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effect, for the 10 years 1934-43. The total estimated cost of such items was determined to be $64,833, the details of which are as follows: Maintenance of facilities to be jointly used $8,490, depreciation $10,001, property taxes $5,118, return of 5.75 percent on $716,941 the present depreciated value of the property to be jointly used, $41,224. The basic data used in the determination of the above factors were developed from a joint study made by accountants and engineers of the applicant and the steel corporation. The methods employed in computing such factors appear to be subject to no particular criticism. However, the applicant concedes that all the expenses taken into consideration will remain constant and must be borne by the steel corporation whether the applicant uses its tracks or not.

As previously indicated the total of the costs determined to be chargeable to the operation of the tracks involved, or $64,833, was divided by the average annual number of cars which it was estimated would have moved over the facilities in the 10 years 1934–43, assuming the operation had been in effect during that period, or 82,959, and the result obtained was 78.15 cents a car. During this 10-year period, the applicant is shown to have handled an average of 7,912 carloads of ore annually to Steubenville, and under the agreement it would pay for each of such cars twice, that is, loaded and empty, and on the basis proposed it would have paid an average of $12,366 annually. During the same period, the Pennsylvania is shown to have delivered 5,444 carloads of ore annually in the Steubenville area making a total annual average of 13,356 carloads, which would mean that the applicant handled 59.25 percent of the total carloads delivered. Testimony by the steel corporation was that 17,442 carloads of ore would be used in the Steubenville area in 1944, and assuming that the same percentage prevails as between the 2 carriers, the applicant would pay under the proposal approximately $16,000 for use of the facilities. Inasmuch as the per car charge is based on the average figure over the past 10 years, the industry will benefit to the extent that the use of the facilities may increase in the future.

In computing the anticipated income from handling the traffic or the loss to the applicant should the traffic not be retained, the applicant estimates that it will handle as much ore tonnage annually to East Steubenville in the next 5 years as was handled by it to Steubenville during the 5-year period 1939-43, or an average of 464,848 tons annually. Based on that tonnage, the annual results of handling the traffic in question are estimated by the applicant to be as follows: Gross revenues, $595,005; operating expenses, $383,808; tax accruals $108,875; equipment and joint-facility rents, net credit, $28,852; and net railway operating income $131,174. The gross revenues were determined by applying the line-haul rate of 105 cents a ton plus a

23-cents-a-ton handling charge at the port to the average annual tonnage indicated. Operating expenses are based on an operating ratio of 62.34 percent which is the 1943 ratio adjusted by adding to system operating expenses additional sums to reflect wage increases and the sum to be paid by the applicant for use of the facilities involved. Taxes reflect an item amounting to $28,822 covering property, social security, capital stock, and other miscellaneous taxes for the year 1943 allocated on the basis of operating revenues, and an item of $80,053 for Federal income tax calculated on the present rate of 40 percent after deduction of proportionate interest and miscellaneous income charges shown in the income account after net railway operating income. No excess-profits taxes are included. The applicant's total credit for equipment and joint-facility rents in 1943 amounted to $1,809,980 of which amount it assumes that 70 percent or $1,266,986 represents operating expenses or taxes, and of that amount, $28,852 was apportioned to the traffic involved on the relation that the revenues therefrom bear to total operating revenues.

Interest of steel corporation.—The steel corporation naturally is interested in securing the approval of the application because the rental received for the use of its properties will be entirely added income. It also desires the service of the applicant at East Steubenville so that carrier competition will be retained and better service received, particularly in the matter of receiving an adequate car supply at the lake ports for the loading of ore and for loading out-bound commodities at its Steubenville plant. It points out that congestion sometimes exists at the lake ports, and the availability of additional ports for handling the traffic reduces the possibility of such congestion. Sixteen of its cargoes were diverted from one port to another during 1942 by reason of congestion at the port to which the cargo was originally destined.

Case for opposing intervener.-The Pennsylvania Railroad Company, hereinafter sometimes called the intervener, objects to the proposed operation on the ground that it will permit the applicant to invade its local territory at East Steubenville, W. Va., which point it now serves and to which point it is in a position to transport efficiently and at no extra cost to the shipper all the ore tonnage which the steel corporation may require delivered. Ports served by it are conveniently located with respect to Steubenville, and ample locomotives, cars, and all other necessary facilities for handling the traffic in an efficient manner are available. The intervener as previously mentioned serves three Lake Erie ports. At Cleveland its facilities consist of four electric unloaders each of which has a 17-ton bucket with an hourly capacity of 2,500 tons, and an estimated annual capacity of 10,500,000 tons. In the maximum war year the ore traffic handled

through the port totaled 8,351,000 tons, and in the maximum pre-war year the traffic totaled 5,858,000 tons. At Ashtabula the intervener has six electric unloaders each of which is equipped with a 6-ton bucket with combined hourly capacity of 2,200 tons. The estimated annual capacity of these unloaders is 9,240,000 tons. In the maximum war year, 3,239,000 tons were handled through the port and in the maximum pre-war year, 4,361,000 tons were handled. At Erie the intervener has two unloaders with 10-ton buckets and two unloaders with 6-ton buckets with a combined hourly capacity of 2,000 tons and an estimated annual capacity of 8,400,000 tons. In the maximum war year, €,726,000 tons were handled through the port and in the maximum pre-war year, 3,498,000 tons were handled. Based on the port capacities indicated above, the intervener asserts that it could have handled approximately 10,000,000 tons through the three ports in excess of the amount actually handled through them in any year.

The Pennsylvania in the period 1930-43 transported an average of 217,047 tons of ore annually for delivery at Steubenville. It began delivering ore shipments at East Steubenville in 1935, and in the period 1935-42 the annual movement thereto averaged 123,800 tons. The movement in 1942 to East Steubenville was 151,750 tons, whereas in that year the movement to Steubenville was 321,876 tons. No ore traffic was moved to East Steubenville in 1943 because of the physical rearrangement of plant facilities which were then in progress, but shipments thereto recently have been resumed. Substantially all the ɔre traffic handled by the intervener for the Steubenville area moves through Cleveland. A small amount has moved through Ashtabula but none through Erie.

The distance over the Pennsylvania to Steubenville from Cleveland is 123 miles, from Ashtabula 161 miles, and from Erie 170 miles, while to East Steubenville the distances from the respective ports are 128.6, 166.6, and 175.6 miles. From Huron to Steubenville the distance is 169 miles, and the distance to East Steubenville under the proposed operation would be about 2 miles farther. The same rates are maintained from all the Lake Erie ports to Steubenville and the Pennsylvania maintains the same rates to East Steubenville. Inasmuch as the applicant does not now serve East Steubenville, it has no ore rate to that point but would establish the Steubenville rate thereto if the application is granted. While the distances from the two principal ports used by the Pennsylvania for moving ore to Steubenville are less than from Huron, the vessel distances to the latter port are less. From Soo Locks, for example, the vessel distance to Huron is 412 miles as compared with 440 and 483 miles, respectively, to Cleveland and Ashtabula.

Argument. The intervener argues that the proposed charge which the applicant will pay for the use of the property in question will amount to a competitive advantage in favor of the latter of 2.5 to 3 cents a ton. In its opinion this advantage is sufficient to influence the diversion of tonnage to the applicant in addition to that which it now enjoys. The intervener states that it has no desire to deprive the applicant of its present tonnage, but that should the denial of the application have that result, it believes that the steel corporation would be able to continue a fair division of tonnage between the competing carriers by giving the applicant an additional amount of its out-bound tonnage or by giving it ore traffic moving to mills of the steel corporation at other manufacturing points. The applicant believes this possibility so speculative that it should not warrant serious consideration. If the application is approved the intervener states that the competitive situation in the Steubenville area can be restored either by giving the Pennsylvania similar rights to handle traffic over the bridge and make a like payment to the steel corporation or by reducing the rate over the lines of that carrier to East Steubenville by the amount of the charge. In the latter event, relief from the provisions of section 4 of the act would be necessary, and in connection with the first proposal the only purpose in operating over the bridge would be to pay the steel corporation for the traffic as the intervener has a line to East Steubenville. Clearly neither of such alternatives would be feasible.

The intervener further argues that the proposed operation is unlawful because the charge therefor is merely an allowance to the steel corporation for service that it should perform for itself. It points out that in the Iron Ore Rate Cases, 41 I. C. C. 181 and 44 I. C. C. 368, decided in 1916 and 1917, respectively, rates on ore were prescribed on a low basis not intended to cover special services including delivery at point of unloading inside the industry, and that such service has not been performed by the railroads since that time. Thereafter it asserts this Commission specifically condemned a practice somewhat similar to that here proposed in Carnegie Steel Co. v. Director General, 96 I. C. C. 527, 132 I. C. C. 689, the difference in that case being, it states, that the carriers were performing the service without charge, whereas here the applicant proposes to pay for the privilege. The intervener also points out that the railroads serving the Steubenville area about 1932 began paying the Wheeling Steel Corporation an allowance of 85 cents a loaded car, exclusive of ore, for plant switching which allowance would have applied to a movement within the industry from one side of the river to the other; and that this allowance was discontinued about 1936 as the result of the decision of this Commission in Wheeling Steel Corp. Terminal Allowances, 214 I. C. C. 53. It was there found that the common-carrier transportation service

began or ended, as the case may be, at the established interchange tracks, that service beyond them was a plant-facility service which the railroads were not required to perform, and that the payment of an allowance there for would result in a departure from the published rates.

It is argued by the applicant that the question of terminal allowances is not involved because the service which it proposes to give is a line-haul movement to a new point of interchange, and not to an unloading point. In its opinion the Carnegie Steel Cases, supra, do not condemn the plan but rather support it. A brief résumé of those cases appears necessary. The Commission there determined that the line-haul rates fixed in Iron Ore Rates, supra, contemplated delivery upon interchange tracks located near the point where the railroad tracks connect with the tracks of the industry and that an additional charge should be made beyond such point, and further that whether or not a terminal charge should be established was intended to depend upon the amount of service rendered within the plant in reaching the point where delivery is finally made, whether that be termed the interchange point or the unloading point. Those cases, among other things involved an issue of undue preference and prejudice resulting from railroads serving the plant of one industry making a charge for a movement from a point inside the industry designated as an interchange point to the ore storage yard, while making no charge for similar service performed to the ore storage yard of a competing industry. In the first report the charges within the complaining industry were found applicable but unduly prejudicial, and the prejudice ordered removed by establishing a point of interchange in the preferred industry within a reasonable distance of the point of connection of its tracks with those of the line-haul carriers, or if that were impracticable it was said that constructive delivery should be considered made at the plant entrance and a reasonable charge assessed for the haul to the point of actual delivery or interchange.

In the second report the Commission found that the situation existing in the preferred industry was such that if a charge was made for the haul from points of connection with the carriers or the established interchanges it might mean that two of the carriers serving it because of their location with respect to the industry would be unable to handle any of its traffic because certain other carriers, whose tracks were located adjacent to the industry's ore yard and could make delivery thereto almost direct, would be used exclusively. In order to permit all carriers to continue their participation in the traffic, the Commission found that the prejudice might be removed either by establishing a charge for the delivery to the storage tracks of the

261 I. C. C.

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