to them. The Intervening Defendants, U.S. railroads, support the Commission's findings that the proposed allowances are in the nature of a rebate and inextricably intertwined with the joint through international rate. While plaintiffs choose to call the proposed allowances "local," it is clear that the allowances are not to be paid for shipments destined within Canada. Plaintiffs have not disclosed why the rationale for better utilization of hopper cars is not equally applicable to inter-Canadian shipments. There are no "local" rates applicable to shipments of potash from Canada to the United States. Only the joint through rate applies to such shipments. While the court does not here decide any question of sufficiency of evidence to support the Commission's Order, it is readily apparent that the Commission's conclusion that the proposed schedules are inextricably intertwined with the joint through international rate is not devoid of rational foundation. Even if we made such a finding, however, this would not of itself justify the Commission's exercise of jurisdiction herein.
III. Consideration of I.C.C.'s jurisdiction over the tariff schedules disputed herein must begin with Section 1(1) of the Interstate Commerce Act, 49 U.S.C. § 1(1), which as relevant here provides that rail carriers are subject to regulation if they engage in transportation "from or to any place in the United States to or from a foreign country, but only insofar as such transportation . . . takes place within the United States."
Plaintiffs rely upon the limiting language emphasized above as the basis for their contention that the tariff schedules here in dispute are beyond the jurisdiction of the Commission because the tariffs by their terms apply only to transportation in Canada (albeit only on shipments bound for the United States.) The Commission relies primarily upon two recent Supreme Court decisions, Canada Packers v. Atchison, Topeka and Santa Fe Ry. Co., 385 U.S. 182, 87 S. Ct. 359, 17 L. Ed. 2d 281 (1966) and H. K. Porter Co. v. Central Vermont Co., 366 U.S. 272, 81 S. Ct. 1341, 6 L. Ed. 2d 284 (1961), for the proposition that it has "jurisdiction over joint international through rates"
and therefore jurisdiction over all aspects of those rates, including the tariffs here challenged. The Court finds the Commission's reading of Canada Packers and H. K. Porter far too broad and inconsistent with the express statutory limitations in the definition of I.C.C. jurisdiction.
In Canada Packers, a U.S. railroad had entered into a joint through international rate with Canadian railroads, which rate the Commission subsequently found to be unreasonable.
The Commission ordered the U.S. railroad to pay reparations in the full amount by which the joint rate exceeded a reasonable rate, considering both the Canadian and U.S. segments of the trip. The Seventh Circuit Court of Appeals held that the Commission was without jurisdiction to determine the reasonableness of freight rates for transportation taking place in Canada and therefore had no power to order reparations with respect to the Canadian portion of the trip. In reversing the Court of Appeals and affirming the Commission's exercise of jurisdiction, the Supreme Court said:
where a carrier performing transportation within the United States enters into a joint through international rate covering transportation in the United States and abroad, the Commission does have jurisdiction to determine the reasonableness of the joint through rate and to order the carrier performing the domestic service to pay reparations in the amount by which that rate is unreasonable. 385 U.S. at 183-184, 87 S. Ct. at 360.
Thus the Supreme Court has held that the Commission does have jurisdiction to determine the reasonableness of an entire joint through international rate. We believe, however, that this is a far more limited holding than the Commission contends here. The Supreme Court did not say that the Commission has plenary powers over joint through international rates.
For in the same sentence the Court found the Commission's remedial powers limited to requiring the domestic carrier to pay reparations. It is significant that the Commission in Canada Packers had not sought reparations from or taken any direct action against the Canadian carrier. Nor has the Commission cited to the Court one instance where it had ever taken any direct action against a foreign carrier for actions in a foreign country, regardless of whether or not such actions affected U.S. commerce or involved joint through international rates.
It is in this significant respect that the present case differs from Canada Packers, for here direct action against a foreign carrier is the logical next step to the Commission's assertion of jurisdiction.
In H. K. Porter, the Commission had found unreasonable a joint through international rate, and had ordered the participating Canadian and U.S. railroads "according as they participate in the transportation within the United States," to take "action . . . to cease their participation . . . ." 366 U.S. at 274, 81 S. Ct. 1341, 1343. A Three-Judge District Court had set aside the Commission's Order on the ground that the Commission was attempting to regulate rail transport in Canada beyond the Commission's jurisdiction. The Supreme Court agreed with the Commission. The Court emphasized that the remedial provisions of the Commission's Order ran only against transportation within the United States. The Court noted that "the Commission's power to forbid unlawful rate discrimination is in no way diminished because the rates are published as joint through rates or combinations through rates." 366 U.S. at 275, 81 S. Ct. at 1343. Yet, as in Canada Packers, the Court implied that the Commission's remedial powers cannot extend to direct control of the Canadian part of the transportation.
The conclusion follows that just as the jurisdiction of the Commission is in no way diminished because international rates are involved, neither is that jurisdiction thereby extended beyond "transportation (which) takes place within the United States."
This reading of the limitations upon the Commission's jurisdiction is well supported by decisions of both the Commission and the Courts. In prescribing new rules in 1970 for joint through international rates, the Commission noted that "Canadian or Mexican carriers file with us, if they so desire, the tariffs establishing joint rates with our domestic carriers, and we do not thereby obtain jurisdiction over those foreign carriers."
The Commission has repeatedly held that it has "no jurisdiction to prescribe international rates for application partly within Canada . . . ." Thermoid Co. v. B. & O. Railroad Co., 303 I.C.C. 743, 752 (1958)
and that its powers over such rates are limited, as in Canada Packers, to holding domestic carriers responsible for reparations for past unreasonable international rates.
Upon these considerations we find that the Commission has no jurisdiction to take remedial or punitive action directly against the plaintiff Canadian railroads for introduction of the proposed tariff schedules. If in subsequent proceedings the Commission should find that the new schedules result in an unreasonable joint through international rate, it remains free to take corrective action such as assessing reparations from domestic U.S. carriers participating in such rates. Since we find the Commission without jurisdiction over this case, the Order striking the proposed tariff schedules from I.C.C. files appears to be of no consequence. It is unnecessary, therefore, for the Court to set aside said Orders or otherwise enjoin the Commission. It appears to the Court that Declaratory relief alone will suffice to resolve this matter.
Judgment for plaintiffs shall be entered accordingly.