B-101113, JUN. 15, 1955

B-101113, JUN. 15, 1955

TO MR. GORDON W. LINDSAY, ASSISTANT TO CHAIRMAN, TRAFFIC EXECUTIVE ASSOCIATION--- EASTERN RAILROADS:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 2, 1955, FILE A-MISC. (163), COVERING SUPPLEMENT NO. 2 TO TEA-ER SECTION 22 QUOTATION NO. A 163. THIS SUPPLEMENT WAS ISSUED DECEMBER 27, 1954, AND IS INTENDED TO AMEND THE ORIGINAL QUOTATION SO AS TO MAKE THE QUOTED RATE SUBJECT TO TARIFF OF INCREASED RATES AND CHARGES NO. X-175, AGENT C. W. BOIN'S I.C.C. NO. A- 922, SUPPLEMENTS THERETO AND REISSUES THEREOF. THE SUPPLEMENT SHOWS AN EFFECTIVE DATE OF APRIL 4, 1951, WHICH, IF GIVEN EFFECT, WOULD RETROACTIVELY INCREASE THE CHARGES FOR TRANSPORTATION SERVICES PERFORMED ON PAST SHIPMENTS MADE UNDER THE QUOTATION. ON DECEMBER 23, 1954, THE CHAIRMAN OF YOUR ASSOCIATION SUBMITTED SUPPLEMENT NO. 2 TO THE DEPARTMENT OF THE ARMY AND TO US, AND YOU DESIRE TO KNOW WHETHER WE WILL HONOR THIS AMENDMENT. IT IS ASSUMED FROM THIS REQUEST THAT YOU DESIRE TO KNOW WHETHER WE WILL APPROVE IN OUR AUDIT THE PAYMENT OF SUPPLEMENTAL BILLS PRESENTED ON PAST SHIPMENTS TO ADJUST CHARGES ON THE BASIS OF THE RATE TENDERED IN QUOTATION NO. A-163, AS ATTEMPTED TO BE INCREASED BY SUPPLEMENT NO. 2.

YOU SEEK TO JUSTIFY THE PROPOSED RETROACTIVE APPLICATION OF THE SUPPLEMENT ON THE BASIS OF THE FACT THAT IN A LETTER DATED JANUARY 19, 1951, MR. JOHN J. FITZPATRICK, FORMER CHAIRMAN OF THE TRAFFIC EXECUTIVE ASSOCIATION--- EASTERN RAILROADS, TOGETHER WITH MR. W. H. DANA, FORMER CHAIRMAN OF THE EXECUTIVE COMMITTEE--- WESTERN TRAFFIC ASSOCIATION, AND MR. J. G. KERR, CHAIRMAN OF THE SOUTHERN FREIGHT ASSOCIATION, INFORMED US OF A PETITION FIELD WITH THE INTERSTATE COMMERCE COMMISSION FOR AUTHORITY TO INCREASE FREIGHT RATES, AND THAT THE NAMED PERSONS WERE REQUESTED TO ADVISE THE VARIOUS GOVERNMENT AGENCIES INTERESTED IN OUTSTANDING SECTION 22 QUOTATIONS THAT THE CARRIERS INTENDED TO MODIFY THEM,"WHERE NECESSARY," SO AS TO REFLECT THEREIN THE SAME INCREASES IN FREIGHT RATES AND CHARGES "AS MAY BE MADE IN THE PUBLISHED TARIFF RATES AND CHARGES.' YOUR POSITION APPARENTLY IS THAT IN VIEW OF THE LETTER OF JANUARY 19, 1951, YOUR FAILURE TO AMEND SECTION 22 QUOTATION NO. A-163 IN THE WAY NOW DESIRED SHOULD BE RECOGNIZED AS AN OVERSIGHT THAT MAY BE CORRECTED BY ISSUANCE OF A SUPPLEMENT ALMOST FOUR YEARS AFTER THE EFFECTIVE DATE OF THE EX PARTE 175 INCREASES.

THE SITUATION AS REPRESENTED BY THE LETTER OF JANUARY 19, 1951, INDICATES THAT THE RAILROADS APPLIED TO THE INTERSTATE COMMERCE COMMISSION FOR INCREASES IN FREIGHT RATES AND CHARGES AND THAT IT WAS THEIR INTENTION, IF AND WHEN SUCH INCREASES BECAME EFFECTIVE, TO MODIFY OUTSTANDING SECTION NO. 22 QUOTATIONS,"WHERE NECESSARY," TO REFLECT SUCH INCREASES. IT IS NOT APPARENT HOW THIS LETTER, WHICH MERELY EXPRESSED AN INTENTION TO TAKE CERTAIN ACTION,"WHERE NECESSARY," COULD BE GIVEN EFFECT AS AUTHORIZING, WITHOUT MORE THE MODIFICATION OF ALL SECTION 22 QUOTATIONS, IN THE ABSENCE OF APPROPRIATE AMENDMENTS, SINCE THE WORDS "WHERE NECESSARY," AS USED IN THE MENTIONED LETTER, CLEARLY SUGGEST AN INTENTION THAT SOME, BUT NOT ALL, SECTION 22 QUOTATIONS WOULD BE SO MODIFIED. IT IS CONCEIVABLE THAT VARIOUS FACTORS, INCLUDING COMPETITION, MIGHT HAVE BEEN VIEWED AS JUSTIFYING A DETERMINATION BY THE INTERESTED CARRIERS NOT TO SUBJECT THE QUOTATION RATE TO THE EX PARTE INCREASES AT THE TIME THEY WERE AUTHORIZED. EVEN IF, HOWEVER, THE ONLY REASON WHY A VALID AMENDMENT TO THE QUOTATION WAS NOT SEASONABLY FILED WITH THE INTERESTED AGENCY WAS DUE, AS YOU INDICATE, TO AN OVERSIGHT, IT IS NOT UNDERSTOOD HOW THE CONSEQUENCES OF YOUR OVERSIGHT PROPERLY MAY BE ASSUMED BY THE GOVERNMENT. IN THIS CONNECTION, IT IS NOTED THAT SUPPLEMENT NO. 1 TO QUOTATION NO. A- 163, ISSUED AUGUST 17, 1954, TO BECOME EFFECTIVE OCTOBER 21, 1954, SPECIFICALLY MADE THE RATE TO BE APPLIED SUBJECT TO TARIFF OF INCREASED RATES AND CHARGES X-175-B, THERE BEING NO ATTEMPT THEN TO ESTABLISH THE RETROACTIVITY OF THE INCREASES IN THAT TARIFF ON THE RATE IN THE QUOTATION.

THE DETERMINATION AS TO WHETHER A PARTICULAR SECTION 22 QUOTATION WILL BE USED IS PRIMARILY THE RESPONSIBILITY OF THE ADMINISTRATIVE OFFICE TO WHICH THE SECTION 22 QUOTATION IS OFFERED. ON JANUARY 10, 1955, THE DEPARTMENT OF THE ARMY REFERRED THE INVOLVED SUPPLEMENT NO. 2 TO US, STATING:

"THE DEPARTMENT OF THE ARMY CANNOT ACCEPT RATE TENDERS THAT INCREASE CHARGES ON PAST SHIPMENTS, THEREFORE, THE TENDER IS BEING REJECTED AND IS FORWARDED TO YOU FOR INFORMATION.'

IN VIEW OF THAT STATEMENT, AND FOR THE REASONS STATED ABOVE, WE WOULD NOT BE WARRANTED IN SETTLEMENT OF CLAIMS IN GIVING SUPPLEMENT NO. 2 THE RETROACTIVE EFFECT YOU SEEK TO ESTABLISH BY ITS TERMS.