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BALTIMORE & OHIO CHICAGO TERMINAL v. U.S.

February 20, 1967

THE BALTIMORE AND OHIO CHICAGO TERMINAL RAILROAD COMPANY, THE BALTIMORE AND OHIO RAILROAD COMPANY, CHICAGO, MILWAUKEE, ST. PAUL AND PACIFIC RAILROAD COMPANY, INDIANA HARBOR BELT RAILROAD COMPANY, THE NEW YORK CENTRAL RAILROAD COMPANY, PLAINTIFFS,
v.
UNITED STATES OF AMERICA AND INTERSTATE COMMERCE COMMISSION, DEFENDANTS, AND ATCHISON, TOPEKA AND SANTA FE ET AL., INTERVENING DEFENDANTS.



Before Kiley, Circuit Judge, and Hoffman and Lynch, District Judges.

The opinion of the court was delivered by: Lynch, District Judge.

Memorandum of Decision

This is a suit to set aside an order of the Interstate Commerce Commission which required the cancellation of certain tariff provisions*fn1 which had been proposed by the plaintiffs in this action.

The plaintiffs Baltimore and Ohio Chicago Terminal and the Indiana Harbor Belt Railroad Company are switching or terminal carriers within the Chicago switching district.

The remaining three plaintiffs are line-haul or road-haul carriers whose lines connect with the Chicago Switching District. They are the Baltimore and Ohio Railroad Company, the Chicago, Milwaukee, St. Paul and Pacific Railroad Company, and the New York Central Railroad Company. These three plaintiffs control the two plaintiff switching carriers.

The current controversy revolves around the payment of so-called "mileage allowances." Owners of specified types of rail cars, usually those which are shipper-owned or shipper-controlled, are entitled to an allowance from the rail lines for all the miles their cars are used. At some districts there are bilateral agreements in force by which road-haul carriers pay the mileage allowance for the miles the cars travel over the tracks owned by the switching carriers. The Harbor Belt and the Chicago Terminal, however, have always paid the mileage allowance to the car owners on movements within the Chicago Switching District.

By schedules filed to become effective in 1963, the Harbor Belt and the Chicago Terminal proposed to cancel tariff provisions authorizing the payment of mileage allowances on certain movements within the Chicago Switching District. Simultaneously, the three road-haul plaintiffs in this action proposed to pay, when any of the three received a line-haul movement, the mileage allowance which the two terminal carriers proposed not to pay.

These tariffs became effective on February 14, 1964. Additional line-haul carriers published tariffs which became effective three days later, assuming the obligation to pay the mileage allowances on their movements through the Chicago Switching District. These tariffs were established for competitive reasons pending determination of the proceedings be-for the Interstate Commerce Commission.

All five plaintiffs in the action before this court were respondents in the proceeding before the ICC. The only respondent to offer any evidence, however, was the Harbor Belt.

The Commission found that the effect of the tariff schedules proposed by the plaintiffs would be to deny the payment of mileage allowances for distances private cars move over the Harbor Belt and Chicago Terminal lines, except when moving to or from these lines via the Baltimore & Ohio, New York Central or Milwaukee roads, or for intra or inter terminal switching movements.

The Commission held that the proposal of the switching carriers was in derogation of their obligation to pay mileage allowances and that this practice violated Section 1(6) of the Interstate Commerce Act (49 U.S.C. § 1(6)).*fn2 The ultimate finding of the Commission was that the proposed schedules were not shown to be just and reasonable. The schedules were ordered cancelled.

The Harbor Belt's and the Chicago Terminal's joint petition for reconsideration was denied by order of the Commission, Division 2, acting as an Appellate Division. The plaintiffs then filed this suit to set aside the Commission order. The court entered an order staying the operation of the Commission orders until hearing and determination by a statutory court composed of three judges as required by Title 28 U.S.C. Section 2284.

Intervening as defendants in support of the ICC in this action are the American Refrigerator Transit Company and ten road-haul railroads*fn3 that connect with the Harbor Belt and Chicago Terminal. The intervening railroad defendants are competitors of the three plaintiff connecting carriers.

The plaintiffs concede that shippers or car leasing companies that furnish freight cars used in performing transportation services are entitled to be paid a mileage allowance. They contend, however, that the Harbor Belt and Chicago Terminal need not pay these allowances if the obligation is met collectively by the railroad industry. The plaintiffs insist that competitive pressures will force other road-haul carriers to pay the mileage allowance on movements within the Chicago Switching District. In other words, the argument is that shippers owning private cars entitled to ...


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