and other bulk commodities and of which there are now in service some 227,964 covered hoppers owned by both railroads and shippers?

It raises the same objections already discussed in connection with the phrase "When applicable" in paragraph (e) and of substituting "must be filed" for "may be filed" in paragraph (f) of the proposed regulations. The last sentence of paragraph (h), which implies that submitting the initial supporting data is permissive and not mandatory, should accordingly be deleted.

S-17. Pacific Northwest Traffic League. It is an association of shippers and receivers of fishing, furniture, and manufacturing products as well as of pool car associations, a food processors association, potato and onion shippers association, and wholesale and retail grocers, manufacturers, jobbers, and distributors. It points out that the IC Act permitted publication of certain special and accessorial rates separate from the line-haul rates on such as switching, refrigeration, piggyback, pickup and delivery, loading and unloading, wharfage, and docking. It, therefore, believes that the Commission's proposed regulations are a mere restatement of existing law and Congress intended, instead, to give section 15(18) a broader interpretation.

Specifically, it urges that "contract or agreed" rates should be included as distinct rail services. It claims that the Commission has approved special multiple-car rates on volume movements, such as grain shipments by rent-a-train, which on a large scale are similar to "contract" rates. However, the shipper of less than volume movements cannot get "contract" rates. This party apparently advocates a system of "contract" rates similar to that utilized in Canada. This system is based on an agreement by the carrier with a shipper for a lower rate than the published tariff rate in exchange for the shipper's agreement that it will give the carrier all or a substantial portion of its freight, subject to approval by a regulatory board.

S-18. Illinois Department of Agriculture. It has the responsibility of aiding agricultural interests in the State of Illinois with marketing and distributing their products. It believes that under the proposed regulations, in connection with distinct rail services, shippers will be treated differently in areas where a carrier has market dominance than shippers located in areas where the carrier does not have market dominance. Specifically, it believes that protection given shippers in Inspection in Transit, supra, would be lost to those shippers located in areas where railroads do not have market dominance, and in effect carriers would be free to raise rates by cutting back on services included in existing tariffs. Therefore, it argues that the Commission should insist that separate rates meet the test as given in Inspection in Transit, supra, even though not meeting market dominance criteria.

S-19. The National Industrial Traffic League. It is composed of shippers, associations of shippers, boards of trade, chambers of commerce, and others which use rail transportation. It does not interpret section 15(18) as permitting the carriers to arbitrarily fragmentize joint through rates, since the provisions of section 15(3) have not been repealed.

It assumes also that when carriers publish separate rates for distinct rail services, they will also continue to maintain certain other rate levels including the prior allinclusive rate basis. Moreover, it asserts that to the extent a distinct rail service presently encompassed in the line-haul rate is segregated with a separate charge applicable thereto, a corresponding reduction in the line-haul rate is in order, citing Inspection in Transit, supra. In addition, it urges that the Commission ensure that the pertinent costs in justifying separate rates be fully disclosed, when a distinct rail service is being proposed.

Next, it has certain problems with the definition of the "carrier's cash-outlays." Specifically, it is concerned with the proposed exclusion of depreciation and amortization.

Finally, it also urges the same changes in connection with the elimination of “When applicable" in paragraph (e) of the proposed regulations, and the substitution of “shall be filed" for "may be filed" in paragraph (f).

S-20. Archer Daniels Midland Company. It processes and distributes grain, oilseeds, cane sugar, and other products. It requests that the Commission explicitly limit its definition of distinct rail services to those specific examples given in the definition in the proposed regulations.

It also points out that paragraph (f) of the proposed regulations should be changed from "may be" filed to "must be" filed; and that paragraph (h) should require that replies to protests must be verified.

S-21. Alabama State Docks Department. It is an agency of the State of Alabama and it operates ocean terminals, warehouses, and other facilities such as a grain elevator and a cold storage plant at the Port of Mobile, Ala. It states that it is essential that the carriers not only cost out the separate rates but also evaluate their effect to the extent that increased rates may cause a decrease in the use of rail service by shippers.

This party also points out that recently it has been the practice of line-haul carriers to not fully absorb the costs for switching connections with terminal carriers, and, therefore, an additional amount for switching is added to the transportation costs. It believes that the Commission should require publication on short notice of such unabsorbed charges.

S-22. Central Foods Corporation. It is a processor of packaged foodstuffs and pet foods and uses rail transportation in the distribution of its products. This party also urges that "contract" rates be included in the definition of distinct rail services, because somewhat similar language is used in section 203a(15) of part II of the IC Act authorizing contract carrier rates and operations by motor carrier.

This party believes that the proposed definition of special equipment and services as distinct rail services is ambiguous. It wants the regulations to include a specific listing of which type of locomotives, cars, and other facilities are special equipment. It also wants to know if "cash-outlays" will be interpreted in appropriate circumstances to mean only incremental investment in facilities, particularly when such facilities could be used for other purposes than providing distinct rail services? For example, would the cost of operating a refrigeration unit on a refrigerator car include the cost of operating the car?

S-23. The Canners League of California. It is an association composed of canners who produce canned fruits and vegetables in the State of California, and they are users of rail transportation. This party states that the pricing of distinct rail services separately from the line-haul rate should result in a reduction of the line-haul rate, based on proof of the cost of the distinct rail service being separated therefrom. S-24. United States Gypsum Company. It is engaged in the manufacture and marketing of building materials and distributes its products by the use of various modes of transportation. It states that in determining reasonableness of separate rates, cash-outlays and demand for distinct rail services should be considered together, particularly where there is a high cost of service and little demand. Apparently, this party means that one consideration should not over-balance the other. It further believes that separation of rates for distinct rail services should be accompanied by a corresponding reduction in the line-haul rates, unless otherwise justified.

S-25. Tidewater Grain Company. It is engaged in grain merchandising primarily for export, with its grain elevator located in Philadelphia, Pa., and it uses rail transportation. It states that not only should the carriers be required to justify separate rates for distinct rail services but that the effect of such rates on increasing or decreasing their share of the market should be considered.

It asks when are terminal switching, weighing, and lighterage to be considered distinct rail services, and when is equipment special?

It repeats the question of what adjustment should be made in the line-haul rate, when distinct rail services are separated therefrom?

With regard to the definition of “cash-outlays" this party apparently fears that the carriers will be permitted to justify a separate rate for distinct rail services on such basis and then based on recomputed line-haul costs justify an increased line-haul rate. S-26. Institute of Scrap Iron and Steel, Inc.—t is a trade association representing members who process and ship scrap iron and steel, most of which is transported to steel mills and foundries by rail. It states again the same matter already considered a number of times, that both the separate rate for distinct rail service and the line-haul rate from which distinct rail services have been separated should be required to be justified by the carrier. It, therefore, believes procedures should be established requiring carrier justification of the effective line-haul rate at the time that rate is constructively increased by publication of separate rates for distinct rail services formerly included in the line-haul rate.

S-27. The Eastern Central Motor Carriers Association, Inc.—It is a tariff publishing agent for its member motor common carriers. It points out that Congress provided that the amendments to part I of the act must be subject to certain safeguards, including consideration of interests of motor carriers as a competing mode. Therefore, so that affected shippers and competing carriers can adequately evaluate how they are affected by proposals filed under section 15(18), justification statements should be required to be filed at the same time the proposed tariffs are filed, with the minimum content of such justification statements specified by the herein considered regulations. S-28. Water Transport Association.―t is a trade association composed of certificated domestic water carriers operating on the Great Lakes and inland rivers, and in coastal and intercoastal trades. They are directly in competition with rail-water routes as an alternative to all-rail transportation. This party repeats the desire of many parties hereto that justification statements should be filed at the same time as tariffs are filed for separate rates and that the minimum content of such justification statements should be specified in the considered regulations.

It also states that paragraph (b) of the proposed regulations establishes a presumption that a separate rate which equals or exceeds a carrier's cash-outlays contributes to the "going-concern value" of the carrier; and it objects to this presumption since "going-concern value" is not defined.

S-29. General Mills, Inc.—It suggests that the proposed regulations should establish a definitive list of distinct rail services, and that such list should not include line-haul switching because it cannot practically or feasibly be separated from the total transportation charge. It believes, on the other hand, that the list should include rates, similar to released rates, which would represent an economic trade-off against fullvalue rates and consist of the line-haul rate plus a separate charge for insurance. This party also supports the principle of the Wichita case, supra, that when a separate charge previously included in the line-haul rate is separated therefrom, the aggregate through charge must be justified as reasonable. However, it believes this principle should not apply if the distinct services have never been included in the line-haul rate or if they represent new services not previously offered by the railroads.

It believes that in addition to the reference in the proposed regulations to Ex Parte No. 320, regarding market dominance, a reconciliation should also be made between this proceeding and Ex Parte No. 327, Rate Incentives for Capital Investment, insofar as including as distinct rail services recoupment of capital costs associated with the rehabilitation of a branch line through a surcharge applicable only to service provided on that line.

It also wants paragraph (d) of the proposed regulations, entitled "Letters of Transmittal," to be modified by adding the requirement that the letter of transmittal must include a cross-reference to the particular rates and tariff items affected by the publication of separate rates.

S-30. Secretary of Agriculture of the United States.—The Secretary is charged with certain responsibilities under the Agricultural Marketing Act relating to the transportation of agricultural products. Therefore, in discharging this responsibility it represents the interests of farmers and small agricultural businesses. It urges that paragraph (e) of the proposed regulations should have the phrase "When applicable" deleted and that in paragraph (f) thereof the word "may" should be changed to "shall," because shippers need adequate advance notice of rate charges, most of which are justified by carriers on the basis of detailed costs and related evidence.

The Secretary wants the definition of distinct rail services in paragraph (a)(1) of the proposed regulations rearranged with the specific listing of examples of distinct services in the first part thereof. It also wants included a statement that the several types of separate charges set forth in section 6(1) of the act are also distinct services, and a statement that shippers may only negotiate for services that they need. This party foresees that it may be difficult to determine what services can "practically and feasibly be separated out from the total transportation charge."

In addition, it supports the principle that when a carrier has separated a service previously included in a line-haul rate and published a separate charge therefor, the aggregate through charge must be justified.

S-31. The American Frozen Food Insitute.-Its members are engaged in manufacturing and selling frozen goods and much of their product is transported by railroad. It states that the railroads have traditionally published separate rates for protective service against heat and cold in connection with the transportation of perishable commodities, including frozen foods. Nevertheless, it argues that the proposed regulations should stress that although the railroads may publish separate rates for various elements of transportation service, they must also provide a complete transportation service to shippers who want such service, including protective service and equipment.

S-32. The Pillsbury Company.—It is a diversified company, including consumer food products, agricultural products, and institutional food and restaurant service. The use of rail transportation is necessary to the conduct of its business. It supports the holding in Inspection in Transit, supra, but believes that the principle enunciated therein should be included in the considered regulations to make clear that the carrier must justify the aggregate charge for the through service.

It argues that establishing expeditious procedures should reduce the time period for processing proposed rates but it should not result in incomplete consideration of the proposals.

It also urges that paragraph (f) of the proposed regulations should be made mandatory in connection with the filing of justification statements at the time of filing of tariffs, by changing "may" therein to "must." It states that only by the concurrent filing of the tariff and the justification statement would the Commission and the public

be sufficiently advised of the reason for the change and its costs related thereto. This would allow interested parties an adequate opportunity to determine whether it is necessary to file protests. Moreover, it is pointed out that the sought amendment of paragraph (f) would eliminate the need for similar information as now suggested in paragraph (h).

S-33. United States Department of Transportation.—It believes that the proposed regulations have set forth most of the procedural matters connected with filing and justifying separate rates for distinct rail services. Nevertheless, it criticizes the definition of "distinct rail services” in paragraph (a)(1) because the definition does not indicate whether the separate rates must be published in an existing tariff or in a new tariff. Moreover, it believes the definition should state that a distinct service is one which is established at the discretion of railroad management. "Contract" rates should be classified as a distinct rail service. Accordingly, it proposes the following definition:

A distinct service is any service that is or could practicably be offered, at the proponent railroad's discretion, as a separable addition or alternative to or deletion from an existing or currently authorized service, and the service is or could be (1) subsumed in an existing tariff or part thereof, or (2) an optional addition to or deletion from an existing tariff or part thereof, or (3) a new tariff.

It urges that the regulations should include strong emphasis on managerial discretion as the ultimate determinant of whether a distinct rail service should be separately established. It believes that the specific data and information suggested by paragraph (i) of the proposed regulations should not be required, and that the proponent carrier should be permitted to submit whatever data and information it deems appropriate. This party supports the discretionary filing of justification statements pursuant to paragraph (f), and not the mandatory amendment certain parties want.

It points out that the proposed regulations define cash-outlays but do not define the demand criteria. Accordingly, it foresees that evidence of cash-outlays will be given the greatest weight in determining reasonableness. It urges, therefore, that the definition of cash-outlays be deleted and that the carriers be permitted to submit any relevant evidence of cash-outlays as well as relevant evidence of the element of demand. In any event, it finds some inconsistency between the two subparagraphs in paragraph (a)(2) defining the term "cash-outlays." The first subparagraph explicitly excludes depreciation and amortization from cash-outlays while the second paragraph incorporates in the definition "annualized cash-outlays equivalent to the carrier's capital investment in *** equipment and facilities." It believe that inclusion of amortization and depreciation in cash-outlay cost is appropriate (at least in those instances in which a new investment is made) because a rail carrier should be permitted to recover the cost of the capital investment required to provide the distinct rail service. Finally, it believes capital investment and the cost of such capital should be included as part of cash-outlay as long as the preponderant use of the equipment or facilities is to provide a distinct rail service.

Next, there is concern about the presumption in paragraph (b) whereby "a rate or charge that equals or exceeds a carrier's cash-outlays for a distinct rail service shall be presumed to contribute to the going-concern value of the carrier" and, therefore, is not unreasonably low. The presumption does not reflect the statutory language about demand for the service-a factor required by the statute to be considered in addition