No. 29856

MARION MANUFACTURING CORPORATION ET AL. v. AKRON, CANTON & YOUNGSTOWN RAILROAD COMPANY ET AL.

Submitted October 15, 1948. Decided July 11, 1949

Rates on crude sulphur, in carloads, from producing points in Texas and Louisiana to Indianapolis, Ind., and Columbus, Ohio, not shown to have been or to be unreasonable. Complaint dismissed.

Ferdinand Born and Isaac Born for complainants.

Joe G. Fender, Leo P. Day, W. C. Neely, Edward A. Trapp, H. M. Tocco, Jr., Tom Martin Davis, Ballinger Mills, Jr., Toll R. Ware, and E. L. Walter for defendants.

REPORT OF THE COMMISSION

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

Exceptions were filed by complainants to the report proposed by the examiner. Defendants replied and the issues were argued orally. Exceptions and requested findings not dealt with in this report have been given consideration and found not justified.

Complainants are the Marion Manufacturing Corporation, hereinafter referred to as Marion, engaged in the manufacture and sale of sulphuric acid at Indianapolis, Ind., and the Smith Agricultural Chemical Company, hereinafter called Smith, engaged primarily in the manufacture and sale of fertilizer with principal offices at Columbus, Ohio, and operating manufacturing plants at Columbus and elsewhere. By complaint filed October 20, 1947, as amended at the hearing,1 they allege that the rates charged on crude sulphur, in carloads, from Boling, Brazoria, Clemens, Freeport, Hoskins, Houston, Long Point, Newgulf, and Orchard, Tex., and Port Sulphur, La., to Indianapolis and Columbus were, are, and for the future will be unreasonable. We are asked to prescribe reasonable rates for the future and to award

1 Southern Pacific Company was eliminated as a defendant.

'Rates stated in this report are in cents per 100 pounds, and, except as otherwise indicated, do not include the authorized general increases which became effective subsequent to June 30, 1946.

reparation on shipments made during the statutory period and pendente lite.

On brief, defendants moved to strike all of complainants' testimony relating to the location of their competitors and competitive markets, on the ground that such testimony is not germane to a section 1 issue. The motion is overruled.

Crude sulphur, an elementary substance, containing less than 0.2 percent impurities upon mining, constitutes a primary raw material without preparation by any artificial processing. It is shipped in bulk, in ordinary box or hopper cars, and is only slightly affected by exposure. It is subject to negligible risk of loss and damage even when transported long distances. No loss and damage claims have been filed on complainants' shipments. Sulphur is the basic material used in the manufacture of sulphuric acid which is indispensable in the production of superphosphate, an important ingredient of commercial fertilizer. It is also used in the manufacture of other commodities, including wood pulp, under the sulphite process. Its value at the mines is now, and has been for the past 25 years, about $16 per gross ton, f. o. b. origin.

A large plant for the manufacture of sulphuric acid was recently constructed by Marion at Indianapolis, and production began on February 12, 1947. The record does not disclose the quantity of crude sulphur required in the manufacture of a ton of sulphuric acid. The Marion plant produces about 142 tons of 100-percent acid every 24 hours. It is sold to fertilizer manufacturers for use in the manufacture of superphosphate, at a current price of about $10.75 per ton for 60-degree acid. Superphosphate is composed mostly of sulphuric acid and phosphate rock, about 45 percent thereof being 60-degree acid. Smith has a sulphuric acid producing plant at Columbus and there consumes about 5,000 gross tons of crude sulphur annually, of which is shipped from Newgulf. Nearly all of Smith's production is used in the manufacture of superphosphate, which is utilized by its plants at Holland and Saginaw, Mich., in the manufacture of fertilizer.

all

The origins named, of which Newgulf is representative, are sulphur producing or refining points and on this traffic are embraced in one rate group. All of complainants' shipments on which reparation is sought, of which 254 moved to Indianapolis and 69 to Columbus in 1947, originated at Newgulf, which is about 73 miles southwest of Houston and 78 miles northwest of Galveston, Tex. The shipments averaged about 120,000 pounds to the car. The rates assailed are 39 cents to Indianapolis, 1,019 miles, and 42 cents to Columbus, 1,198

miles, minimum weight 100,000 pounds. The rates sought are 29 and 32 cents, respectively, minimum 100,000 pounds, or the marked capacity of the car if less. The earnings are, respectively, 7.65 and 7.01 mills per ton-mile and, at the average weight, 45.9 and 42.1 cents per car-mile under the assailed rates, and would be 5.69 and 5.35 mills per ton-mile and 34.1 and 32.1 cents per car-mile under the rates asked. The rates under attack are on the basis of 13.5 percent of the firstclass rates from and to the same points as prescribed in the twentyfirst supplemental report in the southwestern revision, 205 I. C. C. 601, which is the general basis of the sulphur rates to points in central and western trunk-line territories, except as appears below. The rates sought approximate 10 percent of first class.

Complainants compare the rates assailed with those from Newgulf to points in western trunk-line and central territories, as illustrated in the following table:

Great stress is laid by complainants upon the lower rates to the more distant lake ports shown in the above table, all of which are subject to a minimum of 80,000 pounds, whereas the assailed rates carry a minimum of 100,000 pounds. The foregoing rates to the lake ports in Ohio and Michigan were approved by division 2 in

Sulphur from Texas to Michigan and Ohio, 237 I. C. C. 745, decided in March 1940 (see also Sulphur to Michigan and Ohio Points, 216 I. C. C. 632), as a basis for relief therein granted from the long-andshort-haul provision of section 4 of the act to permit the respondents therein to meet water competition by way of the New York State Barge Canal and the Great Lakes, for application during the season of navigation from March 15 to November 15, inclusive, of each year. In that proceeding a proposal by the respondents to observe a reduced rate of 33 cents to the lake ports as the maximum at intermediate points, including Indianapolis, was disapproved. During the winter months the applicable rates to these lake ports are on the column 13.5 basis.

The rates to Chicago and East St. Louis were published in 1933 to meet water or water-truck competition and are observed as maxima at intermediate points, including Danville and Decatur. So also, the rates to Duluth, Barksdale (4.4 miles from the nearest port on Lake Superior), and International Falls were published to meet water competition. In Crude Sulphur to Barksdale, Wis., 245 I. C. C. 363, division 2 denied relief from the long-and-short-haul provision to permit the establishment of a water-competitive rate of 35 cents from these origins to Barksdale. Cuba is on the line of the Chicago, St. Paul, Minneapolis and Omaha Railway Company in southwestern Wisconsin, a short distance from the Mississippi River. It is not intermediate to any lake port, and no reason appears for the relatively low level of the rate thereto. With this single exception, all of the rates shown in the foregoinging table which are on bases below column 13.5 apply to points to which there is now actual or potential water or water-truck competition, or are such water-compelled rates held as maxima at intermediate points. There is no evidence of any sulphur movement to Cuba or to any of these intermediate points in Illinois or Wisconsin, except by inference to Danville because a plant manufacturing sulphuric acid is located at that point. There is some evidence that one of complainants is having, or expects to have in more normal times, difficulty in meeting competition from the Danville plant. Such evidence can be given little weight in determining the issue before us, which is one only of unreasonableness under section 1. Comparison is also made by complainants with the rates about to be discussed on phosphate rock, wood pulp, silica sand, and lime. In Diamond Fertilizer Co. v. Aberdeen & R. R. Co., 259 I. C. C. 75, the Commission prescribed maximum reasonable rates on phosphate rock, minimum 100,000 pounds, from Bartow and other Florida points to Detroit, Cleveland, Indianapolis, Columbus, and other points in cen

tral territory which, on the average, reflect slightly less than 11 percent of first class and, at the minimum weight, yield car-mile earnings ranging from 26 to 29 cents for distances of from 959 to 1,240 miles. The rates thus prescribed are higher to the lake cities than to the intermediate points. The average loading of phosphate rock is there shown as about 103,500 pounds, which is substantially less than the average loading of sulphur, but the average value of the rock is there given as $3.83 per gross ton for the unground and 40 or 50 cents more for the ground, or considerably below the value of sulphur.

On wood pulp, minimum 50,000 pounds, from Herty and Houston, Tex., to points in Missouri, Illinois, Indiana, Michigan, and Ohio, the rates range from 33 to 51 cents for from 662 to 1,400 miles. On the basis of an average loading of 71,000 pounds, the approximate average used in Wood Pulp from Lake Ports to Michigan and Indiana, 223 I. C. C. 631, the rates from Herty of 37 cents to Indianapolis, 848 miles, and of 42 cents to Columbus, 1,027 miles, yield respectively 38.1 and 29 cents per car-mile. The value of domestic wood pulp is said to be about $38 per net ton.

The rates on silica sand with which comparison is made are those prescribed by the Commission on July 7, 1931, in Sand, Gravel, and Crushed Stone, 177 I. C. C. 621, for application between points in the Southwest. They were based on a distance scale extending to 1,000 miles, for which the prescribed rate is 7.6 percent of the rate for that distance in the zone III first-class scale prescribed in the twenty-first supplemental report in the southwestern revision, supra. The value of silica sand appears in Sand, Gravel, and Crushed Stone, supra, as ranging from $1.40 to $2.25 per net ton, f. o. b. origin, and the average loading between representative southwestern points as about 88,000 pounds.

The lime rates to which our attention is called are based on a distance scale prescribed by the Commission from, to, and between southwestern points in Lime from, to, and between Points in the Southwest, 205 I. C. C. 282, decided December 3, 1934. Adding the 10 percent general increase authorized in 1938, the rates thus prescribed for distances of 1,019 and 1,198 miles are, respectively, 39 and 41 cents, minimum 30,000 pounds. Rates made 80 percent of that basis were prescribed as maximum reasonable in connection with a minimum of 50,000 pounds. The latter rates for the distances to Indianapolis and Columbus, plus the 1938 general increases, are 31 and 33 cents, respectively. The average value of bulk lime, f. o. b. origin, is therein shown for the United States as $7.24 per ton in June 1934, and the average loading as 23.26 tons.