No. 28791

RATES ON ROAD AGGREGATES WITHIN THE STATE OF GEORGIA

Submitted March 11, 1943. Decided November 2, 1943

Intrastate rates in Georgia on aggregates, in carloads, found not shown to be unjustly discriminatory, but found to cause undue preference and advantage of persons and localities in intrastate commerce and undue prejudice and disadvantage to persons and localities in interstate commerce. Nonprejudicial rate relation prescribed.

K. R. Bragg, Joseph P. Cook, Carl W. Dilli, Robert J. Fletcher, P. H. Goodwyn, Frank W. Gwathmey, H. L. Hanes, D. Jordan, T. T. Masengill, Edward D. Mohr, and L. L. Oliver for respondents. A. J. Young for Georgia Public Service Commission.

C. A. Barinowski, J. P. Bradley, D. S. Browder, James E. Burkett, H. R. Dever, Sam C. Dreyfus, C. Eugene Fowler, J. L. Griffith, E. L. Hart, J. W. Herman, Jr., T. J. McGinn, J. C. Phillips, A. J. Ribe, and Edgar Watkins for interveners.

BY THE COMMISSION:

REPORT OF THE COMMISSION

Exceptions to the report proposed by the examiner were filed by respondents and several interveners. Reply was made on behalf of numerous Georgia shippers and receivers of freight, and the issues were argued orally. The conclusions herein differ in part from those recommended by the examiner.

Upon petition, as amended, in which violations of sections 3 and 13 of the Interstate Commerce Act were alleged by 12 of the railroads operating within the State of Georgia, we instituted this investigation to determine whether the present rates for the intrastate transportation of a number of commodities,1 herein called aggregates, in carloads, between points in Georgia, cause or will cause any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce, on the one hand, and interstate or foreign commerce, on the other, or any undue, unreasonable, or unjust discrimination against interstate or foreign commerce; and also to determine what rates and charges, if any, or what maximum or minimum or maximum and minimum rates and charges shall be prescribed to

1 Chert, clay, sand, gravel, marl, oystershell dust, limestone sludge, slag, crushed stone, *tone screenings, limestone, and rubble stone.

remove such advantage, preference, prejudice or discrimination, if any be found to exist. All common carriers by railroad operating within Georgia were made respondents, and copies of the order of investigation and notices of hearings were duly served on the Governor of Georgia and the Georgia Public Service Commission. The State commission assigned for hearing at the same time and place its docket No. 4592-A, involving the intrastate rates on the described traffic, and joint cooperative hearings were held by representatives of the two commissions. Evidence in support of respondents' contentions was introduced by them and by shippers producing aggregates in Alabama, South Carolina, and Tennessee. Opposing evidence was introduced by a rate expert of the Georgia commission and by representatives of certain Georgia shippers and receivers of freight. The chairman of the Georgia commission conferred with us as to the determination of the issues. Except as otherwise indicated, rates are stated in cents per ton of 2,000 pounds. They do not include the general increases authorized on March 2, 1942.

When the carriers' original petition was filed on January 27, 1941, the scale of intrastate rates on aggregates, prescribed as maximum by the Georgia commission, and generally made applicable June 1, 1940, to both single-line and joint-line shipments, was the same as the interstate single-line scale then in effect to and from points in Georgia. The interstate joint-line rates were differentially higher. Subsequently, by order of the State commission effective June 15, 1941, the intrastate joint-line rates for distances of 1 to 460 miles were increased 5 cents. As thus increased, they were the same as the interstate jointline rates for 321 to 460 miles, but 5 cents lower for 1 to 320 miles.

At the initial hearing, the petitioning carriers assailed as unlawful (1) the scale of intrastate rates on aggregates prescribed by the Georgia commission as maximum for joint-line hauls of 320 miles and less; (2) the intrastate rates on aggregates established from time to time to meet roadside, pit or truck competition, and intrastate water competitive rates on aggregates to Georgia ports, published to expire on specific dates, but which were maintained beyond such periods under State commission orders; and (3) the refusal by that commission to authorize a 3-percent increase similar to the general increase authorized by us on March 2, 1942, which had been added to interstate rates. Matters designated under (2) and (3) were disposed of prior to the further hearings by action of the Georgia commission. Therefore, generally, the only difference in the rates now in effect is that the intrastate joint-line rates for distances up to 320 miles are 5 cents lower than the interstate joint-line scale.

Respondents ask that the Georgia intrastate joint-line rates for 320 miles and less be increased 5 cents to the interstate level, but they

desire to continue in effect an intrastate truck-competitive rate of 40 cents, hereinafter discussed, which applies from Lithonia to points in the Atlanta group, for distances of 24 to 31 miles. The State commission has maintained in the past, and its rate expert at the hearings took the position, that multiple scales of rates on aggregates, that is, one scale for single-line hauls and another scale differentially higher for joint-line transportation, create discriminations as between producers, and this view is shared by certain Georgia shippers who participated in the proceeding. They seek one rate level for both singleline and joint-line hauls, and contend that the rates on aggregates which we prescribed for application on Georgia shipments are improperly graded, in that they are relatively too high for short distances and too low for the longer hauls. A scale is advocated which will permit rail traffic to move freely over short distanc ́s in competition with motor vehicles.

Various changes in the Georgia intrastate rates on aggregates have been made during the past 15 years. In docket No. 17517; 2 Rates on Chert, Clay, Sand, and Gravel, 122 I. C. C. 133, and 160 I. C. C. 309, distance scales, herein called the 17517 scales, were prescribed for application on aggregates to and from orgia and between points in the State. They became effective intocate on October 1, 1927, and intrastate on March 3, 1930. The intrastate schedules displaced a scale of rates prescribed by the Georgia commission for both singleline and joint-line transportation, which had become effective May 1, 1928, and which differed but little from the single-line scale approved in No. 17517. The order requiring the intrastate rates to be increased to the prescribed interstate levels was vacated as of March 10, 1932, No. 17517 having been reopened upon petition of the Georgia commission, and others to determine, among other things, whether a merged scale, or single-line and joint-line scales should be prescribed. In our report on further hearing in Rates on Chert, Clay, Sand, and Gravel, supra, 197 I. C. C. 215, decided November 7, 1933, we said, at page 242, "the evidence presented in these proceedings plainly supports the continuance of the * * dual system of rates as approved as reasonable and lawful in our prior reports in these proceedings," and the prior findings were affirmed. Thereafter, by order of April 11, 1934, the Georgia commission prescribed a scale of reduced rates for both single-line and joint-line application, but when the carriers obtained an injunction the State commission revoked its order. Effective May 25, 1938, the 17517 single-line scale, increased 10 percent, was made applicable intrastate in Georgia to both single-line and joint-line hauls on some aggregates, and effective July 19, 1938,

'A section 13 proceeding, with which were heard a number of complaint cases and an investigation and suspension proceeding.

the rates were reduced to the level in force for a time beginning May 1, 1928. This level was maintained until June 1, 1940, when another scale for both joint-line and single-line hauls, the same as the singleline scale which became effective interstate on April 30, 1940, was established, as above stated, pursuant to order of the Georgia commission. However, a differential scale was again established June 15, 1941, on order of the State commission, which made the intrastate rates 5 cents lower than the interstate scale, joint line, for distances up to and including 320 miles. The scales merge beyond this distance. The 17517 scales for 1 to 460 miles, the basic interstate scales which have been in effect since April 30, 1940, which are designated by respondents as the T-295 scales, and the intrastate scales in effect in Georgia, are set forth for comparison in the table below:

The T-295 scales are the same for distances here involved as the scales of rates on sand and gravel approved by an order entered April 11, 1940, modifying prior orders in Increases in Mississippi Freight Rates and Charges, 229 I. C. C. 755, and 232 I. C. C. 694. The T-295 single-line scale is lower than the 17517 single-line scale by 20 cents for distances of 1 to 10 miles, 15 cents for 11 to 20 miles, 10 cents for 21 to 50 miles, and the same for greater distances. The T-295 joint-line scale is lower than the 17517 joint-line scale by 25 cents for 1 to 10 miles, 20 cents for 11 to 20 miles, 15 cents for 21 to 50 miles, 5 cents for 51 to 150 miles, and the same for longer distances. These carrier scales are generally applicable interstate on aggregates to destinations in southern States other than Florida, and intrastate in Alabama, Kentucky, Mississippi, North Carolina, South Carolina,

and Tennessee. They were adopted as a compromise basis following many conferences between southern rail carriers and representatives of nearly all of the important shippers of aggregates in the South, in which representatives of various State highway commissions participated. In response to questions propounded by the cooperating Georgia commissioner to several of the counsel representing various shippers at the oral argument as to whether the shippers whom they represented were satisfied "with the present interstate aggregate rates," counsel replied in the affirmative.

According to an estimate made by respondents, an increase in the intrastate joint-line rates to the interstate level would increase the revenues of 11 class I railroads operating in Georgia by $36,849 per annum. The estimate is based on data compiled from bills of lading covering a test period of the 4 months of January, April, July, and October in 1941, when respondents handled intrastate shipments of aggregates weighing 630,026 net tons. Approximately 245,650 tons were joint-line shipments which were routed over the lines of carriers that now apply joint-line rates on joint-line interstate traffic. By railroads, the tons originated were Atlantic Coast Line Railroad Company, 14,713; Atlanta, Birmingham & Coast Railroad Company, 14,914; Atlanta & West Point Rail Road Company, 44; Central of Georgia Railway Company, 50,526; Georgia Railroad, 319,232; Louisville & Nashville Railroad Company, 35,144; Macon, Dublin & Savannah Railroad Company, 10,430; Nashville, Chattanooga & St. Louis Railway, 1,628; Savannah & Atlanta Railway, 16,541; Seaboard Air Line Railway Company, 27,031; and Southern Railway Company (including Georgia, Southern & Florida Railway Company), 139,823. Freight charges on these tonnages as compiled by respondents, based on the intrastate rates made effective in Georgia on June 1, 1940, . total $528,798, as compared with $541,081 under the interstate level, a difference of $12,283 for 4 months, and an estimated difference of approximately $37,000 on tonnage originated during the entire year. There appear to be no transportation reasons for applying different levels of rates on intrastate and interstate shipments, transportation conditions affecting each being substantially similar. Roads which participate in interstate traffic also handle intrastate tonnage and the 2 classes of shipments may be transported in the same trains. In our report on further hearing in Rates on Chert, Clay, Sand, and Gravel, supra, at page 325 we found "that the circumstances and conditions affecting intrastate transportation within Georgia and interstate transportation between points in Georgia, and from points in other States in southern territory, except Florida, to points in Georgia, are substantially similar."