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General American maintains car repair shops at Argentine, Kans., West Colton, Calif., and East Chicago, Ill. Major repairs and maintenance work are performed at these locations, while minor work can be effected at several other shops throughout the country. Its policy has been to try to eliminate empty mileage by arranging with its lessees to shop their cars during an empty return from a loaded trip. A total of 233 covered hopper cars were shipped out of General American repair facilities during the months of February, May, August, and November, 1967. For more than half of them the shopping was for normal re pairs to the interior linings required to protect such lading as foodstuffs and chemicals. At frequent intervals, preventive maintenance programs are established to shop specific lots of cars for routine inspection and repairs.

The examiners conclude that the proposed equalization rule has not been shown just and reasonable for application to the privately owned covered hopper car fleet. Covered hoppers are highly specialized freight cars, and, like tank cars, as discussed by these examiners recently in I. & S. Docket No. 8406, their empty return mileage normally will be in the vicinity of 100 percent. The periodic movement of these cars to repair facilities for ordinary maintenance (and at times for repairs for damages caused by the carriers themselves in train operations) falls within a category of use directly related to their railroad transportation function. In such' handling they are moving as instrumentalities of transportation and it would be inappropriate to subject them to mileage charges, under an equalization rule or otherwise. Thus, although respondents have proposed an equalization rule which would enforce a 100 percent balancing of loaded and empty mileages, the factual situation does not reveal how its application to normal transportation usage of the covered hopper cars would be a reasonable or fair practice. Before a new equalization rule of the general nature proposed here by respondents may be found just and reasonable, it will be necessary for the carriers to provide a clear factual basis for it.

In their decision in the I. & S. Docket 8406 proceeding, these examiners stated several "guidelines" for respondents should they propose eventually a revised mileage equalization rule. Suffice it to say at this point that those general observations would be applicable also in the present situation, and the examiners, rather than restating them here, will refer respondents and protestants to that prior report.

Respondents' justification for imposing the suspended equalization rule upon the operations of privately owned

refrigerator cars is not convincing. The following table reflects
respondents study of usage of privately owned refrigerators on
60 class I and 5 class II railroads between 1963 and 1967:

Ratio
Excess Empty
Loaded

to Year Loaded Miles Empty Miles Total Miles Miles

Loaded Miles 1963 682,437,663 528,709,009 1,211,146,672 153,728,654 77.46% 1964 681, 108, 616 524, 155,532 1,205,264,148 156,953,084 76.96% : 1965 595,819,459 469,877,883 1,065, 697,342 125,941,576 78.86% 1966 572,858,321 436,420,206 1,009,278,527 136,438, 115 76.18% 1967 540,714,728 426,433, 666 967, 148, 394 114,281,062 78.86%

The trends evident in refrigerator car use are not readily com-
parable with those shown earlier for covered hopper cars. There
has been a declining utilization of refrigerator cars, while
the ratio of empty to loaded miles has fluctuated somewhat.
Most important, the refrigerator cars regularly have generated
a substantial excess of loaded over empty miles.

At the hearing respondents were unable to state any particular reason why it would be useful to the railroads to make the proposed equalization rule applicable to the refrigerator cars, except for the desirability of having one equalization rule applicable uniformly to refrigerator cars, covered hoppers, and the other involved freight cars. No special reasons were stated for applying the proposed rule to other types of privately owned freight cars, and no statistical data showing comparisons of their loaded and empty movements was given. Since the examiners have disapproved the proposed equalization rule as to covered hopper cars and since there is no clear factual basis for making such a rule applicable to refrigerator cars, the examiners conclude that the proposed equalization rule should be disapproved in its entirety.

II

Empty Commercial Movements

In addition to the proposed new equalization rule, respondents seek to impose tariff charges, at existing rates now on file with the Commission, on three specific types of empty car movements:

(1) Empty movements of newly acquired, newly constructed

or rebuilt cars prior to first loaded movement.
(2) Empty movements of cars to or from facilities for

lining, relining or modification.

(3) Empty movements of cars to or from facilities for

sale or scrapping. Such movements would not be credited with mileage allowances, nor be accounted for under the mileage equalization rule. These movements would be performed by the respondents only on revenue billing at the 39-cent and 35-cent rates per mile described above, and, in contrast with the method of paying for "unequalized" empty miles, the charges would be assessed at the time of the empty movement itself.

The railroads' justification for this proposal is similar to that supporting the proposed equalization rule. Respondents maintain that a new effort is required by them to control or reduce the total amount of empty miles operated by private cars, and that the three specific categories of movements involved are sufficiently removed from transportation usage to warrant their treatment as commercial movements of private cars.

The carriers point out that the charges which would be assessed for these movements are the same existing rates which already apply to the movement to any freight car moving on its own wheels, whether owned by a railroad or a private company, when moving for nonrevenue purposes.

A part of respondents' purpose with this proposal is to distribute more evenly among the railroads themselves the burden of performing transportation of empty cars to and from manufacturing plants, et cetera. The various facilities at which tank cars are manufactured, repaired, relined, or scrapped are concentrated more heavily on some railroads than on others. The plants at which tank cars are manufactured are largely concentrated in the eastern and central States although some manufacturing facilities are located in the South and Southwest.

The principle is well established that the railroads may properly apply tariff charges for the movement of both carrier-owned and privately-owned freight cars when they are handled solely for the benefit of the owner and not for revenue purposes. Indeed, failure to make such charges would be a violation of section 6(7) of the Interstate Commerce Act as a transportation of property without compensation. Compare Use of Private Passenger Train Cars, 155 1.C.C. 775. The question presented here 18 whether the three described categories of empty freight car movements are for revenue purposes, rather than solely for the benefit of the freight car owners who direct and control the movements.

The examiners conclude that some of the types of movements designated are sufficient ly disconnected from the revenue

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producing business of a railroad as to justify respondents' efforts to apply direct charges for those movements. A freight car manufacturer who ships an empty new car to its distant customer is primarily delivering a product, The respondents' analogies of this kind of movement to a railroad's placing per diem cars into interchange service as instrumentalities of transportation are tenuous. New car shipments are performed solely for the benefit of the seller or buyer. The buyer may need the car, and use it, essentially for storage of product or raw materials, or for other basically intraplant uses not directly related to line-haul transportation. It is only when the buyer commits the car to performance of transportation that it actually becomes a part of the national freight car fleet. It is true that all new privately-owned freight cars probably will soon become transportation revenue producing instrumentalities, but that likelihood is not a certainty until the cars actually have been loaded and moved in transportation service.

The above rationale applies equally to cars that in the terms of the suspended tariff, are "newly acquired", "newly constructed", or "rebuilt". and are moving empty prior to their first loaded movement. Their commitment to belonging to a fleet of freight cars entitled to "free" movement under an equalization rule, as part of a quasi national freight car fleet analogous to the national per diem fleet, takes place with their first loaded movement following acquisicion, construction or rebuilding.

Similarly, the movement of empty freight cars for sale or scrapping is for all practical purposes a deliberate removal of those cars from participation in freight transportation. There is no overriding reason for considering these shipments as movements of instrumentalicies of transportation. In comparison, the railroads apply the considered mileage charges to new railroad-oned cars prior to their first loaded movements, anu co empty rai Ircad-owned cars when moved for sale or scrapping. Similar treatment is fully warranted for the privately-owned cars involved in this proceeding.

The suspended tariff would alsс make subject to published charges those empty movements "to or from facilities for lining, relining or modification". Respondents argue that the lining of a new car is but one step in the process of manufacture and accordingly that such a car has not yet become an instrumentality of transportation. They maintain further that a lining or relining is a relatively long-term improvement distinguishable from routine repairing or maintenance. These arguments prove too much. If the initial lining process is indeed a part of the process of manufacture, then the movement should be classified as a movement of a newly constructed car prior to first loaded movement. On the other hand, if the car has been placed into service as an instrumentality of transportation, the replacement of its lining would appear to be more of a routine repair than a rebuilding. Even though the lining installed in a covered hopper would normally last a long time, the process of relining has noć been shown to be so major a transformation as to interrupt the commitment of that car to the national freight car fleet. The record contains no unambiguous definition of what respondents mean by a movement for modification". The closest thing to a

definition to emerge was that a modification would include a change in the characteristics of the car (volume, type, et cetera) or a structural change of such magnitude as to cause an adjustment in the capital base. Despite that effort of respondents, the examiners are at a loss to know precisely what movements would be covered by the term and what movements would be excluded.

In general, the examiners conclude that except for the provisions relating to movements for lining, relining or modification, respondents have shown their proposal for mileage charges for specified freight car movements to be a just and reasonable proposal. The propriety of tariff charges for the movement of railway equipment on its own wheels has been recognized by the Commission in the past when circumstances have warranted such charges, as when such cars are not in use by the railroads in interchange service. Compare Use of Private Passenger Train Cars, supra.

Protestants make the further argument that the tariff charges of 39 cents and 35 cents per mile which would apply to these empty movements are exhorbitant, unjust, and unreasonable. In essence, they maintain that respondents have failed to sustain their burden of proof since they have not presented evidence to justify these particular levels of the mileage charges. Protestants' contentions are not well taken. While it is true that the respondents have not presented cost analysis evidence to justify the specific levels of charges applicable to these movements, such a showing is not a necessary element in respondents' case. The 39-cent and 35-cent rates are embraced in a classification tariff lawfully on file and in effect, and they are applied to other nonrevenue movements of freight cars that are fully analogous to those shipments under consideration here. The railroads themselves pay these charges for their comparable movements of new freight cars. In the circumstances, the examiners conclude that the respondents have shown the proposed mileage charges to be just and reasonable.

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Protestant Manufacturing Chemists' Association, Inc. (MCA) contends that existing allowances for private hopper cars are less than compensatory and that the Commission should now prescribe new allowances more closely related to the respective costs and responsibilities of the carriers and the shippers furnishing such cars. MCA proposes, for Commission prescription, a new 6-level structure of allowances related to the depreciated reproduction values of the covered hopper cars even if only on an interim basis until a "permanent schedule of allowances can be justified. Certain other protestants who furnish covered hoppers to the railroads for

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