# Appendix — American Trucking Associations, Inc. v. Atchison, Topeka & Santa Fe Railway Co. (No. 57)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1966

## Text

27

.

APPENDIX A

IN THE UNITED STATES. DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION |

Civil Action No. 64 C 1442 f

THE ATCHISON, TOPEKA AND SAN FE RAILWAY COM-
PANY; CHICAGO & EASTERN ILLINOIS RAILROAD COM- —
PANY; CHICAGO AND NORTH WESTERN RAILWAY COM-
PANY; CHICAGO, BURLINGTON & QUINCY RAILROAD
“COMPANY: CHICAGO GREAT WESTERN RAILWAY COM-
PANY; CHICAGO, MILWAUKEE, ST. PAUL AND: PACIFIC
RAJLROAD COMPANY; CHICAGO, ROCK ISLAND AND PA.
CIFIC’ RAILROAD COMPANY; THE DENVER AND RIO
GRANDE WESTERN RAILROAD COMPANY; GREAT NORTH-
ERN RAILWAY COMPANY; THE KANSAS CITY SOUTHERN
RAILWAY COMPANY; LOUISIANA & ARKANSAS RAILWAY
COMPANY; MISSOURI-KANSAS-TEXAS RAILROAD COM-
PANY; MISSOURI PACIFIC RAILROAD COMPANY; NORTH-
ERN PACIFIC RAILWAY COMPANY; ST. LOUIS-SAN FRAN-|
cisco RAILWAY COMPANY; Sr. ‘LOUIS SOUTH WESTERN
RAILWAY COMPANY; S00 LINE RAILROAD COMPANY;
SOUTHERN PACIFIC COMPANY; UNION PACIFIC RAIL~
ROAD COMPANY; WABASH RAILROAD COMPANY; THE
WESTERN PACIFIC RAILROAD COMPANY;

‘Plaintiffs,
¥.

UNITED STATES OF AMERICA; AND
INTERSTATE COMMERCE COMMISSION;
‘Defendants. .

August 20, 1965

Before Castle, Circuit Judge, —— and Decker, Dis-
trict Judges.

Julius J. Hoffman, District Judge. Piggyback service—

¢ 28
the movement of highway trailers on railroad flatears—
constitutes “probably the most significant recent develop-
ment in transportation’, in the opinion of the Interstate
Commerce Commission. Because of the “explosive
growth” of this service in the past five years, the Commis-
sion in 1962 instituted on its own motion a proceeding to
. investigate the subject generally and “to explore new ap-
proaches” to its regulation. That proceeding culminated
in a Report-and Order of the Commission issued under the
title Substituted Service—Charges and Practices of For-
Hire Carriers and Freight Forwarders (Piggyback Serv-
ice), Ex Parte No. 230, reported at 322 I. C. C. 301-417,
dated March 16, 1964, rehearings dehied June 22, 1964,
and December 21, 1964. By this Report and Order, the
Commission promulgated eight rules intended. to regulate
trailer-on-flatear (TOFC) service. These Rules, herein
referred to simply as Rules 1 through 8, are officially des-
ignated and reported as Sections 500.1 through 500.8 of
title 49, Code of Federal Regulations.

This suit was brought to enjoin and set aside the Com-
mission’s order on the ground that four of the eight rules
issued by the Commission are beyond its authority and un-
’ lawful.' Pursuant to Sections 2284 and 2321. through
2325 of the Judicial Code,? the matter has been tried be-
fore a threéjudge court. We conclude that the Commis-
sion’s order ‘must be set .aside.

—
-

: I,
’ The plaintiffs and intervening plaintiffs are aligned as
five separate parties in interest, comprising three groups
of railroads, one railroad individually, and a group of

*A motion for a temporary restraining order was withdrawn
. when the Commission,-on its own motion, stayed the effectiveness
of its rules until further order.

*28 U.S.C. §§ 2284, 2321-2325 (1948).

ee i

tion as authority for the Rules promulgated, and its proceedings
~did not in any sense constitute the “full hearing” on the necessity
_ for through rail-water routes which is required by that section: -
Since the section is the exclusive method by which the Commission
may require joint rail-water service, and since its powers were not
exercised or its requirments met, the Rules are no more valid as
applied to TOFC services due water carriers than te motor car-

riers. wind
Rule 5003(a), 322 I.C.C, 413.

23 Sections 410(a)(1), (e), 49 U.S.C. 1010(a) (1), 1010(c).

46

authority, so that it could act as a carrier ow transport-
ing the shipment itself, it is acting in its capacity “as a
carrier” even though no carrier service is performed in.
fact.* The non-carrying carrier thus would not be sub-
ject to the statute prohibiting any person from perform-
ing the services of a freight forwarder without a license,
but would be excused by the provision exempting a person
who performs such services “as a carrier.” *

No reason is suggested why we should suppose that Con-
gress meant to allow a motor carrier to perform only the
services of,a freight forwarder, not as an incident to
furnishing ‘transportation, merely because ‘the carrier .
holds a bare unexercised authority to furnish transperta- ’
tion,. while at the same time Congress prohibited the li-
censing of motor earriers as freight forwarders.

The principal foundation for the Commission’s new
Rules is apparently summed up in its observation “We
can see no justification either from the standpoint of
legislative limitations or of policy considerations, for hold-

_irig that one carrier may in no circumstances ‘make use

of the services which another carrier holds out to the pub-
lic generally.” * The observation can be sustained only if
the motor carrier is permitted, chameleon-like, to change
its coloration to evade these statutory prohibitions, Thus,

to escape the Congressional denial of power to establish
compulsory through routes under Sec. 216(c), it is.
claimed that the motor carrier in using the railroad’s
open-tariff TOFC service is acting not as a connecting

_ carrier, but merely as a private person belonging to the

general shipping public. At the same time, to escape the

freight forwarder’s claim, ‘it is said that the motor car-

rier does the same thing not as_an aad member oe
% $22 I.C. C. 333, 335

35 Section 402(a) (5), 49 U.S.C. § 1002(a) (5).
26322 I.C.C., at 335.

~~

47

the general shipping public but as a carrier. To keep
faith ng erm , to give reasonable effect to its com-
mands, we o obliged to eschew word-play and to read
the statutes in the light and spirit of their purpose. The
policy explicit in Sections 216(c) and 402(a) (5), and im-
plicit in the structure of the Interstate Commerce Act as
a whole, does not allow a motor carrier to perform its au-
thorized service simply by tendering the shipment to the
railroad for transportation without the railroad’s ‘concur-
rence. This policy is reflected in the National Transpor-
tation Policy declared by Congress “to provide for fair |
and impartial regulation. of all modes of transportation ©
subject to the provisions of this Act, so administered as
to recognize and preserve the inherent advantages of
each ....”* This underlying purpose militates against
allowing rail carriers to invade the motor carrier field,”*
and its reason extends equally to the converse situation,
where motor carriers seek to exploit the inherent advan-
tages of rail transportation. .

VI

We have thus far approached the issues of statutory
interpretation as a matter of first impression. -Our con-
clusion that the Commission’s Rules exceed its powers un-
der the Interstate Commerce Act does not rest’ alone, how-
ever, upon our construction of that legislation. The
holding is supported and confirmed by the consistent and
repeated decisions of the Commission and the courts. Few.
of these opinions can be regarded as directly holding that
motor carriers cannot.legally avail themselves of the rail- _
roads’ open-tariff TOFC service without railroad concur- ~

7 Act Sept. 18, 1940, 54 Stat. 899, 49 U.S.C. preceding § 1.

*8 American Trucking Associations, Inc. v. United States, 864 U.S.
1, 6 (1959) ; United States v. Rock Island Motor Transit Co., 340
U.S. 419, 481-2 (1961). |

- 48

rence. Nonetheless, they proceed upon premises which re-
affirm the statutory principles previously considered.

The Commission’s course of decision began before the

- enactment of part II of the Act, and before motor carriers
were subjected.to federal regulation. In Trucks on Flat-.

cars Between Chicago and Twin Cities, 216 I.C.C. 435 ©
(1936), the railroad had offered open-tariff service to mo-
tor carriers before the passage of part II; in a decision
handed down after the regulatory act had taken effect,

_ the Commission sanctioned the offering. It should be

noted, however, that the railroad had voluntarily offered
the service to attract the traffic of a motor carrier, and

that some five months later the railroad withdrew its

open-tariff offering and entered into a through-route, joint

rate arrangement with the motor carrier, approved in

Meter-Rail-Motor Tra;ic in East and Midwest, 219 1.C.C. —
248, ' |

‘Whatever implications of approval might be drawn
from the earlier decision were overruled three years later
in Substituted Freight Service, 232 I.C.C. 683 (1939).

‘Here the Commission plainly held that a motor carrier:

could not lawfully substitute rail service for its authorized
highway service for a part of the linehaul. Although the

- decision emphasizes the necessity for publication’ of tariffs:

disclosing the manner of carriage, it- also requires that ~
such tariffs be published with the concurrence of the rail- ‘
road. In the absence of such concurrence, which would

establish a through route -at joint rates under Sec. 216

(c),”* the opinion declares that it is “repugnant to the
act” fer a motor carrier “to act as a common.carrier by
motor vehicle and as a shipper by rail as to the same serv-

ice... .”” This interpretation of the Act was followed

and affirmed in an unbroken line of decisions of the Com- |

2 49 U.S.C. §816(c).

- 80232 I.C.C., 690.

49 “
: *» »

mission in the intervening years, Such cases as Ringsby
Truck Lines, Inc. v. Atchison, Topeka & Santa Fe Ry. Co.,
263 1.C.C 139, 141 (1945); Savage Application, 265
I.C.C. 157, 167 (1947) ; and Movement of Highway Trail-
ers by Rail (the so-called New. Haven case) , 293 1.C.C. 93
(1954), are illustrative. For twenty-five years, until the
decision here under review, the Commission had adhered
: to this interpretation of the act directly in conflict with its

newly announced views, ag Et,

f

In the courts, a similar°principle is established in hold-
ings to the effect that a person who engages in transport-
ing goods for the general public by using open-tariff serv-
ice of common carriérs is not himself engaged as a com-
mon carrier by motor vehicle, so as to be entitled to a cer-
tificate of public convenience and necessity under the -
“grandfather” provisions of the Act, Acme Fast Freight,
Inc. v. United States, 30 F. Supp. 968 (D.C. N.Y. 1940),
aff’d p.e. 309.U.S. 638; Ready Truck Lines, Inc. v. United

States, 42 F. Supp. 970 (N.D. II. 1941), affirmed 314 US.

~ 580. -The relevant premise of the decisions is that the

authorized service of the common carrier by motor vehicle
under the law is transportation over the public highways
.by motor vehicle, not rail transportation by railroad: The
- cases would be distinguishable enly if we were Wiliing to
rule that the unexercised power to provide highway serv-
ice qualifies a person as a motor carrier even though he
provides transportation. solely by rail instead.

In the. Acme cuse, it was also urged that a joint service
arrangement might be valid outside the limits of Section. .
216(c) of the Act, 49 U.S.C. 316(¢), a contention simi-
lar to that presented by counsel for the government here.
The court concluded as we have, that the provisions of
that section are the exclusive means for establishing joint
motor-rail through routes and joint rates, and that any
such. arrangement not in conformity with the section must

™,- .

eer emer

50:

fall." Implicit in that section is the Commission’s lack
of power to compel motor carriers arid rail carriers to pro-
vide coordigated: service, and it was-this lack of power
which justified permitting ilroads to: provide motor car-
rier service. incidental ‘and supplemental to their rail
transportation. Interstate Commerce Commission v. Park-
er, 826 U:S. 60, 7241945). See Fulda, Rail-Motor Com-
. petition: Motor Carrier Operations by Railroads, he Nw.
L. Rev. 156, 201 (1959).

Although it is settled that a common carrier may not _
discriminate against (or in favor of) another carrier ship- -
ping its own property for its own purposés,®? Sections 2
and 3 of the Act have never, so far as appears, been inter-
preted by the Commission or -the courts to require one car-
ried to perform service as a substitute for another car-
rier, gua carrier, as the Commission’s new rules would
command. In the face of this settled interpretation of
the Act. by the Commission itself as well as the courts, the
deference ordinarily due to the construction of the Act by .
the administrative agency responsible for its enforcement
is not called for. See All States Freight, Inc. v. New
York, New Haven ¢ Hartford Railroad, 379 U.S. 343
(1964) ; Atchison; Topeka and Santa Fe "Railway Co. v.
United ‘States, 209 F. Supp. 35; 41-42 (N. D. IIl. 1962) ;.
United States v. Leslie Salt Co., 350-U.S. 383, 396 (1956).

Moreover," this settled interpretation of the Act has ©
been recognized and accepted by both the executive and
legislative branches. . In his Message to Congress Relative
to the Transportation System on April 5, 1962, the Presi-

-dent recommended legislative action to achieve precisely

—

*130 F. Supp. at 973.
a ®
2 1.C.C. v. Baltimore & Ohio R.R., 225 U.S. 326 (1912). Freight

’ forwarders, not entitled to establish ‘through routes and joint rates
«@ With common carriers under the Act, are in the same position as

ordinary shippers and are thus protected from discrimination under

the Act. I.C.C. v. Delaware, L. & W. R.R., 220 U.S. 235 (1911).

i.

51

~the result of the Commission’s Rules here in issue.” Bills.
to effectuate this proposal were introduced both in the
Senate and in the House in 1962 and again in 1963.°*
Pending at the same time were bills proposed by the
Commission itself to achieve a similar objective by amend-
ing Section 216(c) of the Act to empower the Commission
to compel motor carriers and railroads to establish
through routes. Congress failed to enact any of these
proposals. While courts must take care not td%give undue
. Weight to legislative inaction, the fact that the President
- placed before the Congress a proposal predicated upon a .
specific interpretation of existing law cannot wholly be
ignored in -interfreting that law when Congress has re-
fused to make the suggested change. See Blau v: Lehman,
868 U'S. 408, 412-13 (1962); Maurer v. Hamilton, 309 |
U.S. 598, 618 (1940); Ra

In conclusion, it appears that neither the specific provi-
sions of the Interstate’Commerce Act nor its geperal un-
derlying’ scheme confer authority upon the Commission to
compel railroads to provide open-tariff TOFC service to
motor carriers; on the contrary, the Act both in its spe-
cifies and general policy, forbid such compulsion. With
-the confirmation of this interpretation in an unbroken line
of Commission decisions, in judicial precedent, and in ex-
cutive and legislative understanding, there is no room for
the Commission to alter the settled Meaning. Like the -—
Commission, this court is foreclosed from indulgence in

* 83 H.R. Doc. No. 884, 87th Cong., 2d Sess: | am

**'S. 3242 and H.R. 11584, 87th Cong., 2d Sess. (1962) and S..
' 1062 and H.R. 4701, 88th Cong., Ist Sess. (1963). It Should be noted
that each bill would have amended Section 2 of the Act not to pro-
hibit discrimination against.competing carriers generally and as to
all service, as the Commission’s reading would require, but merely
to prohibit discrimination‘in the transportation.of “loaded or empty
vehicles or shipping containers,” that’ is, TOFC service.

* S. 3510 and H.R. 12862, 87th Cong., 2d Sess. (1962): S. 676
and H.R. 2088, 88th Cong., Ist Sess. (1963). aber |

=
¥
the: broad. formulation of wise transportation policy. Those
considerations belong to the Congress. We therefore hold
that Rules 2 and as promulgated by the Commission in
this proceeding, and Rule 5 in so far as it amplifies those
-Tules, are invalid and must be set-aside.

VIL

Two collateral matters remain for disposition. While .
the plaintiffs asserted principally the invalidity of Rules 2
and 3, they have also attacked Rules 5 and 7 promulgated
by the Commission in the same proceeding and order:
Rule 5 represents the Commission’s effort to assure that
TOFC service will not be misused by motor carriers as a
means of circumventing the limits of their certificates
- \eoncerning authorized routes. Since a motor carrier might
‘be able to link its separately authorized routes to create a
circuitous route between authorized points of service, and

utilizing TOFC service directly between: those points, Rule
5 permits motor carriers to use TOFC service “in lieu of
their authorized line haul transportation” only’if the rail .
distance is at least 85 per cent of the highway distance by
the authorized route** In so far as this Rule relates to
open-tariff TOFC service, it falls, pro tanto, with Rules 2

8¢ The Rule provides in relevant part:
500.5 Circuity limitations.—

. (a) Motor and water common carriers s shall not participate in
joint intermodal TOFC service which is to be provided in: lieu
of their authorized line-haul transportation, and totor and
water common and contract carriers shall not utilize open-tariff
TOFC service, where the distance from origin to destination
over the route including the TOFC movement is less than 85
per cent of the distance between such points over the motor or
water carrier’s‘authorized service route; provided, however, -
that the Interstate Commerce Commission may grant relief
from the provisions of this’ paragraph upon consideration of an

; secant petition.

53:

and 3.. The railroads have attacked its remaining appli-

cation to joint intermodal service as ambiguous and arbi-

trary, to the extent that it may control joint intermodal

service under existing plan V. We cannot agree that the

Rule is without ratiofial foundation. To the extent that

through routes are established end to end under plan V, -
the Rule by its terms has no application. Where the

TOFC service is used “in lieu of” the motor carrier’s line

haul transportation between points the motor. carrier”
could serve, we cannot conclude that the Commission was

fatally arbitrary in concluding that respect for the limits

of the certificates issued requires the imposition of cir-

cuity safeguards, whether the intermodal arrangement for

the substitution of TOFC service would be classed as plan

Tor plan V. — ee :

Finally, the plaintiffs have attacked the validity of Rule
7, claiming it to be arbitrary, ambiguous, and beyond the
Commission’s power. In substance, the Rule requires
publication in tariff form of the rates and rules governing
the leasing of equipment ( practically, highway trailers)
by a railroad or-its affiliate to any person using the rail-
road’s TOFC service. Literally, the Rule does not require
_ that the lease be for the purpose of TOFC shipment, but
only to a “person using” the railroads’ TOFC service. It
is plain from the objectives of the Commission as elabo-
rated in its Report, however, that ‘the Commission was
concerned with the leasing of trailers by the railroad for
use in its own TOFC service, as part of the total trans-
portation service supplied. This limited interpretation of
the Rule was specifically avowed by counsel for the gov-
ernment on brief and in oral argument. In. this reading,
the Rule would find support in Section 6(1) of the Act; .
requiring full publication of all charges and privileges or
facilities affecting the value of the service rendered to the
shipper, and by Section 1(3) (a), defining rail “transpor-
tation” to include. the instrumentalities of carriage, irre-
spective of ownership.

a \
Since the proceeding must be remanded to the Com-'

- mission in any event, for a general revision of the Rules
as a whole in conformity with these views, we will adopt
and accept this limited interpretation of Rule 7. The
Commission will have ancearly opportunity to clarify its
intent if a broader scope should be thought necessary.

Limited in this way, the Rule appears to be subject to no
invalidating objection.

A decree will be entered for the olaintifts consistent
with the foregoing conclusions.

‘

55 ,

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS .
EASTERN DIVISION

Civil Action No, 64 C 1442.

THE ATCHISON, TOPEKA AND SANTA FE RaILway Com-
PANY; CHICAGO & EASTERN ILLINOIS RAILROAD Com-
PANY; CHICAGO AND NORTH WESTERN RAILWAY Com-
PANY; CHICAGO, BURLINGTON & QUINCY RAILROAD
COMPANY; CHICAGO GREAT WESTERN. RAILWAY Com- .
PANY; CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC
RAILROAD CoMPANy; CHICAGO, Rock ISLAND AND Pa-

. CIFIC RAILROAD COMPANY; THE DENVER AND Rio
GRANDE WESTERN RAILROAD COMPANY; GREAT NoRTH-
ERN RAILWAY COMPANY; THE KANSAS CITY SOUTHERN
RaILway CoMPANY; LOUISIANA & ARKANSAS RAILWAY
COMPANY; MISSOURI-KANSAS-TEXAS RAILROAD Com-

_ PANY; Missouri PaciFic RAILROAD COMPANY; NoRTH-
ERN PACIFIC RAILWAY CoMPANY; ST. Louis-SAN FRAN-
CIscO RAILWAY CoMPANY; ST. LouIS SOUTHWESTERN
RAILWAY COMPANY; Soo LINE RAILROAD COMPANY;.
SOUTHERN PACIFIC COMPANY; UNION PACIFIC Rall-
ROAD COMPANY; WABASH RAILROAD COMPANY; THE
WESTERN PACIFIC RAILROAD COMPANY; ,

. ; Plaintiffs,

Vv. | :

UNITED STATEs OF AMERICA; AND

INTERSTATE COMMERCE COMMISSION :
ae Defendants.

DECREE
This: cause having come on for trial before the Court,

consisting of three judges convened pursuant to law, and -
the Court having heard and considered the evidence and

~ + 66.

the briefs and-arguments of counsel for the parties, and
having rendered and filed-its Opinion herein containing
‘its findings of fact and conclusions of law, and being fully
advised in the premises, itis. °

ORDERED, ADJUDGED, and DECREED:

1. That the Report and Order of the Interstate Com-
merce Commission entered in its proceeding numbered Ex
- Parte 230 and entitled Substituted Service—Charges and
Practices of For-Hire Carriers and Freight: Forwarders
(Piggyback Service), dated March 16, 1964, in so far as
it issues and prescribes Rules 2 and 3 contained therein
and designated as 49 C.F.R. 500.2 and 500.8, be and here-

by is set aside and annulled;

2. That the defendant Interstate Commerce Commission
be and-hereby is permanently enjoined and restrained.
from enforcing said Rules 2 and 3 contained in and issued
‘by the Report and Order aforesaid; and

3. That this proceeding be and hereby is - remanded to
the Interstate Commerce Commission for such further

proceedings, consistent with the Opinion and Decree of

this Court, as may be appropriate.
Dated this 20th day of August, 1965.

ENTER:
/s/ Latham Castle |
er Circuit Judge

/s/ J ulius J. Hoffman
District Judge

/s/ Bernard M. Decker
a | District Judge

57
APPENDIX B
STATUTES INVOLVED
NATIONAL TRANSPORTATION POLICY ©

September, 18, 1940.] [49 U.SC., preceding §§ 1, 301,
901, and 1001.) It is hereby declared to be the national
transportation policy of the Congress to provide for fair |
and impartial regulation of all modes of transportation
subject: to the provisions of this Act, so administered as
to recognize and preserve the inherent advantages of each ;
to promote safe, adequate, economical; and efficient service
and foster sound economic cohditions in transportation

. and the duly authorized officials thereof ; and to encourage

end of developing, coordinating, and preserving a national
transportation system by water, highway, and rail, as well

SPECIAL RATES AND REBATES PROHIBITED

Sec. 2 [As amended February 28, 1920, June 19, 1934,
and August 9, 1935], [49 U.S.C. § 2.) That if any
common carrier subject. to the provisions of this part
shall, directly oy indirectly, by any special rate, rebate, .
drawback, or other device, charge, demand; collect, or re-
ceive from any person or persons a greater or less com- ©

58

pensation for any ‘sevice rendered, or to be rendered,.in .
the transportation of passengers or property, subject to —
_the provisions of this part, than it charges, demands, col-

; lects, or receives from any other person or persons for -

( ing for him or them a like and contemporaneous service
in the transportation of a like kind of traffic under sub-
stantially similar circumstances and conditions, such com-
mon carrier shall be deemed guilty of unjust discrimina-
tion, which is hereby prohibited and declared to be un-
lawful.

PREFERENCES; INTERCHANGE OF TRAFFIC;
TERMINAL FACILITIES “

Sec. 3. [As amended February 28, 1920, March 4, 1927, :
August 9, 1935, August 12, 1935, September 18, 1940, Au-
gust 2, 1949.) [49 U.S.C.'§ 3.] , (1) It shall be unlawful
for any common carrier subject to the provisions of this
part to make, give, or cause any undue or unreasonable
preference or advantage to any particular person, com-
pany, firm, corporation, association, locality, port,-port dis-
trict, gateway, transit point, region, district, territory, or.
any particular description of traffic, in any respect what-
soever; ot to subject any particular person, company, firm,
corporation, association, locality, port, port district, gate- —

way, transit point, region, district, territory, or any par-
ticular description of traffic to any undue or unreasonable
prejudice or disadvantage in any respect whatsoever: Pro-
vided, however, That this paragraph shall not be con-
| strued to apply to discrimination, prejudice, or disadvan-

~se

tage to the traffic of any other carrier ‘of whatever descrip-
- tion. ¥ 3

| . ° Pa ‘
*

59

RATES, FARES, AND CHARGES OF COMMON
CARRIERS BY MOTOR VEHICLE

Sec. 216 [August 9, 1935, as amended June 29, 1938, and
September 18, 1940.] [49 U.S.C. § 316.]

* * * .

_.(¢) Common carriers of property by motor vehicle may.
establish reasonable through routes and joint rates, charg-
es, and classifications with other such carriers or with
common carriers by railroad and/or express and/or wa-
ter; and common carriers of passengers by motor vehicle.
may establish reasonable through routes and joint rates,

‘fares, or charges with common carriers by railroad and/
or water. In case of such joint rates, fares, or charges it
shall be the duty of the carriers parties thereto to estab-
lish just and reasonable regulations and practices in: con-
nection therewith, and just, reasonable, and equitable di-
visions thereof as between the carriers participating there-
in which shall not unduly prefer or prejudice any of such
participating carriers, i

RS

—t-,

le aa all a al ital a

*

Served Apr. 3, 1964

|

OO

30144 = |
INTERSTATE COMMERCE COMMISSION

iar

Ex PARTE No. 230

SUBSTITUTED SERVICE-CHARGES AND PRACTICES
_ OF FOR-HIRE CARRIERS AND FREIGHT FORWARDERS

(PIGGYBACK SERVICE)

Decided March 16, 1964 6

Upon notice of proposed rulemaking, rules and regulaticas:governing the
7 i practices of for-hire carriers of property, operating in imterstate or
foreign commerce and providing or participating in trailer-on-flatcar

sewice, prescribed. :

A table of contents to this report is contained in appendix V.

— Harry C. Ames, S.S. Eisen, James L. Givan, George H. Leonard,
F. N« Melius,’Jr., Giles Morrow, Theo. R. Schneider;. Leonard
te Stelzer, D. Robert Thomas, and Martin Whitten for various freight
forwarders and freight forwarder associations.
Peter T. Beardsley, Albert F. Beasley, James L. Beatty,
Walter N. Bieneman, W. H. Borghesani, Jr., Ferdinand Born,
Robert E. Born, R. Edwin Brady, Le Grand A. Carlston, Homer S.
‘ Carpenter, Eldon R. Clawson, James I. Collier, W. Wilson
Corroum, Ray M. Cream, Paul M. Daniell, Francis P. Desmond,
George S. Diwon, Robert C. Dryden, J. F. Edell, Howell Ellis,
_ Marion M. Emery, W. B. Ewers, John S..Fessenden, F.H. Floyd,
. F. G. Freund, Robert Gawley, Harry L. Grubbs, Marvin Handler,
' James E. Haydon, Richard A. Heilprin, Harold G. Hernly, Thomas
J. Houser, Earl Hummer, Harry J. Jordan, 8S. Harrison > ‘Kahn,
Joseph E. Keller, .James K. Knudson, Houston Lynch, Jr.,
Carney -D. Matheson, Herman Matthei, Francis W: Mclnerny,
George D. Michalson, M. Bruce Morgan, Glenn F.-Morgan, Arlus
-C. Morris, Lloyd Ownbey, Jr., Guy H. Postell, Bryce Rea, Jr.,
G. M. Rebman, Roland Rice, Floyd M. Roach, William R: Rubbert,
- Reagan Sayers, Richard R. Sigmon, Louis E. Smith, R. P. Sohan,
Hugh M. Steinberger, Glenn W. Stephens, C. Austin Sutherland,
Clarence D. Todd, Edward G. Villalon, William M. Watt, Harvey
A. Welty, Gene F. West, James J..Williams, James E. Wilson, °
James W. Wrape, and Chester A. Zyblut for various motor carriers
and motor carrier associations.

Mice. . . . | _ £301

~

-302. + -\ INTERSTATE COMMERCE COMMISSION RE PORTS

John W. Adams, Jr., Margaret P. Allen, Curtis H. Betg, Harry N.
Babcock, John J. Burchell; James A. Bistline,, R. G. Bleakney,
Jr., Benson T. Buck, CharlesgW. Burkett, Jr., J. T. Clark, J. L.
Connor, Richard E. Costello, Robert W. Cronon, John A. Daily,
John C. es telson, Robert S. Davis, William E. Davis, C. H.
Dickman, per A. Dobbins, John H. Doeringer, Robert H.

esecheeay Paul R. Duke, J. H. Durkin, Urchie B. Ellis, J. D.

Feeney, James A. Gillen, E. D. Grinnell, Jr., Rene J. Gunning,
Carl P. Greeley, John W. Hanifin, “L.W. Hobbs: Bryce Hamilton,
Louis A. Harris, William P. Higgins, James W. Hoeland, Richard
A. Hollander, Eugene E. Hunt, J. H. Jester, Edmund J. Kenivy,
Jess Larson, Harry B. LaTourette, Roland J. Lehman, E. R.
Léigh, George M. Mariner, C. E. Martin, Amas M. Mathews, John
E. McCullough, W. D. McLean, Thormond A. Miller, William M.
Moloney, ‘P. G. Mullen, Robert F. Munsell, Walter J. Myskowski,

James W. Nisbet, Eldon S. Olson,.W. H. Parsons, C. Harold

Peterson, Earnest Porter, Gregory S. Prince, C. C. Rettberg, Jr.,
Wade M. Richards, Albert B. Russ, Jr., John F. Smith, John
MacDonald Smith, Robert H. Stahlheber, William A. Thie, Robert .
A. Thompson, L. E..Torinus, Walter G. Treanor, Ray M. Van
Hook, Harold Vikoren, Archie T.. Walters, Philip F. Welsh,

‘Edward K.Wheeler, Robert J. Williams, D.N. Zirkle, and Erle J. —

Zoll, Jr., for various railroads and railroad associations.

Paul J. Coughlin, John Mason, Andrew A. Normandeau, and.
Hugh H. Shull, Jr., for water carriers.

Theo. F.Behler, Harry Bradt, John M. Cleary, Ronald N. Cobert, .

-Paul Coyle, John F. Donelan, -Lestcr J. Door, Samuel W.

Earnshaw, Donald W. Fisher, Walter R. Frizzell, Benjamin G.
Habberton, Dan,F. Hart, John B. Hedges, Leonard A. Jaskiewicz,
Jess Larson, ‘John C- Lincoln, Dickson R. Loos, Sumner J.
McCollester, Clarence M. Mulholland, Clarke Munn, Jr., A. E.

. Norrbom, James E. O’Boyle, F. S. Partridge, Warren Price, Jr.,

Frederick M. Porter, Philip H. Porter, Aloysius F. Power, Theo.
R. Schneider, William R. Settgas, Louis R. Simpson, Charles W.
Singer, Hérold E.Spencer, James FE. Steffarud,.Warren H. Wagner,

_ Charles A.Washer, M.W>Wells, John C. White, and Sidney Zagri

for shippers or other interested parties.
John M. Agrey for Public Service Commission of North Dakota.
Harold C.Heublein for Public Service Commission of Wisconsin.

Charles W. Bucy, Carl R. Bullock, Joseph E. Quin, George A.
Robertson,and Clarence H.Williams for Department of Agriculture.

e a Me ; 822 1.C.C.

* ,

: ee SERVICE-PIGGYBACK 303

“John EB: Faulk, R. M. Hartsock, ok Clement z. Mayo for Depart-
‘ment of Defense.

William R. Pierce for Geaneal Serviece Ailes

John H. Fallon, Harvey Gobetz, and Asa J. Merrill for Bureau
of Inquiry and Compliance, Interstate Commerce Commission.

- REPORT OF THE COMMISSION ON ORAL ARGUMENT

' BY THE COMMISSION: .
_ This proceeding, instituted on June 29, 1962, on our own motion *
under the. authority of parts I, II, III, and Iv of the Interstate ° -
Commerce Act and section 4 of the Administrfffive Procedure Act, ;

constitutes this Commission’s first general investigation of what is
probably the most significant recent development intransportatiofi— ~
trailer-on-flatcar or piggyback service. The notice of proposed
rulemaking made it known that we intended this investigation to be.
broad in scope, encompassing every aspect of TOFC operations,

and that we intended -to explore new approaches to piggyback
service. Among the matters specifically mentioned in - notice
asa subject, for consideration was:

The extent to which motor carriers, water carriers, express anies and
freight forwarders should be permitted to use Plans II andIV open-tarifi/
rail rates and service in their operations.

It was also made clear that we intended to reexamine existing
precedents and practices, and that consideration would be given
to the adoption of rules and regulations which might be found
necessary to regulate coordinated and substituted service trans-
portation in the public interest.
The order instituting this proceeding. same as respondents all
. railroads, motor carriers, and water carriers of property, freight
forwarders,- and express companies operating im interstate
commerce, and authorized and directed our Bureau of Inquiry and
Compliance to participate: It also assigned- the matter for a
prehearing conference, which was held October 9, 1962, and at
which proposed rules, reproduced as appendix II hereto, were
distributed. Oral hearings have not been held, but representations, .
verified statements, and reply statements have been received
from numerous interested parties. The proceeding was assigned
to two hearing examiners who recommended adoption of the
regulations contained in appendix III hereto. Exceptions. to the
$22 1.C.C. :

304 INTERSTATE COMMERCE COMMISSION REPORTS

~examiners’ recommended order and replies thereto have been

- efiled by the parties listed in appendix I, and we have heard oral
argument. Two‘issues, the practices of for-hire motor carriers
of automobiles and the practices of for-hire water carriers
providing ‘‘fishyback’’ service, were severed from the remainder
of the proceeding by order of November 12, 1963, for oral hearing
and separate handling.

The southern railroads have included in their exceptions motions
to strike certain portions of the verified statements filed by the
Bureau of Inquiry and Compliance and certain other parties.
They argue that the Bureau has overstepped its authorization,

_ contained in the order instituting this proceeding, to participate
in this proceeding ‘‘for the purpose of developing the evidence and
_ the. issues,’’ and that the other matter objectedto is irrelexant.or
incompetent as evidence. Also pending is a motion filed by the
same carriers on April 2, 1963, for cross-examination of the
Director of the Bureau of Inquiry and Compliance. The southern
railroads have obviously misunderstood the position of the Bureau
in this proceeding. It is a party like any other, arfd it was free to
introduce any evidence it saw fit. The Director of the Bureau did
not sponsor a verified statement, and has appeared in this
proceeding cnly as counsel. .There is no more reason to subject
him to cross-examination than any other attorney appearing ina
solely representative capacity. The other verified statements
objected to should, in our opinion, remain in the record. The
motions will be denied.

TRAILER-ON-FLATCAR CPRRA TIONS

If the subsequent discussion is to be enderarendsiite, a word
must be said at the outset about the nomenclature.of TOFC services.
. The varieties of services available are commonly referred to in

terms of five numbered plans. These designations: have attained |
general use in the transportation industry, and for the sake of
convenience we are using them in this report. They will be
discussed in greater detail later, but the following capsule
definitions were contained in the appendix to the order inationting
this ee _—

PLAN I -_

Railroad movement: of trailers or containers of motor common carriers, with —
the shipment moving on one bill of lading and billing being done by the trucker.

Traffic moves under rates in regular motor carrier tariffs.
ae 322 1.C.C.

SUBSTITUTED SERVICE-PIGGY BACK 305

PLAN II

Railroad performs its own door-to-door service, moving its own trailers or
containers on flatcars under tariffs usually similar to those of truckérs.

PLAN III

Ramp-to-ramp rates based on a flat charge, regardless of the contents of
trailers or containers, usually owned or leased by freight forwarders or
shippers. No pickup or delivery is performed by the railroad,

PLAN IV .

Shipper or forwarder furnishes a trailer or container-loaded flatcar, either
owned or leased, The railroad makes a flat charge for loaded or empty-car
= movement, furnishing only power and rails.

ws 3 ee ~

PLAN V

Traffic moves generally under joint railroad-truck or other combination of
coordinated service rates, Either mode may solicit traffic for through
movement, woe

The development and effect of TOFC service.~ Transportation
of loaded highway trailers on railroad flatcars is not a new
development, although ‘its growth has been explosive in the past
5 years. Nearly 40 years ago the Chicago, North Shore and
Milwaukee Railroad Company pioneered a ‘‘ferry truck’’ service
that was essentailly similar to today’s plan II piggybacking by the
railroads. Pressed by increasing independent motor carrier
competition, the North Shore in May 1926 inaugurated a new
service for merchandise traffic between Chicago and Milwaukee:
using carrier-owned 16-foot trailers and specially constructed
flatcars, it would provide a door-to-door delivery of less-than-
carload freight in trailer units requiring no transfer of lading en
route from shipper to consignee. This was a complete railroad
service at rail rates on rail bills of lading. At the outset this
service was performed at the same rates and charges previously
applicable to the various classes of merchandise transported, but
in February 1928 this rate structure was modified and a flat
all-merchandise rate, subject to a minimum weight and excepting
livestock and perishables, was published.

The prototypes of today’s plan I and planIII TOFC service were
developed on an experimental basis by several other railroads in

the early 1930’s. In these years the railroads were competing
$22 I.C.C. :

-
for performance of the loading. or unloading functions or the
agency relationship.

In December 1961, the Baltimore and Ohio Railroad and the
Erie-Lackawanna Railroad Company were each fined $1,000 on
_ pleas of nolo contendere to criminal informations alleging that
they loaded trailers for plan III shippers in circumstances such
as those just described. However, in a. similar, stipulated
factual situation the Pennsylvania Railroad Company, on June 8,
1962, was found not guilty of the- Elkins Act violations charged.

Subsequently, similar criminal charges against the Santa Fe and --

the Burlington railroads were dismissed at the request of the .

United States attorney. The extent to which a railroad may con-

tract privately with a TOFC shipper for these and similar services

incidental to TOFC transportation has thus remained unsettled.
322 I.C.C.

318 INTERSTATE COMMERCE ( MMISSION RE PORTS

. Billing and assessment of charges.—Although all-rail TOF(
services held out by. the railroads throughout the country hav
been formed into relatively standardized tariff descriptions, ther:
is evidence of tonsiderable confusion and disagreement withii
the transportation industry 2s to ihe precise application of tarif
rules, as well as evidence that published charges are not alway:
collected. For example, as the applicable plan III rate is ofte:

_ based on a weight factor, it ‘would seem that the participatin;

railroad would assume responsibility for ascertaining the weight:
of the shipments tendered, either by actual weighing or throug}
some system of certification by the shippers. In fact the clas:
I railroads in the western district have: devised procedures fo
certification of weights of TOFC loadings, as part of their lon,
established bureau system of weighing and inspection. But i
has become clear in this proceeding that a number of majo
railroads participating in TOFC operations have not been deter-
mining TOFC shipment weights by any reasonably reliable methoc
or procedure, and therefore cannot know whether proper charges
are being assessed.

Many plan III tariffs provide a rate applicable to the tota
weight of two trailers moving from one shipper to one consignes
on one day on one bill of lading. This rule is often loosely applied
with the result that it has no consistent’ meaning which can be
relied upon as a certainty by all potential shippers. In some
instances the railroads will consider that the ‘‘tender’’ of twc
trailers in a given 24-hour period by a plan III shipper satisfies

the tariff requirement. In any event it isa frequent practice for

the railroads to dispatch loaded plan III trailers whenever receivec
at the rail ramp, with the result that trailers which are pairec
for billing and rate purposes as single-day shipments actually
are shipped on separate days for arrival at destination on dif-
ferent days. We have also been informed of the practice in certair
types of TOFC movements (particularly in those where there has
been a conversion from plan II to plan III en route from origina!

_consignor to ultimate consignee) for the railroad which is taking

up the plan III segment of the shipment to neglect to issue a re-
ceipt or bill of lading until the day or so after it has forwarded
the shipment. This type of delayed issuance ofa required shipping
document may constitute a violation of section 20(11) of the act,
and can open the door to improper preferences to favored shippers,

in violation of the Elkins Act.
aan 1.C.S.

sat saan

Te RN HAR HS Dee SO O OD C2

0 —

a ie ee ee) ee ee i ¢ ? on © ee, ©? De @? ee

o

SUBSTITUTED SERVICE-PIGGYBACK 319

ra
\
\

A similar, perplexing problem for shippers and carriers has '
been interpretation of the ‘‘mixture’’ tariff rule applicable to
plan III transportation of ‘‘all-commodity”’ traffic. Ordinarily
this type of rule will provide that not more than 60 percent of
the weight of a total, two-trailer shipment may consist of,any
one commodity or article. One frequent variation of this tariff, rule
provides the alternative test; not more than 60 percent of the
total shipment or not more ‘than 60 percent of 70,000 pounds,

_. The. carriers do not seem to be applying any consistent approach

in determining whether commodities being shipped are the * ‘same’”’
commodity or article. In general, neither commodity classifica-
tions nor other. published listings are used to determine whether
the articles includéd in a single shipment are sufficiently dis-
similar to constitute different commodities for the purposes of
mixture rules, This state of affairs leaves a railroad free to
haul straight truckloads of high-rated commodities at hidden.
bargain rates should it choose to’ do so for a favored shipper. ©
- Bearing in mind the historic&al development of piggyback trans-
portation and its present-day problems—as well as its appealing
advantages—we shall now proceed to an examination of the
issues raised directly by the instant investigation.

THE PROPOSED RULES.

At the prehearing conference held in this proceedingon October
9, 1962, a series of proposed rules, reproduced as appendix II
hereto, was distributed. As noted atthattime, they were designed
to serve as aframework upon which rulesultimately to be adopted,
if any, could be developed. The proposed rulesrepresented some-
thing of a new approach to TOFC terminology as they attempted to
separate TOKC service, without regard to the five numbered plans
now in common use, into two more basic classes; ‘‘joint inter-
modal’? TOFC service which would include any piggyback service
performed jointly by a rail carrier and amotor or water common

- carrier; and ‘‘all-rail’’ TOFC service which would include any

piggyback service in which traffic moves exclusively at rail rates

and on rail billing.
The proposed rules were predicated upon the basic premise that

all persons desiring to use TOFC service shouldbe able to do so,

with the charges for the same services being equal to all users,

whether they be motor or water carriers, freight forwarders, or

privaté shippers. The proposed rules B-4, B-5, C-1, and C-2 in
322 I.C.C. .

o s
320 INTERSTATE COMMERCE COMMISSION REPORTS ~

particular were designed to implement this concept. Other impor-
tant aspects of the proposed rules included a requirement that a
-rail carrier providing all-rail TOFC service make specific
provision in its tariffs for all incidental and accessorial services
offered by it in connection therewith (rules C-1 and C-2); a pro- -
hibition against the publication of joint intermodal TOFC tariffs
covefing commodities the transportation of which is not subject
to economic regulation for their entire movement (rules B-2 and
C-7); a requirement that rail carriers providing joint intermodal
TOFC service ascertain whether their connecting motor or water
carriers hold appropriate operating authority (rule B-5); a require-
ment that where joint intermodal service is provided, the distance
over an intermodal route used by a railroad and a motor carrier
be not less than 90 percent -of the distance over the authorized
motor carrier route from origin to destination (rule B-3); a pro-
vision permitting joint intermodal TOFC service for the entire
line-haul movement (rule B-7); and a prohibition against the
leasing, directly or indirectly, by railroads or persons under
common control with railroads of highway trucks, trailers, or
semitrailers and rail cars to and from shippers or freight
forwarders (rule C-3). |

Section D of the proposed rules contained certain billing and
notification requirements. These would have included a require-
ment that TOFC service be provided only when the movement was
covered by a bill of lading and manifest with appropriate certifica-
tion of weights and contents of trailers (rules D-1 and D-2); a
regulation providing that two trailers would have to be tendered on
the~game day in order to qualify for a rate covering the trans-
portation of multiple vehicles (rule D-3); and a rule which in
effect permitted rail carriers to restrict the application of all-
commodity rates to shipments containing no more thana designated
percentage of a single commodity (rule D-5). ;

e

THE EXAMINE RS* RECOMMENDATIONS

The examiners, in their report and recommended order, find
a general need for the promulgation of rules and regulations
which would have the effect of fostering the orderly development
of TOFC service. The rules which they recommend be adopted
are set forth in appendix III tothisreport. The examiners recog-
nize the same general divisions of TOFC service into its ‘‘joint
intermodal”’ and ‘‘all-rail’’ aspects as do the proposed rules, but

322 1.C.c. °

SUBSTITUTED SERVICE-PIGGYBACK — 321

they find the plan-numiber terminology useful and retain it. Plans
l and. V are defined specifically, and are grouped together as
**joint intermodal’’ service.

The examiners recommend that railroads performing all- rail
“TOFC service be required to publish in their tariffs all the rates,
charges, and rules connected with such service, including charges
for leasing of equipment, detention of trailers; accessorial
services, and pickup and delivery service if any such services are
offered. The ban on leasing of equipment by rail carriers and
their subsidiaries to or from shippers contained in the rules as
originally proposed would not be retained by the examiners.
They would, however, require that all charges for the leasing and
return of equipment be included.in the rail carrier’s tariff
publications. Also recommended for adoption were a number of
rules consisting largely of modifications of and improvements on
those originally proposed, all of which will be discussed later in
more ‘detail. te

Exceptions to the examiners’ recommended order and replies
to these exceptions have been filed by representative groups or
associations of, or by individual, rail, motor, andwater carriers,
freight forwarders, and shippers, and by our Bureau of Inquiry
and Compliance. In large part, the positions taken by the parties .
in. their exceptions, or in replying to the exceptions of others,
reflect those expressed in their representations and considered
at length by the examiners. Like the examiners’ recommendations,
their arguments can best be discussed in relation to the specific
topics treated below.

THE NEED FOR TOFC REGULATIONS

If there is one predominant theme that has run through the vast
majority of the many representations and pleadings filed in this
proceeding, and stressed by those participating in the oral argu-
ment, it is the desire for flexibility. Carriers and shippers alike

_ agree that TOFC hasalready established itself as an extraordinar-_

ily significant and valuable innovation on the transportation scene
and that it has an almost unlimited future ahead of it. Many of the
parties have arged that we take no action here which might have —
the effect of restricting the growth of piggyback, of forcing it into
any fixed mold, or of limiting in any way the inauguration and
development by the transportation industry—and particularly the
railroads—of new types of TOFC services and of new variations
on or applications of present services.
322 1.C.C.

wae as

322 INTERSTATE COMMERCE COMMISSION REPORTS

There can be no doubt of the benefit which TOFC service has
already rendered the railroads in allowing them to recapture
traffic lost to competing modes of transportation, and especially
to private motor carriage. Also benefiting have been the motor
carriers, which have been provided with an opportunity, through
the use of plan I TOFC service, to obtain efficient line-haul trans-

portation and thus to help themselves even while their business —

helps their raih competitors; the freight forwarders, which have
been afforded an economical’ means for transporting the small
shipments | which they . consolidate; and—most important—the
shippers and the general public which ultimately reap the, benefits
of the increased efficiency and €conomy: that are invariably the
result of the combination of competing forces so that each operates
in the area where it functions best.

‘It is our purpose and our hope‘to encourage the growth of this
transportation phenomenon. Large-scale piggyback has had a
short history, but it is obviously no longer an infant. Perhaps we
might characterize it as a fast-developing teenager, healthy but
not without some growing pains. Looking back on some of our past

decisions—decisions which must necessarily affect the future of

TOFC service because they contain definitions or restriction$
which could hamper its logical deve'opment—it is apparent that
most of them were rendered during the infancy of this transporta-
tion prodigy, and some, like Motor-Rail-Motor Traffic in East and
Midwest, 219 I.C.C. 245, might almost be said to. have predated its
birth. The fact that these decisions were handed down before
anyone could have realized the important. place TOFC service was
destined to attain does not mean that ‘they reached erroneous
results, but it does mean that their pronouncements need to be
reexamined in the light of modern developments.

The assembling of the information necessary for sucha reevalu-
ation was one of the principal ‘reasons for our embarking on a
general investigation of piggyback operations, and the factual

material which has been introduced into this record, and which,

will be of great value to us inthe future administration of the act,
_ alone amply justifies this proceeding. The need for information
relating to TOFC service will, of course, be a continuing one if
‘ we are to remain propérly informed for the future, and-to keep it
flowing we have recently revised certain of our reporting require-
ments in docket No. 34364, Piggy back Traffic Statistics, to call for
_ the quarterly rons of TOFC traffic data by railroads, motor
322 I.C. C.

oe : | at

pretreat ceca tet

sages mode « ee a

OO ODO ae wee BD oe

= "399 1.C.C.

SUBSTITUTED SERVICE-—PIG6Y BACK . 323

and water carriers, freight forwarders, and the Railway Express
Agency. , -
‘In addition to ouf§desire to fill the gaps in available knowl-

_ edge about TOFC operations, there had arisen, shortly before this

proceeding was begun, certain immediate and pressing problems
which required solutions. For example, National Auto. Trans-
porters Assn.—Declaratory Order, 91 M.C.C 395 (the NATA case),
had presented anew the questions whether contract carriers should
be allowed to use TOFC service—a question answered in. the neg-
ative in the New Haven case, supra; whether interchange of TOFC
traffic between rail and motor carriers should be allowed at
other than common poinf&S of service—an issue which had been
treated earlier in Gilbert Carrier Corp. Extension—Kearny, N. J.,
72 M.C.C. 204; and how the certificates,. peculiarto carriers of
motor vehicles, limiting service to initial or secondary movements
should be interpreted vis-a-vis piggyback operations. Gordons
Transports, Inc., V. Strickland Transp. Co., 318 I.C.C, 395, had
raised again the problem, firstconsideredin Substituted Rail Serv-
ice by Red Ball Transfer. Co., 52 M.C.C, 75 and 303 I.C.C, 421, of
the use by a circuitous motor carrier ofa more direct rail TOFC

' service between authorized points. The propriety of the extensive

practice of leasing trailers for use in TOFC service between rail
carriers or their affiliates and shippers, and the apparent oppor-
tunities for rebates and discrimination afforded by this practice,
had been called to our attention by our field employees. The need
to deal consistently with the problems presented in each of these
Situations was instrumental in persuading us that a proceeding —

‘Such as the instant one was necessary.

The information that we have received from the parties and the
arguments which we have read and heard: make it apparent that
there are many differences of opinion as to the wisdom and the
correct application of some of our past decisions. This proceed-
ing affords the opportunity to explore the areas in which the dif-
ferences exist. Also, there have been revealed some abuses in the’
performance of piggyback service: To cite a single example, it is
clear that some railroads, in spite of the fact that their rates for
transporting loaded trailers in TOFC service are based on maxi-
mum weights, make no. attempt to ascertain the actual weight
of the shipments tendered to them and are failing to collect
their published charges. .

We think that the record clearly supports the conclusign that it
would be in the public interest to lay down, through formal rules,

SN ee bE SNORE Anes reery sonal iene Seeaisinted aoe

a“ 324 INTERSTATE COMMERCE COMMISSION REPORTS

2
‘

‘ certain guidelines for TOFC service and practices. .We visualize

these. rules as an aid in furthering, not restricting, the. growth of .

_ piggyback, as providing some standardization of industry practices,

and as a means of insuring that this recent and valuable trans-

pottation development is made available to all persons who are

able to make effective use of it. .Some of the rules to be adopted

here are simply interpretive, but we think itwelI to have summar-

ized and assembled in convenient form the various requirements

of thé Interstate Commerce Act as they relate to piggyback

operations.. Other rules take the form of tariff and billing require-

ments. Still others may be said to implement the broad provisions

of existing legislation. A few of the ‘parties challenge the legality

of our prescribing rules—particularly of the last-mentioned kind—

but we think we have ample authority to take such action. Under

parts II, III, and IV of the act, we are given a general rulemaking

power by: sections 204(a)(6), 304(a), and 403(a), respectively; and

. _in section 12. we are ‘‘authorized and directed to exécute and

~~ enforce’’ the provisions of partI. The Courts have recognized our

rule-making authority. See, for example, Assigned Car Cases, 274

U.S. 564, 575. et seq. (1927), which arose under what is now part

I of the act; American Trucking Assns. V. United States, 344 U,S,

298,-308-13 (1953), which/arose under part II; and United States Vv.

Pennsylvania R. Co., 323 U.S, 612, 616 (1945) in which the ante
Court pointed out that the act, since its inception— ;

=

has contained broad language to indicate the scope of the law. The very com-

' plexities of the subjéct have necessarily causedCongress to cast its regulatory
provisions in general terms. Congress has, in general, left the contents of
these terms to be spelled out in particular cases by administrative and judicial
action, and in ‘the light of the Congressional purpose to foster an efficient and
fair national transportation system. ,

The proposed rules distributed to the parties at the prehearing
conference contained several ideas which appeared to,many to be
both radical in approach and stultifying inneteffect. Particularly
criticized have been rule C-3 which would have flatly prohibited |
the leasing of trailers for use in TOFC service; rule B-4 which |
would have required that the charges received by a rail carrier |
under a division of. revenues for performing part of a joint
intermodal TOFC movement could be no greater than its.com-

pensation for performing all-rail service between the same points; _
and the statement in the material accompanying the draft df the
proposed rules to the effect that they did not contemplate the use —
322 I.C.C.

SOE ER PN CS RHO FH MERE Ba NES SNOT 78 he 1g a ee me te ANNE NPAT CIS KRDO PY eee a pan . =

x

SUBSTITUTED SERVICE-—PIGGY BACK * 325

of TOFC service by motor .contract carriers. Proposed rules
- such as these were largely designed to drawas much comment as
possible from various components of the transportation industry
to the end that we might obtain as much assistance as. possible
from every faction in making our final determinations. The
response has demonstrated that they have served this purpose well.

We cannot help but be aware thay‘ the development of TOFC
transportation is not at a standstill, and that whatever we do here
will not be the final and definitive wordon all the ramifications of
piggyback service. KH any of the regulations to be adopted here
should prove in practice to have the unwanted effect of in any way
hampering the flexible development and free use of TOFC sérvice,
we feel sure that this fact will promptly be called to our attention
- by the affected carriers o~ shippers so that appropriate remedial
erage can be taken.

° ; DEFINITIONS
; Z

_ Part A of the proposed rules contains suggested definitions for.

three terms: ‘‘Trailer-on-flatcar (TOFC).service,’’ ‘‘Joint
intermodal TOFC service,”’ and ‘‘All-rail TOFC service.” The
plan-number terminology is not used at all in the proposed rules,
but it is immediately apparent to those accustomed to thinking of
- piggyback services. in this way that ‘‘joint intermodal’’: TOFC
service includes what has come ‘to be called in the industry plans
I and V, while all-rail TOFC service includes plans II, III, and IV

and variations thereof. The-examipers used the plan- number

terminology throughout their report, and in their recommended
rules they provided definitions for plans I and V.

We agree with the examiners, and with virtually all the parties,
that~the five numbered plans have become firmly ensconced in
transportation language, and we are certain thatthe various TOFC
services will continue to be referred to in such terms regardless
of what we do here. At the same time, we think that the grouping
of these different services into two major classifications—inter-

modal service, in which traffic moves pursuant to a negotiated .

agreement for the division of revenue between carriers of dif-
ferent modes, and all-rail, or open-tariff, TOFC service, in which
only a rail rate is involved—represents a genuine and useful dis-
tinction. In the rules which we are adopting here, this distinction
is retained, but we see it as,one which simply exists as a neces-
Sary element of TOFC service, not as one which has to be, or
should be, imposed by definition.

' 322 1.C.C. , : ee ae

CAPER REARS aR GAN SMM EEO AERP EN MLR EET coke dictemsaieieainie MNT EF het Ee ’ . PRE TT 2 ae eee
2 > . ~ . ——~ “= — — - et ne + he ;
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326 INTERSTATE COMMERCE COMMISSION REPORTS:

Moreover, we do not ‘think it advisable to attempt a formal
definition of plan I or plan V TOFC service. Again the distinction
between them is a real one; and it is convenient to refer ‘to the
different types of intermodal service by these handy and well-
recognized terms. We are, obviously, using them inthis report.
But while they represent-a convenient form of shorthand, their

, use is not essential to the explication of TOFC regulations, One
' of the few parties commenting on the proposed definitions in
its exceptions, the Southern Railway System, takes the position
‘that the definitions contained in the examiners’ recommended
rules 2 through 5 are unnecessary and could lead to confugion.-
We are inclined to agree. The attempt specifically.to define cer-
tain types of TOFC operations could well prove futile, as well as
‘unnecessarily restrictive, in view of the industry’s demonstrated
capacity to develop new services and variations on old ones. The
ryles to be adopted, then, will contain a formal definition only of
TOFC service itself.

TOFC service would have been defined in proposed rule A-1 as

follows:.

. “Trailer-on-flatcar (TOFC) service’? means the transportation, in interstate
‘ or foreign commerce, of any freight-laden highway truck, trailer, or semitrailer
(or the container portion of any highway truck, trailer, or semitrailer having.
a demountable chassis) on a rail car, and/or the return transportation, in
interstate or foreign commerce, of any empty highway truck, trailer, or semi-
trailer (or the demountable container portion thereof) of a rail car.
° . 2) “
The examiners pointed out.that the meaning of ‘‘return transporta-
tion’”” might be subject to more than one interpretation, and they
recommended the following modification of the definition, in their
rule 1; ;:

“Trailer-on-flatcar (TOFC) service’? means the transportation, in interstate
or foreign commerce, of any freight-laden or empty highway truck, trailer, or
semitrailer (or the container portion of any highway truck, trailer, or semi-
trailer having a demountable. chassis) on a rail car.

On exceptions, the Western Railroads contend that this form of the
_ definition might also create interpretive problems as it could be
construed to include the transportation of new trucks and trailers
shipped by a manufacturer and not actually being used in perform-
ing piggyback service. They propose an alternative form of the
definition which, we believe, meets this objection and clearly and
adequately defines TOFC setvice. We shall, therefore, adopt it,
with minor modifications, as our rule 1:
322 I.C.C.

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? * SUBSTITUTED SERVICE-PIGGYBACK - 327

1 Definition of TOFC service.— Trailer-on-flatcar (TOFC) service means
the transportation on a rail car, in interstate or foreign commerce, of (@) any

freight-laden highway truck, trailer, or semitrailer (or the container portion
of any highway truck, trailer, or semitrailer having a demountable chassis); or
(b) any empty highway truck, trailer, or semitrailer (or the container portion

of any highway truck, trailer, or. semitrailer having a demountable chassis)

when such empty equipment is being transported incidental to its prior or sub-

sequent use in TOFC service ,as defined in subparagraph (a) of this section.

-~

Several of the parties object that the examiners’ recommended -

rules as a whole, and particularly the definitions contained in
rules 2, 3, and 4, fail to provide for the use of TOFC service by
water carriers subject to part ill of the act. There,is now some
use by such carriers of TOFG service in lieu of authorized water
service between certain Florida ports. It was certainly not our
intention in instituting this proceeding to preclude the continuance
of such operations, and the rules to be adopted will make provision
for the use by water carriers of piggyback service. Operations of

_this kind should not be confused with those in which water carriers

transport their own or other carriers’ or shippers’ trailers or
containers by water in so-called fishyback service. That. portion
of the instant proceeding involving the latter type of service has

_been separated from the other issues involved herein for individual

treatment and oral hearing by order entered November 12, 1963.

OPEN-TARIFF TOFC SERVICE

Every TOFC service necessarily involves the participation ofa

railroad which performs certain line-haul transportation. This ~

fact, so obvious that it may seem banal to draw attention to it,
is of fundamental importance in any consideration of either the
practical or legal aspects of piggyback operations. So too is the
further proposition that because TOFC operations involve the
rendering of a rail service, they also involve the earning of some
compensation by a rail carrier and the provision, through some
form of tariff publication, for transportation charges, at least a.
portion of which will ultimately be received by a rail carrier.

There are only two ways in which a rail carrier can provide
for receiving compensation for its transportation services. Itcan
through tariff publication establish charges, which must be just

and reasonable, for a particular service to be rendered, or it can —

enter into joint-rate arrangements with other carriers and estab-

$22 1.C.C. -

328 INTERSTATE COMMERCE COMMISSION REPORTS

lish divisions, which must. also be just and reasonable, of the
charge established jointly for the through service. The proposed
rules, in attempting to achieve the endthat TOFC service be made
available to all at equal charges, took an approach which would
have required that the divisions received by a rail carrier pro-
viding joint intermodal service could not exceed any all-rail TOFC
rate maintained by the rail carrier for like services. Proposed

‘rule B-4 would provide: . | :

The railroad or railroads providing TOFC service jointly with motor or
water common carriers shall receive no greater compensation or charge for
its or their portion of the total intermodal movement than it or they would
receive under any all-rail TOFC terminal-to-terminal rates or charges
maintained for like service between the same points.

Also, proposed rule B-5 would have required any rail carrier pro-
viding joint intermodal TOFC service with any motor or water -
carrier to do so indiscriminately with other such carriers. This
rule reads as follows:

Any ~sailroad which provides TOFC service jointly with any motor or water

- common carrier shall not refuse to enter into a like arrangement with other

motor or water common carriers under similar circumstances and conditions,
except that such railroad shall have the duty of ascertaining whether the con-
necting motor or water carriers hold appropriate authority to transport the
involved commoditiés, If the connecting motor or water carriers do not hold
such authority, no ‘joint intermodal TOFC service shall be performed with
respect thereto.

The. hearing examiners rejected both these proposed rules, 2
and we think that they were correct indoing so. We do not believe
that it would be practical to attempt to control by a rule of general
applicability the level of compensation to be received under divi-
sion agreements which are, by nature, private contracts negotiated
by individual carriers. We are, nevertheless, still concerned with
the concept of equal TOFC charges for all underlying the proposed

_rules. For this reason, in the notice setting this proceeding for

oral argument, another approach was suggested, andthe parties
were asked to discuss ‘‘Whether, and under what circumsgances or
requirements, TOFC service provided under an ‘open tariff’ can

- and should be made available to everyone (including freight for-

2¥hey did, howevez, recommend adéption, in their rule 9, of the substance
of the second portion of proposed rule B-5 requiring rail carriers to ascertain’
whether connecting motor carriers hold appropriate authority to join in TOFC
service. This matter will be discussed subsequently.

322 I.C.C.

SUBSTITUTED SERVICE-PIGGYBACK 329

warders, express companies, ‘and common and contract motor and
water carriers, exempt or regulated). ys

‘It is the concern of the rail carriers that should motor carriers:
be given the: opportunity to utilize TOFC service at the open-
tariff rate for their line-haul movements, they will be in a posi-
tion to divert traffic from all-rail TOFC service.. Those support-

_ ing the extension of open-tariff TOFC service to other carriers

point, on the other hand, to the obvious fact that whenever such
service is used, whether by private shipper, freight forwarder,
or competing carrier, the immediate result is revenue for the.
railroad. Why, they ask, should a railroad object to receiving
additional business? The only concrete, practical answer to this
query by any railroad party to this proceeding is that there may
be situations in which a TOFC open-tariff rate between two given
points is established, for competitive reasons, at a particularly
low level, and that by using TOFC service between two such points
a motor carrier could take advantage of the favorable rate in
the performance of part of its line-haul transportation and thus

‘provide service at points beyond those named in the TOFC ¢oriff

at a lower rate than, and thus to the ultimate detriment of, the
railroad.

It is argued by some that the use of open-tariff TOFC peeriee-
by carriers would be in contravention of the st&ted national
transportation policy ‘‘to provide for fair and impartial regulation

Of all modes of transportation subject to the provisions of this

Act, so administered as to recognize and preserve the inherent

| advantages of each * * *.’”* The Western Railroads, for example, in

their reply to exceptions argue that meter carriers would thus
be able to ‘“‘exploit’’ the railroads’ ‘‘acknowledged ‘inherent

advantage as the nation’s low-cost line-haul carrier of goods for

great distances,’’ and that this ‘‘inherent advantage would be sub-

, Merged, to be used’as a means by which motor carriers could

_ establish their primacy in surface transportation.’’ What they

overlook is that all TOFC service is inherently bimodal in that its
basic characteristic is the combination of the inherent advantages
of rail and motor transportation: the railroad’s ability to provide
efficient line-haul transportation of huge volumes of freight for
great distdnces at high speed; and the motor carrier’ s ability to
provide door-to-door, and if necessary job- or farm-site, pickup
and delivery. TOFC could even be said to be trimodal, because
added to the two factors already mentioned is its ability to com-
bine in a type of container service many smiall shipments—a
322 I.C.C.

3

: 4

YY

330 | INTERSTATE COMMERCE COMMISSION REPORTS

type of service which has become associated with the business of
the freight forwarder. :

‘It should not be forgotten in considering the arguments advanced
here ‘that all three—rail carrier, motor: carrier, and freight
forwarder—are even today providing, through the use of piggy-

back, services which in physical characteristics are substantially -

similar. Any one of the three can offer a transportation service
which includes door-to-door pickup and delivery, movement -of
loaded trailers between a shipper’s premises and a rail yard,
and line-haul transportation of the loaded trailers by rail. The
railroad does this under its plan II TOFC tariff; the trucker does
it under plan I, in which it is encouraged by the railroads (all
railroads participating in this proceeding except the Southern
Railway System favor continuation of plan I); and the freight
forwarder does it through use of plans III and IV rail tariffs.

We think that the rail carriers’ fear that the free use of open-
tariff piggyback service by motor carriers would end in the
elimination of the inherent advantage of rail transportation is mis-
placed. On the contrary, it seems obvious to us that the inherent
advantages of each mode of transportation can be given freest play
through the highest degree of coordination, and that encourage-
ment’ of such coordination is in the public interest. We might
also note that the presidential transportation message of 1962
asked that all carriers be assured the “‘right to ship vehicles
or containers on the carriers of other branches of the transporta-
tion industry at the same rates avai! .oletonon-carrier shippers,”’
so that the various carriers would be placed ‘‘in a position of

- equality with freight forwarders and other, shippers ‘in the use of

the promising and fast-growing piggyback and related techniques.”

Those protesting against the legality df the use by a carrier
of open-tariff TOFC service point to a line of our decisions in
which we concluded that it was ‘‘repugnant to the act’’ for a per-

son to act as both a carrier and a shipper which respect to the ©

same service. That such was stated in a number of cases can-
not be disputed, but it should also be noted that when this pro-
ceeding was instituted, one of its stated goals was the ‘‘reexami-
nation of existing Commission precedents and pronouncements
governing coordinated and substituted Service transportation.”
It is. argued, however, that this longstanding and consistent
administrative interpretation of the act must be deemed to have
received the effect of law and that we are precluded from
changing it. Cited as supporting this general rule are United

322 1.C.C.

Pe
ba

ns

~

SUBSTITUTED SERVICE-—PIGGY BACK , 331

tates v. Leslie Salt Co., 350U.S. 383 (1956); Helvering v. Winmill,
05 U.S, 79 (1938); and Atchison, T. & S. F. Ry, Co.v.United States,
09 F, Supp. 35 (1962). Certainly, were we summarily to reject
ast Commission holdings and attempt somehow to penalize some
ndividual party subject to our jurisdiction for engaging in-a
ourse of conduct in which he had followed those holdings,-the
rinciple enunciated in the cited cases would be applicable. We
o not, however, understand the courts to have taken the inflexible
osition that an administrative agency, even if it-has followed a
onsistent ,line .for some time, cannot, ‘when faced with new
evelopments or an appreciably changed factual picture in the
egment of the national life which it is charged with regulating,
lter its past interpretation in a formal proceeding such as this
here rules having future effect are to be issued. When cogent
easons and thé public interest compel it, even a consistent and
enerally unchallenged administrative practice may be overturned.
ompare Norwegian Nitrogen Co. v. United States, 288 U.S. 294, ,
15 (1933)..
So far as we have been able to danetine: ‘the first time the
ommission made the definite statement that a person could not
-t_ as both carrier and shipper as to the same service was in
@ 1939 decision in Substituted Freight Service, 232 I. C.C, 683.
hat proceeding’ arose soon after the beginning. of Federal
-gulation of interstate motor carriage andewas directed toward
stermining whether certain special permissions granted as atem-
rary measure to permit continuance of substituted service
‘rangements of a type prevalent prior’ to the effective date of
irt Il of the act should be renewed. The special permissions
lowed publication of tariff rules which in turn provided for the
ibstitution of motor for rail, water\ for rail, and rail for
ater service. They did not require motor common carrier
erating authority as a prerequisite for the substitutionof motor
rvice for rail or water service; they permitted Substitation
the carrier’s option, without giving the shipper a negative
tion; and they did not call for the identification of the parties
rticipating in the substituted service or of the routes to be used
erein. The Commission concluded that the special permissions
ould not be renewed, and in doing so made three specific findings:
) that the service substituted for common carrier service is it-
lf common carriage and cannot be performed by- motor vehicle
the absence of appropriate motor common carrier authority, (2)
at the substitution of one form of transportation for another ~
322 I.C.C. mines -

*,
~

332 INTERSTATE COMMER COMMISSION REPORTS
\
!

where the ‘ shipper ptherwise directs would be a breach of the
_ contract of_ carriage, and (3) that the routes over which sub-
stituted service is performed and the parties performing it
_ must be fully set forth in lawfully filed. tariffs. Certainly, we
would not dispute any of these findings; in fact, we shall incorpo-
rate them in the.rules to be adopted.

“The statement that a person may not act as both carrier anc
shipper as. to the same service appears first at page 688 of the
- report in Substituted Freight Service, supra. The Commissior
there noted that the substituted . service practices of the easterr
rail carriers differed from most others in that these railroads
utilized ‘‘so-called contract carriers’* in such service, and that
they “‘argue that neither they nor such tontract carriers are or
should be required to act as common carriers. by motor vehicle
. in their relation to the public.’” The report then states, withou'
explanation or supporting precedent; ‘‘But they cannot act as
‘common carriers by rail and shippers by motor -vehicle as tc
identically the same service.’’ Later, on page 690, in discussing
‘an arrangement whereby Consolidated ,Freight Lines, Incorpo-
rated, substituted rail service for its authorized motor service
between Minneapolis, Minn., and asian ol Mont., the Commissior
said; :

It appears that between these points it acts asa semanade or shipper ani
assembles the traffic tendered by the individual shippers isto carload lots
paying the railroad the carload rate between Minneapolis and Terry and assess
ing the individual shipper or consignee its less-than-truckload rate betwed
primary origin and destination. But for itfo act as a common carrier by moto:
vehicle and as*a shipper by rail as to the same service is just as repugian
to’ the act as the reverse situation of the eastern rail carriers, although i
this instance it appears that it actually has common-carrier rights betwee!
Minneapolis and Terry. :

Considering the limited nature of the ultimate findings ir
Substituted Freight Service, supra—that is, that service substitutec
for common carriage must itself be common carriage and that the
tariff publications alowed under the special permissions were
legally insufficient—it is not clear to us why the underlying con-
clusion that.a person may not be both shipper and carrier wit

a, respect to the same service was necessary to the determinatior

of the case. A. contrary result had previously been reached ir
1936 “in Trucks) on Flat Cars between. Chicagd and Twin Cities

216 [.C.C, 435. There the es Great Western Railroad hac
322 I C. Cc.

’ SUBSTITUTED SERVICE-PIGGYBACK = 333

;' wiht. prior to the passage of part II: of the-act, an open-
tariff TOFC rate Which was primarily: designed to attract the
traffic of a motor common carrier, Keeshin Motor Express
Company. The rate was approved, and the Commission commented,

“at page 444, ‘“‘We have here a published tariff, and a motor

carrier would have the same right to make shipments thereunder .

as any other member of the body politit.’’ -Later, when motor
transportation was made subject to our regulation, th»> making
possible the filing of joint motor-rail rates, the Great Western
“and Keeshin joined in publishing such rates, which wer approved
in Motor-Rail-Motor Traffic in East and Midwest, 219 I.C.C, 245.

The Great Western stated at that time that its intention was to

-withdraw the open-tariff. rates previously approved, but the
Commission in no way indicated that such a tariff gould not be
used as originally. proposed; that is; by.motor gommon carriers.

Nor did it inSubstituted Freight Service, supra,either specifically:

overrule or attempt to: distinguish Trucks on)Flat Cars between
Chicago and Twin Cities, supra.

These considerations lead us to the conclusion that the Com-
mission in Substituted Freight Service, in saying that a person
could not ‘be shipper and carrier as to the same service, did not
intend to proscribe the kind of substituted service originally in-
tended by thet
carrier service is-.substituted for another through the use of an
open-tariff rate of the carrier performing the substituted service—
provided that proper notice is given in the tariff publication of the
carrier using the substituted service. What this language was
directed‘ at, as we understand it, was the use of open-tariff
Servite by a carrier not acting in its proper role of carrier,
but acting instead as a shipper or forwarder. Such a-situation
might occur were a carrier to tender a shipment to. another
carrier for transportation to a: point ft cannot serve or over'a
route it cannot use, or without providing in its tariffs for the
substitution. Consistent with this interpretation is the fact. that
the report characterizes Consolidated’s operation between Minne-
apolis and Terry as that ofa forwarderor shipper. Presumably, had
Consoligated, through an appropriate tariff publication of the kind

)

reat Western and Keeshin in which one common. .

prescribed in. Substituted Freight Service, held out ‘its Service

as a motor cayrier, through the use of substituted service, the

arrangement would have received the same approval as did the

original Great Western-Keeshin proposal. rye \.
$22 1.C.C. | , ibtic ;

‘

REAR: SQ ES ere Bony ves

‘ SUBSTITUTED SERVICE-PIGGYBACK i. 337

. : ae

wae ww wewTaime Sw aS =

: ‘ emanated of a like kindof traffic under substantially similar circumstances .
and conditions, ‘

3 Use of open-tariff TOFC service ie motor and water carriers in the per-
formance of economically regulated trans portation.

(a) Eggert as otherwise may be prohibited by these rules, motor common and
contract carriérs, water common and contract carriers, and freight forwarders
may utilize TOFC service in the performance ‘of all or any portion of their
authorized service through the use of open-tariff TOFC rates ence bya

il carrier. ; 4

b) Motor and water.common carriers shall u utilize open-tariff ‘TOFC services
pis if their tariff publications give notice such service may be utilized
at their option, but that the right is reserved to the’ r of their services to
direct’ that in any particular instance TOFC service utilized,

(c) Motor and water contract carriers shall utilize opeti-tariff TOFC service

only if their - -transportation contracts and schedules make appropriate pro-
vision theréfor.

4 _ “@y Tatiffs of motor and Water’ céinimon cafriers and contracts and schedules

of motor and water contract carriers providing for the use of open-tariff~
TOFC service shall set forth the points between which TOFC service may .
be performed and = names of the rail carriers whose TOFC service may .

} be utilized,

JOINT INTERMODAL SERVICE

Having concluded. that there is neither legal nor policy bar to
the use by motor and water carriers of open-tariff TOFC service
proffered by rail carriers generally, and that: such use should be
allowed in the public interest, we come next to a consideration of °

“the proper status and scope which joint intermodal TOFC service
should possess in the broad pattern of piggyback regulation and
service. Initiallys it must be noted that no one questions that
voluntary coordination between the several modes 0 transport
should be encouraged and promoted to the fullest extent possible
in the interests of both the carriers \and the shipping public. Nor
does anyone assert that there is anything improper or unlawful |
} with respect to properly published, through-route and joint-rate
] arrangements among the various modes of carriage. Rather, what
is challenged\by certain of the parties herein is whether certain
Operations and services, and the tariffs embracing: rates and
charges therefor, properly fall: within that class of coordinated“
intermodal service which is allowable under the act. In order to
examine this issue in its proper perspective, it is necessary to”
review hriefly the legal growth and development of that kind of

Piggyback service which embraces_the participation of both sana

and motor common carriers.
$22 1.C.C. ‘

Fe nes PERRI NI EIY F . , “ : — : : —

°

Ce

-and points on the route of such railroad. This protestant claims * * * that joint

* ‘the one hand, and a poigt on a rail line,.an the other, We have frequently

reasonable, * * *
As many considerations bear ieee the feasibility and practicability of such |

338 °. 7 INTERSTATE COMMERCE COMMISSION REPORTS .
hte,

Prior to August 1935, when part II of the Interstate Commerce

Act became law, the motor carrier industry, was not subject to» ‘i
Federal regulation and such carriers, therefore, could utilize the

services of railroads as could any shipper. Trucks on Flat Cars

Between Chicago and Twin Cities 216 1.C.C. 435. Part Il of the | .

act, however, subjected” motor carriers to economic regulation

_ by this Commission, and section 216(c) thereof provided in specific

terms that, motor common carriers may establish reasonable
through routes and joint rates with*rail carriers. Shortly there-
after, the Chicago Great Western Railroad Company and certain
motor common Carriers proposed motor-rail-motor rates between
Chicago and various points east thereof, on thd one hand, ang, on
the other, Mingeapolis-St. Paul, Minn., and certain points in con-
tiguous territory. The ‘proposed rates were of the same amount
as the corresponding all-highway rates published by the partici-

_ pating motor ‘carriers, and the rail service of the Great Western

was to be performed (substituted) between Chicago and St. Paul.

These rates were approved by the Commission in November 1936,

in Motor-Rail-Motor Traffic in East and Midwest, 219 1.C.C, 245,

_the first reported Commission decision dealing with the subject

of. coordinated service by rail and regulated motor common car-
riers. The Commission stated, at pages 272-73:

i

One. of the protestants tontends that the ‘proposed routes are inconsistent

with the provisions éf section 217(a), which impose a duty upon a common
carrier by motor vehicle to publish rates between points on its own route, and
whenever it enters into a through-route and joint-rate arrangement with a
common carrier by railroad to publish rates between Points on its own route

rates are authorized only between 2 point on the route of a motoy carrier, on

approved through routes .and joint rates in wonnection with a rail carrier

serving the points of origin anddestination an her rail carrier participating

only as an intermediate carrier in the t rtation.

Section 216(c) does not define the particular type of through routes therein

authorized to be euntanay, the aad vs ual vans that they shall be

arrangements, we. cannot conclude that the proposed through routes are unlaw-
ful because similar routes are not pr vided from and to all points on the line
of the participating rail carrier. Nor can we accept the contention that because
the haul which a motor common carrier might receive on some traffic would
be short, or terminal in character, that it may not participate in such a joint
rail-motor route. . a

; : 322.1.C.C.

pee AS Cnn baer

- SUBSTITUTED. SES VICE--PIGGYBACK 339

. *

In finally approving the motor-rail-motor rates proposed, the
Commission conclusively found. such M@fes to be valid joint rates,
saying, at page 274: “ig °

One of the protestants argues with great insistence.that it is unlawful for a
motor carrier having authority to operate over particular routes to-*‘substitute
transportation of its motor vehicles on flat cars over a totally different route
for its highway operations.’? This argument assumes that under the proposed
arrangement the stgtus of respondent motor carrier with respect to the rail
portion of the tratsportation would be that of a shipper, Nothing in the evidence
warrants that assumption. The motor carricr’s status is that of @ connecting
‘carrier under a joint-rate arrangement which,-as previously indicated, is specif-
“Yeally authorized by law, The novel way in which the traffic is handled does
‘mot affect the status of the participating carriers in that agreement: It does
not appear that any portion of the transportation which the motor carrier would
perform under the arrangement would be over routes other than those-over
which it may lawfully operate. /Emphasis supplied,/

\ ¢ .

About 2 years following this decision, the Commission in-
stituted an investigation into the lawfulness of Certain special
permission tariff rules and other practices of common carriers
by rail and water subject to part I of the act and of common and

contract, carriers by motor vehicle subject to part II, in connection
with the substitution of motor-vehicle service for rail or water:
service and of rail or water service for motor-vehicle service.
After extensive consideration of the background of substituted
service generally, the Commission in Substitizted Freight Service,»
232 1.C.C, 683 (decided July 25, 1939) found, as relevant'to the
issues presented here, that where acommoncarrier by one trans-

port medium substitutes another form of transportation therefor,it~ -

breaches its bill-of-lading contract with the shipper unless the
shipper is apprised of such optional substitution of service by
appropriate tariff provisions; and that so-called’ substituted
service may not lawfully be furnished without setting forth the
service, the routes over which it is performed, and the parties
performing same in lawfully filed tariffs. In arriving at these '
conclusions, the Commission remarked, at pages 687-88: es

‘There can be no doubt that the interstate transportation service here under
consideration is common-carrier service and that either the rail carrier must
have authority to engage in common carriage by motor vehicle in its own right,
or the motor carriers joining in such service must be authorized to act as such
carriers in their individual capacities. [Footnote omitted,/ In either event,
where the substitution service consists of a combination of line-haul movements
by rail and motor, it is in legal effect a joint service, no matter by what other
name it may be designated. Under the act and our regulations thereunder, it is

322 1.C.C. ee is

F
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Sa ih Se ee ee ce er tes Tere = " gee ner 9
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340 _ INTERSTATE scart a cl REPORTS -

fundamental that the service sovered by published rates, the routes over which
it is performed, and the names of the carriers performing.the. service must be

- set forth definitely in the governing tariffs for the information of the shipping

public, interested carriers, and the regulatory body, in order to insure the
effective and fair ee of the act:

Noting the siiiliiiis of certain respondents in that proceeding

- to the effect that the maintenance of ordinary joint rates covering

the: considered service would be “rigid, inflexible, cumbersome,
uneconomical, unexpeditious, expensive, and impractical,/* the
Commission approved a suggestion of certain ‘of the southern and

western rail carriers under which the substituted service could be
’ covered by a tariff rule and directory containing a list of partici-

pating rail, motor;-and water carriers, and showing between what
points the substituted. service is performed. In thus sanctioning a

form of tariff publication now known as a ‘‘Substituted Freight

Service Directory,” the Commission stated, 232 I.C. Ce at age
689: . oy F ies ‘ a

It “appears that this substituted service;confined as it is to qp-line points
‘served by the originating or destination carrier, is of such a nature as readily

’ to lend itself to such method of. tariff publication. Aay possible breach of

contract could be avoided by inserting the words “‘unless otherwise directed by
the shipper’’ or a phrase of similar importin an appropriate place in the tariff
rule, It appears that such publication in the form of a fariff rule and directory

could be .devised sé as to preserve the benefits of the substituted service
without subjecting the carriers to undue expense or contravening the specific
provisiops of the act, and thus to protect the righfs of competing ee anc

~". the general public.

While limited TOFC operations had been conducted at various
times during the 1930’s and 1940’s by a féw railroads and motor
common carriers, there was a notable resurgence of interest in
this type of service during 1953. , Late in that year, The New York,
New Haven, and Hartford Railroad Company presented to the
Commission for its consideration 20 questions concerning the
legal relations, limitations, and obligations incident to the trans-
portation of highway trailers on railroad flatcars. In response to
such questions, the Commission, in Movement of Highway.Trailers
By Rail, 293 1.C. C393 (decided July 30,1954), referred to its pasi
decisions in the coordinated and substituted service field, and

-confirmed the holdings of those cases... It stated, aa ales at

aha
via a Panos , .822:1.0.0.

= ‘
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i

SUBSTITUTED SERVICE-—PIGGYBACK 341

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~~

we are of the opinion that! trailer-on-flatcar transportation is in fact transporta-
tion by railroad. And this is so whether the trailers are owned or operated by
‘railroads; shippers, or motor common carriers.

A joint rate is one that applies to transporiation extending « over the lines of
two or more carriers, and which is made by arrangement or agreement between _
such carriers and is evidenced by concurrence or power of attorney, 49 CFR.
141.0 (bX3}. In Substituted Freight Service, supra, we said that ‘¢ where the

| substitution service consists of a combination of line-haul movements by rail

and motor, it is in legal effect a joint service, no matter by what other name
it may be designated. *? We recognized that substituted freight service presented
certain problems in the publication of tariffs, and indicated that interested .
carriers might confer with representatives of our Bureau of Traffic to work
out a simplified form of tariff: publication, * * * We stated that if publication”
takes the form of a directory, it Should be published with appropriate con-
currences of the rail and motor carriers listed therein. * * * In these circum-
stances, this substituted freight, service directory, and the related rate tariffs
which make reference thereto,may be said to conform to the requirements as to

- the publication of joint motor-rail rates, femphasis added./

Subsequently, in Substituted Rail setehee by Red Ball Transfer
Co., 303 1.C.C, 421 and Substituted Service — ConsolidatedF reight-
ways, Inc., 3051 -C.C, 301, aff'd. Consolidated Freightways, Inc.,

' Ve United States, 176 F. Supp. 559 (N. D. Cal. 1959), other substi-

tuted rail-for-motor service proposals were approved and author-
ized. In the last-cited proceeding, the court noted the-contention
that the disputed rates were not in fact ‘‘joint rates,’ since
Consolidated Freightways, Inc., was required to point to its, motor
carrier rights to justify the substituted. service arrangfents
proposed. That the court did not fully accept this view is evident
from the following language taken from pages 562 and 563 of its
decision: ~ er :

The ‘conflicting contentions can best be dealt with in the light of the language
of the service which plaintiff proposed to render the pertinent — of which
read as follows:
“‘Application of this Tariff: .
*‘Unless the shipper directs that rail service shall not be performed,
the motor carriers parties to this tariff may, at their option, substitute
railyservice between the points and via the #ail carriers shown herein,
for their actually available services via highways for which such
motor carriers have lquwf ul operating rights as —— carriers via motor
reesei {Emphasis supplied by the court./

This language clearly indicates that plaintiff, a these rates, operated.
under the assumption that the proposed service was to function between points
which it could service under lawful motor carrier operating rights. The fact
that. plaintiff expressly reserved for itself the option to perform the proposed
service by motor carrier is further evidence that it cnae the proposed tariff

322 I.C.C.

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342.“ INTERSTATE GOMMERCE COMMISSION REPORTS

to be an integral part of its. motor carrier operations. Under these circum-
Stances a determination of whether the proposed service is to be labeled

” patiway.or motor carrier service is superfluous since plaintiff must be found

contention in the instant case that the trailer-on-flatcar service should be
dealt with as distinct from its operating authority as /a7 motor carrier is
thus without merit.

e . \ x . , .
_ Theres, thus’ came into existence two fundamental types of
coordinated motor-rail piggyback services and arrangements,
both of which have been sanctioned by this Commission as lawful
joint-rate and through-route arrangements. One form of opera-
tion—which has come to be known as plan I TOFC service—pro-
vides for the “‘substitution” of rail for motor service at rates
which are the equivalent of corresponding all-highway rates

published by the participating motor carrier. A motor Substituted

Freight Service Directory provides reference fo the concurrence
of the rail carrier and the points betweén which the substitution
may be made, and such information is incorporated into the
governing rate tariff by an appropriate tariff rule which preserves

the shipper’s right to direct that such substitution not take place.
The other type of coordinated motor-rail TOFC operations has

come to be known as plan V TOFC service. As here pertinent,
under plan V; rail-motor, motor-rail, or motor-rail-motor serv-
ices are provided under joint rates which are-generally published
in a tariff separate and distinct from other tariffs maintained by

the participating - regulated common carriers and which are

applicable only over the through route or routes. There is no

- question but that a motor.commen carrier may, under an appro-

priate plan V tariff, interchange traffic with the participating
railroad at an. authorized service point short of the full length of
its authorized operations, and later receive such traffic back
again for movement between. other of its authorized points of

service. Ih such an operation, of course, the rail carrier’s

physical participation in the through movement is as a “‘bridge”’ .

. . Carrier and is substantially Similar to that present in a plan I
* Operation. 2se- , | ’
None of-the parties herein challenge the lawfulness or propriety —

of plan V TOFC service. And predicated upon the foregoing

Commission precedents as well as their own independent analysis»

of the relevant statutory provisions in the light of the contrary
A 322 1.C.C.

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ga

SUBSTITUTED SERVICE-—PIGGYBACK 343

arguments of the regulated freight forwarders, Southern Railway

} System, and Helm’s Express, Inc., the examiners concluded that
plan I TOFC service is a lawful through-route and joint-rate
arrangment specifically authorized by section 216(c) of the act;

that the arguments of those attacking the legality of plan I opera-

tions are without merit; and that the continuation of plan I service
‘is in the public interest .and in harmony with the national trans-

portation policy. With this position we agree.
‘In the New Haven Case, supra, it was found, properly we think,

that “‘trailer-on-flatcar transportation is in fact transportation by.

railroad,”’ and that“‘‘this is so whether the trailers are ‘owned or
operated by railroads, shippers, or motor common carriers.”’

We have also noted previously that a railroad lawfully may receive |
as. compensation for its services only such rates and charges as -

are published in tariffs open to the shipping public generally or
such reasonable divisions of joint rates as may be negotiated with
the other carriers participating in the through service. See, for
example, Louisiana, A. & T. Ry. Co. Operation, 170 1.C.C. 602.
Since the rail portion of plan I service is not as such available for
use by the general shipping public, it necessarily follows that such
an operation, if it is to be sustained at all, must be sustained as
a joint-rate arrangement under section 216(c), the only statutory

provision authorizing the maintenance of through routes and joint

rates between a railroad and a motor carrier. Stated somewhat ,
differently, we think the examiners were correct- in concluding _

that motor and rail carriers may cipate inplan I TOFC serv-

ice only as connecting carriers unc er through-route and joint-rate

arrangements specifically authorized by section 216(c). This, as
seen, is’not because of any specific legal rgstriction upon motor
carriers as such, but because of the statutory limitations on the
manner in which a railroad may be compensated. for its service.

Whether plan I TOFC service qualifies as a lawful joint rate
under .section -216(c) of the act is, as has been noted, the subject
of considerable controversy among certain of the parties hereto.
Thus, on exceptions the regulated freight forwarding-cempanies
and Southern Railway System renew their contentions, made
throughout this proceeding that plan I TOFC servicé is unlawful
under the act. Their arguments in this respect are stated in full
in the examiners’ report, have been considered by us, and need
not be repeated here. “We shall instead confine our attention to
the’ more essential aspects of this dispute. - .

Section 216(c) of the act reads as follows:

‘ :

. ” .
PRP eee Soe . ~omewerne -
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. 344 INTERSTATE COMMERCE COMMISSION REPORTS

Common carriers of property by motor vehicle may establish reasonable
through routes and joint rates, charges, and classifications with other such
carriers or with common carriers by railroad and/or express and/or water;
and common carriers of passengers by motor vehicle may establish reasonable
through’ routes and joint rates, fares,.or charges with common carriers by
railroad and/or water. In case of such joint rates, fares, or charges it shall
be the duty of the carriers parties thereto to establish just and reasonable
regulations and practices in connection therewith, and just, reasonable, and
equitable divisions thereof as between the carriers participating therein which

_ Shall not undyly prefer or prejudice any of such participating carriers,

This section does not denote the particular type of through routes
and joint rates therein authorized to. be established, and nowhere

.élse in the act are the terms “‘through routes” and ‘‘joint rates”
4

specifically ‘defined. The freight*forwarders, “however, assert
that section 216(c) must be read in conjunction with the provisions °

Of section 217(a) of the act, and that when this is done it is clear

that a. lawful through-route and joint-rate arrangement must tepre-
sent a joint undertaking by two or more connecting carrier's to
transport property from a point on the line of the originating

- carrier to a point on the line of the delivering carrier. We do not

so read section 217(a).
That section, as here material, provides the following:

Every common carrier by motor vehicle shall file with the Commission ees
tariffs showing all the rates * * * and chargesfor transportation, and all serv-
ices in connection therewith, of * * * property in interstate or foreign com-
merce between points on its own route and between points on its owmroute and

' points on the route of any other such carrier, or on the route of any common.
carrier by railroad * * * when a through route and joint rate shall have been

established. Emphasis supplied?

We think it clear that the italicized portion of section 217{a) quoted .
above was not intended to be, and is not, a limitation upon the

~ general permission which section 216(c) grants to motor common

carriers to establish through routes and joint rates with rail car-.
riers. Instead, such language is a necessary adjunct to the statu-
tory requirement that motor common carriers shall file tariffs
showipg their rates and charges between points on their own

. Toutes, and but for the inclusion: of that.language in the statute,
tariffs providing for joint ratés and through routes would not be

required to be ,filed. And because it is not.lawful for a motor
common carrier individually to publish rates to or from points
it is not authorized to serve; tariffs containing such rates must be

| predicated upd Rreviously established through rouge. and pint

' Wi

4

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SUBSTITUTED SERVICE—PIGGYBACK. . 845

rates. To put it another way, section 217(a), as we read it, pro-
vides that a motor common carrier shall file tariffs applicakle to
or from points it itgelf’is not authorized to serve only wien a
through route and joiht rate shall have been established; but |
converse—that-a through route and joint rate may be established
;Only' to or from points the motor carrier is not authorized to
serve—ig simply not true. We conclude, as was concluded in the
Traffic -in East. and Midwesy case, supra, that the permission
granted motor commoncarriers by section 216(c) of the.act to
establish through routes and joint rates is not limited by anything
contained in that section or in section 217(a), except that the
through routes‘ and joint rates must be réasonable. See also
Lubbock-El Paso Motor Frt., Inc., Com. Car. Application, 27 M.C.C,
585, Lubbock-El Paso Motor Freight,’ Inc., Extension,...29 M.C.C,
281, and Daniels v. Rose, 43 M.C.C, 726. vie
The freight forwarders further argue that plan I services do
not comply with the requirements of a through joint rate in that
(1) the rates charged for such service do not apply on a given
shipment, as such, throughout the entire movement, because the
contract of carriage between the motor carrier and the shipper |
alls for the transportation of less-than-truckload shipments, -
hereas the arrangemerit between the motor carrier and the rail-
road covers ‘the transportation of freight in carloads only, con-
sisting of loaded or empty trailers; and (2) the rates charged for
plan I service are not divided .on a just and reasonable basis
petween the carriers participating therein. These arguments, we
hink, lack merit. Under a plan I arrangement, the motor carrier
nd railroad do, in fact, agree to transport, -at a single through
ate, any given shipment of freight falling within thé scope of
eir tariff publication, and no rates are charged or tariffs
published with respect to such .plan I operations on any other
asis. The arrangement betweén the railroad and the motor
arriers, under which the railroad is to be compensated for its
ortion of the through sérvice, is thus a division agreement speci-
ically ‘authorized by section 216(c), and not a separate rate or
harge. With respect to the second argument of the forwarders,
ection 216(c) requires only that the carriers, parties to the joint
atés, establish ‘‘ just, reasonable, and equitable divisions thereof
Ss between the carriers participating therein which shall not unduly
refer or prejudice any of such participating carriers.’* The
estion of what constitutes just, reasonable, and equitable divi-

ions necessarily involves many considerations, both factual and
822 1.C.C, Shs weny,

-

a alah AP. . ieacaiaatends Ciemeiie aatenien . - =
« .

¢

346 INTERSTATE COMMERCE COMMISSION REPORTS

legal, but plainly the Maintenance of ‘divisions computed on exact-
ly the same basis as isthe overall joint rate, to the exclusion of
all other factors considerations, is not required by the statute

_ and may, in fact, be in violation thereof. The argument of the

freight forwarders that ‘‘It is highly probable that in some in-
stances the ‘division’ is greater than the whole,” is not supported
by the record. - For these reasons, we reject the considered
arguments of the freight forwarders.

Yet another argument raised by the freight forwarders is that
plan I service is not a lawful joint-rate arrangement because the
railroad assértedly is not a party to the bill of lading given to the
shipper by the motor carrier; that is, that before there can be a
through route and joint rate, all participating carriers must be

bound by, and jointly and severally responsibie under, the original
bill of lading. This argument, however, begs the ultimate question

as to the status of thecarriers»®ticipating in plan I service, and,
in our view, assum¢s matters which are simply not true. If, as
we hold, plan I operations are, in fact, valid through-route and
joint-rate arrangements between connecting carriers, it neces-
sarily a that the respective liabilities of the participating
carriers ‘are to be governed by sections 20(11) and 20(12) of the
act. Compare Pacific Purchasing Co. v. Chicago & N. W. Ry Co.,

12 LC.C, 549, 552,and Savage Application, 265 I.C.C. 157, 167..

Under section 20(11), the initial carrier is liable to the shipper for

- all damage or loss, whether caused by itor not, on the theory that

in accepting the shipment under the through joint rate it becomes a
principal and all its connecting carriers agents for the transpor-

"tation of the goods; and section 20(12) provides a “‘right over’? in

order to insure that the ultimate burden falls upon. the carrier

responsible for the loss. Nor can we accept as seriously made

the ‘cofitentions of the freight forwarders to the effect that a rail-
road cannot assume responsibility to an unknown shipper. Prior to
enactment of part IV of the act, shippers by freight forwarder had
for many years been allowed to sue the underlying carriers for

loss or damage occasioned by the latter. Such actions were based

upon the fundamental theory that the shipper was the undisclosed
principal of its agent, the forwarder, in the latter’s contract with
the carrier. See Chicago, M. St. P. & Pac. R. Co. Vv. Acme Fast
Freight 336 U.S. 465 (1948) at page 488 (footnote 27). The contrary

“Contention of the freight forwarders is without foundation..

At this point, it-might be well to mention that our conclusion

_ with respect to the applicability of sections 20(11) and 20(12) in

4

322 I.C.C.

\

PQA IONS AE EDT AE Re NEARER et er gee pe
nea . . -aof tariff publication received. Commission sanction in 1939
in ‘the Substituted Freight Service case, supra, approximately 6
and 3 ‘years, respectively, prior to the advent of Federal regula-
tion of the freight forwarder industry. What the forwarders here
seek to eliminate, then, is a coordinated service, the lawfulness of
which had been confirmed prior to congressional recognition of
their own activities. There is nothing in part IV of the act, under
‘which freight forwarders are regulated, or inits legislative history
which Suggests that Congress intended to curtail existing coordinat-
ed transportation services. Rather, part IV, in defining those
services and persons subject to its scope, specifically excludes
from its purview persons who, as carriers subject to parts I, Il,
or. III of the act, hold themselves out -to the general public as
common carriers to transpdrt, or to’ provide transportation, of

property for compensation... ‘ : .

In their final attack. upon plan 'I operations generally, the
freight forwarders maintain, as they have on brief and in their
petition for separation of the issues filed April 2, 1963, and denied
by the examiners in:their report, that the record herein does not
contain sufficient evidence to Support the lawfulness of plan I

* 322 1.C.¢c.

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INTERSTATE COMMERCE COMMISSION REPORTS

>

service as practiced, even if the plan should ‘be found to k
lawful per se. They argue, ineffect, that, anlike the Commission
approved plans II, If, and IV which involved exhaustive hegring
at which were explored all questions relating to the lawfulness ¢
such plans, including the justness and reasonableness ofthe rate
and their economic and competitive éffect, proceedings involvin

plan I operations. have dealt sotely with an exploration of vartouw

legal theories concerning the statutory basis for-the plan; that w
should not promulgate rules to perpetuate a service about which W
lack any precise knowledge; that such. evidence as the preset
record contains about plan I operations is incomplete and has nc
been tested by croSs-examination of witnesses; that general]
plan I charges are materially lower than plan III charges, and.
the latter are just and reasonable, the planI chargés become .sus
pect; that they have not been afforded a full and fair hearing wit
respect to the issues involved; and that, therefore, their petitio
for separation of the issues and for orai hearing regarding pla
I TOFC service, as practiced, should be granted. We find thes
arguments to be without merit and, accordingly, affirm the ex
aminers’ denial of the freight forwarders’ petition. The followin
quotation, taken from page 686 of the Substituted Fic ight Servic
case, ‘supra, best sums up our views in this regard:

ss The issuance of a report setting forth our interpretation o of we law, afte
briefs and oral argument, is Censistent with our practice ii. » number |

‘important proceedings /Citations otmitted/. The principal issue in the insta

proceeding is one of law***, On this issue we think the procedur: outline

"above has constituted a full hearing within the meaging of the act, all partie

having been given full opportunity to be heard as to the step proposed to t
taken. ** *It may also’be that * * * mixed questions of law and fact /may/ arts
whether the practices in connection therewith are reasonable, nondiscrimina
tory, or otherwise lawful, which wili require oral hearings for the taking ¢
testimony. If so, requests for such hearings will receive proper consideratio.
In the meantime, at this stage of the proceeding, such oral hearings would n
be in the interest of justice nor serve any useful purpose,

The views so stated apply with equal force to the present proceed
ing, and we see little that can be added thereto. It should be notec
however, that we have, from ‘the outset, said that the level o
reasonableness: of TOFC rat@s was not in issue in this case. Ww
adhere to that position.

The freight forwarders have raised additional arguments whic
call for brief comment. One which is also urged by the Loca

_ and Short Haul: Carriers National Conference involves the legalit

322 I.C.C.

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SUBSTITUTED SERVICE-—PIGGY BACK 2 349

~

§ of plan I TOFC service wherein rail service is provided or substi-
@ tuted by a motor common carrier for the entire line-haul move-

@ ment, and will be taken up ata later point in this report. The for- .

warders also argue that we have been inconsistent in dealing with
qplan I service in that we have termed it ‘‘in legal effect’’ a joint

: service, but have regulated it as if it‘entailed operation over an -

alternate route or a deviation route within the meaning of section
208(b) of the ag. This view appears to be the result of a mis-
conception of the fationale underlying the imposition of so-called
circuity limitations, to be discussed fully below, upon a regulated
7 Motor carrier’s participation in TOFC service. _

} =In summary, we conclude, as did the examiners and the Com-
tmission decisions prior to the NATA case, that when a motor
common carrier participates im plan I TOFC operatiosis, paying
ithe railréad compensation other than that set forthin the railroad’s
regularly published tariff, the motor carrier’ 8 status is that of a
connecting carrier in a joint service provided voluntarily by the

§ participating rail and motor common carriers; and that plan I.

4} TOFC operations thus constitute a valid through-route and joint-

\rate arrangement within the contemplation of section 216(c) of the .

j act. A fact which we have referred tc before in this report is the
general lack of opposition to the provi..onofa.through joint inter-
} modal -TOFC service under what are known generally as plan. V
(tariffs and arrangements. Plan I and plan V, however, share in
3common the important features of a through-route and joint-rate

arrangement: both entail the voluntary cooperation and agreement

of the participating carriers; both involve the p4\"ment by the. ship-

sper of a single through rate which is divided among the catricz
} participants on a negotiated basis; and both may involve the rendi-
tion of joint service between points the motor carrier is authorized
gto serve in all-highway service. The fundamental distinction

between plan I and plan V operations, as we'see it, is that rail
and motor carriers serving different areas may combine their
service in plan V operations to perform a through service
between origin and destination. Another. difference is that the
tariff rules covering the rendition of plan I service specifically
embrace a holding out by the motor carrier to perform an all-
highway service at the election of the shipper, whereas the rates
provided in plan V joint tariffs are applicable’ only over the
joint intermodal route. Insubstance, then, planImerely embraces
a simplified form of tariff publication, which combines a joint
motor-rail-motor rate applicable over the intermodal route with

322 I.C.C.

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Page Pi;

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350 INTERSTATE COMMERCE. COMMISSION REPORTS
© . ° 7 a

an all-motor rate of the same level which is applicable over t
alternate all-highway routing. And though this forni¥ of tari
publication and. intermodal operation necessarily raises questio!
as to the motor carrier’s underlying motor-carrier operati!
authority, for that is a service alternatively held out, we do n
think any real significance may logically be accorded this featut
of plan I TOFC operations from -the standpoint of the bas:
legality of such service under the statute. |
The net effect of the above conclusions is, as was recognize
by the examiner, to allow only motor common carriers’sub ject t
part II of the act to participate in plan I service arrangement
and to preclude such participation by contract carriers as we

_ as by unregidlated carriers generally. See, for example, Holme

Con*ract Carrier Application, 8 M.C.C.391; Reed: Contract Carrie
Application, 24.M.C,C, 459; and Acme Fast Freight, Inc., Commc
Carrier Application, 2M.C.C, 415 and 8 M.C.C, 211; affd. Acm
Fast Freight, Inc., v. United States, 30 F, Supp. 968, affd. pe

curiam, 309 U.S, 638. Our conclusions, however, with respect t

the availability of open-tariff rail service to everyone on a
equal Basis will, we think, ease any burdens which otherwise migh
be thought to result and make further discussion of this matter’ un
necessary: We, of course, recognize that the conclusions express
ed here are at variance with some of the reasoning in the NAT:
case. However, as previously noted, the TOFC practices o
moter carriers of automobiles = whose operating authorities ar
limited specially to initial ot secondary movements — have bee!
Separated from the other issues here present because of the
unique problems involved and have been set for furthe

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386412_0015%3A03. Public record. Not legal advice.