PTME PER TON MILE EARNING

BASED ON 100,000 POUNDS PER CAR.

SC RATE PLUS EX-PARTE 311 SURCHARGE OF 2.2%

EC

INTERSTATE COMMERCE COMMISSION

DECISION

No. 378091/

MC CARTY FARMS, INC., ET AL.

V.

SERVICE DATE

JUL 3 0 1982

BURLINGTON NORTHERN INC.

Decided: July 21, 1982

The purposes of this decision are: (1) to reopen the record in No. 37809, McCarty Farms, Inc., et al. v. Burlington Northern, Inc.; (2) to institute a separate proceeding, No. 37809 (Sub-No. 1), McCarty Farms, Inc., v. Burlington Northern Railroad Co., to consider separately the reasonableness of the barley rates discussed in the initial decision in No. 37809; (3) to consolidate these two proceedings with No. 37815S, Montana Dept. of Agriculture, et al. v. Burlington Northern, Inc.; and (4) to rule on Montana's motion to compel discovery filed April 22, 1982.

In No. 37809, complainants filed a class action suit in U.S. District Court, alleging that rates assessed by defendant on wheat and other grains from points in Montana to Pacific Coast_ terminals in Oregon and Washington are unreasonably high. The suit was referred to the Commission for resolution of certain issues, including maximum reasonableness of rates for wheat. In an initial decision served December 14, 1981, an Administrative Law Judge found that the challenged rates are unreasonable to the extent they exceed 200 percent of variable costs.

In No. 37809, the record has been closed and an initial decision issued; defendant's appeal of the initial decision is now pending. However, due to the circumstances of these cases and because recent decisions (referred to infra) have further defined our current approaches to various costing and jurisdictional issues where maximum reasonableness of rates is in issue, it is appropriate to reopen this proceeding.

1/This proceeding also embraces No. 37809 (Sub-No. 1), McCarty Farms, Inc. v. Burlington Northern Railroad Company and No. 37815S, Montana Dept. of Agriculture, et al. v. Burlington Northern Inc. No. 37809 (Sub-No. 1) removes the issue of reasonableness for rates on barley from the lead docket; the reasons for this administrative action are discussed in the decision.

No. 37809

When the complaint in No. 37809 was filed with the Commission, it added allegations of unreasonableness of rates for barley. Defendant argues, and complainants agree, that the barley rates are not at issue in the court suit. Complainants argue that both barley and wheat rates should be considered together, since filing a separate complaint at this Commission would be a duplication of efforts. It is true that the same tariff is involved, the origins are the same (within the state of lontana), and the destinations involve the same ports in Washington and Oregon. Nevertheless, there are two important differences which require a separate proceeding. First, the court referral case is a class action suit on behalf of all Montana wheat producers and shippers. Because the Commission's rules do not permit class action suits, the complainants for the barley rates are not a class of shippers, but only those parties specificially named in the complaint. Second, the findings on wheat in No. 37809 are recommendations to the court; the findings as to barley will result in a binding Commission order. Accordingly, two separate proceedings are warranted. The complaint filed in No. 37809 is sufficient to institute No. 37809 (Sub-No. 1).2/ We caution complainants in No. 37809 (Sub-No. 1) that, even though the proceedings are consolidated for the reasons discussed below, they should set out -specific factual contentions (origins, destinations, routings) for barley rates.

This

In No. 37815S, the issues relate to the maximum reasonableness of rates for the future for both barley and wheat. proceeding is in its initial stages. No record has been developed.

Consolidation of these three cases is necessary because the issues concern similar commodities, tariffs, origins, and destinations. The destinations in No. 37809 and No. 37809 (Sub-No. 1) are to Pacific Coast terminals in Oregon and Washington. The complaint in No. 37815S alleges the unreasonableness of rates to Portland, OR, Seattle, WA, and Minneapolis, MN. Since there are overlapping interests and similarity of issues, these proceedings should be consolidated. Because of the necessity to reopen No. 37809 and to institute and define the affected interests in No. 37809 (Sub-No. 1), there will be no undue delays by consolidating these with No. 37815S.

Under these circumstances. the Commission's decisional process would best be served by allowing the parties to tender

2/ Since the complaints in No. 37809 and in No. 37815 were filed March 27, 1981, and March 26, 1981, respectively, they are timely filed within the purview of section 229 of the Staggers Act.

No. 37809

additional evidence. The parties should be aware of regent decisions on various costing and jurisdictional issues.3/

Our decision here to reopen the record in No. 37809 follows No. 36114 (Sub-No. 1), Potomac Electric Power Company v. Consolidated Rail Corporation and related cases (unprinted), served April 7, 1982. There it is pointed out that while maximum reasonableness in Ex Parte No. 347 (Sub-No. 1) involves coal rates, the costing analysis there and the jurisdictional-related findings in Ex Parte No. 411 establish certain principles applicable to maximum reasonableness determinations in rail cases of all types. See No. 36114, page 3, fn. 6. Because the initial decision in No. 37809 preceeded these decisions (except for Ex Parte No. 320 (Sub-No.2), it could not reflect these considerations. Accordingly, the parties should submit evidence to address these matters. Additionally, the parties may discuss any other relevant issues, and specifically those affected by the Staggers Act or recent policy changes. This new evidence is being sought to develop a complete up-to-date and standard cost presentation. inference that our maximum reasonableness analysis will be confined to these data is warranted.

No

The attached appendix generally outlines the cost-related evidentiary requirements which are necessary for complete records in maximum rate proceedings. Where the type of evidence outlined in the appendix is deemed not relevant to the commodities or

3/ See, Ex Parte No. 347 (Sub-No. 1), Coal Rate GuidelinesNationwide (unprinted), served December 21, 1982, Ex Parte No. 411, Complaints Filed Under Section 229 of the Staggers Rail Act of 1980, 365 I.C.C. 507 (1982) and Ex Parte No. 320 (Sub-No. 2), Market Dominance Determinations, 365 I.C.C. 118 (1981), which reflect our current approaches to various cost and jurisdictional issues.

For example, the Ex Parte No. 347 (Sub-No. 1) decision, supra, places greater emphasis on equipment and fixed plant investment additives, provided any double count of these investments is satisfactorily eliminated. In addition, among other things, constant costs must be distributed on the ratio basis (rather than the ton/ton-mile basis), unless another method is justified. The decision in Ex Parte No. 411, supra, allows the application of the Producer Price Index to certain expenses and precludes use of the employee level adjustment in updating costs. It also addresses certain key jurisdictional issues, finding, among other things, that our new market dominance guidelines should be used.

No. 37809

transportation service, or unavailable, it need not be filed./ If the parties find that the evidence and arguments already submitted meet current requirements of Ex Parte No. 347 (Sub-No. 1), supra, and the jurisdictional conclusions of Ex Parte No. 411, supra, and Ex Parte No. 320 (Sub-No. 2), supra, they need not repeat their presentations. The parties in No. 37809 and No. 37809 (Sub-No. 1) should present only the additional evidence they conclude is necessary. If one party submits new, updated evidence, the party choosing not to do so may be prejudiced in failing to respond.

Montana's motion to compel discovery filed April 26, 1982 is granted. No reply was filed. Montana's motion is predicated on defendant's lack of response to the interrogatories, rather than any dispute over the merits of the questions. Because of the current status of the other two proceedings, it is necessary for No. 37815S to go forward.

All parties should notify the Commission within 20 days concerning the most efficient filing schedule and whether the parties in No. 37815S are ready to go forward. We can allow the parties in Nos. 37809 and 37809 (Sub-No. 1) to use the same schedule that will be set in No. 37815S. Alternatively, parties in Nos. 37809 and 37809 (Sub-No. 1) may file concurrent opening and reply statements. Comments on this are invited.

It is ordered:

1. The record in No. 37809 is reopened for the possible receipt of new evidence.

2. The proceeding in No. 37809 (Sub-No. 1) is instituted for the purpose of deciding issues in No. 37809 with respect to barley rates.

4/ For instance, complainants originally introduced cost evidence based mainly on an actual cost study of a one percent waybill sample of carload movements, as opposed to a Rail Form A study. While RFA is generally necessary as a minimum standard in maximum. reasonableness eases, complainants may submit an actual cost.study. The Commission has historically encouraged the use of such evidence.

5/ The parties' attention is directed to 365 I.C.C. at 510. While the decision correctly states that unemployment insurance should not be updated by the Producer Price Index, it should be increased by the same updating as wages since it is a function of wages.