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ATCHISON, TOPEKA AND SANTA FE RAILWAY CO. v. U.S.

August 20, 1965

THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY ET AL., PLAINTIFFS,
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS.



Before Castle, Circuit Judge, and Hoffman and Decker, District Judges.

The opinion of the court was delivered by: Julius J. Hoffman, District Judge.

  Piggyback service — the movement of highway trailers on railroad flatcars — constitutes "probably the most significant recent development in transportation", in the opinion of the Interstate Commerce Commission. Because of the "explosive growth" of this service in the past five years, the Commission in 1962 instituted on its own motion a proceeding to investigate the subject generally and "to explore new approaches" 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 Service), Ex Parte No. 230, reported at 322 I.C.C. 301-417, dated March 16, 1964, rehearings denied June 22, 1964, and December 21, 1964. By this Report and Order, the Commission promulgated eight rules intended to regulate trailer-on-flatcar (TOFC) service. These Rules, herein referred to simply as Rules 1 through 8, are officially designated 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 Commission's order on the ground that four of the eight rules issued by the Commission are beyond its authority and unlawful.*fn1 Pursuant to Sections 2284 and 2321 through 2325 of the Judicial Code,*fn2 the matter has been tried before a three-judge court. We conclude that the Commission'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 freight forwarders. For the defense, the American Trucking Associations, Inc., and some of its members, the Contract Carrier Conference, and the National Auto Transporters Association all intervened to join as defendants with the Commission and the United States. Despite this multiplicity, the several plaintiffs are agreed on the main point of the railroads' controversy with their rivals, the truckers, and in their objections to the Commission's new rules.

The primary issue to be decided is the validity of Rules 2 and 3, promulgated by the Commission in its proceeding by a divided vote. Briefly glossed, they require a railroad which offers TOFC service on an open-tariff basis, that is, to the regular shipping public, to make that service available on the same terms without discrimination to motor carriers*fn3 acting in that capacity in hauling freight, and, as a corollary, authorize the motor carriers to substitute this TOFC service of the railroads for their regular highway transportation by truck. In full, these rules provide:

  500.2 Availability to all of TOFC service. — TOFC
  service, if offered by a rail carrier through its
  open tariff publications, shall be made available to
  any person at a charge no greater and no less than
  that received from any other person or persons for
  doing for him or them a like and contemporaneous
  service in the transportation of a like kind of
  traffic under substantially similar circumstances and
  conditions.
  500.3 Use of open-tariff TOFC service by motor and
  water carriers in the performance of economically
  regulated transportation. —
  (a) Except as otherwise may be prohibited by these
  rules, motor common and contract carriers, 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 published by a rail
  carrier.
  (b) Motor and water common carriers shall utilize
  open-tariff TOFC service only if their tariff
  publications give notice that such service may be
  utilized at their option, but that the right is
  reserved to the user of their services to direct that
  in any particular instance TOFC service shall not be
  utilized.
  (c) Motor and water contract carriers shall utilize
  open-tariff TOFC service only if their transportation
  contracts and schedules make appropriate provision
  therefor.
  (d) Tariffs of motor and water common carriers 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 the names of the rail
  carriers whose TOFC service may be utilized.
  (e) Motor and water common and contract carriers
  utilizing open-tariff TOFC service in the performance
  of authorized transportation shall tender traffic to
  and receive traffic from rail carriers only at points
  which the motor and water carriers are authorized to
  serve.

These Rules break new ground. To the present time, the available TOFC service has been divided among five categories or "plans" which have evolved from the carriers' practices and the Commission's rulings. As capsulized in the Commission's Report, the five plans involve the following arrangements:

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.

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 truckers.

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
  ...

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