INVESTIGATION AND SUSPENSION DOCKET No. 50921
ROUTING GRAIN, CENTRAL TERRITORY

Submitted April 8, 1948. Decided August 10, 1949

1. Respondents' failure to provide routing desired by shippers in connection with proportional rates on grain, grain products, and grain byproducts, in carloads, from Chicago, Ill., St. Louis, Mo., Milwaukee, Wis., and other gateways between official and western territories, and from other ratebreak points, to destinations in central territory, including border areas, found unlawful in part.

2. Proposed exclusion of routes in connection with rates on grain, grain products, and grain byproducts, in carloads, from origins in Illinois on the lines of The Baltimore and Ohio Railroad Company, and from St. Louis, Mo., on that line, also from origins on lines of The Chesapeake and Ohio Railway Company in Illinois, Indiana, Kentucky, Ohio, and West Virginia, to destinations in central territory, including border areas, found unlawful in part.

3. Schedules under investigation ordered canceled, without prejudice to the filing of new schedules in accordance with the findings herein. Proceeding discontinued.

F. H. Cole, Jr., John C. Lyon, H. M. Tocco, Jr., Richard T. Wilson, Jr., Robert H. Bierma, J. P. Canny, Leo P. Day, J. S. Dortch, Jr., A. E. Pfaff, and C. C. Plummer for respondents.

C. L. Athanson, F. Martin Dickey, John A. Forshey, William E. Gayle, Clarence R. Halter, C. R. Hillyer, and John D. Mummert for various protestants.

Walter D. Matson, George P. Shuler, Jr., Chas. B. Bowling, and Charles W. Bucy for the Secretary of Agriculture, protestant.

Freeman W. Bradford, R. V. Craig, H. J. Dellert, Howard Dresbach, G. O. Fagan, I. M. Herndon, John E. Kuntz, Lee J. Quasey, O. E. Robinson, and A. A. Wuchterl for other parties.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MILLER, PATTERSON, AND CROSS BY DIVISION 3:

Exceptions were filed by respondents and certain protestants to the examiners' proposed report, and the parties have been heard in oral

1 This report embraces also Investigation and Suspension Docket No. 5358, Routing Grain, Baltimore & Ohio Railroad Co. and Chesapeake & Ohio Railway Co. to C. F. A. Investigation and Suspension Docket No. 5334, Routing Grain, Ann Arbor Railroad Co., to the East, originally part of the present proceeding, was discontinued by order entered March 11, 1946, respondents therein, under special permission, having filed schedules canceling those under suspension.

argument. Our conclusions differ from those recommended by the examiner. Exceptions and requested findings not discussed in this report nor reflected in our findings or conclusions have been given consideration and found not justified.

By schedules filed to become effective December 31, 1941, respondents in the title proceeding 2 proposed specific routing for application in connection with the proportional rates on grain,3 in carloads, from Chicago, Ill., St. Louis, Mo., Milwaukee, Wis., and numerous other related gateways, to destinations in Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, and West Virginia. Upon protests filed by the Toledo Board of Trade, of Toledo, Ohio, Cincinnati Board of Trade, Inc., of Cincinnati, Ohio, The Union National Mill, of Springfield, Ohio, Chelsea Milling Company, of Chelsea, Mich., The Commercial Milling Company, of Detroit, Mich., and other parties, the operation of the schedules was suspended until July 31, 1942. Thereafter, these respondents deferred operation of the schedules. Later, upon respondents' petition and by order entered August 17, 1944, division 2 vacated and set aside the order of suspension, as of September 1, 1944, so far as it suspended the operation of the schedules designated therein, but continued the investigation proceeding as to such schedules.

By schedules filed to become effective August 1, 1945, and later, respondents in Investigation and Suspension Docket No. 5358, namely, The Baltimore and Ohio Railroad Company, The Chesapeake and Ohio Railway Company, and their several rail connections, proposed specific routing for application in connection with the rates on grain, in carloads, from origins in Illinois on the line of the Baltimore & Ohio and from St. Louis on the line of the same carrier, also from origins on the Chesapeake & Ohio in Illinois, Indiana, Ken

* Respondents in Investigation and Suspension Docket No. 5092 are carriers parties to tariff No. 535-B, I. C. C. No. 3633, filed by Agent B. T. Jones. (Joint with agent L. E. Kipp, I. C. C. No. A-3375.)

'Grain, grain products, and grain byproducts are referred to herein as grain, unless otherwise indicated by the context.

The gateways, also known as rate-break points, are those at or near the border between official and western territories. The destinations are in central territory, including border

areas.

Carrier abbreviations and short titles used herein, among others, are Baltimore & Ohio or B. & O. for The Baltimore and Ohio Railroad Company; Chesapeake & Ohio or C. & O. for The Chesapeake and Ohio Railway Company; Ann Arbor or A. A. for The Ann Arbor Railroad Company; Chicago, Indianapolis & Louisville or C. I. & L. for Chicago, Indianapolis and Louisville Railway Company; Detroit, Toledo & Ironton or D. T. & I. for Detroit, Toledo and Ironton Railroad Company; Erie for Erie Railroad Company; New York Central or N. Y. C. for The New York Central Railroad Company; Nickel Plate or N. K. P. for The New York, Chicago and St. Louis Railroad Company; Norfolk & Western or N. & W. for Norfolk and Western Railway Company; Pennsylvania or P. R. R. for The Pennsylvania Railroad Company; Pere Marquette or P. M. for Pere Marquette Railway Company; Wabash or Wab. for Wabash Railroad Company; and Wheeling & Lake Erie or W. & L. E. for The Wheeling and Lake Erie Railway Company.

tucky, Ohio, and West Virginia, to destinations in central territory, including border areas, as set forth in the respective tariffs under suspension. The destinations covered by the Baltimore & Ohio tariff, I. C. C. No. WL-10836, are in Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, and West Virginia. Those included in the Chesapeake & Ohio tariff, I. C. C. No. 12815, are in Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin. Upon protests filed by shippers and others interested in the movement of grain, the operation of these schedules was suspended until March 1, 1946. Respondents in I. and S. No. 5358 have voluntarily postponed the effective date of the schedules until disposition of this proceeding.

As these investigation and suspension proceedings present similar issues, they were consolidated for hearing and disposition. Hearings were held at Chicago and Toledo. Numerous shippers and other grain interests appeared in opposition to the routing contemplated by the schedules in question. The burden of defense was assumed by the Baltimore & Ohio, Chesapeake & Ohio, New York Central, Nickel Plate, and the Pennsylvania. Certain parties were neutral and others supported respondents in whole or in part. Briefs were filed by respondents and the principal protestants. The evidence is voluminous and concerns many hundreds of routes referred to specifically. It is impracticable to enter into a discussion in detail of all of this evidence. It will be reviewed to the extent necessary to reach sound conclusions. While much of the discussion which follows has reference primarily to I. and S. No. 5092, the facts and principles referred to have equal application to the issues in I. and S. No. 5358.

In Southwestern Millers' League v. Atchison, T. & S. F. Ry Co., 227 I. C. C. 795,' decided July 12, 1938, the Commission prescribed for the future reasonable and nonprejudicial proportional rates on grain, in carloads, from Chicago and other gateways to points in central territory, on traffic from northwestern and trans-Mississippi territories. The resulting rates were so designed as generally to produce an equalized adjustment as between these shipping areas. For example, through rates from Kansas City, Mo., and Minneapolis, Minn., two of the more important grain markets, to most destinations in central territory, were equalized by making the factors from Chicago to destination 3 cents higher on grain from Minneapolis than on like

A joint brief was filed in behalf of all respondents. The Michigan protestants submitted no brief, but adopted that filed by counsel representing the Toledo shippers and other protestants. Separate briefs were filed by the Secretary of Agriculture and John W. Eshelman & Sons, protestants.

'Other reports in that proceeding are 126 I. C. C. 23, 173 I. C. C. 86, 176 I. C. C. 668, 225 I. C. C. 195, and 231 I. C. C. 130.

traffic from Kansas City, the proportional rates from Minneapolis to Chicago being 3 cents lower than the corresponding rate from Kansas City. In the establishment of these prescribed rates the destinations were grouped as authorized. The rates were made effective on February 5, 1939, in Agent Jones' tariff I. C. C. No. 2790.

Temporary relief from the long-and-short-haul provision of section 4 of the Interstate Commerce Act was granted in connection with the prescribed rates, without limitation as to circuity, by fourth-section order No. 13247, entered October 20, 1938, as requsted in fourth-section application No. 17484. After hearing on this application, the carriers were granted continuing authority to establish and maintain the lowest proportional rates approved or prescribed in Southwestern Millers' League v. Atchison, T. & S. F. Ry Co., 225 I. C. C. 195, and reports supplemental thereto, supra, that might be constructed over any route, and to maintain higher rates at intermediate points, subject to certain circuity limitations, also subject to other conditions not particularly pertinent herein. See Proportional Rates on Grain to Central Territory, 237 I. C. C. 213, decided by division 2 on January 31, 1940, and fourth-section order No. 13691, entered in that proceeding. The effective date of fourth-section order No. 13691, when entered, was April 30, 1940.

The carriers concluded that compliance with the limiting provisions of this fourth-section order should be accomplished by establishment of specific routing. Preparation of a suitable rate and routing tariff was a huge task and was not completed until November 29, 1941, when Agent Jones' tariff I. C. C. No. 3633, also referred to as tariff 535-B, was filed in purported compliance with fourth-section order No. 13691 as modified. This is the tariff under investigation in I. and S. No. 5092. Seventh and eighth supplemental fourth-section orders No. 13691, entered January 8, 1943, and October 4, 1944, respectively, provide, in substance, that the circuity limitations originally prescribed shall not become effective until 60 days after the date of the order concluding I. and S. No. 5092.

At least two other considerations prompted respondents to establish specific routing. One of these was rule 4 (k) of Tariff Circular 20, hereinafter discussed. The other was the position as to routing

• Rates and rate differences are stated in cents per 100 pounds. They do not include increases authorized in 1946 and later.

The fourth-section order provided that the relief shall not apply (1) where the distance over the short line or route is 150 miles or less and the longer line or route is more than 70 percent circuitous, and (2) where the distance over the short line or route exceeds 150 miles and the longer line or route is more than 50 percent circuitous, except that where the distance over the short line or route exceeds 150 miles and the distance over the longer line or route does not exceed 255 miles, relief will apply to such longer line or route even though it is more than 50 percent circuitous.

274 I. C. C.

taken by the Office of Defense Transportation-Interstate Commerce Commission Grain and Grain Products Transportation Conservation Committee. This organization, composed primarily of individuals closely connected with the grain industry, was organized to assist in the war effort. Among other functions, its activities were directed toward full utilization of freight cars and the elimination of wasteful transportation in connection with shipments of grain. One of its recommendations was that specific routing be established on grain, in order to eliminate excessively circuitous routes. The recommendations of this committee were included in the matters brought to the attention of the Commission in connection with the carriers' petition requesting vacation of the order of suspension in I. and S. No. 5092. Although the committee is no longer active, the carriers urge that the views of that body should be given weight in deciding the matters now under investigation. It is unnecessary to determine whether or not the reasons which prompted the carriers to establish the routing in I. and S. No. 5092 were valid in all respects. The character of routing required to be maintained under provisions of the Interstate Commerce Act is what must be determined.

Various protestants acquiesced in the carriers' petition which resulted in vacating the suspension in I. and S. No. 5092. But, so far as the Toledo shippers are concerned, it now is indicated that their action in this respect was a patriotic gesture, to further the war effort, and was not intended to bind them to any course of future conduct concerning grain routes. It is their present position that the numerous routes which the carriers established soon after the suspension was vacated 10 do not meet their requirements, nor do other routes which became effective thereafter, including those established since the hearing herein. Other protestants take much the same position. Liberal routing is desired generally that may be used for shipments requiring one or more stops for storage, drying, milling, or other processing.

The routing proposed in I. and S. No. 5358 does not differ in character from that under investigation in I. and S. No. 5092. Specific routing is provided in all of the tariffs now under consideration. It is the intention of the carriers to establish other specific routing on grain, including that originating on important railroads in central territory. The routes proposed by the Baltimore & Ohio in I. and S. No. 5358 are contained in a single rate and route tariff, except that reference is made therein to a basing book for rates and routing to points on and

10 With their petition for vacation of the order of suspension in I. and S. No. 5092, the carriers submitted an exhibit showing numerous routes which they intended to establish for the purpose of satisfying, so far as possible, the objections raised by protestants to the routing contemplated by the suspended schedules. These, and other routes subsequently established, met the objections of some of the shippers.