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NEW YORK CENT. R.R. CO. v. UNITED STATES

April 28, 1967

The New York Central Railroad Company et al., Plaintiffs
v.
United States of America, Interstate Commerce Commission et al., Defendants



The opinion of the court was delivered by: LEVET

LEVET, D.J.:

This action was brought by the plaintiffs under §§ 1336, 1398, 2284 and 2321 through 2325 of Title 28, U.S.C. to set aside and enjoin the order of the Interstate Commerce Commission, No. 34254, April 1, 1966, cited as Application of Section 4 Requirements to Joint Motor-Rail Rates Established Under Section 216(c), 326 I.C.C. 453. The Commission's decision also embraces I & S Docket No. 7956, Petroleum, TOFC, Sewaren, N.J., to Zionsville, Ind.

The plaintiffs, The New York Central Railroad Company, The Pennsylvania Railroad Company, The Baltimore and Ohio Railroad Company, and Class I Southern Territory Railroads, are railroad corporations engaged as common carriers in the transportation of property and passengers by railroad in interstate commerce. Plaintiff, Spector Freight System, Inc., is a certificated common carrier engaged in the transportation of property by highway in interstate commerce. Plaintiff, The New York Central Railway Company, is a Delaware corporation with principal offices in New York County, New York, N. Y., and therefore venue properly lies in this court. Plaintiffs, Baltimore and Ohio Railroad Company and Class I Southern Territory Railroads, intervened in ICC No. 34254 and were parties to the proceeding before the Commission. The Louisville and Nashville Railroad Company and the Chesapeake and Ohio Railroad Company filed briefs before the Commission in support of plaintiffs' position. The Port of New York Authority, Eastern Central Motor Carriers Association, Waterways Freight Bureau, Acme Fast Freight, Inc., National Carloading Corporation, Pacific and Atlantic Shippers, Springmeier Shipping Co. and Universal Carloading & Distributing Company, Inc., intervening defendants, filed briefs in opposition both before the Commission and in the instant proceeding. Except for the Port of New York Authority, the intervening defendants are motor carriers or freight forwarders engaged in the transportation of freight in interstate commerce. It is interesting to note that not a single private shipper appears in opposition.

 Pursuant to §§ 2321 through 2325 of Title 28, U.S.C., this review was heard before this three-judge court.

 The controversy involves joint rail-motor rates maintained, or to be maintained, by plaintiffs and certain motor carriers - more particularly joint rates for trailer-on-flat car ("TOFC" or "piggyback") service. Two categories of TOFC service, out of the five which have evolved from the carriers' practices and the Commission's rulings, are involved herein, i.e., Plans II and V as described in Substituted Service - Charges & Practices of For-Hire Carriers & Freight Forwarders, 322 I.C.C. 301, 304-05 (1964) (hereinafter "Substituted Service") [Reversed by Atchison v. U.S. ('65), 244 F. Supp. 955]. Under Plan II TOFC, the entire door-to-door service is provided by the railroad under a single bill of lading, moving its own trailers or containers on flatcars, under tariffs usually similar to those of truckers. It is generally limited to local pick-up and delivery and is regulated under Part I of the Interstate Commerce Act (Sections 1-27 inclusive of Title 49, U.S.C.). Plan V TOFC, however, involves through motor-rail or motor-rail-motor services, with independent line-haul motor carriers at one or both rail terminals and joint rates applicable only over the through route or routes, the motor carriers being subject to Part II of the Interstate Commerce Act, Sections 301-327, inclusive, Title 49, U.S.C. Either the railroad or the motor carrier may originate or deliver a Plan V shipment, which may move on either a rail or motor bill of lading depending on which carrier originates the shipment. The railroad provides only ramp-to-ramp service, or either the pick-up or delivery but not both. *fn1"

 The New York Central case (ICC No. 34254) arose from a Petition For A Declaratory Order filed by plaintiff New York Central with the Commission pursuant to Section 5(d) of the Administrative Procedure Act (Section 1004(d) of Title 5, U.S.C.). The railroad has established a Plan II TOFC rate on air coolers from Louisville, Kentucky, to New York City, of $1.52 per 100 pounds. It has a Plan V rate of $1.48 per 100 pounds from Louisville to Trenton, New Jersey, by way of New York City, the New York City-to-Trenton run being handled by motor carrier. The Pennsylvania Railroad has a direct route from Louisville to Trenton and offers a Plan II rate of $1.48 per 100 pounds for that route. Obviously, New York Central's Plan II TOFC rate is greater for the shorter route from Louisville to New York City than its Plan V TOFC rate for the longer route from Louisville to Trenton via New York City. On January 17, 1963, the Secretary of the Commission advised the New York Central that the joint rail-motor TOFC rates from Louisville to Trenton (Plan V), which were lower than the all-rail TOFC rates from Louisville to New York (Plan II), constituted a violation of the long- and short-haul clause of Section 4(1) of Part I of the Interstate Commerce Act (Section 4(1) of Title 49 U.S.C.). *fn2" The railroad thereafter filed its petition for a declaratory order (a) that Section 4 does not apply to the joint rates filed jointly by the railroad and the motor carriers, and (b) that, even if Section 4 does apply, it has not been violated because the services rendered by the railroad under the two sets of tariffs (Plans II and V) differ. By a six-to-five vote, the Commission rejected the recommended report and order of its hearing examiner supporting the railroads, and decided against the railroads on both issues. On its own motion, the Commission also raised and answered a third point, holding that competition with the Pennsylvania Railroad's Plan II service between Louisville and Trenton did not entitle the New York Central to automatic relief under the second ("circuity") proviso of Section 4(1) for its Plan V service. *fn3"

 The second ICC order (I & S Docket No. 7956) resulted from a proceeding against the Pennsylvania Railroad and the Spector Freight System, Inc., charging that certain joint tariffs they filed violated Section 4(1) of the Act. The Pennsylvania Railroad published reduced joint motor-rail-motor TOFC rates in connection with plaintiff Spector Freight System, Inc., a certificated motor carrier, the rates to apply on petroleum and petroleum products from Sewaren, New Jersey, to Zionsville, Indiana. The Pennsylvania also maintained a higher all-rail TOFC rate between Kearny, New Jersey, and Indianapolis, Indiana. Accordingly, the Commission suspended the proposed motor-rail-motor rate, since that rate would operate from Sewaren to Zionsville over the Pennsylvania Railroad between Kearny and Indianapolis and would appear to violate the long-and short-haul clauses of Section 4(1). The question of the application of the "circuity" proviso of that Section has not been raised in this latter case.

 The Commission's hearing notice of September 16, 1963, set forth two issues to be determined:

 
"1. Whether motor-rail or motor-rail-motor rates are subject to the provisions of section 4 of the Interstate Commerce Act, and
 
"2. Whether the services performed in connection with plan II and plan V trailer-on-flatcar rates differ to such an extent that no violation of the fourth section results."

 Since we conclude that motor-rail or motor-rail-motor rates are not subject to the provisions of Section 4, it is not necessary for us to reach any determination of the second issue posed.

 The keystone to the Commission's majority report is its decision in Motor-Rail-Motor Traffic in East and Midwest, 219 I.C.C. 245 (1936), handed down shortly after the passage of the Motor Carrier Act of 1935, and followed in a number of decisions from 1937 through 1955. *fn4" However, none of these decisions has been subject to judicial review.

 The sum and substance of the Commission's decision in Motor-Rail-Motor Traffic, supra, is that:

 
"While Section 4 does not apply to the charges of motor common carriers, when such a carrier joins in a through route and joint rates with a railroad, it becomes a participant with the railroad in a movement which is subject to that section. Motor common carriers are not required to join with rail carriers in such routes and rates but, having voluntarily entered into such a joint arrangement, the motor carrier assumes obligations similar ...

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