Citations
- 581 F.2d 1004
Full opinion text
Opinion for the Court filed by ROBB, Circuit Judge.
ROBB, Circuit Judge:
The Aluminum Company of America (Alcoa) petitions for review of an order of the Interstate Commerce Commission (ICC) upholding a rate increase for shipments of petroleum coke in the Southwest Freight Bureau (SWFB) territory.
In 1975 the SWFB filed with the ICC a proposed rate increase for petroleum coke within the Southwestern territory and between the Southwestern territory and other territories. When two large consumers of petroleum coke, Alcoa and Reynolds Metals Company, filed protests, the ICC suspended the proposed rates until May 1976 and ordered a hearing under the modified procedure to determine whether the rates were just and reasonable. See 49 C.F.R. §§ 1100.43-.54 (1976). Review Board Four found the rates to be just and reasonable because “the comparisons of revenues to costs, when considered in the light of the rate comparisons [to the adjacent Western Trunk Line (WTL) territory], are indicative of rates below the maximum reasonable level.” (J. A. 234) The Commission, Division Two, with one commissioner dissenting in part, denied reconsideration and Alcoa brought the case here.
Alcoa argues that the ICC decision should be vacated because the railroads’ cost evidence did not support the decision, because the cost evidence is inconsistent with ICC decisions rejecting the use of unweighted territorial average costs, and because the rate comparison with the adjacent WTL was improper. Because we conclude that the ICC has failed to explain adequately the basis of its comparison to the rates in the adjacent WTL territory, we remand to the Commission for further consideration.
COST EVIDENCE
Before the Board Alcoa raised a number of objections to the cost evidence. In its decision the Board accepted three of Alcoa’s objections, restating the evidence to correct the errors identified by Alcoa. The Board refused, however, to make adjustments for multiple car shipments and for shipper-owned cars which Alcoa contends reduce the cost of service.
A.
Regarding the multiple car shipments, the Board concluded that the Rail Form A unit costs relied upon by the railroads represented a reasonable cost approximation in-view of the relatively small number of carloads of petroleum coke normally handled as a unit each day. The Board also pointed out that Alcoa had not attempted to measure the economies it asserted were to be realized from handling multiple carloads.
Alcoa relies heavily upon evidence in the record that the calcining plant at Enid, Oklahoma receives an average of 18 carloads per day of raw coke and ships out an average of 13 carloads per day of calcined coke. Alcoa argues that Commission precedent requires that reduced costs resulting from the handling of multiple car shipments be considered in determining the reasonableness of rates. Petroleum Rail Shippers’ Ass’n v. Alton & S. R., 243 I.C.C. 589, 650 (1941); see Increased Rates on Coal, Arkansas and Oklahoma to Texas, 356 I.C.C. 568, 574 (1977). It appears however that the figures on the average carloads per day handled at Enid, Oklahoma are deceptive. The arrivals at Enid come from Amarillo, Texas to the west of Enid and from Houston to the south, from McPherson and Wichita, Kansas to the north and from Coffeyville, Kansas and Ponca City, Oklahoma to the east. Even allowing for a generous amount of circuity in routing, it is apparent that the 18 carloads per day converge upon Enid from four different directions and do not move together as a unit. Thus the actual number of cars in the multiple car shipments is substantially less than the 18 claimed by Alcoa.. The same is true of the 13 carloads per day shipped out of Enid. Almost half go to Sandow, Texas, and the remainder to points in Tennessee, North Carolina, and Indiana. Furthermore, we note that these figures are averages rather than regular shipments of specific numbers of cars. At best, the evidence as to multiple car shipments is inconclusive. Considering all these factors, we cannot say that the Board’s rejection of a multiple car shipment adjustment was irrational.
B.
The shipper-owned car adjustment, which Alcoa contends should have been made, presents a more difficult question. The Board rejected this adjustment because some of the savings realized by the railroads from the use of shipper-owned cars are offset by mileage payments made to the owner.
In support of the Review Board decision, counsel for the ICC points to evidence in the record that using shipper-owned cars actually costs the railroads 5