The opinion of the court was delivered by: Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiff CO-OPerative Shippers, Inc. ("CO-OP) is an
association of shippers which consolidates the freight of its
members and tenders the combined loads to line-haul motor and
rail carriers, thereby obtaining for its members the benefit of
the carriers' reduced transportation rates for volume shipping.
In March of 1983, CO-OP delivered a trailer to defendant The
Atchison, Topeka and Santa Fe Railway Company ("Santa Fe") for
trailer-on-flatcar ("TOFC") shipment from Chicago, Illinois, to
Richmond, California. The train carrying the trailer derailed in
Oklahoma, damaging the trailer's cargo, and CO-OP filed this
action to recover the actual value of the damaged goods. Santa Fe
has admitted liability for the loss, but it disagrees as to the
rate at which it should reimburse CO-OP. Rather than the full
actual cost of the damaged freight, Santa Fe maintains that its
liability is limited to a "released rate" of $.35 per pound.
Presently before the Court are the parties' cross-motions for
summary judgment. For the reasons set forth below, CO-OP's motion
is granted in part and denied in part, and Santa Fe's motion is
A. Common Law Liability of Carriers
At common law, a carrier's liability for damage to goods
transported by the carrier was virtually unlimited. Though not an
absolute insurer, the carrier was liable to the shipper for the
full extent of the damage unless it was caused by an act of God,
a public enemy, the shipper, public authority or the inherent
vice or nature of the goods themselves. E.g., Missouri Pacific
Railroad Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142,
1144, 12 L.Ed.2d 194 (1964).*fn1 Courts refused to enforce
exculpatory agreements between carrier and shipper purporting to
relieve the carrier from all liability for property damage caused
by the negligence of the carrier or its servants; such contracts
were deemed to violate public policy because they tended to
induce carelessness on the carrier's part. Adams Express Co. v.
Croninger, 226 U.S. 491, 509-10, 33 S.Ct. 148, 153-54, 57 L.Ed.
However, common law did permit the carrier and shipper to agree
to merely limit — rather than eliminate completely — the
carrier's liability for property loss or damage, so long as the
shipper granted the limitation in consideration for a lower
transportation rate than would reasonably be charged for the
carrier's unlimited liability. Id.; Hart v. Pennsylvania Railroad
Co., 112 U.S. 331, 340, 5 S.Ct. 151, 155, 28 L.Ed. 717 (1884).
Such agreements were justified on the grounds that the carrier
was entitled to know its potential liability for property loss
and to be compensated in proportion to the risk it assumed.
Therefore, if a contractual limitation of liability was the
result of a "fair, open, just and reasonable agreement" between
carrier and shipper, entered into by the shipper "for the purpose
of obtaining the lower of two or more rates of charges
proportioned to the amount of risk," Croninger, 226 U.S. at
509-10, 33 S.Ct. at 153, and if the shipper was given "the option
of higher recovery upon paying a higher rate," Boston & Maine
Railroad v. Piper, 246 U.S. 439, 444, 38 S.Ct. 354, 355, 62 L.Ed.
820 (1918), the agreement was enforceable at common law.
B. Statutory Law Before Deregulation
Congress codified these common law principles in 1906 when it
passed the Carmack Amendment to the Interstate Commerce
Act ("the Act").*fn2 Although the Carmack Amendment provided that no
contract, rule, receipt or regulation could exempt a carrier from
full liability, the courts continued to uphold reasonable
released-rate agreements. Croninger; see also Boston & Maine
Railroad v. Hooker, 233 U.S. 97, 34 S.Ct. 526, 58 L.Ed. 868
(1914); Kansas City Southern Railway Co. v. Carl, 227 U.S. 639,
33 S.Ct. 391, 57 L.Ed. 683 (1913).
Carriers frequently evaded the Carmack Agreement's restrictions
by publishing reduced rates based upon released values and
setting full value rates at prohibitively high levels,
effectively denying shippers any real choice. I.C.C. Report to
Congress, 8. Congress responded in 1915 by passing the First
Cummins Amendment to the Act, prohibiting all released-rate
agreements except when the goods were concealed and their
character was unknown to the carrier. However, within a year
Congress determined that the First Cummins Amendment was too
restrictive. In 1916 it passed the Second Cummins Amendment,
returning to the common-law practice of allowing released rates
but only when such rates were approved in advance by the I.C.C.
and only with "value of the property."*fn3 This statutory scheme
lasted until the passage of the Staggers Rail Act of 1980.
C. Deregulation Under the Staggers Act
In October 1980, Congress enacted the Staggers Rail Act of 1980
in order to improve the economic and competitive conditions of
the national rail system "through financial assistance and
freedom from unnecessary regulation." H.R.Cong.Rep. No. 1430,
96th Cong., 2d Sess. 80 (1980), reprinted in 1980 U.S.Code Cong.
& Ad. News 3978, 4110-11. Among other changes, the Staggers Act
amended 49 U.S.C. § 10730, making § 10730(a) inapplicable to rail
carriers and adding a new subsection (c) specifically relating to
rail carriers. Section 10730(c) allows rail carriers to offer
released rates without first obtaining I.C.C. approval, and it
omits the provision that the released rate must be "reasonable
under the circumstances."*fn4
The Staggers Act also amended the I.C.C.'s authority to exempt
carriers from regulation. Revised § 10505 directs the I.C.C. to
grant an exemption when it finds that, with respect to a person,
class of persons, or a transaction or service, regulation
(1) is not necessary to carry out the transportation
policy of section 10101a of this title;*fn5 and
(2) either (A) the transaction or service is of
limited scope, or (B) the application of a provision
of this subtitle is not needed to protect shippers
from the abuse of market power.
Moreover, § 10505(f) singled out "transportation that is provided
by a rail carrier as part of a continuous intermodal movement" as
a service particularly appropriate for deregulation. Acting
pursuant to these directions from Congress, the I.C.C. exempted
from regulation rail and truck transportation provided by rail
carriers in ...