steam railroad is in Racine, Wis. This carrier was not under Federal control during any part of the control period in 1917-20.

The receivers argue that there are only four classes of electric railways, as follows: Urban, suburban, interurban, and electrified sections of steam railroads. This entirely disregards commercial railroads operated by electric power, which have been many times recognized by the Commission as a distinct class of electric railways. See, among others, Piedmont & N. Ry. Co. Construction, 138 I. C. C. 363, 372; Texas Electric Ry., 208 I. C. C. 193, 202; Sacramento N. Ry., 208 I. C. C. 203, 207; Fort Dodge, D. M. & S. R. Co., 211 I. C. C. 9, 13; Des Moines & C. I. R., 214 I. C. C. 353, 358; and Salt Lake & U. R. Co., 214 I. C. C. 717, 721. The first of the above-cited decisions was sustained by the Supreme Court in Piedmont & N. Ry. Co. v. Interstate Commerce Commission, 286 U. S. 299.

In Texas Electric Ry., supra, the following rule was laid down for distinguishing between an interurban and a commercial railroad operated by electric power:

The Commission's views as to what constitutes an interurban were stated in Rules for Testing Other Than Steam Power Locomotives, supra. Those views should not be lightly departed from after Congress has authorized the Commission to determine the status of electric railways under a similar exemption provision in an act not otherwise administered by us. In harmony with that and similar decisions, we are of the opinion that an electric railway which is engaged in the general transportation of freight, whether the revenue therefrom is greater or less than its passenger revenue, which handles the bulk of such freight in standard equipment similar to that used by the steam railroads, which freely interchanges the same with the steam railroads for transportation to or from points on their lines, a considerable portion thereof being handled in interstate or foreign commerce, and which participates in joint rates with the steam railroads for interstate transportation, has more of the characteristics of a commercial railroad operated by electric power than of an interurban as that term is used in the exemption provision under consideration. Of course, there are many other circumstances and conditions which may have a bearing on the question, and some electric railways are of such an unusual character that their status might depend on other things, but we believe the factors referred to are generally the most important and should be given great weight where all of them exist together.

The North Shore appears to come close to possessing the abovementioned characteristics of a commercial railroad operated by electric power, but its status is not entirely clear, in view of the fact that it handles no carload freight to or from the two largest cities served and has no interchange connection with any steam railroad at either of those cities.

In Rules for Testing Other Than Steam Power Locomotives, 122 I. C. C. 414, a large number of electric railways were classified under a similar exemption of street, suburban, or interurban electric rail

ways in the Locomotive Inspection Act, and the North Shore was one of 35 electric railways which were there found not to fall within. the exemption. However, the evidence here differs considerably from that in the case cited as disclosed by the appendix to that report. For example, there is nothing to indicate that the Commission there had before it the fact that this carrier handles no carload freight to or from either Chicago or Milwaukee.

The receivers rely upon a decision by the District Court of the United States for the Northern District of Illinois, which was affirmed by the Supreme Court in United States v. Chicago N. S. & M. R. Co., 288 U. S. 1. That case involved the question of whether the North Shore fell within a similar exemption of street, suburban, or interurban electric railways in section 20a of the Interstate Commerce Act. It was there shown that this carrier had from time to time since March 1, 1920, issued securities with an aggregate face value of over $60,000,000, of which securities with a face value of approximately $39,000,000 were outstanding in the hands of the public; that these securities had been issued with the approval of the State commissions of Illinois and Wisconsin but without authority from this Commission under section 20a, on the theory that the carrier was exempt therefrom as an interurban; that this had been done with the knowledge of and without objection by this Commission for more than 10 years; and that if the carrier were not held exempt, all of the above-mentioned securities outstanding in the hands of the public would be void. After referring to this situation,

the Supreme Court said at pages 13, 14:

It would be difficult indeed to conceive a clearer case of uniform administrative construction of section 20a as applied to this company. Conceding that the proper classification of the railway is not free from difficulty, all doubt is removed by the application of the rule that settled administrative construction is entitled to great weight and should not be overturned except for cogent reasons. New York, N. H. & H. R. Co. v. Interstate Commerce Comm., 200 U. S. 361, 401; Logan v. Davis, 233 U. S. 613, 627; Brewster v. Gage, 280 U. S. 327, 336; Fawcus Machine Co. v. United States, 282 U. S. 375, 378; Interstate Commerce Comm. v. New York, N. H. & H. R. Co., 287 U. S. 178.

The primary responsibility rested upon the Commission to determine whether under the circumstances the railroad was required to procure leave under section 20a for the issuance of securities. Evidently entertaining serious doubts on this question it has for more than a decade resolved them in favor of the carrier, and the company and its officers have acted in reliance on the administrative tribunal's construction of the statute. At this late day the courts ought not to uphold an application of the law contradictory of this settled administrative interpretation.

It seems clear that the Supreme Court's decision was based on the peculiar situation above outlined, which has no counterpart in this

122018-37-Vol. 219-12

P

steam railroad

eral control duri The receivers:

railways, as sections of st

railroads op recognized:

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363, 372:

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9, 13; 7:

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was sustained as

Interstate Cami

zege a matter of first impression, we should, though ifficulty, be inclined to hold section 20a inapplica

to be stated, we consider the question settled. otations show that aside from the situa-cision, the court regarded the status of tor close question to decide. However, ...ven if the decision were not so required, the North Shore exempt from section titled to respectful consideration. The the North Shore's physical and traffic ally the same as when the evidence was

In Texas Micarload freight is now a somewhat larger eght business.

distinguishing operated by

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in Ruler feroić

1

portion of freight revenue to total revenue, a that of any other electric railway whose sued under the Railway Labor Act, except

views homie & Mactan Railroad Company and the New York, Railway Company, herein called the West& M. R. Co., 216 I. C. C. 745, that carrier was 100 cacings, sethough it handles no freight at all, but 22.97 of its total passenger revenue is derived from interline Bakong cử hảo 3 one operating arrangement with the Pennsylvania Hrebead Company, and it operates a down-town passenger terminal ing that cartier mi New York, N. Y. In New York, W. & B. Ry. Co., 45 5. C. C. 288, the Westchester was also found not exempt, although reight revenue was only 4.2 percent of its total revenue, but it is od by the New York, New Haven & Hartford Railroad Company sard was found to be a part of that carrier's system. Those decisions elearly distinguishable from the present case.

y this is a close or border-line case, but considering the d by the Supreme Court in the case hereinbefore cited, the absence of any opposition of record to the contencarrier is exempt, and the fact that no carload freight ...ed to or from or interchanged at either of the two principal ...which are much the largest cities served, the doubt must oved in favor of holding that the carrier falls within the pdon Wind that the Chicago North Shore & Milwaukee Railroad pany's line falls within the terms of the exemption proviso in ia paragraph of section 1 of the Railway Labor Act, as amended

1, 1934.

FOURTH SECTION APPLICATION No. 16328

SUGAR TO AUGUSTA, GA.

Submitted May 5, 1936. Decided November 4, 1936

Authority granted, on conditions, to establish and maintain a rate not lower than 29 cents per 100 pounds on sugar, in carloads, from Baltimore, Md., to Augusta, Ga., without observing the long-and-short-haul provision of section 4 of the Interstate Commerce Act.

R. T. Etheridge for applicants.

REPORT OF THE COMMISSION

DIVISION 2, COMMISSIONERS AITCHISON, TATE, AND SPLAWN BY DIVISION 2:

The Seaboard Air Line Railway Company (L. R. Powell, Jr., and Henry W. Anderson, receivers), the Baltimore Steam Packet Company, and the Georgia & Florida Railroad (W. V. Griffin and H. W. Purvis, receivers) apply for authority to establish and maintain a rate of 29 cents on sugar, in carloads, minimum 40,000 pounds, from Baltimore, Md., to Augusta, Ga., without observing the long-andshort-haul provision of section 4 of the Interstate Commerce Act. Relief was temporarily authorized by fourth-section order no. 12382. Rates and differences in rates are stated in amounts per 100 pounds. A water-and-rail rate of 29 cents is now in effect from Baltimore to Augusta and points in North Carolina and South Carolina on and east of a line roughly through Charlotte, N. C., Chester, Columbia, and Trenton, S. C., and Augusta. That rate applies over water-rail routes through Norfolk or Portsmouth, Va., and Savannah, Ga., and conforms to section 4. The purpose of the relief sought is to enable applicants to establish the same rate over the route of the Baltimore Steam Packet Company to Norfolk or Portsmouth, the Seaboard Air Line to Greenwood, S. C., and the Georgia & Florida to Augusta without reducing the rates to intermediate points. Departures will occur at points on the Seaboard Air Line between Sandy River, S. C., and Greenwood, inclusive, and on the Georgia & Florida between Greenwood and Augusta to which points the water-and-rail rate is 33 cents. The all-rail rate to the intermediate points is 36 cents and

to Angusta 22 cents. The proposed rate is 3 cents lower than the

By fourth-section order no. 10460, entered in fourth-section application no. 13517, the applicants therein were authorized to establish and maintain on sugar, in carloads, from Baltimore and north Atlantic ports to points in Sorth Carolina by way of their waterrail routes through Norfolk, Portsmouth, or Pinners Point, Va., rates the same as the lowest water-and-rail rates applicable from and to the same points over any water-and-rail route through Norfolk constructed on a basis not lower than 3 cents under the rates prescribed in Southeastern Sugar Investigation, 142 I. C. C. 459, for application from and to the same points, and to maintain higher rates to intermediate points. In the last-cited proceeding the Commission found, among other things, that reasonable all-rail rates from Baltimore to points in South Carolina will be rates equal to 27.5 percent of the first-class distance scale prescribed in the southern class-rate investigation for application between points in southern territory for the same distance. Due to unregulated water-carrier competition and motortruck competition the carriers comprising the routes from Baltimore and north Atlantic ports to various destinations in the South by way of Norfolk and Charleston, S. C., established rates on sugar substantially lower than 27.5 percent of first class. These socalled motortruck competitive rates from Baltimore to Augusta and destinations in North Carolina and South Carolina were constructed on the basis of rates of 5 cents to Norfolk or Portsmouth, or 15 cents to Charleston, plus the rates of the rail carriers beyond the ports. The proposed water-and-rail rate of 29 cents to Augusta is approximately 18.59 percent of the present first-class rate.

Class rates from Baltimore to Augusta applicable over water-andrail routes through higher-rated intermediate points in South Carolina are maintained under authority contained in fourth-section order no. 11200, as amended, entered in Rates from, to, and between Points in Southern Territory, 191 I. C. C. 507.

The movement of sugar to Augusta amounts to approximately 200 cars per year. A large portion of the movement is consigned to two receivers located on team tracks of the Georgia & Florida. This application is based upon the desire of applicants to handle this traffic over their route through Greenwood and to afford receivers of sugar at Augusta additional transportation facilities. The distance over applicants' route is 641 miles as compared with 447 miles over the shortest route through Savannah, 600 miles over the shortest route through Portsmouth, and 681 and 730 miles over other routes through Norfolk. It will be noted that applicants' route is 41 miles longer than the direct route through Portsmouth, but is 89 miles shorter