Docket No. 14536, subject to the condition, as modified in our suplemental report and order of December 9, 1944, 257 I. C. C. 805, that the Louisville & Nashville permit the Illinois Central to participate in joint operations between the proposed mines of the Kirk and the Wickliffe companies, a distance of approximately 1 mile, over the line of railroad therein permitted to be constructed, in the event we should find in the proceeding now under consideration that the public convenience and necessity require such action. The condition was proposed by the Louisville & Nashville in its petition for modification of the original condition and is accepted by the Illinois Central.

The Illinois Central owns more than 99 percent of the stock of the Chicago, St. Louis & New Orleans, and operates the property of the latter under a long-term lease dated June 13, 1882, as amended. The proposed extension will become the property of the lessor, but will be operated by the lessee pursuant to the after-acquired property clause of the lease.

The Illinois Central depends upon coal traffic for a substantial portion of its operating revenues. In the past 6 years it handled more than 102 million tons of bituminous coal which contributed an annual average of about 15 percent of its gross revenues from all commodities, and represented an annual average of more than 30 percent of the total freight tonnage handled on the system. The coal traffic moving over the Louisville & Nashville during the period stated amounted to approximately 175 million tons, and furnished annually an average of about 35 percent of its total gross revenues from all commodities.

The so-called western Kentucky field, where the mines in question are located, is in Muhlenberg, Hopkins, Webster, and adjoining Counties. It has 49 mines, of which 16 are served by the Louisville & Nashville, 25 by the Illinois Central, and 8 by both carriers jointly. The field is one of the oldest and most productive areas served by the Illinois Central and the Louisville & Nashville, and the carriers are dependent upon it for fuel for their own use and for a large volume of their coal traffic.

The mines which the applicants propose to serve have not been opened, but for convenience will be referred to as the new mines. They are part of coal-bearing lands, hereinafter referred to as the coal area, bounded on the north by the applicants' so-called Kentucky division, on the west by the Owensboro and Nashville division of the Louisville & Nashville, on the east by the Green River, and on the south by a geological fault, called Browder fault. The source of the largest production is the No. 9 seam of coal, of which the tonnage available in the undeveloped portion of the coal area is estimated at 78 million tons. Other coal in the area in substantial quantities is

the No. 11 seam generally found near the surface of the ground and mined only to a limited extent, although mining on a large scale is expected to develop within the next few years. It requires washing, and some mines are being equipped with cleaning plants or so-called washers. Mines in that part of the area adjacent to the Owensboro and Nashville and the Kentucky divisions have been either exhausted or are in the process of being worked out, particularly of the No. 9 seam. Coal from mines on the Owensboro and Nashville division is marketed largely at points in western Kentucky and Tennessee territory while the Illinois Central serves a large territory in the north. The Wickliffe mine will require an estimated expenditure of $300,000 for its development. It will be a so-called modern mine, equipped with the latest mechanical devices, and will have a capacity to produce about 450,000 tons the first year and larger amounts in subsequent years. The estimated supply of coal available in the Wickliffe company field is 40 million tons in both seams. The president of the company, however, stated that the mine will not be opened unless the services of both carriers are provided, for the reasons hereinafter indicated. The Wickliffe company at present operates a mine on the Owensboro and Nashville division at or near a point called Browder, adjoining the area where the new mine is located. The old mine has been worked out for several miles underground, running into Browder fault, and its continued operation is considered uneconomical.

The Kirk company and the Louisville & Nashville entered into an agreement, dated May 10, 1944, providing for the construction of the latter's line to the Kirk mine and for the opening and operation of the mine. The agreement does not prohibit the mining company from shipping its coal also over the line of another carrier. Negotiations between the vice president in charge of traffic of the Illinois Central and the Kirk company left the former with the impression that the latter also desires Illinois Central service. An officer of the mining company was present at the hearing but did not testify. The tonnage available at this mine was estimated at about 12 million tons of the No. 9 seam. The Kirk company also operates a mine on the Owensboro and Nashville division located about 2 miles south of the Browder mine. The mine has produced approximately 3 million tons in the past 24 years, but is now practically worked out and the tipple and equipment will be transferred to the new mine.

The anticipated production from the new mines for each of the first 5 years is 750,000 tons. The mean length of the haul on the Illinois Central is estimated at 292 miles and the average rate a ton $1.57, as compared to 142 miles and a rate of $1.38 for the Louisville & Nashville from the Kirk company mine. If both carriers are per

mitted to serve the mines, the Illinois Central expects to participate in the traffic to the extent of at least 375,000 tons annually. Based on the traffic expected, the annual results of operation are estimated as follows: Operating revenues $588,760; operating expenses, based on the 1943 freight operating ratio, $372,384; taxes $7,700; and net earnings $184,468.

The Wickliffe company is of the opinion that it cannot successfully operate its new mine without the services of both carriers. The president of the mining company contends that joint service will enable the mine operator to increase the tonnage, as he will have access to all the local markets on both roads; that the company would have access to the car supply, services, and connections of both railroads, enabling it to meet competition of mines having joint services in the western Kentucky field; and that it would have available different routes to the same markets. The witness stated further that based on production for 10 or 12 years, the Browder mine, served only by one carrier, has not developed enough business to warrant the expenditures necessary to convert it to a mechanical mine, and that while the Louisville & Nashville could physically handle the coal produced at the new mine, the coal company would not have sufficient markets available to dispose of the tonnage which it would be necessary to produce in order to warrant operation of a mechanical mine. He stated also that the mining company was interested in the construction of a modern mine requiring large expenditures which would not be warranted without the services of both carriers, that joint service has always been desired at the new mine, and that the company does not propose to start operations unless it secures the services of both carriers. Counsel for the Louisville & Nashville contends in this connection that it is unreasonable to conclude that a concern like the Wickliffe company would go out of business, as it has been operating for over 40 years, is the seventh largest operator in the field, owns the best coal property in that area, and is selling more coal than at any time in the past.

The proposed line would connect with the yard tracks at Central City instead of the main line. It would be of standard gage, single track and laid with 90-pound rail. The estimated cost of construction is $321,300, which includes $89,280 for grading, $62,689 for bridges, trestles, and culverts, $41,255 for ties, $24,192 for rail, $10,296 for other track material, $8,900 for ballast, $32,569 for labor, and $29,193 for contingencies. Construction would commence as soon as the necessary government approval is secured and would be completed in approximately 8 months.

There has been a national emergency in the coal industry for more than 2 years. The United States Department of Solid Fuels Admin

istration for War has estimated a substantial shortage of coal and has encouraged the opening of new mines. The number of customers in the western Kentucky field is increasing, and there is urgent demand for coal. The Southern Railway Company, which occasionally bought coal in this field in the past, today buys regularly. The New York Central and other railroads, as well as manufacturing plants at Louisville and other users of coal from this field have increased their requirements.

The applicants contend, among other things, that neither carrier has the exclusive right to serve the new mines because they are located in an area which is not reached by either but is available to both; that the coal area, as a whole, is as close to the line of the one carrier as it is to the line of the other, although the new mines are somewhat closer to the Louisville & Nashville line; that their position for the future would be prejudiced if they are not permitted to construct, since it would open the door to permit the Louisville & Nashville to enter the part of the area now nearer the Illinois Central line; that establishment of joint service would give the Louisville & Nashville access to tracts nearer the Illinois Central line, having recoverable tonnage equal to that available at the new mines; that any attempt to divide the territory at this time would result in future controversies with the continued burden upon us of making hairsplitting divisions of coal lands between the two railroads; that the cost of construction is trivial when compared to millions of dollars of revenues that would be received from the anticipated traffic; that the Illinois Central would not expect to participate materially as a connecting carrier in the coal traffic to points north of the Ohio River originating on the Louisville & Nashville because that carrier's preferred route to Chicago, Ill., and other northern points, is via the line of the Chicago & Eastern Illinois Railroad at Evansville, Ind.; that duplication of rail facilities is not synonymous with duplication of service, as the operations at the joint mines in the western Kentucky field will show; and that the Wickliffe company will not risk operation to its new mine without the services of both carriers.

The intervener opposes the proposed extension principally on the grounds that it would be uneconomical to construct two lines and maintain double service in a territory that can be served by one line; that Pond Creek forms a natural barrier to the Illinois Central extension; that each railroad should be permitted to construct an extension to serve that portion of the area which can be most easily reached and most economically developed from existing lines; that there is no reason for us to permit the applicants to build and operate 8 miles of railroad to serve the Wickliffe company mine which can be reached and served by the intervener with approximately 1 mile of construc

tion, or permit them to build about 7 miles to the Kirk company mine which the intervener can serve over 2 miles of track; that based on the past production at the Kirk and Wickliffe mines now in operation, the tonnage that would be produced at the new mines would be insufficient to support two railroads; and that the scope of this application is limited to service to the new mines and therefore the case should not be considered one involving service to the entire coal area, as there is no proof of a public need for such service.

The carriers have exhausted, or will in the near future, most of the coal supply of the No. 9 seam found in that portion of the coal area immediately bordering their respective lines. The portion beyond is undeveloped. It contains substantial coal tonnage of both the No. 9 and No. 11 seams and is not served by either carrier, but is accessible to both. There are, however, no indications of an immediate development of the area other than the properties of the Kirk and Wickliffe companies. The new mines, which contain large quantities of recoverable coal, are located in the undeveloped portion and are closer to the line of the Louisville & Nashville than to the Illinois Central. Several mines in the western Kentucky field seem able to operate successfully though they are directly served by one railroad, and the record is not convincing that the new mine of the Wickliffe company requires the services of two railroads for its successful operation. Since the Louisville & Nashville will provide over the extension it has been permitted to construct whatever rail service may be required by the new mines, and there are no prospects of immediate development of the area other than the new mines, construction by the Illinois Central of the proposed extension would result in an unnecessary duplication of railroad facilities, which would not be conducive to efficient and economical operation.

We find that the present and future public convenience and necessity have not been shown to require construction by the Chicago, St. Louis & New Orleans Railroad Company and operation by the Illinois Central Railroad Company, of the line of railroad in Muhlenberg County, Ky., described herein, and an appropriate order denying the application will be entered.

MILLER, Commissioner, dissenting:

In the determination of this proceeding, the coal area as a whole must be considered, and we should look not only to the immediate future and to the coal that will presently be mined from the two new openings but also to the coal that will be mined eventually in the intermediate territory. That territory is not now served by either the Illinois Central or the Louisville & Nashville. It is true that the openings to the new mines will be closer to the existing line of the Louisville