rated intermediate points shall not be increased, except as may be authorized by the Commission, and shall in no instance exceed the lowest combination of rates subject to the act; and provided, further, that the authority herein granted shall not apply to any line or route over which the distance is more than 50 percent longer than the distance over the short tariff line or route from and to the same points. In conforming to these limitations the average distance from all points in the group or the distance from a centrally located point in a group instead of distances from individual points may be compared with the distances determined in like manner over the short tariff routes. All other and further relief prayed will be denied. 246 L. C. C. No. 27757 BLUE RIDGE GLASS CORPORATION v. ALABAMA GREAT SOUTHERN RAILROAD COMPANY ET AL. Submitted February 20, 1941. Decided July 9, 1941 On further hearing, finding in prior report, 231 I. C. C. 715, that rates on roughrolled glass, in carloads, from Kingsport, Tenn., to destinations in the Southwest were and would be unduly prejudicial, reversed. Order vacated, and complaint dismissed. Wilbur LaRoe, Jr., Frederick E. Brown, Arthur L. Winn, Jr., and J. D. Musick for complainant. Wallace T. Hughes, Fred L. Wallace, C. S. Burg, James G. Blaine, H. H. Larimore, Robert Thompson, M. G. Roberts, Wm. W. Dalton, and H. J. Carr for defendants. REPORT OF THE COMMISSION ON FURTHER HEARING DIVISION 3, COMMISSIONERS MAHAFFIE, ALLDREDGE, AND JOHNSON BY DIVISION 3: Exceptions were filed by defendants to the report proposed by the examiner. Our conclusions differ from those recommended by him. In the prior report, 231 I. C. C. 715, decided February 27, 1939, division 3 found that the rates on rough-rolled glass, plain and wire, in carloads, from Kingsport, Tenn., to points in Arkansas, Louisiana, Mississippi, Oklahoma, and Texas (except points west of a line from Amarillo through San Antonio to Corpus Christi), had not been shown to be unreasonable, but that they were, and for the future would be, unduly prejudicial to complainant and unduly preferential of its competitor at Okmulgee, Okla., to the extent that the rates on like traffic from Okmulgee were, or might be, less than the rates from Kingsport to the same destinations by amounts greater than would result from the maintenance thereto of rates from Okmulgee based on 27.5 percent, minimum 40,000 pounds, and rates from Kingsport based on 32.5 percent, minimum 40,000 pounds, of the corresponding contemporaneous first-class rates. Defendants complied with the order entered in conformity with that finding by establishing, effective June 30, 1939, a rating of 27.5 percent of first class from Okmulgee, thereby materially increasing the rates from that point. Upon a petition filed by the defendant carriers in southwestern territory, asking modification of the order so as to permit them to establish rates 430790-42-VOL. 246- -5 which they consider necessary to meet motor-carrier competition from Okmulgee, we reopened the proceeding for further hearing. Defendants in southern territory opposed the petition and did not participate in the further hearing. Rates will be stated in cents per 100 pounds. No party has challenged the correctness or adequacy of the recital in the prior report of the facts developed at the original hearing. Complainant has abandoned its allegation of unreasonableness, admitting that "the case simmers down finally to a straight question of prejudice and preference." In August 1936, defendants reduced the rate on rough-rolled glass from Okmulgee to New Orleans, La., to 32.5 cents, approximately 15 percent of first class and but slightly more than one-half the corresponding truck rate, and made that rate applicable to intermediate points in Mississippi, Louisiana, and Texas. The basis of 32.5 percent of first class, which the Commission had approved as the maximum reasonable basis of rates on this traffic in both southwestern and southeastern territories, continued in effect from Kingsport. The resulting disruption of the relation of rates from Kingsport and Okmulgee to the points accorded the 32.5-cent rate constituted the principal ground for the complaint. Defendants now "are willing to accede to the same basis of rates, mile for mile," from Kingsport and Okmulgee to New Orleans, but desire to reestablish what they designate the "truckcompelled rates from Okmulgee to points in Texas which were in effect prior to June 30, 1939, or to establish such rates as may be necessary to meet truck competition." The following table compiled from the record shows the rates established on June 30, 1939, from Kingsport and Okmulgee to representative southwestern destinations, those in effect immediately prior to that date from Okmulgee, the motor-carrier rates from Okmulgee, and rates made 27.5 percent of the first class from Kingsport. 1 Minimum 14,000 pounds. * Minimum 40,000 pounds. 32.5 percent of first class. 427.5 percent of first class. At the further hearing, defendants confined their evidence to the rates and competitive conditions affecting traffic from Okmulgee to Texas destinations. Their exhibits show the movement of roughrolled glass from Okmulgee by rail and by truck to Dallas and Fort Worth combined, and to Houston, Waco, Wichita Falls, and Abilene, Tex., separately, for the three periods, January 1 to June 29, 1939, June 30 to December 31, 1939, and January 1 to August 31, 1940. No shipments moved by either means of transportation to the latter three points during 1939. During the 8 months of 1940, there was no movement by rail, and only 10,029 pounds to Waco, 27,807 pounds to Wichita Falls, and 9,569 pounds to Abilene by truck. Even to Wichita Falls, the movement by truck during the 8-month period aggregated little more than two-thirds of a minimum carload. No rates to Wichita Falls or Abilene are shown. Defendants desire to reestablish a rate of 35 cents, minimum 40,000 pounds, from Okmulgee to Waco, although the corresponding truck rates are 55 cents, minimum 14,000 pounds, and 51 cents, minimum 40,000 pounds. During the three periods described, the movement by truck from Okmulgee to Dallas and Fort Worth combined was 75,301, 95,875, and 92,322 pounds, or approximately 2, 2.4, and 2.3 minimum carloads, respectively. The truck rate was 44 cents, and the carload rates were 35 cents prior to June 30, 1939, and 37 cents thereafter. There is no showing that any shipment that moved by truck weighed enough to justify its movement as a carload at any compensatory rate. It will be noted that the carload rate was increased only 2 cents, and that it still was 7 cents lower than the truck rate. The increase obviously did not affect the movement by rail; only one carload moved to Dallas and Fort Worth during the 6-month period ending June 30, 1939, and three moved during the succeeding 14 months. A somewhat different situation is presented in connection with the movement from Okmulgee to Houston during the three periods. In the 6 months when the rail rate was 36 cents and the truck rate was 50 cents, the movement was 24,668 pounds by truck and 272,037 pounds, or about 6.8 minimum carloads, by rail. In the 6 months after the rail rate was increased to 54 cents, the movement by truck was 226,554 pounds, and during the next 8 months it was 296,311 pounds. No shipments moved by rail at the 54-cent rate. It cannot be determined from the evidence how much, if any, of the truck traffic to Houston was potential carload traffic. The cessation of movement by rail over a period of 14 months and the increase in the movement by truck indicate the necessity for a different relation of rates by rail to those by motor carrier on traffic to Houston. Defendants seek to reestablish a rate of 36 cents, which is the former rate to New Orleans, and by intermediate application to Houston, increased 10 percent. The truck rate to Houston, 472 miles, is low as compared with truck rates of 44 cents to Dallas, 230 miles, 55 cents to Waco, 327 miles, and 66 cents to Austin, 434 miles. The general levels of truck rates in the Southwest are stated to be 32.5 percent of first class, minimum 40,000 pounds, and 40 percent of first class, minimum 14,000 pounds. On the latter basis, the rate from Okmulgee to Houston would be 77 cents. The facts strongly suggest that the disadvantageous situation in which defendants find themselves should be corrected by an increase in the rate by truck, rather than by a reduction in the rate by rail which might create undue prejudice and preference as between shippers. The only question here in issue, however, is whether, under all of the circumstances and conditions disclosed, the rates from Kingsport to the destinations covered by the complaint are in violation of section 3 of the act. Our negative finding on that issue renders this an inappropriate proceeding for disposition of the question of properly related rates as between the competing forms of transportation. In the prior report, division 3 concluded that: By establishing rates from Okmulgee which in some instances are less than 50 percent of the column 32.5 rates approved by the Commission as maximum reasonable rates for the traffic, and which in many instances are less than 60 percent of the truck rates between the same points, the defendants have created a disparity in rates clearly subjecting the Kingsport complainant to undue prejudice and disadvantage in competing with the Okmulgee intervener in the territory considered. However, the existence of truck competition from Okmulgee and not from Kingsport, constitutes a difference in circumstances and conditions warranting rates from Okmulgee relatively somewhat lower than those from Kingsport. Complainant presented evidence at the further hearing of the recent development of truck competition from Kingsport to the Southwest. Its witness named seven common-carrier truck lines, operating large numbers of trucks on regular schedules, which serve Kingsport and have direct connections to southwestern destinations, including those treated in defendants' traffic analyses. During the year ended June 30, 1940, complainant shipped 2,275,174 pounds of rough-rolled glass to the Southwest, 21.3 percent of which moved by common-carrier trucks. The truck rates from Kingsport are higher than those by rail, but expedition in transit and the fact that the trucks make delivery directly to the building sites frequently induce consignees to elect to pay the difference between the charges by rail and by truck. For example, complainant shipped 40,000 pounds to Shreveport by truck at a combination rate of $1.08, when the available rail rate was 85 cents. The motor carriers usually maintain rates from Kingsport subject to a minimum of 40,000 pounds |