BY JOHN F. DONELAN, Editor

Increased Switching Charges

The Interstate Commerce Commission, on December 1, made public its report by Commissioner Goff in Sub 2 of Ex Parte 223, in which it found that a proposed general increase in rail switching charges is not just and reasonable. In part, the Commission found that the application of flat increase on varying levels of terminal switching charges through the nation is unreasonable because it results in substantially greater percentage increases at certain terminals than at others. The proposed increases would apply only on switching movements not connected with linehaul.

The Commission found that a uniform percentage increase, subject to varying maximum amounts, equal to 20 percent over prior charges not to exceed $7.50 in the eastern district, $5.00 in the western district, and $3.75 in the southern and Pocohontas regions will be just and reasonable. Such increases would be applied on the type of switching service described in Par. (c) of Item 165 of the Tariff of Increased Rates and Charges, Ex Parte 223, as well as that described in Par. (a) and regardless of the type of carrier or agency of transportation which serves as a connection. Commissioners Freas and Webb dissenting in part would have found the $7.50 flat increases just and reasonable; Commissioner Walrath, dissenting in part, did not agree with the application of the increased item 165 (c).

Rail Joint Rates With Seatrain Lines

The I. C. C. served and distributed through statutory channels on December 1, the report and order of Hearing Examiner W. J. Kane in which it is recommended that the Commission find the failure of the railroads to join with Seatrain Lines, Inc., in the establishment of joint through rates on exceptions and commodity-rates traffic between points in eastern seaboard territory and in southern and southwestern territories, and to agree upon equitable divisions thereof, is in violation of sections 1(4) and 3(4) of the Interstate Commerce Act. The Examiner recommended that the rail defendants be required to establish for the future, single-factor joint through rail-water-rail differential rates not exceeding 5 percent under the corresponding all-rail rates on the traffic involved.

Rail Rates on Cotton, etc., to Gulf Ports

On December 11, the I. C. C. served the report and order of Hearing Examiner R. J. Mittelbronn in Docket 33558, in which it is recommended that the Commission find that rail class, exceptions and commodity rates applicable on certain commodities assailed by Brazos River Harbor Navigation District are-except as to cotton, grain and grain products and potash-found not shown to be unjust or unreasonable, but are

and for the future will be unduly preferential to the Houston Port group and the Port of Beaumont as to movements in export, import, coastwise and intercoastal commerce between points in Texas, eastern New Mexico, eastern Colorado, Kansas and Oklahoma on the one hand, and Freeport, Texas on the other. The Examiner recommended that such rates should not exceed the contemporaneous rates to Beaumont. Rail rates on grain and grain products and the transit arrangements in connection therewith were not shown to be unjust or unreasonable but are unduly prejudicial to Freeport and unduly preferential to Houston, Galveston and other Texas ports.

The Examiner made a like conclusion as to rail rates on cotton and potash.

Baltimore & Ohio—Mahoning Valley Railroad Control

On December 6, Finance Board No. 3 of the I. C. C. served its report and order in F.D. 21622, in which the Baltimore & Ohio as operators of the properties of its subsidiary-the Buffalo, Rochester and Pittsburgh Railway Company, and the latter company were authorized to acquire direct control of the Mahoning Valley Railroad Company through purchase of all the latter's capital stock and the Baltimore & Ohio to acquire indirect control of the Mahoning Valley and to continue to operate the rail properties of both companies. cluded in the properties of the Buffalo-Rochester (which are operated by the Baltimore & Ohio) is approximately 342 miles of owned line located in New York and Pennsylvania, and all of the rail properties of the Mahoning Valley which the Buffalo-Rochester has leased since May 1, 1896.

Railroad Operating Reports

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Division 2, on December 1, issued its order in Docket 33687, denying petitions filed by the Railway Labor Executives' Association, Security Research Bureau, Inc., and Congressman John B. Bennett, seeking reconsideration of the Commission's order of July 12, 1961, which requires the filing, beginning with the first quarter of 1962, of reports of revenues and expenses, Form R&E, and of income and balance sheet items, Form IBS, on a quarterly rather than on a monthly basis as formerly required.

Uniform System of Accounts for Railroads

The I. C. C. has caused to be published as Part II of the Saturday, November 25, 1961 issue of the Federal Register, the revised Uniform System of Accounts for Railroad Companies which became effective January 1, 1962.

Internal Revenue to Study Rail Depreciation Schedules

Treasury Secretary Dillon announced on December 6 that the Internal Revenue Service will undertake special engineering studies of railroads and five other major industries as part of the Department's review of depreciation schedules.

Internal Revenue Service engineers will examine the "useful lives" of major types of machinery and equipment in railroads and the following other industries: aircraft and parts manufacturers, automobile manufacturers, electrical machinery and equipment manufacturers, metal working machinery and machine tools and steel mills.

Section 5a Agreement for Eastern Railroads

Division 2, by order served December 5, has approved modifications in an agreement between eastern railroads classified as Application No. 3 under section 5a of the Act, which abolish the Freight Traffic Committee Trunk Line Territory, and the Freight Traffic CommitteeCentral Territory, and provide for the disposition of emergency proposals without public hearing.

Lehigh Valley Loan Guaranty

The I. C. C. on November 29 approved a Lehigh Valley Railroad Company application for Government guarantee of a $5 million loan to reimburse the carrier's treasury for expenditures for certain additions or betterments or other capital expenditures. Of the total loan, $1,670,000 will be at 4.5 percent and $3,330,000 at 5 percent.

I. C. C. Disapproves Proposed Barge-Rail Rate on Bituminous Coal

In I & S Dockets 7368 and 7524 the Commission has disapproved a proposed barge-rail rate on bituminous fine coal in minimum lots of 5,000 net tons from Huntington, West Virgina, to points in the Chicago, Illinois, district. The rate of $3.36 a ton had been filed by the Chicago & Eastern Illinois Railroad Company and the Ohio River Company. The proposed division was $2.04 to the railroad and $1.32 to the barge line.

Of the proposal, the Commission stated:

From the evidence presented, we determine that the out-ofpocket cost on the Ohio Company, plus the cost of dumping the coal at Huntington and the transfer cost (from barge to railroad) at Mount Vernon, Indiana, approximates $1.268, which added to the cost of $2.1476 on the Chicago & Eastern Illinois produces a through out-of-pocket cost of $3.416, or substantially in excess of the proposed rate. It is thus apparent that the rate as proposed is not compensatory.

BY RICHARD R. SIGMON, Editor

J-T-Reddish Cases Remanded

The Commission erred in indulging in a presumption that existing carriers would be adversely affected by a loss of "potential" traffic, and by placing on a contract carrier applicant the burden of proving the inadequacy of existing service. This was the conclusion of the United States Supreme Court, which affirmed lower court judgments remanding the applications to the Commission for further consideration. Interstate Commerce Commission v. J-T Transport, and Atchison, Topeka & Santa Fe R. Co. v. Reddish, and related cases, Nos. 17, 18, 49, 53, and 54, October Term, 1961, 30 LW 4019 (Lower court opinions noted 28 ICC Pract J 74, and 28 ICC Pract J 372).

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The Commission's approach in emphasizing the protestants' interest ignores the other criteria specified in § 209 (b), Interstate Commerce Act, as amended, and particularly slights the shipper's requirement for a transportation service designed to meet its "distinct need. this regard, the adequacy of the existing services for normal needs and the willingness and ability of the existing carrier to render the service is not, in the Court's thinking, the end of the matter, because it is the "distinct need" of the shipper which must be considered and that need may be unmet by the existing services if the new (contract carrier) service is better tailored to fit the special requirements of a shipper's business, the length of its purse, or the select nature of the delivery service that is desired."

Mr. Justice Frankfurter, with Mr. Justice Harlan and Mr. Justice Steward joining dissented in the J-T Transport case because the District Court there improperly assumed that the 1957 contract carrier amendments introduced a "radical departure" in the regulatory policy of preserving and protecting common carrier service by controlling the number and scope of contract carrier operations. Rather, in the dissenting justices' view, Congress was, in the statutory amendments, giving the Commission more helpful standards than in the existing law through harmonious amendments. The "adequacy of existing service" test which had been carefully forged in the 1935-1957 period was not erroneously imported as a "sixth criterion" but is implicit in the third factor enunciated in amended § 209 (b): "the effect which granting the permit would have upon the services of the protesting carriers.”

The same three justices concurred in the Reddish remand on the narrow ground that the Commission should determine whether the rates of the protestant motor carriers are prohibitive.

New York, Chicago Commercial Zones

In MC-C-2, New York, N. Y., Commercial Zone, decided November 17, 1961, the Commission found that the § 203 (b) (8) exemption should be extended to embrace motor transportation of shipments which have

had a prior or will have a subsequent, movement by rail carrier, and which is performed wholly between points in the existing exempt zone around New York, on the one hand, and, on the other, the Pennsylvania Railroad's trailer-on-flatcar terminal at Kearny, New Jersey.

In reaching its conclusion, the Commission rejected a contention that alteration of the commercial zone exemption cannot be based on the private competitive interests of an individual carrier, since the maintenance of sound economic conditions among regulated carriers is an important phase of the National Transportation Policy.

Vice Chairman Murphy and Commissioners Walrath and Herring dissented on the ground that the majority's view establishes a dangerous precedent that may lead to a further breakdown in regulation. Commissioner Freas also dissented.

In MC-C-3, Chicago, Ill., Commercial Zone, decided November 14, 1961, division 1, on reconsideration, concluded that Elk Grove, Illinois, is not within the commercial zone of Chicago.

Second Proviso Operations

A state franchise for operations interstate commerce will not support operations under the second proviso of § 206(a)(1). MC-C-2507, Daniels-Investigation of Second Proviso Eligibility, decided November 21, 1961.

Automobile Delivery

The automobile delivery business was again before the Commission in MC-C-3117, Spencer-Investigation of Operations, decided October 31, 1961, by division 1.

The respondent's customers were primarily vacationers going to resorts in Florida, California, and Arizona. While formally respondent brought owners and casual drivers together, the division found that, in practice, respondent proposed the specific elements of the agreement, screened the drivers, had them fingerprinted and photographed, and attempted to keep contact with them during the trip, and this resulted in respondent holding out and actually providing a transportation service to the public. Respondent's disclaimer of responsibility and control and his use only of casual drivers did not negate his carrier status. Commissioner Webb dissented.

Air Motor Transportation

Another aspect of the problem of motor transportation of freight moving partially by air was considered by division 1 in MC-123034, Special Delivery, Inc., Ext.--Bradley Air Field, decided November 7, 1961. In that proceeding, applicant sought, in part, authority for certain motor transportation not within the § 203 (b) (7a) partial exemption. The application was supported by three air freight forwarders holding no authority from the I. C. C. The division concluded that:

[A]ny person performing the functions of a freight forwarder (which the three supporting shippers here do) and which uses the