Commission's own motion into the rail and truck rates in generally the same territory as involved in the I. & S. cases.

Commodity description.-Rates applied geenrally on bulk petroleum products. Territory.-Rates applied from Friendship, N.C., a pipeline terminal, to various and points in the States of Virginia and West Virginia.

Level of preexisting and proposed rates.-The history of the preexisting rates was as follows: After the Commission order in I. & S. 5710, the railroads, on July 16, 1950, established a mileage scale of rates which, for the destination territory involved here, ranged from 21 cents in excess of the effective motor rates between the same points to 11.6 cents less than such rates. In late 1953, the railroads reduced their rates "to many points" to a level generally 1.5 cents less than truck. To some of these points the motor carriers reduced their rates so that "in January 1954 the motor and rail rates, for the most part, were on about the same level" (299 ICC 612). In early 1954, many rail rates and a few motor carrier rates were reduced so that the rail rates generally became lower than the motor rates. In January 1955, certain rail rates published to specified Virginia destinations reestablished the 1.5 cent differential and were suspended by the Commission. In February 1955, reduced motor carrier rates equalizing rail rates to two Virginia points were also suspended.

Basis for reduced rates.-The railroads relied upon figures showing the preponderance of the petroleum traffic from Friendship moved by truck prior to the establishment of the 1.5 cent differential. To one representative destination, the traffic divided 95.9 percent motor, and 4.1 percent rail prior to September 1954. In that period the rail rates had been higher than the motor carrier rates almost constantly. After establishment of the 1.5 cent differential under truck, the traffic had divided 76.3 percent rail and 23.7 percent truck. The railroads relied upon cost testimony showing that, for distances in excess of 75 miles, they were the low-cost carrier.

Commission holding and basis therefor.-The Division report prescribed a 1 cent differential rail under motor for distances 75 miles or more.

Upon further hearing it was developed that, under the preexisting rates, motor carriers had been handling about 83.5 percent of the total competitive traffic. It further developed that the railroads were the low-cost carrier, on a fully distributed basis, for distances in excess of 65 miles on gasoline and 55 miles on fuel oil, and on an out-of-pocket cost basis, for distances in excess of 55 miles on gasoline and 20 miles on fuel oil. Petroleum shippers objected to the establishment of the 1-cent differential by a "forced increase in some of the tank truck rates" (p. 684), and indicated they would divert their traffic to private carriage if this adjustment were maintained.

Upon further hearing, the Commission found lawful the rate adjustment then in effect which reflected a 1.5-cent differential rail under motor rates. In so holding it relied upon the national transportation policy section 15(a)(2) and section 16(i). In the course of so holding, it stated that petroleum traffic "can and should pay not only its direct cost of transportation service, but also as nearly as practicable, its full share of the representative cost and expenses of each agency, plus a fair profit" (p. 687). It noted that the tank truck operators were solely dependent upon petroleum traffic for their revenue and they were the low-cost carriers for some of the traffic and that "other inherent advantages are also entitled to consideration" (p. 687). It also indicated the interest of rail shippers, with sizable financial investments in storage facilities on rail, must be considered.

APPENDIX IV

PROCEEDINGS INVOLVING RAIL RATE REDUCTIONS ON SOYBEAN AND VEGETABLE

ACIDS

1. SWL Tariff No. 318 ICC No. 4275, February 27, 1958, I. & S. Docket 6915. 2. SWL Tariff SW 2004-B, ICC 4299, July 10, 1959.

3. SWL 318-A ICC 4441 Supplement 3 effective December 27, 1961, cut the soybean oil rates from Emporia and Wichita, Kans., to Dallas and Fort Worth. The tank truck carrier met these cuts and petitioned both publications be suspended which was denied by the ICC (ICC No. 28812).

4. SWL 318-A ICC 4441 Supplement 6 effective January 27, 1962, cut the soybean oil rates from Fredonia, Kans., to Dallas, Tex., and from Wichita, Kans., to Fort Worth, Garland, and Sherman, Tex. The tank truck carrier's petition for suspension was denied (ICC No. 29137).

5. SWL 318-A ICC 4441 Supplement No. 11 effective April 27, 1962, cut the soybean oil rate from 20 various Arkansas, Missouri, Tennessee, Kansas, and Oklahoma origins to Dallas, Denison, Fort Worth, Garland, and Sherman, Tex. The tank truck carrier's petition for suspension was denied (ICC No. 29976).

6. SWL 318-A 4441 Supplement No. 17 effective June 27, 1962, cut the soybean oil rate from numerous origins in Kansas, Arkansas, Missouri, and Tennessee to Oklahoma City, Okla., Houston, Tex., and Gretna and New Orleans, La. The tank truck carrier's petition for suspension was denied (ICC No. 30581).

7. SWL Tariff No. 318, Supplement No. 20, ICC No. 4441, effective July 18, 1962, cutting soybean oil rates from Fort Smith, Morrilton, and Van Buren, Ark., to Dallas, Denison, Fort Worth, and Sherman, Tex. The tank truck carrier's petition for suspension was denied (ICC No. 30824).