In Lumber between Points in Official Territory, 214 I. C. C. 493, division 2 found not justified the proposal of respondents therein to establish rates on lumber and related articles between points in official territory on the basis of sixth class, 27.5 percent of first class, and prescribed as a reasonable maximum basis, 25 percent of first class, minimum 36,000 pounds. Those rates were increased 5 percent on March 28, 1938. That basis remained in effect until August 20, 1940, when it was voluntarily reduced by the rail carriers to column 22.5, that is, 22.5 percent of first class. All-rail transcontinental rates on lumber from Washington, Oregon, Idaho, Montana, and California to points in official territory, Chicago and east, which had ranged from 79 to 90 cents, were reduced to 72 cents. The reductions, designed to meet water competition through the Panama Canal, were suspended, but were found justified by the Commission in Lumber from Pacific Coast to Eastern Points, 210 I. C. C. 317. Rates on lumber from the South (except the Carolinas), the Southwest, and western trunk-line territory to points in official territory were reduced 12.5 percent, but most of those reductions were canceled on July 1, 1936, when the 72-cent commodity rate from Pacific coast territory was increased to 78 cents. On January 10, 1940, commodity rates on lumber from the South and Southwest to points in official territory were reduced 8 percent, subject to a maximum of 4 cents. No corresponding reductions were made from points in western trunk-line territory.

The rates from the origins in Michigan and Wisconsin bear no definite relation to class rates. They apply from and to large origin and destination groups which have been maintained for many years and have proven satisfactory. The rates on lumber from southern, southwestern, and Pacific coast territories to destinations in official territory are on an origin and destination group basis. Within offical territory, however, the rates on lumber are practically on a point-topoint basis. With the exception of one intervener, as hereinafter indicated, complainants oppose any modification of the existing groups in respect of the rates assailed, or any fixed relation to class rates.

On traffic to central territory, Ironwood, Mich., is near the northwest corner of a group, No. 11, which lies east of group No. 7, extending along the western boundary of Wisconsin from Lake Superior to a point northwest of La Crosse, Wis. On traffic to trunk-line and New England territories, Ironwood is in the northeastern extremity of a group, No. 8. Prior to August 10, 1940, Ironwood and other lumberproducing points, such as Bessemer, Mich., were in group No. 7 in respect of traffic to central territory. On that date, the rail carriers in western trunk-line territory placed those points in group No. 11. They refused to establish similar grouping in respect of traffic to trunk-line

and New England territories. Intervener Marathon Paper Mills Company contends that, in respect of traffic to those territories, Ironwood is improperly placed in group No. 8 in the manner in which it was improperly placed in group No. 7 in respect of traffic to central territory and asks that it be placed in group No. 5 in respect of traffic to trunkline and New England territories. Group No. 5 lies immediately east of group No. 8 and corresponds generally with group No. 11.

The table below contains the short-line distances and rates on lumber from points in the origin territory to important destinations in central and trunk-line territories:

In respect to traffic to points in central territory, rates from Ironwood are the same as from Cameron and Park Falls, Wis., the three points being in group No. 11. In respect of traffic to trunk-line and New England territories, Ironwood is in group No. 8, while Cameron and Park Falls are in group No. 5. The rates from Ironwood to typical destinations, such as Rochester and New York, N. Y., Harrisburg, Pa., and Baltimore, Md., exceed those from Cameron, Park Falls, and Ontonagon by 2, 1, 1, and 1 cents, respectively. To points in central territory, the rates from Ironwood exceed those from certain other points in the origin territory by amounts as great as or greater than the difference between the rates from the same origins to points in trunk-line territory.

Defendants' refusal to regroup Ironwood in respect of the adjustment of rates on lumber to points in trunk-line and New England territories similar to the regrouping in respect of traffic to central territory is not shown to subject Ironwood to undue prejudice.

Complainants compare their rates with relatively lower rates on lumber for similar distances from certain points in the South and Southwest to destinations in official territory. Similar comparisons

are made by defendants to show that the rates assailed are lower than from points in the South and Southwest. The origins selected by each party are claimed to be representative shipping points. All of the selected origins are grouped with other points and the specific distances shown do not represent the average distances from and to established groups. Under the circumstances we are unable to determine whether the levels of the assailed rates are higher or lower than those prevailing from the South and Southwest.

The table below contains short-line distances from Rhinelander and Wausau, Wis., typical origins, to destinations in official territory; the first-class rates from and to those points and 22.5 percent thereof; the rates on lumber; and rates 22.5 percent of first-class rates for like distances within official territory:

C: 22.5 percent of first-class rates from and to the same points.

'D: 22.5 percent of first-class rates for like distances in official territory.

The assailed rates from the origins in Michigan and Wisconsin average slightly less than 22.5 percent of the applicable first-class rates from and to the same points. Those sought by complainants would, in most instances, be lower than rates for like distances prescribed for application between points within official territory in Lumber between Points in Official Territory, supra. In certain instances, the rates sought would be as low as, or lower than, the rates for like distances voluntarily established by rail carriers within official territory. For example, from Rhinelander to Baltimore and New York, 1,043 and 1,051 miles, respectively, complainants desire rates of 40 and 43 cents. For like distances, rates applicable between points in official territory are 42 and 43 cents, respectively.

Complainants' inability to market forest products successfully at points in the destination territory in competition with forest products from the Pacific coast, the South, and the Southwest cannot be attributed to rate differences. Where complainants' rates exceed rates for like distances within official territory the excess averages approxi

562949m 44-vol. 256-11

mately 5 cents, which is equal to the approximately $1 per 1,000 feet of lumber, but it is not shown that this disadvantage is undue. There is no showing that transportation conditions or other relevant considerations warrant the prescription of rates for forest products from the complaining origins that are upon a level no higher than that of the rates within official territory.

We find that the rates assailed are not shown to have been or to be unreasonable or otherwise unlawful. An order dismissing the complaint will be entered.

256 I. C. C.

No. 25473 (SUB-No. 1)

OHIO-KENTUCKY ASSOCIATED INDUSTRIES v. AHNAPEE & WESTERN RAILWAY COMPANY ET AL.

Submitted October 16, 1942. Decided August 3, 1943

Upon further hearing, finding in prior report, 243 I. C. C. 579, that rates on firebrick, in carloads, from Cincinnati, Ohio, and Louisville, Ky., to destinations in upper Michigan, Minnesota, and Wisconsin are not shown to be unreasonable, and finding that the relation between such rates and rates on like traffic from St. Louis and points grouped therewith, to the same destinations, results in certain undue prejudice and undue preference, affirmed. Nonprejudicial rates prescribed.

R. A. Ellison for complainant.

Leo P. Day, George F. Dyche, and Edward A. Kaier for defendant petitioners.

R. B. Elster, George Jeck, J. A. Behrle, and C. N. Richards for opposing defendants.

Thomas L. Phillips for opposing interveners.

REPORT OF THE COMMISSION ON REHEARING

BY THE COMMISSION:

Exceptions to the report proposed by the examiner were filed by complainants, interveners, and certain of the defendants, and we heard oral argument. Our conclusions differ from those recommended by the examiner.

In the complaint, filed in behalf of firebrick manufacturers at Cincinnati, Ohio, and Louisville, Ky., it was alleged that, from those two origins to destinations in upper Michigan, Wisconsin, Minnesota, and Iowa, the rates on firebrick, in carloads, were unreasonable and unduly prejudicial. The allegation of undue prejudice was based upon the maintenance of rates on like traffic lower in level to the same destinations from competitive manufacturing points in Indiana and Illinois, including also what was described as the St. Louis, Mo., district. Findings were made by division 2 in the prior report, 243 I. C. C. 579, that the assailed rates had not been shown to be unreasonable but that the relation between those rates and the rates concurrently maintained from St. Louis and points grouped therewith to the same destinations, for the corresponding transportation of like traffic, resulted in undue prejudice to complainants and undue preference of their competitors at St. Louis, and points grouped therewith. Rate