. United
States, 384 F.Supp. 298 (N.D.IIl. 1974), aff'd. mem. 421
U.S. 956, 95 S.Ct. 1943, 44 L.Ed.2d 445 (1975).

The issue before us involves solely the third element
needed to establish a claim of discriminatory rate — that
the carrier be the “common source” of both prejudicial
and preferential rates. The order issued in Corpus Christi
II — establishing an “actual control” test rather than a
presumed “common control” of joint rates — resulted
from notice served and published in the Federal Register
to the effect that the Commission was “considering mov-
ing from a conclusive presumption of common control to
an analysis of actual control over the joint rates.”’ The

’The notice published at 44 Federal Register 67558-559 (No. 228,
November 26, 1979), stated that the Commission was reopening the
Corpus Christi I decisions and invited briefs and comments. The |
notice provided:

Summary: The above-captioned cases [the Corpus Christi
cases] are being reopened to determine if the port equaliza-
tion orders entered in these proceedings should be
modified. As the orders presently exist, the carriers are re-
quired to maintain equivalent rates to both the Houston
area ports and Corpus Christi. The orders were entered
partly on the basis of the railroads’ ability to control the
rates to the Gulf ports. Our reexamination of these cases

12a

decision of the Commission in Corpus Christi '! limited its
consideration to this criteria,* and its modification of its

will be limited to the issue of actual control of rates to the
Gulf ports and how control of these rates influences the
Commission's authority to order relief in cases arising
under 49 U.S.C. 10741. We will focus on situations where
carriers cannot agree on rate policies and, as a result, con-
currences to joint rate changes cannot be secured. We will
also explore the circumstances, if any, in which a violation
of 49 U.S.C. 10741 might exist if common control of rates
is not found when unequal rates are proposed to the Gulf
ports. We believe this action is necessary to appropriate
regulation in this area.

Supplemental Information: Our purpose in reopening the
Corpus Christi cases is to determine wheiher these out-
standing port equalization orders require modification to
recognize current rate-making situations not contemplated
when the outstanding orders were issued . . . .

We are considering moving from a conclusive presump-
tion of network common control to an analysis of actual
control over the joint rates. The principal test of actual
control which we are considering is discussed in Wheat,
Oklahoma and Kansas to Texas Gulf Ports, 357 1CC 382
(1977), 359 ICC 592 (1979) [Wheat IT], which is presently
pending on court appeal.

An extended analysis of actual common control is a
departure from past Commission decisions and directly af-
fects the operation of the Corpus Christi orders. Ac-
cordingly, it is necessary to reopen these proceedings and
receive comments. Participants should comment on the ap-
propriate legal analysis of the issue of rate control in cases
arising under 49 U.S.C. § 10741. Commentors should also
address the question of, under what circumstances, if any,
unequalized rate proposals should be found to violate
§ 10741 when there is no common control.

PRs Commission noted, however, Corpus Christi I], 364 1.C.C. at

This limiting of the issues to only one of the criteria

13a

former test to determine whether a carrier is the “common
source” of the discriminatory rates is the only substantive
issued posed for us by this petition for review.

A. “Presumed Common Control” and “Actual
Control” Tests

In Texas & Pacific Ry. Co., supra, as previously noted,
the Supreme Court had indicated that, for a carrier nar-
ticipating in allegedly discriminatory joint rates to meet
the “common source” requirement (i.e., that the carrier be
the source of both the prejudicial and the preferential
rate), the carrier “must effectively participate in both
rates.” 289 U.S. at 650, 53 S.Ct. at 776 (emphasis sup-
plied).

At the times that the Corpus Christi I cases were decided
in 1954 and 1961, the Commission used a “network com-
mon control” theory to determine whether carriers effec-
tively participated in a discriminatory joint rate. By this
test, the Commission, in effect, conclusively presumed
common control because the carriers involved acted as a
network, so that each was responsible for the joint rate. In
the 1954 Corpus Christi case, the carriers were found to
have effective common control of the rates simply by vir-

under section 10741(b) was not and is not intended to
detract from the importance the Commission places on the
other three criteria. The fourth factor, similarity or
disparity in transportation conditions, continues to be our
primary consideration. It is axiomatic that there can be no
discrimination if economic and operational analysis proves
that different rates are appropriate. This analysis includes
review of matters such as the different distances involved,
alternative routings available, differences in the cost of
service, and, especially, any “ifferences in competitive con-
- ditions.

l4a

tue of carrier participation in joint rates. See 291 1.C.C. at
469-470. In the 1961 Corpus Christi case, the carriers at-
tempted to argue that “no one carrier effectively controls
the rates to Corpus Christi and the other allegedly prefer-
red ports.” 315 1.C.C. at 162. Without any discussion of
the matter, but citing Texas Pacific Ry., supra, the Com-
mission asserted that the carriers “acting in conjunction
with the originating lines, directly and effectively control
the rates.” Id.

During the 1970’s the Commission began to modify its
approach to this analysis of common control. For exam-
ple, in Soybeans, Midwest to Chicago and Gulf Ports, Ex-
port, 335 1.C.C. 883, 890 (1970), vacated as moot, 416
U.S. 953, 94 S.Ct. 1964, 40 L.Ed.2d 303 (1974), the Com-
mission refused to find common control by an origin car-
rier where connecting carriers refused to concur in rate
changes, and where there was no showing of mutual and
joint participation in the action alleged to be
discriminatory. In Corn and Soybeans Midwest to Gulf
Ports, For Export, 349 1.C.C. 1, 4(1974), the Commission
held that where a carrier served one port directly and one
by means of a joint service with a second railroad, section
10741(b) “does not give this Commission the power to re-
quire equalized rates in the event that the second railroad
refuses to participate in an equalized joint rates.”

The Commission’s movement away from applying a
conclusive presumption of common control of joint rates
culminated in Wheat I and, particularly, in Wheat II. In
the latter decision the Commission explicitly adopted an
“actual control” test, see note 1, and explicitly rejected the
common-control presumption: “To summarize, because
of the need to assure rate flexibility, we have required
proof that the railroads actually control the rates to the
preferred and prejudiced ports. In this regard, we believe

1Sa

that the presumption of control extending from the ex-
istence of a network such as was found to exist in the Cor-

pus Christi cases is insufficient to assure that actual con-
trol exists. While seeking proof of actual control, we have
allowed the railroad to show that it does not have such
control because it could not, after acting in good faith, ar-
rive at divisions agreements.” Wheat IT, 359 1.C.C. at 604.
As a consequence, after service and publication of notice,
reopening Corpus Christi I to consider a substitution of an
actual control test for the former presumption of network
control, see note 7, the Commission by way of a rule-
making procedure adopted in Corpus Christi II the order
presently under review: “The actual controi standard shall
be used to determine the common source of unreasonable
discrimination under 49 U.S.C. 10741(b) in future
challenges to carrier rate adjustments to the ports in these
proceedings.” 364 1.C.C. at 279.

B. The Scope of Our Review

The scope of our review of Interstate Commerce Com-
mission action is reiterated in Missouri-Kansas-Texas
Railroad Company v. United States, 632 F.2d 392 (Sth
Cir. 1980), cert. denied, 451 U.S. 1017, 101 S.Ct. 3004, 69
L.Ed.2d 388 (1981), which involved, in part, the Commis-
sion’s adoption of a different standard for determining
whether a railway merger is “consistent with public in-
terest.” We stated: “We can ask only whether the Commis-
sion has observed the statutory limits that Congress has set
for its discretion, whether its action was arbitrary or
capricious, or whether its findings are supported by ade-
quate analysis and substantial evidence in the record as a
whole.” Jd. at 400.

The “arbitrary and capricious” standard is narrow and

l6a

permits a reviewing court merely to consider whether the
agency decision “was based on a consideration of the rele-
vant factors and whether there has been a clear error of
judgment.” Citizens to Preserve Overton Park, Inc. v.
Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823-24, 28
L.Ed.2d 136 (1971). The “substantial evidence” standard
requires a determination that agency findings are sup-
ported by “such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Con-
solidat-d Edison Co. v. N. L. R. B., 305 U.S. 197, 229, 59
S.Ct. 206, 217, 83 L.Ed. 126 (1938). If the evidence of
record is such that it supports inconsistent inferences and
conclusions, the courts must defer to administrative
choice. /ilinois Central Railroad Co. v. Norfolk &
Western Railway Co., 385 U.S. 57, 69, 87 S.Ct. 255, 262,
17 L.Ed.2d 162 (1966). This same standard of review is
used in our review of a Commission rate determination.
See Systems-Fuels, Inc. v. United States, 642 F.2d 112 (Sth
Cir. 1981).

The judicial deference that is accorded to a Commission
action of the present nature is attributable to the fact that
“the courts have always recognized that Congress intended
to commit to the Commission the determination, by ap-
plication of an informed judgment to existing facts, of the
existence of forbidden preferences, advantages and
discrimination.” United States v. Chicago Heights Truck-
ing Co., 310 U.S. 344, 352-53, 60 S.Ct. 931, 936, 84 L.Ed.
1243 (1940). The broad discretion thus accorded to the

I.C.C. in these cases has long been recognized as necessary
to the types of value judgments therein involved:

Whether a preference or advantage or
discrimination is undue or unreasonable or un-
just is one of those questions of fact that have

been confided by Congress to the judgment and

17a

discretion of the Commission... and upon
which its decisions, made the basis of ad-
ministrative orders operating in future, are not to
be disturbed by the courts except upon a showing
that they are unsupported by evidence, were
made without a hearing, exceed constitutional
limits or for some other reason amount to an
abuse of power.

Manufacturers’ Ry. Co. v. United States, 246 U.S. 457,
481, 38 S.Ct. 383, 389, 62 L.Ed. 831 (1918).

The “narrow scope within which Congress has confined
judicial participation” in the Commission’s rate deter-
minations is attributable to the fact that “[t}he process of
rate making is essentially empiric... fluid and
changing . . . [involving] factors that must be valued as
well as weighed.” Congress has, therefore, given the Com-
mission “the duty of being responsive to the dynamic
character of transportation problems.” Board of Trade of
Kansas City v. United States, 314 U.S. 534, 546, 62 S.Ct.
366, 372, 86 L.Ed. 432 (1942).

C. The Actual Common Control Standard

In adopting the actual common control standard, the
Commission swept away a presumption of network com-
mon control that it used for many years to impose strict
liability on carriers based on their participation in joint
rates and the presence of interconnecting rail lines. We
must now determine, within the narrow scope of review
that we have, whether the Commission acted properly in
abolishing this former presumption and in adopting, in-
stead, a test that centers on factual issues that determine
whether the carrier participated in the actual control of the
disparate joint rate claimed to be discriminatory.

18a

When we considered a Commission change in policy in
the context of railroad mergers, we stated that “it is
established beyond argument that an agency may change
its policies so long as it identifies and articulates its reasons
for doing so.” Missouri-Kansas-Texas Railroad Company
v. United States, 632 F.2d 392, 403 (1980), cert. denied,
451 U.S. 1017, 101 S.Ct. 3004, 69 L.Ed.2d 388 (1981). Our
opinion in Missouri-Kansas-Texas echoed that of the
Supreme Court in American Trucking Associations, Inc.
v. Atchison, Topeka, and Santa Fe Railway Company,
387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967), in
which the Commission had changed its former interpreta-
tions and then argued, much as the Commission does in
the present case, that its past interpretation was based on
an erroneous interpretation of principles enunciated by
various judicial decisions. The Supreme Court did not,
however, rest its analysis of the propriety of the Commis-
sion change in interpretation on the Commission’s argu-
ment that its own prior decisions in a course of twenty-five
years were erroneous. Rather, instead it specifically
recognized the ability of the Commission to change its
mind and to change its prior interpretations:

[T]he Commission, faced with new develop-
ments or in light of consideration of the relevant
facts and its mandate, may alter its past inter-
pretation and overturn past administrative rul-
ings and practice .. . . Regulatory agencies do
not establish rules of conduct to last forever;
they are supposed, within the limits of the law
and of fair and prudent administration, to adopt
their rules and practices to the Nation’s needs in a
volatile, changing economy.

387 U.S. at 416, 87 S.Ct. at 1618.
Our principal concern, then, is to determine whether

19a

the Commission has observed the statutory limits that
Congress has set for its discretion, and that the Commis-
sion has exercised such discretion and has explained its
departure from previous policy so that a reviewing court
may determine that the decision is reasoned and not ar-
bitrary. Burlington Truck Lines v. United States, 371 U.S.
156, 167-68, 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962);
Missouri-Kansas-Texas Railway Company v. United
States, 632 F.2d 392, 403 (1980), cert. denied, 451 U.S.
1017, 101 S.Ct. 3004, 69 L.Ed.2d 388 (1981).

Applying the criteria set forth above, we first note that,
under section 10741(b) of the Act, Congress gave the
Commission a mandate “to protect persons, places, ports,
or traffic types from unreasonable discrimination. This
duty was reiterated in transportation policy sections of the
revised Interstate Commerce Act 49 U.S.C. 10101.” Cor-
pus Christi II, 364 1.C.C. at 276. “Whether a discrimina-
tion in rules or services of a carrier is undue or
unreasonable has always been regarded as peculiarly a
question committed to the judgment of the administrative
body, based upon an appreciation of all the facts and cir-
cumstances affecting the traffic.” New York v. United
States, 331 U.S. 284, 347, 67 S.Ct. 1207, 1240, 91
L.Ed.1492 (1947). Despite the petitioners’ claims to the
contrary, Congress has never sanctioned the “network
common control” standard, nor is there any semblance of
Congressional intent that such standard be frozen into the
administrative process of determining whether joint rates
are discriminatory.’ Thus, the Commission's abolition

*Notwithstanding the broad discretion that is necessarily accorded
to the Commission in these cases, the petitioners offer two arguments
to show that the adoption of the actual common control is contrary to
legislative intent.

First, the petitioners argue that Congress adopte’ the “network”
common control analysis because it made certain amendments to the

20a

of the network common control presumption, and its new
practice of requiring proof of actual joint control, is not
shown to be a matter not entrusted to the Commission’s
sound discretion.

Likewise, the Commission clearly explained its depar-
ture from previous policy so that we may determine
whether its decision is arbitrary and not irrationally
founded. The Commission provided extended discussions
of the actual common control standard in both Wheat
cases, in its Federal Register annoucement of reopening of
the Corpus Christi I cases, and in the Corpus Christi Il

Act after various alleged “network” common control were decided, and
did not challenge “network” control analysis. Even if we are to assume
that the cases that the petitions cite were true “network” common con-
trol cases, we cannot accept the peititioners’ argument that all former
administrative policy, practice, and regulation are, in effect, “frozen”
every time Congress amends or enacts a statute without disputing the
current corpus of agency jurisprudence.

Second the petitioners claim that Section 202(f) of the Railroad
Revitalization and Regulatory Reform Act of 1976, (the “4R Act”), 49
U.S.C. § 10711, precludes the Commission from changing its policy.
Section 10711, provides that ratemaking amendments in the 4R Act
should not be construed to modify the application of Section
10741(b). The petitioners conclude from this that Congress impliedly
adopted the “network” common control analysis, thus precluding
agency abolition of the “network” common control presumption.

There is nothing in the 4R Act to indicate that Congress wished to
do anything to upset Commission discretion in discrimination cases;
rather, Section 10711 provides only that the 4R Act is not meant to af-
fect the discrimination statute. In addition, although section 101(b)(3)
of the 4R Act was not included when the Interstate Commerce Act was
recodified in 1978, it is nevertheless helpful in interpreting the effect of
the 4R Act generally. Section 101(b)\(3) of the 4R Act provides that
Congress intended to “permit railroads greater freedom to raise or
lower rates for rail services in competitive markets.” Abolishing the
“network” common control presumption certainly tends to effect that
policy.

2la

decision itself. The Commission explained that its network
common control standard was tantamount to a presump-
tion that imposed strict liability on carriers for the ex-
istence of rate disparities. The Commission now wishes to
abandon the network common control standard, and
adopt a standard that will impose liability only when there
is actual control, to accord with actual fact rather than
resulting from an arbitrary presumption.

Thus, the Commission has determined upon an analysis
to be utilized that it deems to be appropriate for the deci-
sion of discriminatory rate protests, a matter within its
statutory authority. The adoption or change of a method
of analysis to be used in the administrative decision of
such matters is not shown to be beyond the discretion en-
trusted to the Commission in its administration of matters
statutorily regulated by it. The Commission has clearly ar-
ticulated a non-arbitrary basis for the method of analysis
adopted by it. Finding these criteria are met, judicial review
extends no further. We affirm the order in question.

The petitioners produce seemingly endless arguments
about the “evils” of the actual control standard. All of
these arguments, however, assume that our court may
engage in broad review and substitute its judgment for
that of the well-reasoned decision of the Commission. We
may not.

Il. The Procedural Attack upon the 1980 Corpus
Christi Il Vacation of the 1954 and 1961 Corpus
Christi I Decisions.

In 1979, the Commission reopened the 1954 and 1961
Corpus Christi I decisions to determine whether they
should be modified and to consider whether the Commis-
sion should move from a conclusive presumption of net-

22a

work common control to an analysis of actual control as
had been previously discussed in Wheat I]. The Commis-
sion did so after service and after publication of notice (see
note 7), in procedures that fully complied with the rule-
making requirements of the Administrative Procedure
Act. See Corpus Christi IT, 364 1.C.C. at 271-72. Ultimate-
ly, the reopening led to the Commission’s 1980 Corpus
Christi II, which no* only adopted the new actual control
standard (see Part I of this opinion), but also to vacation
of the Corpus Christi I 1954 and 1961 decisions.

The petitioners mount a procedural attack upon the
vacation of these prior orders. They contend that in the
1980 reopening of the Corpus Christi I case, the Commis-
sion should have proceeded by adjudication and not by
rulemaking and that the vacation of the Corpus Christi I
orders were improper. We find no merit to these conten-
tions.

The choice between rulemaking and adjudication “is
one that lies primarily in the informed discretion of the ad-
ministrative agency.” S.E.C. v. Chenery Corporation, 332
U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947).
The Commission is given rutemaking power in section
10321 of the Act,'® and the Commission may choose to
use its rulemaking power as long as it does not abuse its
discretion in so doing.

The Commission argues, and we accept, that rulemak-
ing was particularly appropriate in this case because the
purpose of re-opening the Corpus Christi I cases was to
consider the adoption of a new standard of common con-
trol that would transcend the interests of the particular

_ 'Section 10321 states: “The Commission may prescribe regula-
tions in carrying out this subtitle.”

23a

petitioners and carriers originally involved in the Corpus
Christi I cases. Further, the petitioners have not shown
any harm as a result of the agency decision to proceed by
rulemaking.

The Commission was entirely reasonable in giving all in-
terested parties an opportunity to comment on agency
policy and the Commission did not abuse its discretion in
deciding to proceed by rulemaking.

Similarly, the Commission did not act improperly in
vacating the Corpus Christi I orders. The Commission
has authority to reopen cases at any time, and the peti-
tioners’ claim that the cases should not be reopened simply
because they were decided 18 and 25 years ago is without
merit. Cf., American Farm Lines v. Black Ball Freight
Service, 397 U.S. 532, 540, 90 S.Ct. 1288, 1293, 25
L.Ed.2d 547 (1970). The Commission’s vacation of the
earlier continuing orders that conflicted with its new
policy may reasonably be considered an appropriate
method within the Commission’s discretion by which it
could implement its adoption of the new actual common
control standard.

The petitioners’ claim that the vacation was improper
because it imposes retroactive liability is mistaken, because
no retroactive liability was imposed. The original Corpus
Christi I orders applied prospectively, and the only effect
of the adoption of the new standard of actual common
control is to permit unequalized rates in the future where
no actual common control in fact exists. (If such une-
qualized rates are in fact proposed, the petitioners of
course still have adequate remedy to protest them upon
any grounds accorded by law.)

The petitioners’ final claim that the Commission should

24a

not have vacated the orders without determining whether
common control to Corpus Christi exists under the new
standard is without merit. As the Commission points out,
the effect of vacation is not to change rates currently on
file. If carriers subsequently initiate rate changes, they can
be examined on an individual basis.

Conclusion
For the reasons stated:

(1) We DISMISS petitions in our docket nos. 78-1348,
79-1816, and 80-1842, which attack the Wheat adjudica-
tions that rejected Corpus Christi claims of discriminatory
rates, as MOOT.

(2) We AFFIRM the orders complained of by the peti-
tion in our docket no. 80-1843, finding that these orders,
(a) adopting the new actual control standard and (b)
reopening and vacating the 1954 and 1961 Corpus Christi I
orders, were procedurally proper and within the Commis-
sion’s authority and discretion.

DISMISSED AS MOOT IN PART: AFFIRMED IN
PART.

25a

APPENDIX

The Consolidated proceedings before us result from
four petitions for review of Interstate Commerce Commis-
sion, (“the Commission” or “the I.C.C.”) orders:

1. Our docket number 78-1348, being a petition filed
by the Nueces County Navigation District No. 1, Corpus
Christi (“Nueces County”), a political subdivision of the
State of Texas, which seeks review of a report and order of
the Commission dated December 19, 1977, Wheat,
Oklahoma and to Kansas to Texas Gulf Ports, 1.C.C.
docket no. 36491 (Sub-No. 1), 357 1.C.C. 382 (1977), a
decision that held that the reduced rates of wheat from
points in Oklahoma and Kansas to various Texas ports
was not unduly preferential to them nor prejudicial to the
Corpus Christi port. We will refer to this decision as
Wheat I.

2. Our docket number 79-1816, a petition by Nueces
County and by Producers Grain Corporation (“Producers
Grain”), a regional grain marketing association of
Amarillo, Texas, which seeks review of an I.C.C. decision
of February 2, 1979, Wheat, Oklahoma and Kansas to
Texas Gulf Ports, 1.C.C. docket no. 36491 (Sub-No.1),
359 1.C.C. 592 (1979), which (after reopening Wheat J)
reaffirmed its action on broader basis. We will refer to
this decision as Wheat II.

3. Our docket number 80-1842, another petition by
Nueces County and by Producers Grain, which seeks
review of an I.C.C. decision dated July 21, 1980, Nueces
County Nav. Dist. No. 1 v. Abilene & Southern Ry. Co.,
I.C.C. docket no. 31098 (but also embracing I.C.C.
docket nos. 33447 Nueces County Nav. Dist. v. Atchison,
T & S.F. Ry., and 36491 (Sub-No. 1), Wheat Oklahoma

26a

and Kansas to Texas Gulf Ports), 364 1.C.C. 269 (1980)),
a decision that:

(a) vacated earlier orders in I.C.C. docket nos. 30918,
Nueces County Navigation District No. 1 v. Abilene and
Southern Railway Company, 291 1.C.C. 459 (1954), and
in docket no. 33447, Nueces County Navigation District v.
Atchison T & S.F. Railway Company, 315 1.C.C. 155
(1961) — to be referred to as the “Corpus Christi I” cases.
These previous decisions had held joint rail rates
discriminatory as to Corpus Christi based upon the Com-
mission’s former presumed “common control” rule;

(b) held that a new “actual control” (of a discri-
minatory rate) standard, adopted in the opinion, shall
be used in the determination of unreasonable discrimina-
tion in future challenges to carrier rate adjustments to the
ports in these proceedings instead of a former presumed
“common control” of joint rates that were discriminatory;
and

(c) affirmed the decision in Wheat J and II, supra, in-
sofar as it applied the actual control analysis, but modified
its discussion relative to rate prescription in the absence of
common control. We will refer to this decision as Corpus
Christi Il.

By this petition for review, Nueces County and Pro-
ducers Grain reiterate their objections to the holdings in
Wheat I and II and reaffirmed in Corpus Christi IT, that
the reduced rail rates of wheat to various Texas ports were
not discriminatory to the Corpus Christi port.

4. Our docket number 80-1843, is yet another petition
by Nueces County and by Producers Grain that seeks
review of the same July 20, 1980 1.C.C. decision, Corpus
Christi II, supra, but which in this instance attacks the

27a

reopening of the earlier 1954 and 1960 Nueces County
decisions (the (a) holding above), and also attacks the deci-
sion’s adoption of the new “actual control” standard in the
above (b) portion of the ruling.

A number of parties have intervened in the proceedings
before us.

In support of the respondent Coinmission, the follow-
ing rail carriers intervened: The Missouri Pacific Railroad
(“MoPac”); the Southern Pacific Transportation
(“Southern Pacific”); the Atchison, Topeka & Santa Fe
Railway Company (“Santa Fe”); and Burlington Northern
Inc. (successor in interest to the St. Louis-San Francisco
Railway Company — the “Frisco” Railway). Houston
Port Bureau, Inc., also intervened in support of the
respondent Commission’s orders.

The Bunge Corporation and the Louis Dreyfus Cor-
poration (“Dreyfus”) intervened in support of the peti-
tioners, Nueces County and Producers Grain.

28a
APPENDIX B
No. 36491 (Sus-No. 1)

WHEAT, OKLAHOMA AND KANSAS TO
TEXAS GULF PORTS

Decided December 19, 1977

Reduced rates on wheat from points in Oklahoma and Kansas to

Galveston, Houston, Texas City, Beaumont, and Port Arthur,
Tex., for export found not to be unduly preferential of those

ports and prejudicial to Corpus Christi, Tex., or otherwise
unlawful. Proceeding discontinued.

Donald E. Engle, Hugh L. McCully, Donald E. Ran-
son, and Donal L. Turkal for respondents.

Frank C. Brooks, Andrew P. Goldstein, and Raymond
R. Nolen for protestants.

G. E. Strange for intervener in support of respondents.

REPORT AND ORDER OF THE COMMISSION
By THE COMMISSION:

By schedules effective February 20, 1977, respondent, St.
Louis-San Francisco Railway Company (Frisco or respon-
dent) published reduced carload rates' from 1 to 3 1/2
cents lower than previously effective rates on wheat from

‘Rates are stated in amounts per hundred pounds.

29a

origins to Oklahoma and Kansas? to the Beaumont,
Galveston, Houston, Port Arthur, and Texas City, Tex.,
ports for export, but not to the port of Corpus Christi,
Tex. Prior to the reductions, the Frisco maintained iden-
tical rates to all the above destinations. Upon protest of
Louis Dreyfus Corporation (Dreyfus) and the joint protest
of Nueces County Navigation District No. 1 (District) and
Producers Grain Corporation (Producers), all of which
represent Corpus Christi interest, and protest of Texas
Grain and Feed Association (Texas Grain), representing
various Texas grain elevators and feed mills, the investiga-
tion of the proposed rates was entered into by order dated
February 16, 1977 (served February 24, 1977). Because
Frisco claimed in initial statements that the failure to af-
ford reduced rates to Corpus Christi was due to the non-
concurrences by the Missouri Pacific Railroad Company
(MoPac or MP) and Southern Pacific Transportation
Company (Southern Pacific or SP), we broadened the in-
vestication by order dated August 4, 1977, to designate
these carriers as respondents.

In our initial consideration of the evidence, we found
significant questions had been raised as to the possible
preferential treatment of the Beaumont, Galveston,
Houston, Port Arthur, and Texas City ports and the possi-
ble prejudicial treatment of the port of Corpus Christi, a
situation which would violate section 3(1) of the act. One
of the elements to establish a section 3(1) violation is that
the originating carrier has control of both the preferred
and prejudiced rates. Respondent alleged in its initial
statement that it did not have common control over both

?Arkansas City and Winfield, Kans., and Bender, Blackwell, Eddy,
Goltry, Grainville, Helena, Lamont, Middletown, Peckam, and Salt
Fork, Okla.

30a

the allegedly preferred and prejudiced rates since it could
not force connecting lines to concur.

In situations where one railroad serves one port directly
and the other port by joint service with a second railroad,
this Commission has stated that a carrier does not have
common control if it offers to establish equivalent service
at equivalent rates, but the connecting carrier declines.
Corn & Soybeans Midwest to Gulf Ports, 349 1.C.C. 1, 4
(1974). The initial statements showed that the Frisco re-
quested concurrences from other carriers, some of which
concurred while others did not.

In our order dated September 8, 1977, we stated that we
were no longer satisfied that offers of divisions by
Originating carriers are sufficient by themselves to
demonstrate a willingness to provide equivalent service at
equivalent rates, unless it is clearly and convincingly
shown by the carriers :hat these offers were made in good
faith. The order further stated:

Without such a showing, the originating car-
rier may predicate the lower joint rate upon a
division of revenues which substantially reduce
the share of the connecting carrier or carriers. By
so doing the origin carrier could virtually compel
the non-concurrence of the connecting carriers.
In order to establish that it has made good faith
offers of divisions with non-concurring
railroads, respondent should submit evidence
showing: (1) the amount and proportion of the
offer of divisions in the case at issue; (2) the
amount and proportion of the established basis
of division, if any, on the particular commodity
and over the particular route; and (3) the amount
and proportion of the established basis of divi-
sions and identical or comparable commodities

3la

over identical or comparable routes. Respondent
may also submit any other evidence, including
cost data, to support its case.’

Respondent Frisco depicts the reduction as necessary to
meet the direct competition of The Atchison, Topeka and
Santa Fe Railway Company (Santa Fe) and the Chicago,
Rock Island and Pacific Railroad Company (Rock
Island), both of which published similar reduced rates on
wheat.

In Investigation and Suspension Docket No. 9132,
Wheat, Kansas and Oklahoma to Texas Gulf Ports, decid-
ed February 7, 1977,‘ the Santa Fe’s reductions were
found just and reasonable and not otherwise in violation
of the Commission’s order in docket No. 31098, Nueces
County Nav. District No. 1 v. Abilene & S. Ry. Co., 291
1.C.C. 459 (docket No. 31098) and docket No. 33447,
Nueces County Nav. Dist. No. 1 v. Atchison, T. & S. F.
Ry. Co., 315 1.C.C. 155 (docket No. 33447).

Frisco refers to the testimony in 1.&S. Docket No. 9132,
wherein Santa Fe justified its reductions on the basis that
successive general increases had increased the rail rates to
the extent that motor carrier competition was becoming a
significant factor. Frisco claims that, while it is affected by
motor carrier competition, it is more directly affected by
the reduced Santa Fe and Rock Island rates. Maps submit-
ted by Frisco illustrate the close proximity of Frisco’s, San-

This criteria was subsequently modified to require (1) information
relevant to the offer of divisions in the issue case and (2) information
relevant to any established bases of divisions on similar or identical

commodities over similar or identical routes. Supporting detail, in-

cluding cost data, proportional rates, or other basis for divisions of-
fers can be submitted.

“Appeal docketed sub nom., Producers Grain Corporation v. In
terstaie Commerce Commission, No. 77-1788 Sth Cir.

32a

ta Fe’s, and Rock Island’s lines. Respondent draws the
conclusion that without these reductions, wheat will move
either by the competing rail carriers or trucks.

Union Equity Co-Operative Exchange (Union Equity),
which supports the reduction herein, is a regional
cooperative with 226-member elevator organizations
located in 7 States, and has elevators totaling 50.3 million
bushels storage capacity at Enid, where a considerable
amount of grain is stored during the harvest season. Enid,
Okla., located no further than 90 miles from the involved
origins, is an important transit point for the grain trade.
Union Equity also has elevators at Forth Worth and
Houston, Tex., with capacities of 5 and 6.5 million
bushels, respectively.

The table below shows the amount of grain handled by
the Frisco from all origins to Enid and from Enid to

various guif ports.

St. Louis-San Francisco Railway Company
shipments handled to and from Enid, Okla.

1973 1974 1975 1976

All origins to Enid, Okla ......... 640 1,093 1,276 2,125
Enid to Beaumont, Tex .......... 446 86503 295 54
Enid to Corpus Christi, Tex. ...... 14 32 70 111
Enid to Galveston, Tex .......... 37 63 105 351
Enid to Houston, Tex ............ 2,584 2,118 2,503 2,055
Enid to Port Arthur, Tex ......... 14 8§6€2 il 31
Total Enid tothe Texas ports ... 3,095 2,778 2,984 2,602

Union Equity argues that general increases have
distorted the rate structure between various “rate-break”
border points, so that in one instance stations only 6.6

33a

miles apart have seen an increase from a 2-cent differential
(30 and 32 cents) between the two stations in 1968 to a
4-cent differential in 1977 (66 and 70 cents). The issue
rates would reduce this individual differential 1.5 cents (66
and 67.5 cents). These differentials in the transportation
costs force the disadvantaged elevators either to absorb
the rate differential or obtain a cheaper means of
transporting their wheat, purportedly by trucks. Evidence
was also presented to show that wheat has moved via truck
from nine of the involved origins to both Enid and
Houston.

The Houston Port Bureau, Inc., which represents the
port of Houston in transportation matters, includes in its
membership organizations which own elevators with total
capacity of 27 million bushels. It argues that the Frisco
must be permitted to meet both rail and motor carrier
competition. It also contends that since the port of
Houston has more available capacity than protestants, it
will draw more export grain through its facilities. In order
to accomplish this, it states that competitive rates must be
available.

As stated, protestants to this proceeding include the
District and Producers, both of which filed a joint state-
ment, and Dreyfus, and Texas Grain. Producers is a
regional grain marketing cooperative association with 6.4
million bushel capacity elevator located at Corpus Christi.
The exporting of bulk grain through the Corpus Christi
port is one of Producers’ principal operations, with wheat
accounting for 31.3 percent of the total volume from 1972
through 1976. Producers’ witness has testified that the
Commission decisions in docket Nos. 31908 and 33447,
supra, were a major factor in Producers’ decision to pur-
chase its Corpus Christi elevator facility.

34a

Producers testifies that the rate reductions work out to
6/10 of 1 cent to 2.1 cents per bushel and that, other fac-
tors being equal, a difference of a fraction of a cent per
bushel will determine if a contract will be made between
buyer and seller.

Producers acknowle«, oducts, and water carriers are
not regulated when carryimg commodities in bulk, the
manner in which most grain is transported. These carriers
have the flexibility to adjust rates as economic and
transportation conditions require. By comparison,
prescribed rates would leave the rail carriers with little or
no flexibility. Prescribed rates could result in charges
which become too high in times of rapidly changing
transportation and economic conditions. High rates as a
result of rate prescriptions could prevent or restrict the

*As discussed in the prior report, the reduced rates are clearly within
the zone of reasonableness. Protestants have argued both explicitly
and implicitly that the issue is not that their rates are too high, but that
identical rates are not afforded to both Corpus Christi and the other
Texas ports.

°A rate is prescribed under a section 10704 order. This order re-
mains in effect unless modified. To modify a prescribed rate a carrier
must first petition for permission to change the rate level. This peti-
tion is subject to opposition, reopening of the administrative pro-
ceeding and possible court appeal. See Atchison, T. & S.F. Ry. Co. v.
United States, 284 U.S. 248 (1932). If the permission to change the
rate is granted, the carrier may then publish the change. However, this
rate change still remains subject to possible investigation and suspen-
sion in a subsequent proceeding.

78a

farmers’ ability to market farm products and could un-
justifiably cause increases in consumer prices. The carriers
themselves would lose revenues if a higher level of rates
prevented traffic from moving. On the other hand,
prescribed rate might eventually result in noncompen-
satory revenues to the carriers because of rapid inflation.

Further, the record in this proceeding is not sufficiently
comprehensive to permit a rate prescription. There is no
evidence as to what effects prescribed rates would have on
the grain rate structure. Past rate prescriptions have been
in relationship to existing commodity rate structures. E.g.,
Ayrshire Corp. v. United States, supra; Youngstown Co.
v. United States, 295 U.S. 476 (1935), and Franklin
Limestone Co., Inc., v. Alabama G.S.R. Co., 264 1.C.C.
753 (1946). Here protestants have the burden of
establishing a record sufficient for rate prescriptions, '® in-
cluding evidence describing the regional grain rate struc-
ture, the effects of prescribed rates for one carrier on this
structure, and sufficient economic justification as to why
prescribed rates should take precedence over carrier flex-

'°The prior decision incorrectly implies that the burden of proof is
on the respondent carriers in regard to section 3(1) (section 10741). A
carrier's burden of proof under a section 15(8) investigation relates to
the justness and reasonableness of the proposal. 49 U.S.C. section
10707. A respondent carrier does not initially have the burden of pro-
of in respect to section 3(1) issues, except in regard to transportation
conditions. Lake Cargo Coal, Ky., Va., and W. Va. to Ashtabula
Harbor, 326 1.C.C. 63, 69 (1965). 329 1.C.C. $49, $53 (1967). Pro-
testants have the burden in justifying prescribed rates. We note that
under the Administrative Procedure Act (5 U.S.C. $56), the propo-
nent of an order has the burden of proof unless otherwise provided by
statute. Cf. Lake Cargo Coal, Ky., Va., to Ashtabula Harbor, supra.
This result is also dictated by logic. If the burden of proof were on a
carrier to show that prescribed rates were not justified, this would
ase an eanausite Caden ens conterbeis ce on heewn casin the

ALTERNATIVE ORDER

We now turn from the issue of whether rates should be
prescribed to the issue of whether an alternative order can
be issued under section 10704. The factual question is
whether Frisco exercises actual control over the rates in
such a manner that an alternative order can be issued. In
Texas & Pacific the court stated that a carrier must be the
common source of the rates to both the preferred and pre-
judiced points before we may issue an alternative order.
The court stated at 289 U.S. 649:

Where, however, a carrier whose lines reach, or
which controls the rate to, one of the destina-
tions, is a party to a joint rate to the other but
cannot make or control the latter rate, or though
it were to withdraw as a party thereto, or to
cancel the rate, the discrimination would still
continue — it cannot be held responsible, nor
can any order to remove the prejudice run
against it. [Footnote omitted.]

At 289 U.S. 650-51, the court quoted with approval
from Central Railroad of New Jersey v. United States, 257
U.S. 247:

In the Central Railroad case it was said (p.
259): But participation merely in joint rates does
not make connecting carriers partners. They can
be held jointly and severally responsible for un-
just discrimination only if each carrier has par-
ticipated in some way in that wnich caused th.
unjust discrimination; as where a lower joint rate
is given to one locality than to another similarly

situated. (Citing cases.) If this were not so, the
legality or illegality of a carrier’s practice would
depend, not on its own act, but on the acts of its
connecting carriers***. What Congress sought to
prevent by that section [3], as originally enacted,
was not differences between localities in
transportation rates, facilities, and privileges,
but unjust discrimination between them by the
same carrier or carrier. [Emphasis added.]

If Frisco does not effectively participate “in some way in
that which causes the unjust discrimination,” then it can-
not have common control. /bid.

In the simplest case, one carrier serving both points
would clearly have common control. Similarly, if two or
more carriers serve both points between them and are
acting in concert, they would also have common control.
The difficult factual questions arise as to whether the car-
riers are acting in concert when the origin carrier must
serve one of the ports by a connecting carrier (which can-
not serve the issue origins) and the connecting carriers do
not concur in the origin carrier’s changed rates.

Prior orders equalizing rates to Corpus Christi and
other Texas ports were entered on the basis of our powers
under section 3(1) (section 10741). We have the authority
under section 10741 to remedy unreasonable discrimina-
tion between ports by a single carrier or a group of carriers
acting in concert. If, for example, the origin carrier serves
both the Galveston and Corpus Christi ports, we may re-
quire the carrier (under appropriate circumstances) to
publish equivalent rates to both ports. Further, if two
railroads jointly serve these two ports, they cannot publish
rates favoring one port. We do not have the authority
under section 10741 to equalize rates between two ports if
each port is served by only one of two carriers and the two
carriers do not act in concert.

In Albany Port District Comm. v. Ahnapee & W. Ry.
Co., 219 1.C.C. 151, 172 (1936), the Commission found
that a massive differential rate adjustment covering ports
in the north Atlantic region demonstrated that the railroads
serving those ports had acted in concert.'' While none of

the carriers served all the ports directly, as a group they
had control of the rates to all the ports at issue.

In Beaumont, Tex., Port Comm. v. Abilene & S. Ry.
Co., 253 1.C.C. 127, 132-33 (1942), we found a network of
rail systems because of the railroad’s many points of in-
tersection and because each of the carriers participated in
joint rates to each of the ports and inland points covered
by the complaint. A situation similar to the Beaumont case
ws found in the 196] Corpus Christi case. 315 1.C.C. at
162. While the 1954 Corpus Christi order dealt with a
broader origin area, the Commission again found that a
network controlled the rates to the preferred and preju-
diced ports. 291 I1.C.C. at 470.

In the Corpus Christi cases, the Commission presumed
that because of the interrelated nature of the rail network,
common control existed. We do not believe that this

'!'Thus the amount of a port rate between Baitimore and a point in
Michigan is primarily determined, not by considering the distance and
the transportation conditions appertaining to the routes over which
that rate applies, but by deducting a certain differential from the rate
between New York and the Michigan point. This differential rate ad-
justment was formed by the voluntary joint action of all the carriers
serving the ports. It depends for its very existence upon the continued
participation of every such carrier. And so long as this adjustment
remains in existence each of these carriers effectively participates not
only in the rates over its own line, but in every rate in the entire struc-
ture. In other words, the carriers serving the ports, acting together, ex-
ercise effective control over the entire structure of port rates to and
from the ports other than Albany [219 1.C.C. 172.]

82a

analysis is adequate in addressing the complex fact pat-
tern we have before us. Here the Frisco has published a
reduced rate by independent action in which the MoPac
and SP have not concurred. Given these facts, and absent
any deliberate action on the part of the Frisco to induce
this nonconcurrence, we cannot find that any rail carrier
controls the rates to the ports in question, nor can we find
that these carriers acting in concert commonly control the
rates. There is no evidence that the pricing policies of these
railroads with regard to these ports have been jointly
developed. On the contrary, each railroad has acted within
the scope of its legitimate management discretion to
establish cost related rates for these services by indepen-
dent action. The Corpus Christi cases will be reopened to
determine whether those decisions are consistent with the
action taken here.

Our decision to focus on actual control, rather than to
presume that carrier interaction inevitably leads to com-
mon control, is reinforced by important policy considera-
tions. Congress stressed in the 4R Act that railroads have a
need for flexibility in ratemaking if they are to compete in
today’s competitive environment.'? Requiring equalized
rates to the ports abscit actual common control stifles
ratemaking initiatives. Independent and aggressively com-
petitive ratemaking must be encouraged.

Our interest in assuring that rail carriers have actual
common control has developed in two stages. In the first
set of cases, we determined that when a necessary connect-
ing carrier refused to participate in joint equalized rates,
the origin and connecting carriers were not acting in con-
cert and, therefore, did not have common control over

'*See section 101(b)(3) of the 4R Act.

83a

these rates.'? In the second group of decisions, which
includes this case, we expressed concern that an origin
railroad could evade a finding of common control by
predicating its proposed joint rates on an unreasonable of -
fer of division of revenue, thus assuring that the con-
necting carriers would refuse to enter into the joint rate.'*
We, therefore, required the origin carrier to show that it
has made good faith offers of divisions. The mechanics of
the good faith test can best be explained by beginning with
a discussion of respondents’ and protestants’ respective
burdens on the issue of common control.

To demonstrate common control, the protestant has the
initial burden of proving that the originating carrier could
serve both the preferred and prejudiced ports either by
itself or by means of connecting carriers, acting as a net-
work or otherwise. Here, Frisco serves the preferred ports
directly and can serve Corpus Christi indirectly by means
of SP or MoPac. After the protestant has shown that
respondent can serve all the points, the burden then shifts to
respondent to go forward and rebut protestant’s evidence
of control by showing that respondent made a good faith
effort to arrive at a division of revenue agreement with the
connecting railroads, but was unsuccessful in doing so.
When respondent makes such a showing, it demonstrates
that it has no actual control of the rates to the ports which
it does not serve directly. There is, then, no common con-

''Soybeans, Midwest to Chicago and Gulf Ports for Export, supra;
Corn & Soybeans Midwest to Gulf Ports, for Export, 349
L.C.C.1.(1974); L. and 8. No. 9052 (embraces |. and S. No. 9052 (Sub-
No. 1)) Wheat, New Mexico and Texas to Gulf Ports, supra; |. and S.
No. 9132, Wheat, Kansas and Oklahoma to Texas Gulf Ports, supra.

'*No. 36491, Wheat, Oklahoma and Kansas to Texas Gulf Ports,
supra, |. and 8. No. 9169, Corn, Wheat or Grain Sorghums, to Texas
Ports, supra.

84a

trol of the rates under consideration. The burden of pro-
ducing evidence on this issue is placed on the respondent
carrier since it alone has access to the division of revenue
information. '*

To summarize, because of the need to assure rate flex-
ibility, we have required proof that the railroads actually
control the rates to the preferred and prejudiced ports. In
this regard, we believe that the presumption of control ex-
tending from the existence of a network such as was found
to exist in the Corpus Christi cases is insufficient to assure
that actual control exists. While seeking proof of actual
control, we have allowed the railroad to show that it does
not have such control because it could not, after acting in
good faith, arrive at divisions agreements.

DIVISIONS

We turn now to the topic of division of revenue itself,
and what is a good faith offer. Our concern is that if an
origin carrier is not required to show that it has made a
good faith offer of divisions, it could always evade the
finding of common control by predicating a lower joint
rate upon an offer for divisions of revenues which
svostantially reduces the share of the connecting carrier,
01 upon some other condition which could reasonably be
expected to induce the nonconcurrence of the connecting
carrier. If the connecting carrier refuses to concur after a
good faith offer of divisions, the Commission is left with
no alternative but to find that the origin carrier does not
have common control over the rates to the prejudiced

port.
From the facts of this case, there is no doubt that Frisco
negotiated divisions in good faith in its attempt to obtain

''See Rate Incentives for Capital Investment, 353 1.C.C. 760, 766
(1977).

85a

concurrences. It went through established rate bureau pro-
cedures, and, after a negative vote by the bureau member-
ship, independently published the lower rates. Even before
independent publication, Frisco still attempted to obtain
concurrences, based on existing division arrangements
from the MoPac and SP, so that the reduced rates would
be effective to Corpus Christi.'* The divisions proffered
by Frisco were basically identical to those in effect prior to
the rate reductions. The cost evidence indicates that the
revenues to the connecting carriers, both with the prior
and new rates, were compensatory or only slightly non-
compensatory.

The important factor is not the compensatory na _ .ce of
the divisions, but whether the tender of existing divisions
could be considered a good faith offer. Because the
tender, if accepted, would have resulted in, at the most,
only a small reduction of the connecting carrier’s revenues,
we again conclude that the respondent did not attempt
deliberately to induce the nonconcurrence of its connect-
ing carriers, and that the offers were made in good faith.'’

'®We note that Frisco ultimately did obtain concurrences from Fort
Worth and Denver Railway Company and Missouri-Kansas-Texas
Railroad Company to the preferred ports.

'’This is not to say that a tender of the same divisions by an origin
carrier will necessarily result in a finding that it has made a good faith
tender of divisions. Changed circumstances may render a previously
reasonable divisions tender not only unacceptable to the connecting
carrier but also so clearly unacceptable that its tender can be viewed as
reflecting something iess than good faith on the part of the originating
carrier. The marginal profitability of the existing divisions to the con-
necting carriers means that a tender of the existing divisions under any
changed circumstances merits careful examination. However, the
change here is not so great, nor are the resulting divisions so obviously
noncompensatory that we can conclude that the respondent offered
them in an attempt to induce nonconcurrence by the connecting car-
riers.

Thus Frisco’s actions in attempting to obtain concur-
rences, both prior and subsequent to the rate bureau’s re-
jection, demonstrate Frisco’s failure to participate effec-
tively in the rates to Corpus Christi. We believe that this
inability to obtain concurrences to Corpus Christi after
making good faith divisions offers amply demonstrates
that Frisco cannot be held responsible for the acts of the
destination carriers and that the lawfulness of the reduc-
tions should not depend on the actions of those carriers.
Texas & Pacific, supra, pages 650-51, citing the Central
Railroad case. We conclude, then, that Frisco does not
have control over the rates to the prejudiced port of Cor-
pus Christi. Because Frisco lacks the necessary control
over the rates to both the preferred and prejudiced ports,
no alternative order can be issued.

The parties contend that we should not inquire into divi-
sions in a section 3(1) proceeding. Protestants believe that,
to the extent that inquiring into good faith offers of divi-
sions is an extension of Corn & Soybeans, this test is un-
warranted in view of the Corpus Christi orders. The car-
riers want us to look only at rates and services without in-
vestigation and disclosure of divisions information. Our
obligation, however, is to make a decision consistent with
the legal principles of Texas & Pacific and with facts ade-
quate to support our conclusions. Omission of the good
faith test would leave the record barren of facts which are
essential to our conclusions on the common control issue.
We are not attempting to conclude what divisions are
proper, but merely that they were offered in good faith.
Our examination of (1) the similarity between existing
proposed divisions, (2) Frisco’s efforts to obtain concur-
rences to Corpus Christi, and (3) the relatively small
changes in the revenue-to-variable costs ratios, lead us to

87a

conclude that Frisco acted in good faith and thus does not
control the rates to Corpus Christi.'*

In spite of these conclusions, Dreyfus would have the
present rates to the preferred ports canceled under section
15(8),'* thus placing the former and higher rates in effect.
Dreyfus apparently reasons that an order to cancel the
rates, in contrast to an alternative order, would not re-
quire a finding of common control. We do not find it nec-
cessary to resolve this point because, under the cir-
cumstances of this case, we will not require a higher level
of rates where the lower level is sufficiently compensatory.
In the prior decision the cost data showed the lower rates
to the preferred ports at 139 to 160 percent of variable
costs. In the absence of evidence to the contrary, these
ratios sufficiently demonstrate the reduced rates to be
compensatory. Dreyfus indirectly supports this view when
it terms the sought reduced rates to Corpus Christi, to
which the transportation costs are higher, as compen-
satory. Accordingly, we will not order the reduced rates
canceled.

We a: . urged to conclude that if Frisco acted in “good
faith” by its divisions offers, then the connecting carriers
acted in “bad faith” by their refusal to join in the reduced
rates. We do not agree. Negotiations such as these,

'*Protestants have filed a petition for further hearing. Protestants
seek to show that Frisco’s division offers were considered too low by
the connecting carriers. This request is denied. This issue is not
whether the carrier offered the largest divisions possible but whether
the negotiations were conducted in good faith considering the existing
conditions.

'"We note that in section 202(f) of the Rail Revitalization and
Regulatory Reform Act, which amends section 15(7) of the Interstate
Commerce Act (now section 15(8)), expressly states that nothing in
the 4R Act amends sections 2, 3, or 4 of the Interstate Commerce Act
(now 49 U.S.C. 10741 and 10726).

although carried out in good faith, will not necessarily
culminate in concurrences. In other words, the test is not
whether an agreement is reached, but the substance of the
negotiations. Here the connecting carriers acted in good
faith and within managerial discretion in rejecting offers
that, although they were on the same percentage basis as
existing divisions, were slightly lower in monetary terms.
Further, our reason for inquiring into the proffered divi-
sions was solely for determining common control and
whether a section 10741 order would lie. A finding that all
parties to the divisions negotiations acted in good faith
precludes the entry of an alternative 3(1) order, under sec-
tion 10741. Even if we were to find that the connecting
carriers had acted in bad faith, they cannot control, and
thus cannot adjust, the rates for shipments originating and
terminating on Frisco’s line.?° Thus there cannot be a
section 10741 alternative order solely against the con-
necting carriers.

On reconsideration, we find that the assailed rates are
not in violation of section 10741 or otherwise unlawful.
This decision does not affect the quality of the human en-
vironment.

2°Dreyfus states that “this mistaken focus of the majority's new sec-
tion (1) doctrine is the fact that an origin carrier supposedly cannot
compel a connecting carrier to join in a proposed rate reduction” and
cites Carolina, C. & O. Ry. Co. v. Southern Ry. Co., 299 1.C.C. 335,
affirmed Southern Ry. Co. v. United States, 153 F. Supp. 57. This
case focused on the reasonableness of the through rates. Lower rates
were prescribed because the routes were commercially closed. The
record in the present proceeding does not show that the route has been
commercially closed, and thus would not justify requiring connecting
carriers to join in a proposed rate reduction.

COMMISSIONER STAFFORD, concurring:

While I agree with the ultimate result, I reaffirm my op-
position to the good faith offer of divisions test.

Congressional policy, most recently enunciated in the
Railroad Revitalization and Regulatory Reform Act of
1976 (Public Law 94-210), indicates a clear intention to
give railroads the greatest leeway in pricing flexibility.
This so-called “good faith” test injects the Commission
even more deeply into matters involving carrier manage-
ment and pricing policies. The issue was resolved rather
easily in this proceeding; however, other cases will surely
be more difficult and time-consuming. If the carriers can-
not arrive at a mutually acceptable joint rate among
themselves. I see no need for the Commission to impose

itself into the negotiating process.

COMMISSIONER GRESHAM, dissenting:

My dissent to the December 19, 1977 decision in this
proceeding expressed the view that (1) the respondent car-
riers commonly control the rates at issue and (2) the
schedules under investigation should either be canceled or
extended to Corpus Christi. Within 2 months of that deci-
sion, respondents Frisco and MoPac did establish equal
rates.

I find the patter)» of these Gulf port cases’' to be
disturbing: rates are protested as prejudicial to Corpus
Christi; the Commission investigates and finds (over

?'In addition to the present proceeding, see also Investigation and
Suspension Docket Nos. 8454, 8576, 9052 (Sub-No. 1), and 9132. I.
and S. No. 8454 is perhaps typical. Denied relief by the Commission,
Nueces County filed its court brief in August 1972. Shortly thereafter,
in September 1972, the carriers extended the rate reductions to Corpus

vigorous dissent) no violation of former section 3(1), now
49 U.S.C. 10741(b), because of a lack of common control
by the respondents; protestants seek judicial review; then,
once the carriers become convinced that protestants are
serious, they back down and offer equivalent rates to Cor-
pus Christi. In my opinion, these ultimate filings confirm
the carriers’ control of the traffic.

Two other aspects of today’s decision are also troubling.

The majority has ignored section 202(f)(3) of the 4R Act
which arguably qualifies the ratemaking flexibility given
the rail industry insofar as port rate relationships are con-
cerned. It has also failed to determine if its decision will
have a significant adverse effect on the competitive posi-
tion of the shippers and consignees servi.d by the respond-
ent carriers, in violation of 49 U.S.C. 10704(e)(2), former
section 15a(5).

The majority has declined to act under 49 U.S.C.
10704(a)(1), former section 15(1), because of the nature of
the traffic and the flexibility needed by the carriers to ad-
just rates promptly. Taken literally, this is a declaration
that the Commission now disavows the use of former sec-
tion 15(1) with respect to grain. Without expressing an
opinion on whether that approach is right or wrong, I note
that it is at apparent odds with the pending action in Feed
Grains to New England, 356 1.C.C. 678, 694-95 (1977),
appeal docketed sub nom. New England Grain and Feed
Council, et al. v. United States, No. 77-1324, D.C. Cir-
cuit, filed April 1, 1977.

For these reasons and the additional reasons noted in
my separate expression of December 19, 1977, I respect-
fully dissent from today’s decision.

9la

92a
APPENDIX D
No. 31098'
NUECES COUNTY NAVIGATION DISTRICT No. 1

v. ABILENE & SOUTHERN RAILWAY COMPANY,
ET AL.

Decided July 21, 1980

Upon reopening of No. 31098 and No. 33447, actual control and not
network of common control found to be (he proper standard in
Corpus Christi cases to establish common source of
unreasonable discrimination under 49 U.S.C. 10741. Good faith
test can be used to show actual control. Prior orders based on
network common control vacated. In No. 36491 (Sub-No. 1)’
standard applied and prior decision affirmed, as modified.

DECISION
By THE COMMISSION:
BACKGROUND

The Commission has enuciated a four-part test to deter-
mine the issue of unreasonable discrimination under sec-
tion 10741(b).

2359 1.C.C. $92 (1979). A petition for review of this case
before the ith crc in Now. 71348 and 79-1816, Nueces

ik

See also Increased Rates Frozen Fruits & Vegetables, 351
L.C.C. 676, 682 (1976); Prince Albert Pulp Co., Lid. v.
Canadian Natl. Rys., 349 1.C.C. 482, 491 (1974); In-
vestigation of Railroad Freight Rate Structure, 345 1.C.C.
1364, 1417 (1976). Thus, a finding of common control
(element three of the four-part test) has been found
necessary for a violation of 49 U.S.C. 10741. See Texas &
Pacific Ry. Co. v. United States, 289 U.S. 627, 650 (1933).

By notice served November 15, 1979 and published in
the Federal Register on November 26, 1979, we reopened
No. 31098, Nueces County Nav. District No. 1 v. Abilene
& S. Ry. Co., 291 1.C.C. 459 (1954) and No. 33447,
Nueces County Nav. Dist. No. 1, v. Atchison, T. & S.F.
Ry. Co., 315 1.C.C. 155 (1961) (the Corpus Christi cases)
to determine if port equalization orders entered in these
proceedings based on earlier findings or violations of sec-
tion 10741(b) should be modified. We indicated that our
reexamination of these cases would be limited to the issue
of actual control of rates to the gulf port and how control
of these rates influences the Commission’s authority to
order relief in cases arising under 49 U.S.C. 10741(b)

94a

(formerly section 3(1) of the Interstate Commerce Act).
We stated that we would focus on situations where carriers
cannot agree on rate policies and, as a result, concurrences
to joint rate changes cannot be obtained. We noted that
we favored an analysis of actual control over joint rates in
place of a conclusive presumption of common control.

This limiting of the issues to only one of the criteria
under section 10741(b) was not and is not intended to
detract from the importance the Commission places on the
other three criteria. The fourth factor, similarity or
disparity in transportation conditions, continues to be our
primary consideration. It is axiomatic that there can be no
discrimination if economic and operational analysis
proves that different rates are appropriate. This analysis
includes review of matters such as the different distances
involved, alternative routings available, differences in the
cost of service, and, especially, any differences in com-
petitive conditions.

The need to undertake this transportation co7ditions
analysis depends, however, on the complaining party’s
ability to satisfy the remainder of the test. Accordingly, as
we were concerned here with the standard to be used in
determining common control (the third criteria), and a

Under 49 U.S.C. 10741(b) of the revised act, a common carrier
“may not subject a person, place, port, or type of traffic to
unreasonable discrimination.” Under former section 3(1) of the act, it
was unlawful for any common carrier “to make, give, or cause any un-
due or unreasonable preference or advantage” or to subject a person,
place. port, or type of traffic “to any undue or unreasonable
preference or advantage” or to subject a person, place, port, or type of
traffic “to any undue or unreasonable prejudice or disadvantage.”
Because there is no substantive change in the law under the recodified
Statute, and because many of the court and Commission decision
arose under the former act, we shall use interchangeably section 3(1)
and 10741 and the terms “unreasonable discrimination” and “undue
preference and prejudice.”

95a

change in that test could, in and of itself, invalidate our
earlier prescription orders in these proceedings, we saw no
reason to raise as an issue in this proceeding the transpor-
tation conditions issue.

The Federal Register notice requested that parties com-
nent on the appropriate legal analysis of the issue of rate
control in cases arising under 49 U.S.C. 10741 and the cir-
cumstances, if any, under which unequalized rate pro-
posals should be found to violate 10741 when there is no
common control.

Fifteen parties filed comments. As might have been an-
ticipated, the port interests generally contended that there
is no need to depart from network common control, that
the good faith test is not an appropriate measure of com-
mon control, and that common control is not required to
find a violation of section 10741 except when an alter-
native order is sought. The rail interests, on the other
hand, argued that the old Corpus Christi orders have been
preempted by the 4R Act and currently applicable stand-
ards of railroad ratemaking, that any future violations of
section 10741 must be proven on the basis of actual com-
mon control, and that, absent common control, there are
no circumstances under which rate proposals should be
found to violate section 10741. We have considered all the
comments received. They are discussed in detail below.

In the Corpus Christi cases, the Commission concluded —
that the carriers serving the Texas ports, acting in conjunc-
tion with the originating lines, directly and effectively con-
trolled the grain and grain product rates to the preferred
ports (Galveston, Houston, and Port Arthur) and the pre-
judiced port (Corpus Christi). 291 1.C.C. at 470; 315
I.C.C. at 163. We further found that these rates “are and
for the future will be, unduly prejudicial to Corpus Christi
and unduly preferential” of Galveston, Houston, and

96a

other Texas ports to the extent that the rates to Corpus
Christi exceed those to Galveston and Houston. 291
1.C.C, at 470; 315 1.C.C. at 163. The orders implementing
the Corpus Christi reports required each of ihe defendant
carriers “according 2s iney participate in the transporta-
tion” io maintain rates which will prevent the undue
preference and prejudice found to exist. For the reasons
set forth in this decision, we find that the network com-
mon control standard used in these reports to determine
undue preference and prejudice was inadequate and
should be replaced with an actual control standard. We
shall vacate the outstanding orders in these proceedings.
Future challenges under 49 U.S.C. 10741 to carrier rate
adjustments to the ports involved in these proceedings
shall be considered under the actual control standard.

PROCEDURAL ISSUES

The Nueces County Navigation District No. 1 and Pro-
ducers Grain Corporation (District) and the Bunge Cor-
poration and Louis Dreyfus Corporation (Bunge) filed a
petition requesting service of pleadings on all parties par-
ticipating in the reopened cases and filing of replies. They
argue that, because this is an adjudicatory proceeding, this
procedure is necessary. We disagree. Under the APA, a
rate prescription is treated as a rule, 5 U.S.C. 551(4). See
Alaska Steamship Co. v. FMC, 356 F.2d 59, 61 (9th Cir.
1966). This is a rulemaking and not an adjudication
because the Commission ordered the dependent carriers to
abstain in the future from maintaining export rates on
grain from the involved origin points to Corpus Christi
that exceed those to the other Texas ports. 49 U.S.C.
10741. See Texas & Pacific Ry. Co. v. United States, 289
U.S. 627, 650 (1933). We are considering a broad change
in approach, not application of a prior theory of law to

97a

one particular set of facts. As required for a rulemaking
proceeding under the APA, notice was published in the

Federal Register informing interested persons of “either
the terms or substance of the proposed rule or a descrip-
tion of the subjects and issues involved.” 5 U.S.C. 553(b).
Further, we do not believe cross-service and replies are
necessary to a proper decision.

District filed on February 25, 1980, a motion to strike
all or part of a number of pleadings because they are not
briefs on the legal issues but attempts at injecting factual
materials into this proceeding. The New Orleans Traffic
and Transportation Bureau filed a motion to sirike on
February 28, 1980. The motions are not timely and shall
be denied. Under rule 21(a) of the Commission’s General
Rules of Practice, 49 CFR 1100.21(a), a reply or motion
addressed to any pleading must be filed within 20 days
after the pleading was filed. The challenged pleadings were
filed between 46 and 54 days thereafter.

THE CoMMON CONTROL TEST

The issue of what constitutes common control has pro-
duced a great deal of litigation before the courts and the
Commission. In Central Railroad Co. of New Jersey v.
United States, 257 U.S. 247, 259 (1921), Justice Brandeis
rejected a strict liability standard for carriers participating
in joint rates:

But participation merely in joint rates does not
make connecting carriers partners. They can be
held jointly and severally responsible for unjust
discrimination only if each carrier has par-
ticipated in some way in that which causes the
unjust discrimination * * *. If this were not so,
the legality or illegality of a carrier’s practice
would depend, not on its own act, but on the acts

of its connecting carriers. If that rule should
prevail, only uniformity in broad privileges and
practices, or the cancellation of all joint rates,
could afford the carriers the assurance that they
were not in some way violating the provisions of
section 3.

The Supreme Court in Texas & Pacific attempted to
define what Justice Brandeis meant by “participated in
some way.” It held that because a carrier would not be
responsible for the discrimination, and also because an
alternative order could not be given, the carrier or carriers
“must effectively participate in both rates.” 289 U.S.
649-50.

In response to the court decisions, the Commission
developed its “network common control” concept in which
railroads were viewed as an interlocking network, jointly
controlling the rates to and from the ports. The earliest
mention of this concept in a port case was in Albany Port
District Comm. v. Ahnappe & W. Ry. Co., 219 1.C.C. 151
(1936). We later defined network control in this manner:

All [of the carriers], acting together, exercise
effective control over the entire structure of rates
to and from the ports, and therefore each of
them participates not only in the rates over its
own line, but in every rate in the entire structure,
thereby collectively and individually joining in
the unduly preferential rates * * * and the undu-
ly prejudicial rates * * *. [Beaumont, Tex., Port
Comm. v. Abilene & S. Ry. Co., 253 1.C.C. 127,
132-3 (1942).]

Generally, our policy has been that the larger the
geographic area examined, the more likely it is that the
railroads would be found to have common control of the
rates throughout the entire region. When the Commission

99a

examined widespread rate adjustments, it did not
necessarily focus on the rate to each individual point and
was more likely to find that the railroads before it con-
trolled the adjustment as a whole.‘

In port cases, the focus has usually been on rates to only
a few points. In recent years, common control has increas-
ingly become a pivotal issue. See Corn & Soybeans
Midwest to Gulf Ports, for Export, 349 1.C.C. 1 (1974)
(vacated by Commission order of June 29, 1978, pending
review in Nueces County Navigation District, et al v.
United States, (N.D. Texas, No. CA-3-74-1253); Corn,
Wheat or Grain Sorghums, to Texas Ports, 359 1.C.C. 132
(1978). Although in recent cases we have distinguished
port cases from proceedings in which large regional and
interterritorial rate adjustments are examined, we have in
the past given ports the benefit of the network common
control theory. The Corpus Christi cases are such an ex-
ample. In reviewing these decisions, we note that common
control was largely presumed. There was no extended
analysis of whether the defendant carriers effectively con-
trolled the rates. 291 1.C.C. at 469-70; 315 1.C.C. 162. We
now find such an analysis of common control to be inade-
quate.

As a matter of fundamental fairness and in keeping with
court interpretations, we believe that actual control, and
not network common control, is necessary in finding a sec-
tion 10741 violation in the Corpus Christi cases. The
courts have held that section 10741 violations are not a
matter of strict liability. Two single-line carriers will not
be held accountable, nor will a carrier be liable by merely

“See Increased Rates Frozen Fruits & Vegetables, 351 1.C.C. 676
(i976); Washington Potato & Onion Shippers Assn., Inc., v. U.P.R.
Co., 300 1.C.C. 537 (1957). But see Feed Grains to New England, 356
1.C.C. 678, 691 (1977).

100a

participating in joint rates. See Central Railroad. Thus,
carriers “must effectively participate in both rates.” Texas
& Pacific, 289 U.S. at 650. Carrier responsibility is
necessary for a section 10741 violation; a conclusive
presumption of carrier control is a deficient standard.

District and Bunge argue that departing from the net-
work common control standard to one of actual control
would change former section 3 and impair the an-
tidiscrimination provisions of the statute enacted by Con-
gress to protect shippers, ports, and localities from per-
nicious and detrimental actions by carriers. We disagree.
Unless the carriers that effectively participate in the joint
rates are responsible for a “voluntary and wrongful act,”
they do not violate former section 3(1), id. at 651 and no
relief for shippers is appropriate. The standard urged by
District and Bunge is basically no standard at all but an ir-
rebuttable presumption leading to total port equalization
and minimal or no rate flexibility. We do not believe this is
what Congress and the courts intended.

Bunge draws a distinction between rate proposals and
an existing network of rates. It states we should not add
common control as a prerequisite to exercising our power
under section 10741 when faced with unequalized rate pro-
posals. We are not adding common control as a prere-
quisite under 49 U.S.C. 10741; the courts and Commission
have consistently held it is a requirement before a finding
of unreasonable discrimination can be redressed. We are
here determining a standard for a finding of common con-
trol. Further, as we discuss infra, New York and Ayrshire
do not require that we prescribe a rate absent common
control.

As we noted above, in recent years we have been using an
actual control standard in port cases. In the first of these
cases, we found that when a connecting carrier refused to

10la

participate in joint equalized rates, the origin and connect-
ing carriers were not acting in concert and thus did not
“control” the rates to the differently treated ports.’ In
our most recent cases on actual control, we have
developed the “good faith offer of divisions” test. This test
is used when a dispute over divisions is asserted as the
obstacle to changing a joint rate. The origin carrier is re-
quired to show a good faith offer of divisions to its con-
necting carriers because of our concern that that carrier
could avoid a finding of actual control simply by making
an unreasonable offer of divisions of revenue that would
assure the refusal of the connecting carriers to agree to ad-
justing the joint rate.

We find that the good faith test can be used in the Cor-
pus Christi cases to determine actual control. That test is
described in some detail in the Wheat case, 359 I.C.C. at
603-7. Briefly, to demonstrate common control the ship-
per, port, or locality has the burden of proving that the
originating carrier could serve both the preferred and pre-
judiced ports either by itself or with connecting carriers.
After this has been shown, the burden shifts to the carrier

SSee Corn & Soybeans, Midwest to Gulf Ports, for Export, 349
1.C.C. 1, 4 (1974):

Basic to section 3(1) is the concept of common control. Under
outstanding orders of this Commission, if one railroad serves both
Houston and Corpus Christi, it may not establish rates to one port
without publishing equivalent rates to the other. Further, if two
railroads jointly serve both ports, they cannot publish rates favoring
one port. However, if one railroad serves one port directly and serves
the other by means of joint service with a second railroad, section 3(1)
does not give this Commission the power to require equalized rates in
the event that the second railroad refuses to participate in an equalized
joint rates. The first railroad, by its willingness to offer equivalent
service at equivalent rates effectively rebuts any presumption of undue
preference or prejudice arising from its publication of a reduced rate
to one port.

102a

to go forward and rebut the shipper’s evidence of control.
It can do so by showing an unsuccessful good faith effort
to arrive at a division of revenue with the connecting car-
riers. When the carrier makes this showing, it
demonstrates it has no actual control to the ports it does
not directly serve and thus there is no common control. /d.
at 603-4. Factors we shall consider in determining good
faith are: the similarity between existing and proposed
divisions; the carrier’s efforts in obtaining concurrences;
and the relatively small changes in revenue-to-variable cost
ratios. Jd. at 605-6.

The good faith test is criticized because it recognizes
divisions disputes between carriers as a lawful reason for
withholding reasonable rates to the public. The Santa Fe
argues that the level of divisions on joint rates has
historically been a matter between carriers.

It is true that, in general, divisions disputes do not
justify denying relief to an adversely affected party. But
this does not mean that we can never consider them in per-
forming our duties under the act; “a division of a through
rate may not ordinarily be made the standard of
reasonableness of rates or the measure of discrimination.”
(Emphasis supplied.) Sulphur, Louisiana and Texas to
Mich., N.Y., Ohio, and Pa., 287 1.C.C. 129, 151 (1952).
Moreover, the courts have not rejected the consideration
of divisions of revenues in undue preference and prejudice
cases. In light of the requirement of carrier responsibility
for a section 1, 741 violation, the issue of a good faith of-
fer of divisions is properly within the scope of our inquiry.

It is also submitted that the good faith test should apply
to connecting as well as originating carriers. We find this
argument to be without merit. Only if a connecting carrier
participates in both the movements to the allegedly pre-

103a

ferred and prejudiced points can it be said to have com-
mon control and thus be subject to an alternative order.

Finally, it is argued that as practical matter the good
faith test would put almost all joint rates beyond the reach
of section 10741 as the railroads will grasp the simplicity
with which charges of unreasonable discrimination can be
evaded. We reject this contention. Congress has given us a
mandate under 49 U.S.C. 10741 to protect persons,
places, ports, or traffic types from unreasonable
discrimination. This duty was reiterated in the transporta-
tion policy section of the revised Interstate Commerce
Act. 49 U.S.C. 10101. We shall carefully scrutinize the
evidence the carriers must present to show good faith to
ensure that carriers do not “evade” their duty to provide

nondiscriminatory rates.

We find that in the Corpus Christi cases actual control,
which can be established through the good faith test, is
necessary to determine the common source of discrimina-
tion under 49 U.S.C. 10741(b). Since the network com-
mon control standard was used in these cases, we shall
vacate our outstanding Corpus Christi orders.

RATE PRESCRIPTIONS IN THE ABSENCE OF
CoMMON CONTROL

Parties here have argued, based on New York v. United
States, 331 U.S. 284 (1947) and Ayrshire Corp. v. United
States, 335 U.S. 573 (1949), that, even if common control
is absent, rates can be prescribed under 49 U.S.C. 10704
(formerly section 15(1)) to remedy unreasonable
discrimination. The Wheat case indicated some support
for this position, although cautioning that it is unclear
whether New York would have reached the same conclu-

104a

sion if the issues had been limited to section 15(1). 359
L.C.C. 593, 599.

We disagree with these interpretations of New York and
Ayrshire. In both cases, the reasonableness of the rate was
also involved.

In cases such as those before us now which are limited
solely to issues of discrimination, the only requirement for
a remedy is that the discrimination be removed. This may
be done by lowering one rate to the level of the other, rais-
ing one rate to the level of the other, or equalizing the rates
anywhere in between. In these cases, the Commission is
not called upon to make a judgment as to the reason-
ableness of the ultimate rate level.

Of course, there may be instances where the level of the
rate is also at issue. A complainant may seek a prescription
of a reasonable rate along with the discrimination relief if
it believes the rate it is complaining about is unreasonably
high. Or, the Commission, on its own initiative, may reach
a similar conclusion. Clearly, we have authority under sec-
tion 10704 if the rate is unreasonable or otherwise
unlawful to prescribe rates. New York is consistent with
this analysis. There the court recognized that the fixing of
reasonable class rates throughout the Nation was done
under former section 1, despite the fact that issues of
discrimination also were involved. New York, 331 U.S. at
342. Ayrshire also involved a Commission determination
that not only must discrimination be cured, but maximum
reasonable rate findings were required. Ayrshire, 335 U.S.
at 582-583.

We recognize that there is language in both these cases
(notably New York at 342-43) that could lead one to con-

10Sa

clude that the Commission may find unreasonable
discrimination and prescribe a remedy (other than an
alternative order) in the absence of common control. The
following excerpt, taken out of context, could produce
this conclusion.

If the hands of the Commission are tied and it is
powerless to protect regions and territories from
discrimination unless all rates involved in the rate
relationship are controlled by the same carriers,
then the 1940 amendment to section 3(1) fell far
short of its goal.

However, when read in context with the immediately
preceding discussion of section 1 issues and the court’s
recognition of the role of that section in these cases, we
believe it is clear that the cited language was not intended
to require the Commission to prescribe a rate to remove
discrimination under former section 3(1) absent a finding
by the Commission that such a prescription is necessary to
correct rates which are otherwise unlawful. To read the
quoted language as providing a new test of discrimination
omitting the common control requirement would lead to
the anomalous result in which the harsher remedy of a rate
prescription applies when one of the four section 10741
factors is missing while the more flexible remedy of an
alternative order applies when all four factors are
present.°®

*Moreover, especially in the New York case, the court was consider-
ing the Commission's power to adjust rates on a broad territorial basis
which is not involved here.

In light of this, it cannot convincingly be argued that
common control is merely a procedural element necessary
to issue an alternative order. It is instead, substantive
evidence of carrier responsibility for unreasonable
discrimination. Section 10704 is a remedial section of the
act which provides for the prescription of maximum or
minimum rates once there Has been a violation of one of
the substantive parts of the act. Unreasonable discrimina-
tion is such a substantive provision; common control is
merely one of the case law developed criteria for a finding
of unreasonable discrimination. Therefore, a rate cannot
be prescribed absent common control unless there is some
other violation of the act.

Even if New York and Ayrshire could be read as
authorizing the Commission to prescribe rates absent a
finding of common control or a violation of some other
section of the act, clearly they do not require the Commis-
sion to do so. All of the reasons which support our belief
that the act should be interpreted as we have indicated sup-
port a determination that, if we have this authority, it
should not be exercised. Accordingly, we conclude that,
even if we have the authority, we will not prescribe a rate
to remove unreasonable discrimination absent common
control unless it is necessary to cure some other violation
of the act.

What we have said here as to exercise of our authority
under section 10704 is equally applicable to our exercise of
authority under other remedial sections of the act.
Without a finding of substantive violation of the act, we
will not order a rate canceled.’

"See New York v. United States, 562 F . 2d 887, 898 (2d Cir. 1977),
Increased Rates Frozen Fruits & Vegetables, 351 1.C.C. 676, 682
(1976), and Corn and Corn Products, Illinois to Official Territory,
332 1.C.C. 485, 490 (1968).

107a
Port RELATIONSHIPS

Finally, it is argued that certain ratemaking amend-
ments of the 4R Act do not modify the application of sec-
tion 10741 or affect the authority of the Interstate Com-
merce Commission related to ~ate relationships between
ports. We agree. Neither this decision nor the Wheat case
are consistent with this section. The act provides no special
standards for review of port relationships. Rates for the
ports are judged on the same basis as other rates, with the
same standards of lawfulness. Moreover, our findings are
in keeping with section 101(b)(3) of the Railroad
Revitalization and Regulatory Reform Act of 1976 which
declares it to be the policy of the Congress to permit the
railroads greater freedom to raise or lower rates in com-
petitive situations. This statement of congressional policy
supports the actual control standard. A policy of near
strict liability does not comport with carrier freedom. To
impose a strict liability standard of network common con-
trol without regard to the ability of the carrier to remedy
the unlawful discrimination is totally at odds with congres-
sional policy of giving railroacG management greater rate
flexibility. Similarly, our refusal to prescribe a rate in the
absence of actual control also comports with the congres-
sional policy encouraging pricing flexibility and competi-
tion.

THe WHEAT CASE

By order of January 29, 1980, the United States Court
of Appeals for the Fifth Circuit remanded the record in
the Wheat case to the Commission. Nueces County
Navigation District No. 1, et al. v. United States, Nos.
78-1348 and 79-1816. For the reasons indicated in this
decision, we reaffirm our application in the Wheat case of
the actual control standard.

In this case, the St. Louis-San Francisco Railway Co.
(Frisco) published reduced rates to certain Texas ports it
serves in joint-line service in connection with Fort Worth
and Denver Railway Co. (FWD) and Missouri-Kansas-
Texas Railroad Co. (MKT).* The carriers with which it
connects to serve Corpus Christi refused to join in similar
reductions to that port, despite Frisco’s continued good
faith offers of division. We find that the Wheat case prop-
erly held that the assailed rates were not in violation of
section 10741 because there was no finding of actual con-
trol. We reaffirm the Wheat case finding that actual con-
trol is determined by surrounding circumstances, in-
cluding good faith offers of divisions.

We also reaffirm the Wheat case finding that no
prescription under section 10704 may be ordered both for
the reasons stated in that decision and because, as we have
indicated in this decision, there must be a finding of a
violation of a substantive section of the act before a rate
can be prescribed. The only allegations of unlawfulness in
this proceeding concern section 10741. To the extent the
Wheat case indicates that a prescription to correct
unreasonable discrimination in the absence of common
control may be ordered, it is modified in accordance with
this decision.

It is ordered:

The orders in No. 31098, Nueces County Navigation
District No. 1 v. Abilene & Southern Railway Company,

*We also wish to clarify that, contrary to the statement at 359
1.C.C. 603, Frisco does not serve any of the allegedly preferred points
directly. The Frisco’s lines do not extend south of Dallas, and Fort
Worth, TX, and Frisco obtained concurrences from FWD and MKT
to serve the allegedly preferred ports. See 359 1.C.C. at 604, footnote
16, December 19, 1977 decisions at 8.

109a

et al. and No. 33447, Nueces County Navigation District
No. 1 v. The Atchison, Topeka & Santa Fe Railway Com-
pany, et al., are vacated. .

The actual control standard shall be used to determine
the common source of unreasonable discrimination under
49 U.S.C. 10741(b) in future challenges to carrier rate ad-

justments to the ports in these proceedings.

Our decision in No. 36491 (Sub-No. 1), Wheat,
Oklahoma and Kansas To Texas Gulf Ports as it applies
the actual control analysis is affirmed. The discussion of
rate prescriptions in the absence of common control is
modified, as described in this decision.

This decision will not significantly affect either the
quality of the human environment or conservation of
energy resources.

This decision is issued pursuant to the authority of 49
U.S.C. 10321 and 10741 (the Interstate Commerce Act)
and 5 U.S.C. 553 and 559 (the Administrative Procedure
Act).

By the Couumission, Chairman Gaskins, Vice Chairman
Gresham, Commissioners Stafford, Clapp, Trantum,
Alexis, and Gilliam. Commissioner Stafford concurring in
the result. Vice Chairman Gresham not participating.

AGATHA L. MERGENOVICH,
Secretary.
(SEAL)

110a
APPENDIX F

ORDER

At a Session of the INTERSTATE COMMERCE COM-
MISSION, Division 3, held at its office in
Washington, D.C., on the 19th day of
January, A. D. 1954.

No. 31098
NUECES COUNTY NAVIGATION DISTRICT NO. 1

v.

ABILENE & SOUTHERN RAILWAY COMPANY
ET AL.

This proceeding being at issue upon complaint and
answers on file, and having been duly heard and submitted
by the parties, and full investigation of the matters and
things involved having been made, and said division hav-
ing, on the date hereof, made and filed a report containing
its findings of fact and conclusions thereon, which report
is hereby referred to and made a part hereof, and the divi-
sion having found in said report that the assailed rates on
grain, grain products, and articles taking the same rates, in
carloads, from points in eastern Colorado, Kansas,
Missouri, Illinois, lowa, Nebraska, South Dakota, North
Dakota, Minnesota, and Wisconsin to Corpus Christi,
Tex., for export, are, and for the future will be, unduly
prejudicial to Corpus Christi and unduly preferential of
Galveston, Houston, and other Texas ports to the extent
that said rates exceed or may exceed the rates on like traf-
fic to Galveston and Houston:

It is ordered, That the defendants named in the com-
plaint, to the extent that they participate in the unduly
preferential and prejudicial rates, be, and they are hereby

notified and required to cease and desist, on or before
April 29, 1954, and thereafter to abstain, from practicing
the undue prejudice referred to in the next preceding
paragraph hereof.

It is further ordered, That said defendants, according as
they participate in the transportation, be, and they are
hereby notifies and required to establish, on or before
April 29, 1954, upon not less than 30 days’ notice to this
Commission and to the general public by filing and
posting in the manner prescribed in section 6 of the In-
terstate Commerce Act, and thereafter to maintain and
apply, rates, regulations, and practices which will prevent
and avoid the undue prejudice referred to in the first
paragraph hereof.

And it is further ordered, That this order shall continue
in force until the further order of the Commission.

By the Commission, division 3.

GEORGE W. LAIRD,
Secretary.
(SEAL)

112a
APPENDIX F

ORDER

At a Session of the INTERSTATE COMMERCE COM-
MISSION, Division 2, held at its office in
Washington, D.C., on the 14th day of
November, A. D. 1961.

No. 33447
NUECES COUNTY NAVIGATION DISTRICT NO. 1
v.

ATCHISON, TOPEKA & SANTA FE RAILWAY
COMPANY
ET AL.

This proceeding being at issue upon complaint and
answers on file, and having been duly heard and submitted
by the parties, and full investigation of the matters and
things involved having been made, and said division hav-
ing, on the date hereof, made and filed a report containing
its findings of fact and conclusions thereon, which report
is hereby referred to and made a part hereof:

It is ordered, That the defendants named in the com-
plaint, to the extent that they participate in the transporta-
tion, be, and they are hereby, notified and required to
cease and desist, on or before February 20, 1962, and
thereafter to abstain, from practicing the undue prejudice
and preference found in said report to exist.

It is further ordered, That said defendants, according as

they participate in the transportation, be, and they are
hereby, notified and required to establish, on or before

eS? SE ge oe — a

113a

February 20, 1962, wpon not less than 30 days’ notice to
this Commission and to the general public by filing and
posting in the manner prescribed under section 6 of the In-
terstate Commerce Act, and thereafter to maintain and
apply rates, transit arrangements, regulations, and prac-
tices which will prevent and avoid the undue prejudice and
preference found in said report to exist.

And it is further ordered, That this order shall continue
in force until the further order of the Commission.

By the Commission, division 2.
HAROLD D. McCOY,

Secretary.
(SEAL)

lida
APPENDIX G

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

Nos. 78-1348, 79-1816
80-1842 & 80-1843

U.S. COURT OF APPEALS
FILED

ICC 36491 cm tUN L182
Cierk

NUECES COUNTY NAVIGATION DISTRICT NO. 1
et al., Petitioners,

v

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.
PRODUCERS GRAIN CORPORATION, et al.,
Petitioners,
v.
INTERSTATE COMMERCE COMMISSION, et al,
Respondents.
NUECES COUNTY NAVIGATION DISTRICT NO. 1,
et al, Petitioners,
Vv

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

PRODUCERS GRAIN CORPORATION, et al,
Petitioners,
Vv

INTERSTATE COMMERCE COMMISSION, et al.,
Respondents.

PETITIONS FOR REVIEW OF ORDERS OF THE
INTERSTATE COMMERCE COMMISSION

11Sa

ON PETITION FOR REHEARING
(June 1, 1982)
Before CLARK, Chief Judge, RUBIN and TATE, Circuit
Judges.
PER CURIAM:

IT IS ORDERED that the petition for rehearing filed in
the above entitled and numbered cause be and the same is
hereby denied.

ENTERED FOR THE COURT:

/s/ CLERK’S NOTE:

- we SEE RULE 41 FRAP AND LOCAL
United Stat

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0683%3A2. Public record. Not legal advice.