No. 32219 BOGNAR & COMPANY, INC., ET AL. v. PENNSYLVANIA RAILROAD COMPANY Decided September 24, 1958 Rates on fire clay, in carloads, from New Galilee, Pa., to Sparrows Point, Md., found not shown to be unjust, unreasonable, or unduly prejudicial. Complaint dismissed. Michael J. O'Malley and Charles M. Donley for complainants. Eugene E. Anderson, Jr., and Raymond F. Scannell for defendant. Samuel P. Delisi for intervener supporting defendant. REPORT OF THE COMMISSION DIVISION 2, COMMISSIONERS WINCHELL, MURPHY, AND GOFF BY DIVISION 2: Exceptions to the proposed report of the examiner were filed by the complainants, and the defendant and the intervener replied. Exceptions and requested findings not discussed in this report nor reflected in our findings or conclusions have been considered and found not justified. By complaint filed on July 9, 1957, as amended at the hearing, the complainants, corporations engaged in the manufacture and sale of refractory products at New Galilee, Pa., allege that the rates1 charged on fire clay, in open and closed cars, from New Galilee to Sparrows Point, Md., are unjust, unreasonable, unduly prejudicial to them, and unduly preferential of a shipper at New Cumberland, W. Va. Lawful rates for the future are requested. The West Virginia Fire Clay Manufacturing Company, a shipper of fire clay at New Cumberland, intervened in support of the defendant insofar as the issue of undue preference and prejudice is concerned. The present rates on fire clay, in closed and open cars, minimum 60,000 pounds, to Sparrows Point are: from New Galilee 828 and 798 cents, and from New Cumberland 804 and 762 cents, respectively, or 24 and 36 cents lower from the alleged preferred origin than from New Galilee. The respective short-line distances from New Galilee and New Cumberland to Sparrows Point are 359 and 366 miles. Fire clay is a low-priced commodity used in the operation of steel mills, and is shipped generally in open-top cars. It may be divided 1 Rates and rate differences are stated per net ton, and do not include Ex Parte No. 212 Increases. roughly into three general classes: (1) A fine ground clay used for socalled laying-up of brick work in furnaces; (2) a fine ground clay known as ladle clay used for laying-up brick in blast furnaces and open hearth ladles; and (3) notch clay used to plug the notch or hole in blast furnaces. The Bethlehem Steel Company's plant at Sparrows Point is a large user of notch clay. The complainants compete with the intervener in the sale of fire clay at various eastern points. They desire particularly to serve the Bethlehem Steel Company plant at Sparrows Point. For this reason they seek freight rates from New Galilee on a parity with those of the intervener at New Cumberland. The complainants have been shipping fire clay from a plant at New Galilee since 1942 to numerous northern, eastern, and western points, but have been unable to ship to Sparrows Point. The clay at New Galilee is identical in quality with that produced at New Cumberland, and may be used for the same purposes by the same mills. Other producing points with which the complainants are connected, either directly through ownership or indirectly through purchase arrangements, do not furnish a product usable in exactly the same manner as the New Cumberland and New Galilee clay. The complainants contend that the rates on shipments from New Galilee to Sparrows Point should be on a parity with those from New Cumberland, as the distance from New Galilee to Sparrows Point is 7 miles shorter than that from New Cumberland; that they have been excluded from this specific eastern market owing to the difference in the rates; and that where a parity in rates exists the competitors share in the market. The intervener's market for the sale of this commodity is confined to eastern points, which area it has been serving for more than 30 years. The plant at Sparrows Point consumes about 30 percent of its total products, the remainder, with the exception of a small tonnage moving locally by truck, being shipped to the Bethlehem plants at Johnstown, Steelton, and Bethlehem, Pa. The intervener urges that the rate parity sought by the complainant would deprive it of a fair opportunity to compete in its only market, the East, and thus result in irreparable damage. The defendant serves both of the origins here concerned. It states that the rates on fire clay from New Galilee to Sparrows Point are part of a longstanding group and differential adjustment which should not be disturbed in order to give special treatment to a single shipper. Such a disturbance of the group adjustment, it claims, would result in a substantial overall loss of revenue to the carriers. The rates here assailed on fire clay are related to and grouped with those of a number of similar refractory products, such as firebrick, conduits, and tile, originally established by the carriers in 1911 after a comprehensive rate investigation and consideration of the competition between the various producing points. Owing to distortions of rate differentials resulting from numerous general percentage increases, in National Paving Brick Mfrs. Assn. v. Alabama & V. Ry. Co., 68 I. C. C. 213 (1922), hereinafter called the General Brick case, the level and relations of the rates on brick and various clay products applying east of the Rocky Mountains were reexamined. Therein, the Commission prescribed a general group and differential rate adjustment for application in all territories east of mountain-Pacific territory on articles contained in the uniform brick list, including ground clay and ground fire clay, which became effective on October 16, 1922. With the exception of certain modifications resulting from complaints in individual rate situations in official territory, the rate relations thus established have continued in effect since that time. These group adjustments are based on the so-called McGraham percentage formula. Rates on brick and clay, including fire clay and articles in the uniform list prescribed in the General Brick case from central-territory groups to trunkline territory were based on a key rate of 660 cents from Chicago, Ill., to New York, N. Y., the rates from other producing-point groups in central and trunkline territories being made percentages of the Chicago-New York rate. For example, the Canton, Ohio, group rate to New York is 71 percent of the Chicago-New York rate. The group adjustment in official territory was again reexamined and approved by the Commission in Eastern Brick Rates, 218 I. C. C. 59. Rate adjustments disturbed following general percentage increases have been restored by the carriers in order to maintain the fixed rate relations of the refractory interests. New Galilee is located in the most easterly part of the Youngstown, Ohio, group, which comprises many producing points. For rate purposes this group, under the McGraham formula, was assigned 66.5 percent of the Chicago-New York rate. New Cumberland, immediately south of the Youngstown group, is in the western part of the Pittsburgh, Pa., group. While Pittsburgh is normally a 60-percent group, the Commission in the General Brick case prescribed for this group a rate of 420 cents to New York, and established differential adjustments below that rate for groups immediately east of Pittsburgh. For example, rates from Connellsville, Johnstown, and Clearfield, Pa., to the New York group are, respectively, 5, 10, and 20 cents under the Pittsburgh rate. Sparrows Point is in the Baltimore, Md., group, which is 60 cents under the corresponding rate to New York. Under the above-mentioned formula, the Baltimore rate from Pittsburgh was 24 cents, 305 L. C. C. both in closed and open-top cars, under the Youngstown rate. At the present time, the spread of 24 cents, Pittsburgh under Youngstown, still prevails in closed cars but is 36 cents in open-top equipment. On shipments of fire clay from both origins to the Bethlehem Steel Company's plant at Lackawanna, N. Y., the rate situation is the reverse of that shown in the instant proceeding. To that point the complainants enjoy an advantage over the rates from New Cumberland of 30 and 27 cents in closed and open-top cars, respectively. Approximately 40 percent of the fire clay shipments to the Lackawanna plant is supplied by the complainants and none by the intervener. The groups established under the above-mentioned formula were designed to promote shipper competition and to stabilize rate relations between producing points and competing markets. Group adjustments have long been used in the establishment of freight rates so as to place shippers of a particular commodity on the same or related rate levels. All group adjustments are more or less arbitrary, and group lines usually have the appearance of injustice at points across such lines or because of the extent of the rate groups, but such situations do not necessarily constitute undue prejudice or preference. In a group adjustment of large scope, some disparities measured by distance alone are bound to occur, but the question whether the prejudice is undue must be considered in the light of the entire adjustment and the primary purpose for which it was established and is maintained. Whitacre-Greer Fireproofing Co. v. Atlantic C. L. R. Co., 200 I. C. C. 407, concerned issues based on facts similar to those here, wherein a shipper in the Youngstown group assailed the lower rates on hollow building title of a competitor located in the adjacent Pittsburgh group on shipments to eastern destinations, including Maryland. Division 3 concluded therein that since the evidence dealt only with a single point in each group, the showing made was insufficient to warrant a finding that would disrupt longstanding relationships and throw out of alinement the adjustment prescribed in the General Brick case. See also Hickory Clay Products Co. v. Atlantic Coast Line R. Co., 198 I. C. C. 599. A like conclusion is warranted here. These group adjustments have been generally satisfactory to the clay products industry for more than 35 years, and this record would not support a finding that the adjustment so long continued should now be disturbed. We find that the rates assailed are not shown to be unjust, unreasonable, or unduly prejudicial. The complaint will be dismissed. COMMISSIONER WINCHELL, being absent, did not participate in the disposition of this proceeding. No. 28000 (SUB-No. 165) IN THE MATTER OF THE APPLICATION FOR APPROVAL OF PROPOSED MODIFICATIONS OF SYSTEMS OR DEVICES UNDER PARAGRAPH (b), SECTION 25 OF THE INTERSTATE COMMERCE ACT, AS AMENDED NEW YORK CENTRAL RAILROAD COMPANY Decided October 10, 1958 Application of The New York Central Railroad Company for approval of the dis- John A. Daily and Bernard Hulkower for applicant. REPORT OF THE COMMISSION DIVISION 3, COMMISSIONERS TUGGLE, MURPHY, AND Walrath BY DIVISION 3: By an application filed pursuant to section 25 (b) of the Interstate Commerce Act, as amended, The New York Central Railroad Company seeks approval for the discontinuance of manual block system between Jay Street junction, Rochester, N. Y., and Charlotte, N. Y., a distance of 6.92 miles on the Charlotte branch of its Syracuse division, and the removal of railroad crossing signals at Hague Street, Otis, N. Y., and Charlotte. Hearing has been held. The granting of the application was opposed by the Brotherhood of Locomotive Firemen and Enginemen, the Order of Railway Conductors and Brakemen, the Order of Railroad Telegraphers, and the Brotherhood of Railroad Signalmen of America. Waiver of a proposed report was stipulated by the parties. The branch line between Jay Street junction and Charlotte is single track, and applicant's trains are currently operated by train orders and a manual block system. The manual blocking is handled by the telegraph operator in the Rochester passenger station and by the operator and an agent at Charlotte station. The only signals are at Jay Street junction, and these signals are controlled by the train dispatcher through centralized traffic control machines, CTC, located in the Rochester passenger station. At Hague Street, Otis, an industrial track crosses the single main track of the Charlotte branch at grade. Train movements over this |