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FREIGHT CAR SHORTAGES—continued

the decline in the volume of less-than-carload shipments resulting from the preference of shippers for the faster and more flexible service of motor carriers and to some extent of freight forwarders and express.

Railroads subject to the Interstate Commerce Act are not required to obtain permission, as such, from this Commission to curtail or abandon service at individual stations that they serve. Section 1(18) of the Interstate Commerce Act relates to abandonments of rail lines and operations and section 13a relates to discontinuance or change of operations or services. Under section 1 (18) of the Act a rail carrier subject thereto may not abandon all or any portion of “a line of railroad or the operation thereof” unless and until there shall first have been obtained from the Commission a certificate authorizing such abandonment. Decisions of the Commission and the Courts indicate that the term "line of railroad” denotes a permanent road or way having rails providing a track for freight or passenger cars, and not a station, the abandonment of which is ordinarily a matter wholly within the jurisdiction of the state regulatory bodies. In Palmer v. Massachusetts, 368 U.S. 79, decided November 6, 1939, the Supreme Court said, at pages 84–85 :

The dependence of local communities on local railroad service has for decades placed control over their curtailment within the regulatory authorities of the State. Even when the Transportation Act in 1920, 49 U.S.C.A. . $ 1 (18–20), gave the Interstate Commerce Commission power to permit abandonment of local lines when the overriding interests of interstate commerce required it, Colorado v. United States, 271 U.S. 153, 46 S. Ct. 70 L. Ed. 878, this was not deemed to confer upon the Commission jurisdiction over curtailments of service and partial discontinuances. In Boston & Maine Railroad Abandonment, 249 I.C.C. 507, (1941) Division 4 of the Commission at page 508 said:

In the event of abandonment of the portion of the Newburyport branch in question, Topsfield, having about 1,150 inhabitants, would become the northerly terminus of a so-called stub line, extending northerly from Danvers. Under those circumstances, the applicant would propose discontinuance of the passenger and less-than-carload freight service between Danvers and Topsfield, limiting operation to handling carload freight traffic by means of a train operating from Salem. Partial discontinuance of rail service is not

within our jurisdiction. In Express Service at Borden, Campbellsburg, & Pekin, Ind., 286 I.C.C. 303, (1952) where the Railway Express Agency proposed to eliminate entirely express service at these three Indiana points because the express service was unprofitable, the Commission held that the proposed elimination of express service was not subject to the Commission's jurisdiction under section 1(18) of the Act.

Section 13a (1), relating to discontinuances or change of certain operations or services, confers jurisdiction upon the Commission only (1) if a carrier files a notice with this Commission of its intent to discontinue or change an operation or service from a point in one state to a point in anoti and (2) if such discontinuance or change is subject to any provision of the constitution or statutes of any state or any regulation or order of any court or an administrative or regulatory agency of any state. Paragraph (2) of section 13a relates to discontinuances or changes wholly within a single state, and before this Commission acquires jurisdiction there must be a showing of (1) state jurisdiction, (2) denial by an appropriate state agency of or failure to act by such agency within 120 days on an application filed with it by the carrier, and (3) the filing by the carrier of a petition with this Commission.

That the provisions of section 13a are not applicable where only discontinuance of or a change in service at a station is involved is shown in Boston Term. Co. Reorganization, 312 I.C.C. 373 (1960), where the Commission in discussing sections 1 (18) and 13a said at pages 378 and 379 :

Section 1(18), which was enacted as part of the Transportation Act of 1920, provides in pertinent part:

no carrier by railroad subject to this part shall abandon all or any portion of a line of railroad, or the operation thereof, unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity permit such

abandonment. The quoted language was intended to “provide that there shall be some Federal control over the matter of abandonment,” (58 Cong. Rec. 83168318) and was designed to protect industries or homeowners who had

FREIGHT CAR SHORTAGES—continued

located in reliance on the availability of the railroad line. (“Return of Railroads to Private Ownership, Hearings Before the Committee on Interstate and Foreign Commerce of the House of Representatives, 66th Cong. on J.R. 4378," September 25, 1919, p. 2872.) While some extension of Federal authority was sought, the emphasis was on coordination and cooperation between the Federal and State authorities, and where to draw the line separating Federal jurisdiction from that left to the States was regarded as being a matter of secondary importance. (id. p. 2958)

It is well settled that under this provision we have no jurisdiction where mere curtailment of service is sought (Colorado v. United States, 271 U.S. 153; Palmer v. Massachusetts, 368 U.S. 79, 85; Alabama v. Southern Ry. Co., 341 U.S. 341, 346) such as the elimination of express service (Express Service at Borden, Campbellsburg, and Pekin, Ind., 266 I.C.C. 303, 305), or the discontinuance of passenger service while retaining freight service (Norfolk & W. Ry. Co. Abandonment, 187 I.C.C. 66).

As long ago as 1925, we found that we lacked jurisdiction over the proposed retirement of a freight and passenger depot (94 I.C.C. 691).

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The Congress has been fully aware that the abandonment of stations is ordinarily a matter wholly within the jurisdiction of the State regulatory bodies. Indeed, as recently as 1958, the Congress made it clear that it did not wish to transfer such jurisdiction to this Commission (H. Rept. No. 1922 85th Cong. 2d Sess. p. 12), and the additional jurisdiction conferred in that year by the enactment of section 13a (i.e., over the discontinuance or change of certain operations or services) did not include jurisdiction over “discontinuance or change of the operation or service of stations, depots or other facilities” as was provided in an earlier version of the bill which later was

enacted as the Transportation Act of 1958. However, where a carrier proposes to abandon or limit service at a station, there are certain provisions of the Act, relating to the rates of carriers and their holding-out to serve the public which require action by the carriers and by us. Section 6 requires the carriers to file with this Commission schedules of their rates and charges. These schedules reflect the holding-out of the carriers including the types of services and rates charged from and to points served by them. When a carrier proposes to cease serving a station or to discontinue less-than-carload service on interstate or foreign traffic to and from a station or stations it must modify its tariffs or schedules of rates and charges accordingly. This must be done by proper publication of notice in tariffs filed with the Commission at least 30 days before the changes are to become effective. During this period any interested party believing that the proposed changes will result in violations of the Interstate Commerce Act may petition the Commission for suspension of the proposal in accordance with Rule 1.42 of the Commission's General Rules of Practice. A copy of that rule is attached for ready reference.

When such petition is filed (and at times without such a petition) the Commission through its Board of Suspension or Division 2 then gives informal consideration, pursuant to authority set forth in section 15 (7), to the proposal and the objections, with a view toward determining whether there are possible violations of various provisions of the Act, such as section 1, relating to reasonableness, section 2, relating to unjust discrimination, and section 3, relating to undue or unreasonable preference and prejudice. If there are reasons to believe that further investigation will reveal that the proposals are unlawful, they are suspended and investigated or allowed to go into effect subject to further investigation.

As pointed out there have been quite a number of tariff publications providing for discontinuance of less-than-carload service at various points throughout the country. The first to which a protest or request for suspension was filed was to become effective April 6, 1961. From that date through April 16, 1964, there have been 162 cases involving requests for suspension of tariffs proposing curtailment or discontinuance of rail less-than-carload service. In the great majority of the cases, 110, the Railway Labor Executives Association was the only protestant, there being no shipper interest whatsoever. There were 40 proposals protested by the Railway Labor Executives Association in which they

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were joined by other parties such as individual shippers, chambers of commerce, and other organizations. There were 12 proposals in which the Railway Labor Executives Association took no part but other shippers and organizations were the protestants. Thus, on a basis of the records before us, the Railway Labor Executives Association has been the principal protestant and there has been very little interest evidenced by shippers or receivers who might be inconvenienced by the proposed curtailment or discontinuance of less-than-carload service.

In justifying their proposals to curtail or discontinue less-than-carload service the railroads have shown in almost all instances that there has been a substantial decline in the amount of less-than-carload traffic tendered to them for transportation, that they are handling little or no interstate less-than-carload traffic at particular stations, and that operations are being conducted at a loss.

In many cases where shipper protests were filed, it was demonstrated by actual figures that the use of rail less-than-carload service was sporadic and very light. Consequently, in practically all of the cases coming before our Board of Suspension, the tariffs were not suspended or investigated because adequate showings of possible violations of the Interstate Commerce Act were not made.

An example of a case where suspension by Division 2, acting as an appellate division, resulted in a report on a proposal to curtail LCL service at Pt. Pleasant, W. Va., is the Commission's decision in I. & S. Docket No. 793, LCL Restrictions at Points in W. Va. by the B. & O., decided April 5, 1963 (mimeographed). Division 2 of the Commission found the proposed curtailment of less-than-carload service at Pt. Pleasant, W. Va. was just and reasonable. There were two shipper protestants, neither of which made an appearance at the hearing.

Of course, if the Commission does not suspend a proposal, any interested party may file a complaint, under the provisions of section 13 of the Act, alleg. ing unlawfulness of the discontinuance or curtailment. An example of such a proceeding is Docket No. 33390, Marietta Chamber of Commerce v. 0. & N. W. Railway Company, (mimeographed) which involved the discontinuance of lessthan-carload service on interstate traffic to and from various Chicago & Northwestern stations. The examiner, in his recommended report and order (which in the absence of exceptions became final March 27, 1961) stated at sheet 8:

"when a carrier exercises its managerial discretion in attempting to meet a particular situation confronting it, this Commission is without authority to interfere unless it results in some violation of the act."

The duty under section 1(4) of the act to provide and furnish transportation is conditioned upon the request therefor being reasonable. In determining whether a request for rail service is reasonable, the loss of the service to the shipping public should be compared with the cost to the carrier of providing the services sought. Demopolis, Ala., Chamber of Commerce v.

Southern Ry. Co., 206 1.C.C. 70. It will be noted that the examiner also found that the discontinuance of lessthan-carload service at the points in issue was not subject to section 1(18) of the Act and had not been shown to be unjust and unreasonable or otherwise unlawful.

Copies of the referred to decisions are attached. I hope that they and the above discussion adequately answer your questions with respect to proposals to discontinue or curtail LCL service.

An investigation has developed the fact that we have received very few complaints over the past few years regarding the failure of motor carriers to handle small shipments. However, in the letter from the All-Good Chair Company, which accompanied your letter, mention is made of the fact that more and more truck lines are refusing to handle furniture unless they can carry it to the final destination and there is no interchange. I have referred this matter to our Bureau of Motor Carriers for investigation and as soon as it is completed, I will advise you as to the general situation in connection with the transportation of less-than-truckload shipments, particularly furniture, and the jurisdiction and powers of the Commission, as requested in your letter of April 14, 1964. Sincerely yours,

ABE MCGREGOR GOFF, Chairman. Attachments. (Answers continued on p. 228, following attachments.)

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INFORMAL PROCEDURE FOR DETERMINING
MOTOR CARRIER AND FREIGHT FORWARDER REPARATION

Decided

Proposed Informal Procedure whereby Commission would exer

cise primary jurisdiction in determining Motor Carrier and Freight Forwarder Reparations on past shipments found shown to be unlawful. Proceeding discontinued.

Arthur A. Arsham, Robert A. Blocki, John H. Caldwell, Wilbur R. Casey, John M. Cleary, John F. Donelan, Frank J. Dorsey, Clifton A. Lando, W. L. Machmer, Eugene J. Mielke, Philip H. Porter, and W. R. Rubbert, appearing for respondents supporting Proposed Informal Procedure.

Peter T. Beardsley, Nelson J. Cooney, Andrew N. Happer, Thomas M. Knebel and Bryce Rea, Jr., George Leonard, Giles Morrow, T. R. Schneider, Thomas Shea, Clarence William Vandegrift, and L. E. Tomlinson, appearing for respondents in opposition to Proposed Informal Procedure.

REPORT AND ORDER

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RECOMMENDED BY R. J. MITTELBRONN, HEARING EXAMINER

This proceeding presents for disposition a simple question of law: Did the amended provisions of section 204(a) and section 406(a) of the Interstate Commerce Act, enacted by the 89 th Congress as portions of Public Law 89-170, September 6, 1965, confer upon the Commission jurisdictional authority to establish a system of voluntary informal settlement of shippers' claims involving damages arising from the application and collection of unreasonable rates or charges on past shipments by common carrier by motor vehicle or freight forwarder?

This identical question of law was born from the union of litigants in the original Ex Parte No. 249 proceeding instituted by the Commission Notice dated December 14, 1965, which culminated in the May 15, 1967, decision of the statutory three-judge district court, District of Columbia, in National Motor Freight Traffic Ass'n v. United States, 268 F. Supp. 90. Unfortunately the three-judge court was not required to decide this particular question of law because it found that the Commission had failed to comply with the rulemaking provisions in section 4 of the Administrative Procedure Act (5 U.S.C., section 553). On that ground alone the Commission's adopted informal procedure, which it unilaterally promulgated in Ex Parte 249, for determining motor carrier and freight forwarder reparation claims in uncontested cases was reversed and remanded by judgment of the court entered June 5, 1967.

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Responsive to the aforesaid judgment of the district court, the Commission entered an order dated June 29, 1967, which it served on July 14, 1967, and which complies in ali details with the provisions of section 4 of the APA anent statutory notice, opportunity to be heard, etc., of proposed rulemaking. For ready reference, copy of said Commission order is attached and incorporated herein as appendix A. The litigants have responded to said Commission order and, in accordance with the modified procedure rules, have submitted their factual evidence and legal arguments pro and con the lawfulness of any Commissionprescribed informal procedure for determining motor carrier and freight forwarder reparation claims on past shipments.

While the instant docket Sub-No. 1 proceeding is the legitimate offspring of the cited three-judge court opinion and order in Ex Parte No. 249, one is compelled to look behind the immediate ancestry for the causes which gave rise to the Ex Parte No. 249 proceeding wherein the single question of law raised before the court, and now before the Commission on remand, had its inception.

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The causal chain of events which crystallized into the issue of law presented herein is set forth in detailed, lucid, succinct, and impeccable, logical language of circuit court Judge McGowan's opinion when speaking for the threejudge court at 268 F. Supp. 90, 92, under subheading I. For ready reference, the pertinent excerpt of Judge McGowan's opinion containing the background analysis of this proceeding is incorporated herein and attached here to as appendix B.

By stipulation of the parties, four legal issues were put to the three-judge court for its disposition of the original controversy in Ex Parte No. 249:

(1) Whether the complainants, National Motor Freight Traffic Association, et al., had any legal standing,

(2) Whether the Commission's action in unilaterally establishing the informal procedure was a matter ripe for judicial review inasmuch as no one had yet been aggrieved,

(3) Whether or not any statutory author-
ity exists to support the Commission action of
prescribing the informal procedure for determin-
ing reparations, based upon the application of
unjust, unreasonable, or discriminatory rates
on the past shipments moving via common carriers
by motor and freight forwarders, and

(4) If such statutory authority did exist, was the Commission required to comply with the rulemaking provisions of section 4 of the Administrative Procedure Act in establishing an informal procedure for determining the lawfulness of motor carrier and freight forwarder rates as applied to past shipments?

Confronted with these four questions, the three-judge court held:

We have concluded, in respect of the first two of these issues, that plaintiffs are

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