section 1(5), JA at 1528, the ICC found otherwise and petitioners have not appealed that finding before us. To the extent that petitioners appeared to be arguing "that the lesser combination rate is, itself, a form of discrimination exercised by" Williams, JA at 1527, they appeared merely to be repeating their argument under section 3(1) that the combination rates were preferential to Gulf Coast shippers and prejudicial to themselves. Hence, while we do not necessarily agree with the administrative law judge that whether "one carrier (public- or shipper-owned) is shortchanged in divisions with another carrier (public- or shipper-owned) is a matter . . . between the carriers [and one that is] foreign to the issue whether the joint rates . . . are discriminatory," we do agree that in this case the issue was not properly raised." 38 Initial Decision, supra, JA at 1594; see id. at 1592-94; 1605. In the two Supreme Court precedents relied upon by the administrative law judge for the proposition that "division of a joint rate is a matter of no concern to a shipper," id. at 1592; see note 37 supra, no shipper-owned carrier was involved. In both cases, shippers challenged joint rates as unreasonable under § 1, and the division of the rates had no impact on their overall reasonableness, as the Court noted in both cases. Great No. Ry. Co. v. Sullivan, supra, 294 U.S. at 463; Louisville & Nashville R.R, Co. v. Sloss-Sheffield Steel & Iron Co., supra, 269 U.S. at 234. Hence, they do not appear to disapprove of the dicta in The Tap Line Cases, supra, 234 U.S. at 28-29, suggesting that, in a case under § 2 in which shipper ownership of a carrier is relevant to the existence of discrimination, the division of joint rates may be a matter of importance to the allegedly injured shippers. The ICC, in fact, has allowed a shipper to intervene in a division-of-rates case on precisely this theory. Divisions Received by Brimstone R.R. & Canal Co., 68 I.C.C. 375, 376 (1922), rev'd on other grounds, Brimstone R.R. & Canal Co. v. United States, 276 U.S. 104 (1928). See id. at 386, citing The Tap Line Cases, supra. In reviewing the ICC's Brimstone decision, however, the Supreme Court did conclude that the ICC had no authority to order the retrospective redivision of joint rates; the Commis Accordingly, the ICC is affirmed on this issue. The case is remanded to FERC for determination by it of whether Williams' rates are reasonable and whether those rates in relation to the combined Williams-Explorer rates create an illegal preference. In other respects, the decision of the ICC is affirmed. It is so ordered. sion's authority with respect to rate divisions, derived from 49 U.S.C. § 15(6) (a), as amended, Pub. L. 94-210, § 201, 90 Stat. 34 (1976), is entirely prospective. Brimstone R.R. Co. v. United States, 276 U.S. 104, 121-23 (1928); see Baltimore & Ohio R.R. Co. v. Alabama Great So. R.R. Co., 506 F.2d 1265, 1268-69 (D.C. Cir. 1974). Consequently, by affirming the Commission on the ground that petitioners failed properly to raise this issue before the ICC, we have not foreclosed them from raising it again before the ICC's successor (FERC) and from receiving precisely the prospective redress to which they would potentially be entitled were we instead to remand. Williams, of course, would be free at that time to interpose the defense that whatever special tratment was accorded Explorer's owners was required by the need to meet competition from Explorer and other carriers. See, e.g., McGraw Elec. Co. v. United States, 120 F. Supp. 354, 361-62 (E.D. Mo.) (threejudge court), aff'd mem., 348 U.S. 804 (1954); JA at 1888, 2574. 44-579 0 - 79 - 25 UNITED STATES OF AMERICA PETITION FOR THE INITIATION OF A The purpose of this petition is to request the Federal Trade Commission ("Commission") pursuant to 5 U.S.c. § 553 and 16 C.F.R. § 1.25 to initiate a rulemaking proceeding to proscribe as unfair methods of competition certain forms of petroleum pipeline ownership. Specifically, I request the Commission issue a trade regulation rule declaring it to be an unfair trade practice for an oil company to have any ownership interest in petroleum pipelines of certain classes. Jurisdiction The Commission has authority under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 and 16 C.F.R. § 45, to prohibit "unfair methods of competition in or affecting commerce." While pipelines themselves are exempted from the Commission's jurisdiction to the extent they are common carriers as defined in Section 5 (a) (6) of the FTC Act, parent companies of such carriers are not exempt. The Commission may proceed against parents and affiliates of, or parties acting in concert with, persons exempted from the Commission's jurisdiction.*/ The Commission has authority under Section 6 (g) of the FTC Act to proceed by way of rulemaking in lieu of of the FTC Act.**/ This method is especially appropriate where an elaborate factual record need not be developed. Because the debate over the competitive consequences of petroleum pipeline ownership by integrated oil companies will involve predominantly issues of competitive theory, with disputes of fact playing a less significant role, rulemaking rather than adjudication is the most efficient way to address this question. The question whether divestiture for competitive purposes can be ordered in an administrative rulemaking proceeding was dealt with by the Supreme Court this year in FCC v. National Citizens Commission for Broadcasting (June 12, 1978, S.Ct._). In that case, the Court upheld an FCC rule dealing with the "cross ownership" of television and radio stations by */ Perpetual Federal Savings & Loan Ass'n., Docket No. 9083, Final Order to Cease and Desist, 3 Trade Reg. Rep., 21,371 (December 6, 1977) (appeal pending). Exxon Corp. et al., Docket No. 8934, Order Deying Respondents' Motion to Strike Allegations Re Pipelines or to Stay this Proceeding Re Pipelines, July 3, 1978; Order Denying Respondents' Motions to Strike Pipeline Allegations, Etc., October 16, 1974; Order Denying Respondents' Motions Regarding Governmental Action and Primary Jurisdiction, December 3, 1974. **/ National Petroleum Refiners' Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973), cert. denied, 415 U.S. 957 (1974). newspapers; the FCC rule required divestiture in sixteen cases. The court upheld the divestiture requirements, thus establishing a clear precedent for dealing with industry-wide structural problems through rulemaking. The Commission has long held that divestiture is within its power when this remedy would advance the public interest.*/ Harm to the Public Interest The specific unfairness on which this petition is grounded involves the relationship between pipelines and their oil company owners, and the inherent competitive advantages that accrue to the oil companies as a result of such ownership. As will be discussed below, the public interest is injured in two ways. First, consumers must pay higher prices for petroleum products because integrated oil companies are able to exploit the monopoly power inherent in their pipeline ownership. Second, competition between oil companies is injured because the system of integrated oil company ownership virtually by definition places disadvantages on the non-owner shipper in terms of both costs and access to the lines. This unfairness does not depend upon a specific pattern of behavior; it is the inevitable result of shipper ownership of common carrier pipelines. */ In re Ekco Products, 65 FTC 1163, 1213 (1964), aff'd |