The opinion of the court was delivered by: KNOX
The plaintiff National Electrical Manufacturers Association (NEMA) and four of its members bring this action to set aside a decision and order of the Interstate Commerce Commission (Commission) upholding railroad rates for transportation of heavy electrical equipment. See 349 I.C.C. 502, Docket No. 35,380. This action was brought against the United States as defendant pursuant to 28 U.S.C. § 2322, and the Commission has appeared as a defendant pursuant to 28 U.S.C. § 2323. The railroads also are defendants in this action, being permitted to intervene under 28 U.S.C. § 2323.
The plaintiffs, other than NEMA, are manufacturers of transformers, generators, turbines, motors and related apparatus, which they ship from various points in the East and South to destinations throughout the United States. This suit involves the applicable rates for equipment of this type that exceeds 75,000 pounds per unit in weight, and which in some cases exceeds 300,000 pounds per unit.
Because of the large size and weight of this equipment, the use of heavy capacity and special type railroad cars is required. The exceptionally heavy equipment is transported on special flatcars furnished by the shippers.
This action is an appeal from the finding of the Commission in No. 35,380, NEMA, et al v. Aberdeen and Rockfish Railroad Company, et al, that the assailed rates were not shown to be unjust and unreasonable in violation of § 1(5) of Title 49. These plaintiffs, as well as other shippers not a party to this proceeding, had sought reparations for excessive charges and the prescription of lower rates for the future. The Commission denied relief. Plaintiffs, before the Commission and in this proceeding, have assailed the present railroad rates for transportation of this heavy electrical equipment as unreasonably high, both relative to other commodities and per se, as bearing a disproportionate and unreasonable share of the transportation burden. They also assail the allowance of four cents per mile for the use of shipper-owned cars as unreasonably low and seek, instead, a reduced rate for those shipments with no mileage allowance. In this appeal from the decision and order of the Commission, this three-judge district court
was convened in accordance with the provisions of 28 U.S.C. §§ 1336, 2284, and 2321-2325.
The scope of review of decisions of the Interstate Commerce Commission is well established, and little exposition is needed here. In Atchison, T. & S. F. R. Co. v. Wichita Board of Trade, 412 U.S. 800, 93 S. Ct. 2367, 37 L. Ed. 2d 350 (1973), the Supreme Court stated:
"Judicial review of decisions by the Interstate Commerce Commission in rate cases necessarily has a limited scope. Such decisions 'are not to be disturbed by the courts except upon a showing that they are unsupported by evidence, were made without a hearing, exceed constitutional limits, or for some other reason amount to an abuse of power'. Manufacturers R. Co. v. United States, 246 U.S. 457, 481 (38 S. Ct. 383, 389) (62 L. Ed. 831) (1918). As this court has observed, 'The process of rate making is essentially empiric. The stuff of the process is fluid and changing -- the resultant of factors that must be valued as well as weighed. Congress has therefore delegated the enforcement of transportation policy to a permanent expert body and has charged it with the duty of being responsive to the dynamic character of transportation problems.' Board of Trade of Kansas City v. United States, 314 U.S. 534, 546 (62 S. Ct. 366, 372) (86 L. Ed. 432) (1942)." [Footnote omitted].
In United States v. Pierce Auto Freight Lines, 327 U.S. 515, 66 S. Ct. 687, 90 L. Ed. 821 (1946), we are told:
"(The function of the reviewing court) is limited to ascertaining whether there is warrant in the law and the facts for what the Commission has done. Unless in some specific respect there has been prejudicial departure from requirements of the law or abuse of the Commission's discretion, the reviewing court is without authority to intervene. It cannot substitute its own view concerning what should be done . . . for the Commission's judgment upon matters committed to its determination, if that has support in the record and the applicable law."
The test is whether the Commission's action is supported by substantial evidence on the record considered as a whole. 5 U.S.C. § 706; Consolo v. Federal Maritime Com., 383 U.S. 607, 86 S. Ct. 1018, 16 L. Ed. 2d 131 (1966).
I. SHIPPING RATES USING RAILROAD-SUPPLIED CARS.
About ninety per cent or more of the shipments we are concerned with in this case are transported on railroad-owned equipment. In general, however, the heaviest and most bulky items are transported on shipper-owned cars. Of the studied 1,616 shipments in the year 1968, the 1,550 shipments which moved in railroad-owned cars weighed an average of 136,798 pounds per car, while the remaining 66 shipments transported in shipper-owned cars averaged 459,294 pounds per car. The railroads have a substantial investment in cars for transporting heavy electrical equipment, and because of this equipment's excessive weight and large dimensions, it requires special handling procedures and services as will be further described below. For further elucidation of the problems of these commodities which require circuitous routing, see the learned opinion of Judge Dumbauld in Westinghouse Electric Corp. v. United States, 388 F.Supp. 1309 (W.D.Pa.1975).
Plaintiffs contend that the high freight rates applicable to their shipments of electrical equipment result from the simple fact that they are "captive" traffic of the defendant railroads, other means of transportation being impractical. Plaintiffs' evidence assailed the shipping rates in two ways. First, they compared the rates on other selected commodities. Secondly, they showed the relationship of rail revenues produced from the commodities in question to the "fully allocated costs" attributed to this traffic. The Commission rejected both of these analyses.
As to the comparison with other commodities, the Commission found the evidence unpersuasive. They found the compared commodities where also durable, manufactured goods having a predominant origin in the Eastern territory, but that otherwise they were not comparable. The Commission further concluded:
"There is no showing that each of the compared commodities have any transportation characteristics in common with complainant's heavy electrical machinery which, because of excessive dimensions in weight, necessitates (a) the use of special flatcar equipment, (b) extra rail services involving clearances of routes, inspection of freight after loading and between rail interline to insure continued clearances, (c) circuitous rail routing resulting from clearance problems, (d) reduced speed in transit to preclude shifting and damage to lading, (e) individual switching as opposed to normal "hump" switching to eliminate impact and thus preclude damage to freight, (f) slow turnaround and low car utilization of special equipment account lack of volume in movement of complainant's high valued commodities, (g) the abnormally high risk the carriers assume in transporting complainant's products weighing 75,000 pounds or more each, that range in value from $ 100,000 to $ 1,500,000 per article as shown in complainant's exhibit No. 3, pages 6-7, and (h) complainant's products by reason of their excessive dimensions and weight are unlike any compared commodities in that they are 100 percent captive to the rail lines and, therefore, cannot benefit from the influence of intermodal rate competition as is the case with the rail rates on the compared commodities."
Plaintiffs also assailed the rates by attempting to show that the ratio of revenues to fully allocated costs was in excess of 200 percent, or in other words, that the revenues attributable to the freight in question exceeded fully allocated costs by 100 percent. Putting aside various problems raised as to how these figures should be computed and what adjustments to the figures were appropriate, the Commission noted the lack of precedent for holding that any specific ratio of revenues to fully allocated costs was unreasonable. The Commission cited contrary authority, however, showing generally ...