Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

CENTRAL OF GEORGIA R.R. CO. v. UNITED STATES

August 7, 1974

CENTRAL OF GEORGIA RAILROAD COMPANY et al., Plaintiffs,
v.
The UNITED STATES of America and the Interstate Commerce Commission et al., Defendants



The opinion of the court was delivered by: MCGOWAN

Plaintiff rail carriers challenge certain orders entered by the Interstate Commerce Commission in rate proceedings under the Interstate Commerce Act, 49 U.S.C. ยง 1ff. Those proceedings are characterized by the Commission as involving "a situation which to our knowledge has not heretofore been presented for our consideration in a formal proceeding," namely, the invocation of Section 15(7) of the Act to change a tariff by terminating a multiple-car rate. *fn1" The novelty of the issue has prompted the Commission to reformulate the burden of proof statutorily imposed upon a carrier initiating a rate alteration under Section 15(7), and, by reference to such revised burden, to invalidate the new schedule. In so doing, we think the Commission has failed to reflect accurately the legislative scheme of rate regulation embodied in the Act, particularly Sections 15(1) and 15(7) thereof. For the reasons set forth hereinafter, the prayer of the complaint for an injunction against the Commission's action is granted.

I

 Under the Interstate Commerce Act, as in so many regulatory statutes modeled upon it, it is the regulated utility that sets the rate in the first instance, subject always to the statutory standards of justness and reasonableness, and the avoidance of discriminatory or preferential treatment. A question of justness and reasonableness may be raised either as to a rate already lawfully in effect, or on the occasion of a proposal by the carrier to effect a change in an existing rate.

 Section 15(7), by contrast, is directed to the circumstance where a carrier proposes to make a change in an existing rate. *fn3" It provides that, whenever such a change is filed with the Commission, the latter may, upon complaint or upon its own initiative, enter upon a hearing with respect to the lawfulness of the proposed rate. Pending hearing and decision of that question, the Commission may suspend the operation of the new rate, but not for longer than seven months. Whether the hearing is completed before or after the expiration of the suspension period (at which time the carrier may begin to charge the new rate), the Commission may make such order with respect to the new rate as it could under Section 15(1) with respect to an existing rate. If the Commission has not acted before the new rate becomes effective, it may, in the case of an increased rate, enter an accounting order requiring the carrier to keep track of the additional amounts received because of the increase; and it may direct refund of such portions of the increase as it may ultimately find to be unlawful. At any hearing involving a change in the applicable rate under Section 15(7), the statute expressly places the burden of proof upon the carrier to show that the proposed change is just and reasonable.

 It will be noted from the foregoing that the Commission's power to prescribe what the future rate shall be, or to set minimum and maximum limits within which a rate will be deemed to be lawful, comes into being only when the Commission has found the existing or the proposed rate, as the case may be, to be unjust and unreasonable. The provision with respect to minimum and maximum limits is also significant because it reflects the concept that there may be circumstances in which any one of several rates would be equally lawful, falling as they may within what the Supreme Court has termed "a zone of reasonableness . . . within which a carrier is ordinarily free to adjust its charges for itself." United States v. Chicago, M. St. P. & P. Ry., 294 U.S. 499, 506, 55 S. Ct. 462, 465, 79 L. Ed. 1023 (1935); and see Atchison, T. & S.F.R.R. v. Wichita Bd. of Trade, 412 U.S. 800, 812-814, 93 S. Ct. 2367, 37 L. Ed. 2d 350 (1973).

 The factors that enter into a determination by the Commission of justness and reasonableness have been identified in many Commission and court decisions interpreting the purposes entertained by Congress in its employment of that concept. One obvious consideration is the relationship between the rate and the cost of providing the service. A factor closely related to this is the question of whether an increased rate will result in a decline in the volume of the traffic in question by reason of the inability of the traffic to bear the increase or because other means of carriage will become available. Another area of inquiry is the extent to which the rate is justified or necessitated by competitive circumstances.

 The question of who has the burden of proof on these and related issues is of critical importance. As we have seen, where the carrier is proposing a change in rate, Congress has expressly placed the burden upon it to show the justness and reasonableness of the proposed change. Contrarily, where the Commission moves to investigate the lawfulness of an existing rate and, having found it unlawful, prescribes a new one, the burden of proof is upon those who raise the challenge to the old rate and who seek the new prescription.

 II

 This controversy involves the rates charged by the plaintiff rail carriers for the transportation of kaolin clay from the Toomsboro District of Georgia to the ports of Savannah and Port Wentworth, Georgia. *fn4" This movement is for export, as is also a rail movement of the clay from Toomsboro to Port Royal, South Carolina. Initially the export rate to the Georgia ports was $3.50 per ton on a minimum carload weight of 30 tons. In 1961 the carriers offered a new rate of $3.34 per ton for a single-car shipment with a minimum weight of 50 tons; and in 1962 a multiple-car rate of $2.88 per ton was made available for 10 or more such cars moving at the same time from Toomsboro to the Georgia ports. This last-mentioned rate was concededly made only for the purpose of responding to the complaint of the Toomsboro shippers that they were in competition with export clay producers in South Carolina who had a $2.88 per ton single-car rate to Savannah.

 Intervening general rate increases had by 1969 brought the export rates from Toomsboro to the Georgia ports to levels of $3.18 per ton for a multiple-car shipment with a minimum of 500 tons; $3.68 per ton for a single-car shipment with a minimum of 50 tons; and $3.96 for single-car shipments with a minimum of 30 tons.

 Port Royal, South Carolina, is a port which competes with the Georgia ports for export clay from Toomsboro. Complaint was made to the carriers in 1969 that the multiple-car rate from Toomsboro to the Georgia ports afforded the latter an undue preference, to the prejudice of Port Royal. In the course of investigating this complaint the carriers came to believe that there were no continuing competitive conditions which justified the multiple-car rate. They also purported to find that the multiple-car rate was in fact not warranted by lower operating costs, and they concluded that termination of the multiple-car rate would have no significant adverse effect on the volume of shipments from Toomsboro to the Georgia ports. For these reasons, and because of their need for additional revenues, the carriers filed tariff changes under Section 15(7) cancelling the multiple-car rate.

 Protests were forthcoming from the intervening defendants in this proceeding -- the Georgia Ports Authority, the operator of the port facilities at Savannah and Port Wentworth, and United States Clay Producers Traffic Association, Inc., a trade association representing the Toomsboro shippers. The new tariffs were suspended for the full seven-months period, and an investigation instituted. *fn5" The suspension period ended after the submission of evidence and briefs but before decision, and the new tariffs become effective. *fn6" ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.