Waterways Freight Bureau v. Interstate Commerce Commission and United States of America, Missouri-Kansas-Texas Railroad Company, Intervenor

561 F.2d 947, 183 U.S. App. D.C. 54, 1977 U.S. App. LEXIS 12613
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 1, 1977
Docket76-1598
StatusPublished
Cited by3 cases

This text of 561 F.2d 947 (Waterways Freight Bureau v. Interstate Commerce Commission and United States of America, Missouri-Kansas-Texas Railroad Company, Intervenor) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Waterways Freight Bureau v. Interstate Commerce Commission and United States of America, Missouri-Kansas-Texas Railroad Company, Intervenor, 561 F.2d 947, 183 U.S. App. D.C. 54, 1977 U.S. App. LEXIS 12613 (D.C. Cir. 1977).

Opinion

TAMM, Circuit Judge:

We are once again confronted with “another episode in the long and continued struggle between the railroads and competing barge lines.” A. L. Mechling Barge Lines, Inc. v. United States, 376 U.S. 375, 376, 84 S.Ct. 874, 11 L.Ed.2d 788 (1964). In this return engagement to the reviewing courts, Waterways Freight Bureau (WFB or petitioner), representing common carrier barge lines handling almost all of the regulated traffic along the Mississippi River system 1 petitions this court to review and set aside 2 a report and final order of the Interstate Commerce Commission, ■ acting through its Division 2, 3 which granted an application filed by member railroads of the Southwestern Freight Bureau for special relief from the Interstate Commerce Act’s general prohibition against long- and short-haul rate discrimination. 4 Interstate Commerce Act § 4(1), 49 U.S.C. § 4(1) (1970). We vacate the Commission’s decision and remand for further proceedings.

I.

In an effort to attract a greater share of the traffic then moving by the barge lines, the applicant-railroads filed an application with the Commission in September 1972 in which they proposed to reduce their rates 16.7 percent, from $16.80 to $14.01 per ton, on iron and steel shipments from St. Louis and its environs to Houston. Since the *949 existing rates would continue in effect for intermediate destinations along the St. Louis-to-Houston route and would be higher than the proposed rate in certain cases, the railroads were required at the same time to seek relief from the general proscription of section 4(1). See generally In-termountain Rate Cases, 234 U.S. 476, 34 S.Ct. 986, 58 L.Ed. 1408 (1914). This “fourth-section” application was supported by one shipper, Granite City Steel Company, which during 1971 had shipped 92.6 percent of more than 37,000 tons of various steel products by barge from St. Louis to Houston. J.A. 332. The proposed rate of $14.01 per ton was calculated at 110 percent 5 of the shipper’s aggregate costs for comparable transportation of its product by barge. Both the railroads and the shipper claim that this rate was determined upon lengthy negotiations to be “the highest rate which would permit movement of the traffic by rail.” 6 Id.; Intervenor’s Brief at 3. The barge lines, on the other hand, argue that the proposed rate is too low.

A.

The parties on appeal are in substantial agreement on the governing legal principles. 7 Section 4(1) of the Act, which is as old as the Commission itself, Act of Peb. 4, 1887, § 4, 24 Stat. 380, essentially prohibits a railroad, pipeline or water common carrier from collecting a greater total charge for shipments over shorter distances than over longer, when both involve the same route and the same direction. 8 This general pro *950 hibition, however, is subject to an exception which provides

[t]hat upon application to the Commission and after investigation, such carrier, in special cases, may be authorized by the Commission to charge less for longer than for shorter distances for the transportation of passengers or property, and the Commission may from time to time prescribe the extent to which such designated carriers may be relieved from the operation of the foregoing provisions of this section, but in exercising the authority conferred upon it in this proviso, the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed

49 U.S.C. § 4(1) (1970) (emphasis added).

The burden on an applicant common carrier seeking special relief from this section is a heavy one. See, e. g., Mechling Barge Lines, 376 U.S. at 385, 84 S.Ct. 874, 11 L.Ed.2d 788; Louisville & N. R. Co. v. United States, 225 F. 571, 581 (W.D.Ky. 1915), aff’d, 245 U.S. 463, 38 S.Ct. 141, 62 L.Ed. 400 (1918); J.A. 338; Petitioner’s Brief at 36. Thus, to be “reasonably compensatory” so as to qualify for dispensation from section 4(1), a proposed rate must

(1) cover and more than cover the extra or additional expenses incurred in handling the traffic to which it applies; (2) be no lower than necessary to meet existing competition; (3) not be so low as to threaten the extinction of legitimate competition by water carriers; and (4) not impose an undue burden on other traffic or jeopardize the appropriate return on the value of carrier property generally .

Transcontinental Cases of 1922, 74 I.C.C. 48, 71 (1922) (emphasis added); e. g., Rules to Govern the Filing of Fourth Section Applications, 310 I.C.C. 275 (1960); Igert v. United States, 211 F.Supp. 42, 44-45 (N.D.Ala. 1962). Of these four criteria, we need concern ourselves on this appeal only with the second, for WFB’s essential position collapses basically to the argument that the railroads failed to meet their burden of showing that the proposed $14.01 rate was “no lower than necessary to meet existing competition.” 9

B.

This case consequently boils down to little more than a dispute over the discrete cost items to be included in determining the shipper’s total cost of moving the goods to Houston via barge. The railroads based their proposed rate on the following calculation:

Origin loading cost $ 2.00 per net ton

Barge rate (St. Louis to Houston) 7.98

Houston transfer 1.60

Interstate switching 1.16

Total 10% Add On $12.74 per net ton 1.27

TOTAL $14.01 per net ton

See Petitioner’s Brief at 12; J.A. 332.

Petitioner discredits this calculation, claiming that the total cost of utilizing barge transportation actually is significantly higher because most ex-barge traffic in Houston travels by truck, not railroad, and that'at least half of all such truck deliveries to Houston-area customers suffer delays that result in additional dockside storage and reloading charges.

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561 F.2d 947, 183 U.S. App. D.C. 54, 1977 U.S. App. LEXIS 12613, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waterways-freight-bureau-v-interstate-commerce-commission-and-united-cadc-1977.