# Appendix — Aberdeen & Rockfish R. Co. v. Students Challenging Regulatory Agency Procedures (SCRAP) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_0118%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1975 - **Citation:** 422 U.S. 289 ## Text _— ~—_ In the Supreme Court of the Anited States Ocroser ‘erm, 1974 Nos. 73-1966 and 73-1971 ABERDEEN AND RockrisH RaiLRoAD COMPANY, ET AL., APPELLANTS V. SrupENTS CHALLENGING REGULATORY AGENCY Procepures (S.C.R.A.P.), Ev AL. AND Unirep States or AMERICA AND INTERSTATE COMMERCE COMMISSION, APPELLANTS Vv. SrupEeNTs CHALLENGING KecuLaTtory AGENCY Procepurges (8.C.R.A.P.), er at. ON APPEAL FROM THE UNIZ2ZD STATES DISTRICT COURT FOR THE DISTRICS OF COLUMBIA eee et et reneeeenenttaenaeantinantiamnnendenedcnsticmenandliedeaaedatid —— ee a FILED JULY 2, 1974 PROBABLE JURISDICTION NOTED OCTOBER 15, 1974 TABLE OF CONTENTS Order of the Supreme Court noting probable jurisdiction, ey ET Be ND oo ke dirncas cnddidecesedcosekes Interstate Commerce Commission Fina! environmental impact statement? of Interstate Com- merce Commission, entitled Ex parte No. 281, Increased Freight Rates and Charges (Environmental Matters), Final Report, May 1, 1973, reported at 346 I.C.C. 88-277 ........ Draft environmental impact statement of Interstate Com- merce Commission, issued March 5, 1973 ................ Verified statements (V.S.) and reply verified statements (R.V.S.) : Se ee in aku coc encnsehasenns Wate Bk Oe Os Ge OE ov ccc chécececceccocceceac V.S. No. 27, A. Paul Funkhouser ...................6. Was Be ie I a BE . . cv cccccccceceeececeecs V.S. No. 195, A. Paul Funkhouser .................... ee es i nn cucu cncccncsen Ss I cee dennnnne Te ns i Va es ee Se Ek ED oon cocenccsecedeceeccecs ee es no i ecu cececenceces re Se, i a cee ceneence R.V.S. No. 24, Robert E. Parrish ...........ccccccceces R.V.S. No. 31, William J. Bolch, et al. ................ ee, Se on ons cecbeusbecececess ae Se ee ss ID... cc cccccceccecceceeces as Se Ge Oe Oe EE. . occu ccecconcesscecces R.V.S. No. 65, Joseph Feldman ..............0cecceees R.V.S. No. 76, G. J. Robinson .......ccccccccccccccces R.V.S. No. 77, Edward L. Pepper .............cceceees I R.V.S. No. 89, William J. Bolch .......... ccc ccc cc ccce Page bo 1 The opinion and judgment entered February 19, 1974, in the district court are printed as Appendices B and C to the Jurisdictional Statement. * The Commission’s order of May 3, 1974, discontinuing the proceeding, is printed as Appendix E to the Jurisdictional Statement. Letter and attachment of Chairman Russell Train, Council on Environmental Quality, to Chairman George Stafford, Interstate Commerce Commission, dated October 30, 1972.. Letter and attachment of Sheldon Meyers, Environmental Protection Agency, to Robert Oswald, Interstate Commerce Commission, dated October 30, 1972 .................... Letter of Sidney R. Galler, Deputy Assistant Secretary of Commerce for Environmental Affairs, Department of Com- merce, to Secretary Robert L. Oswald, Interstate Commerce Commission, dated April 12, 1973 ...................... Railroad respondents’ comments in support of draft environ- mental impact statement, dated April 12,1973 ............ Comments of General Services Administration on draft en- vironmental impact statement, dated April 12, 1973 ....... Comments of Institute of Scrap Iron & Steel, inc., in opposi- tion to draft environmental impact statement, dated April SUA 60:5.0080.006s bhelieuhunnsecdéeecnda peeeeueueacne Comments of Environmental Defense Fund, National Parks and Conservation Association, and Izaak Walton League of America on draft environmental impact statement, dated April 12, 1973, with appendix ......................... Comments of S.C.R.A.P. on draft environmental impact state- ment, dated April 11, 1973 ... 0... ccc ccc cccccccccece Comments of Copperweld Steel Company on draft environ- mental impact statement, dated April 12,1973 ............ Comments of National Association of Secondary Material Industries, Inc., on draft environmental impact statement. . Letter of Wm. W. Lyons, Deputy Assistant Secretary of the Interior, to Robert L. Oswald, Secretary of Interstate Com- merce Commission, dated April 13, 1973 ................ Letter of Chairman Russell E. Train, Counsel on Environ- mental Quality, to Chairman George Stafford, Interstate Commerce Commission, dated Se Be ME ovccvccaccdar Letter and attachment of Sheldon Meyers, Environmental Protection Agency, to Robert L. Oswald, Interstate Com- merce Commission, dated April 19, 1973 ................ Letter of John Quarles, Acting Deputy Administrator of En- vironmental Protection Agency, to Robert Oswald, Inter- state Commerce Commission, dated June 6,1973 .......... Ex parte No. 270 (Sub-No. 6), Railroad Freight Rate Strue- ture, Investigation of Scrap Iron and Steel (38 Fed. Reg. PUD WE OE DUE 00 060s cc anceanvccecnscccccocdl ae Page 566 571 576 580 597 608 716 In the Supreme Court of the United States Nos. 73-1966 anp 73-1971 ABERDEEN AND Rockrisu RarLroapD CoMPANY, ET AL., APPELLANTS Vv. STuDENTs CHALLENGING ReGuLATORY AGENCY Procepures (S.C.R.A.P.), eT aw. AND Unirep States, ET AL., Stupents CHALLENGING RecuLatory AGENCY Procepures (S.C.R.A.P.), ev aL. Appeats from the United States District Court for the District of Columbia. The statements of jurisdiction in these cases having been submitted and considered by the Court, probable jurisdic- tion is noted. The cases are consolidated and a total of one hour is allotted for oral argument. October 15, 1974 Mr. Justice Powell took no part in the consideration or decision of this order. June 1 to bo ~ * w t - ~ 7 w~ = ~~: June 12 Docket Entries Filed complaint. Issued summons and comp/aint. Issued summons and complaint to involuntary plaintiff, Filed motion for appointment of special process servers; filed memorandum in support of motion. Filed motion and memorandum in support of motion for prelimi- nary injunction. Filed application and memorandum in support to convene a three-judge court. Issued affidavit of service on involuntary plaintiff. Issued affidavit of service on detendant Attorney General and U.S. Attorney. , Entered order appointing special process servers. Filed motion for extension of time to respond to plaintiff's motions; memorandum in support of motion. Filed joint motion to dismiss complaint, memorandum in support of motion and in opposition to preliminary injunetion, notice. Filed memorandum and notice in opposition to application for three-judge court. Filed motion and memorandum in support for temporary re- straining order. Filed motion of Environmental Defense Fund, The National Parks and Conservation Assoc. and the Izaak Walton League ot America to intervene as plaintiffs, memorandum in support. Filed motion of Aberdeen and Rockfish Railroad Co. et al. te intervene as defendants Granted motion to intervene of Aberdeen and Rockfish R.R. Granted motion of Environmental Defense Fund, the National Parks and Conservation Association and the Izaak Walton League to intervene. Denied defendants’ motion to dismiss. Denied plaintiffs’ motion for temporary restraining order. Granted motion for three-judge court. Filed order denying motion to dismiss and motion for temporary restraining order, Filed motion and memorandum in support of Environmental Defense Fund, The National Parks and Conservation Assoe. and the Izaak Walton League of America to intervene as plaintitts. Filed designation of three-judge panel, Filed motion and memorandum in support for preliminary in- junction of Environmental Defense Fund. Fried opposition to motion to dismiss complaint. Filed order granting Environmental Defense Fund, the National Parks and Conservation Association, and the Izaak Walton League of America leave to intervene, 2 1972 June 12 13 July 10 Nov. 7 Docket Entries Filed notice to enjoin enforcement of orders of ICC regarding freight rates to be determined by three-judge court. Filed motion, affidavit and notice for consolidation with C.A. 806-72. Filed amended complaint and memorandum in support. Filed supplemental memorandum in support of motion for pre- liminary injunetion. Filed memorandum in opposition to motion to consolidate. Filed memorandums of Aberdeen and Rockfish R.R. in opposition to motion to consolidate and to motion for preliminary in- junetion. Hearing begun; concluded ; taken under advisement. Filed memorandum of points and authorities in opposition to plaintiffs’ motion to dismiss. Entered memorandum opinion and order granting plaintiffs’ motion for preliminary injunction and denying defendants’ motion to dismiss. Filed injunetion. Filed motion, memorandum in support, and notice for stay pending appeal. Filed order denying application of intervening railroads and ICC for a stay of judgment pending appeal. Filed defendants’ notice of appeal to the U.S. Supreme Court. Filed certificate of mailing of notice of appeal by USA. Entered transcript of proceedings. Entered decision from the Supreme Court of U.S. dated July 19, 1972. Filed notice of appeal to Supreme Court by LCC. Filed notice of appeal to Supreme Court by intervenors. Filed motion of plaintiff for preliminary injunction and to ex- pedite oral argument, memorandum in support. Entered order allowing plaintiff 10 days to file memorandum on the necessity of having expedited oral argument; continuing hearing set 11/10/72. Fiied defendants’ opposition to motion for preliminary injune- tion and for expedited oral argument. Filed plaintiffs’ memorandum regarding expedited oral argument. Filed motion and memorandum in support of intervenor plain- tiffs for teave to file amended and supplemental complaint. Filed motion of intervening plaintiffs for modification of pre- liminary injunction and clarification of jurisdiction. Filed motion of plaintiffs for expedited hearing. Filed memorandum of intervening railroads regarding request for expedited hearing. Entered order directing that ICC and intervening railroads respond to motion for preliminary injunction and motion for modification of preliminary injunction and that ICC respond 3 15 15 Docket Entries to memorandum concerning expedited oral argument by 12-15-72. Filed memorandum and affidavits of intervening railroads re- specting relief sought by Scrap and Environmental Defense Fund. Filed defendants’ memorandum of points and authorities in opposition to intervening plaintiff's motions to amend com- plaint. Filed defendants’ memorandum of points and authorities in opposition to plaintiff’s motions for preliminary injunction and for expedited oral argument. Letter from Supreme Court regarding request to transmit record. Certified copy of order from Supreme Court noting probable jurisdiction. Filed reply memorandum of intervening plaintiffs in re motions to file amended complaint. Filed order denying plaintiff’s motior for preliminary injunction. Filed order directing clerk to prepare and certify the record to the Supreme Court. Filed order denying motion of pltf. for preliminary injunction. Record on appeal! delivered to Supreme Court. Motion of National Association of Secondary Material Indus- tries, Inc., Commercial Metals Co., I. V. Sutphin Co. and Frankel Brothers & Co., Ine. to intervene as pltfs. Motion of defts. U.S.A. and Interstate Commerce Commission for extension of time to respond to motion of Nasmi to inter- vene ; memo. Opposition of pltfs. to motion for extension of time to respond to motion of Nasmi to intervene. Memorandum of Aberdeen and Rockfish Co. in opp. to Nasmi’s motion to intervene. Intervenor complaint of Netional Association of Secondary Material Industries, Inc., Commercial Metals Co., 1.V. Sutphin Co., Ine. and Frankel Brothers & Company, Ine. Order Granting motion of National Assoc. of Secondary Material Industries, Ine., Commercial Metals Co., I.V. Sutphin Co. and Frankel Brothers & Co., Ine. to intervene as Pitts. Motion of Institute of Serap Lron and Steel, Inc. and Julian C. Cohen Salvage Corporation to intervene as pltfs. Motion of pitf. for preliminary injunction. Motion of plitfs. for Temporary Restraining Order. Motion for Temporary Restraining Order heard and taken under advisement. Memorandum by defts. in opposition to interlocutory relief. Order temporarily enjoining defts. and defts-intervenors Aber- deen & Rockfish Railroad Co. and all other railroad intervenors and each of them until further order of Court from collecting 4 1973 Jun. Jul. 11 26 mr) 11 13 13 Docket Entries rate increases. This Order shal! apply to shipments originating after June 7, 1973 and moving under transit arrangement. Certified copy of order from the Supreme Court of the United States staying order of June 7, 1973 of the District Court pending further order of the Court. LETTER from Clerk, of Supreme Court of United States in re opinion, Judgment or mandate; Opinion attached. COPY of Letter from Clerk of Supreme Court of the United States in re denial of application of SCRAP to vacate the stay. ORDER granting motion of the Institute of Serap Iron and Steel, Ine. and Julian 8S. Cohen Salvage Corp. to intervene as plaintiffs; directing parties to submit memoranda by 7-13-73. a complaint of Institute of Serap Lron and Steel, ne. NOTICE of appeal by The Alerdeen and Rockfish Railroad Company to the Supreme Court of the United States. NOTICE of appeal by deft. Interstate Commerce from order ot 6-7-73 to the U.S. Supreme Court. NOTICE of appeal by deft. U.S.A. for order of June 7, 1973 to the U.S. Supreme Court. AMENDMENT to the notice of appeal by defts; copies mailed i Boudin, John F. Dienelt, and John F. Banzdolf, MEMORANDUM of Institute of Scrap Iron and Steel pursuant to order of court of June 27, 1973. MEMORANDUM of National Association of Secondary Ma- terial Industries, Ine. in response to court order of June 27, 1973. MEMORANDUM of pltf. in response to the court order of June 27, 1973. JOINT memorandum of USA and Interstate Commerce Com- mission in response to court order of June 27, 1973. STATEMENT of Environmental defense Fund respecting mo- tion for leave to file amended and supplemental complaint. MEMORANDUM of Intervening Railroads as to the court of order of June 27, 1973. ANSWER of Intervenor Railroads to the complaint of SCRAP. ANSWER of Intervenor K.R. to the complaint of Environ- mental defense funds. ANSWER of Intervenor R.R. to the complaint of National Association of Secondary Material Industries; Ine. ANSWER of Intervenor R.R. to the complaint of the Institute of Serap ron and Steel Ine. CERTIFIED copy of Judgment from the U.S. Supreme Court that the judgment of the U.S. District Court is hereby re- versed with costs and remanded to the U.S. Distriet Court for further proceedings in conformity with the opinion of this court. JOINT Answers of defts. to amended complaint. vd 1973 Sep. Oct. Nov. 10 i4 ws) 13 14 14 4 16 15 Docket Entries MOTION of Intervenor-Pitfs. National Association of Secondary Material Industries, Ine. (NASMI), Commercial Metals Co., 1.V. Sutphin Co., Ine., and Frankel Brothers & Co. Inc. for summary judgment. JOINT Motion of defts. for an extension of time in which to respond to intervenor-pltfs’ motion fer summary judement. MOTION of Intervenor-pitfs’ to expedite briefing scehdule and hearing on motion for summary judgment. MEMORANDUM of the intervening railroads respecting briefing and hearing schedule. MOTION of pitf. intervenors, Institute of Scrap Iron and Steel, Ine. and Julian C. Cohen Salvage Corp. for summary judg- ment. STATUS Hearing ORDER denying the motion of Environmental Defense Fund to file an Amended & Supplemental Complaint; further order that the Environmental Defense Fund shall have until Sept. 24, 1973 to file a motion for summary judgment. MOTION of Guy Vander Jagt, Member of Congress, for leave to file brief Amicus Curiae. MOTION of Environmental Defense Fund for summary judg- ment; statement of material tacts. MOTION of pitf for summary judgment. JOINT motion of detts for summary judgment. MEMORANDUM of intervening railroads in opposition to motions of pitf and intervening pltfs for summary judgment. LETTER FROM the counsel for defts in re corrected pave 12a of memorandum in support of motion for summary judgment ; attachment. STATEMENT by pitff. intervenors in opposition to joint mo- tion of the United States of America and Interstate Commerce Commission for summary judgment. ORIGINAL Affidavit of Roger F. Scanlan, Consultant Penn Central Transportation Company. ORIGINAL Affidavit of Norman M. Lorentzsen. INTERV ENOR-Plaintiff NASMUE'S reply to defts’ memoranda in opposition to plitfs’ motions for summary judgment, and in opposition to defts’ motion for summary judgement. MOTION of Intervenor-pitts. Nasmi, et. al. for leave to submit their motion for summary judgment on the papers filed. LETTER trom E. Bruce Butler in re certified reeord of the proceedings betore the Interstate Commerce Commission with attachments. CROSS-Motion for summary judgment heard and taken under advisement. EXHIBITS D& E. SUPPLEMENTAL reply of intervenors NASMI’S. ORDER directing the parties to file certain memoranda by 11-22-73. 6 1973 Nov. 20 21 23 26 Dee. 19 19 19 19 19 June 14 Docket Entries WITHDRAWAL of appearance of John F. Dienelt as attorney for pitf. intervenor Environmental Defense Fund; enter ap- pearance of Jacqueline M. Warren. STATEMENT by detts. #1 & 2 to the court; appendix A, MEMORANDUM of the Institute of Serap Lron and Steel, Ine. to Court's order of November 15, 1973; administrative record summary. COMMISSION aetions in ex parte No. 281 by deft. #2. CERTIFIED copy of order from the Supreme Court of the United States that the Judgement in these canses be, and the same is hereby vacated with costs; and that these causes be remanded to the United States Distriet Court for further consideration in light of Atchison, Topeka and Santa Fe Rail- way Co. v. Wichita Board of trade, 412 U.S. 800 (1973) and it is further ordered that Aberdeen and Rockfish Railroad Company, et al recover from S.C.R.A.P. One Hundred Dollars ($100) for their costs herein expended. MEMORANDUM Opinion vacating orders of 10/4/72 and 5/2/73. JUDGMENT vacating orders of 10/4/72 and 5/2/73 in ex parte 281; remanding case for further proceedings. NOTICE of appeal by Interstate Commerce Commission to the Supreme Court from opinion and judgment of 2/19/74. NOTICE of Cross-appeal to the Supreme Court of the United States by Institute of Serap Iron and Steel, Ine. Deposit $5.00 by Boggs. NOTICE of cross-appeal to the Supreme Court of the United States by Environmental Defense Fund. Deposit by Hellegers $5.00. APPEARANCE of John F. Hellegers entered as counsel for Environmental Defense Fund. NOTICE of appeal to the Supreme Court of the United States from order of 2.19 74 by the National Association of See- ondary Material Industries, Ine. now known as the National Association of Reeyveling Industries, Inc. Deposit by Merrigan $5.00. NOTICE of appeal to the Supreme Court of the United States trom order of 2°19 74 by the Aberdeen and Roekfish Railroad Company and other carriers listed on attached notice. Deposit $5.00 by Horsky. NOTICE of appeal to the Supreme Court of the United States by United States of America from order of 2.19.74. No fee- Govt. MOTION by pitf., Environmmental Defense Fund to dismiss its cross appeal to the Supreme Court of the United States from the judgement of February 19, 1974. 7 Docket Entries 1974 June 28 MOTION by Institute of Scrap Iron and Steel, Inc. to dismiss cross appeal and the appeal of the National Association of Secondary Material Industries, Inc. July 3 ORDER granting motion of the Institute of Serap Iron and Steele, Inc. and the National Association of Recycling Indus- tries, Inc. to dismiss their cross-appeal. 3.090880 Oooo 30720 INTERSTATE COMMERCE COMMISSION Ex PARTE No. 28] INCREASED FREIGHT RATES AND CHARGES, 1972 (ENVIRONMENTAL MATTERS ) 88 INTERSTATE COMMERCE COMMISSION KEPORTS Ex PARTE No. 281 INCREASED FREIGHT RATES AND CHARGES, 1972 (ENVIRONMENTAL MATTERS) Decided May |, 1973 On further proceedings, the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) construed and applied, and a final environmental impact statement issued. Upon consideration of the prior report in this proceeding (341 L.C.C. 288), of certain selective increases in rail freight rates and charges on the movements of commodities being transported for the purposes of recycling (which increases were found in the prior report to be just, reasonable, and otherwise lawful), of the draft environmental impact statement dated March 5, 1973, and the comments thereon, and the quantifiable and other effects of such increases upon the quality of our human environment, found That such selective rail freight rate increases, when considered in the light of historic and prevailing rate relationships, transport patterns, and the infinite variety of technological and other variables discussed in this report, are not likely to have a significant impact upon the movement of the involved traffic by rail. That any probable adverse environmental effects which cannot be avoided, when balanced against other stated public policy purposes, the lack of probability that the proposed rail rate increases will have a material adverse environmental effect, and the environmental benefits to be ensured by the maintenance of an efficient and reliable railroad system, are not significant That upon a rigorous exploration and objective evaluation of possible alteri.atives, the proposed action found to have less detrimental effects upon the environment than other reasonable and practicable alternatives That future generations will be assured of the availability of an efficient railroad system and its inherent environmental advantages, and that there is no potentially significant short-term effect upon the quality of the human environment because the movements of secondary commodities will not be significantly deterred and such traffic will not be diverted from the railroads That there are likely to be no irreversible and irretrievable commitments of resources Appearances as noted in the prior report, and, in addition: Russell E. Train for the Council on Environmental Quality Sheldon Meyers for the United States Environmental Protection Agency. W. W. Lyons for the United States Department of the Interior. 146 LCC 10 INCREASED FREIGHT RATES AND CHARGES, 1972 8Y M.S. Meeker, Leonard A. Salters, and Arthur F. Sampson for the General Services Adininistration of the United States. Irving M. J. Kaplan, Edward L. Merrigan, and Peter H. Meyers for protestants. | FINAL REPO Tt -PORT OF THE COMMISSION-ON FURTHER PROCEEDINGS By THE COMMISSION . This report represents, in accordance with the National nvironmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 er seq our final | statement as to the environmental effects of these enna in the railroad freight rates and charges on movements of commodities being transported for the purposes of recycling found in our prior report and order (341 1.C.C. 288) to be just, reasonable and otherwise lawful. ) | BACKGROUND This pene cter into the adequacy of na.ionwide railroad freight rates anc charges was instituted, following the filing of petitions by nia railroads and connecting water and motor carriers, by report - ae of this Commission entered December 21, 1971 (340 CC. 35 8). it was noted in that report, which also denied petitioners request for authority to establish an interim surcharge = certain bills for freight charges on less than statutory notice, that the carriers had failed to submit a statement with their petitions regarding the environmental impact of their proposal as co é > NE > di iti Qe ntemplated by the NEPA. We directed the petitioners to file and y rve an environmental impact statement within 10 days from the “nd of service of those orders, and they responded on January 3 : Z Our December report and orders were served on all parties to nee wr gy 265 and 267, Increased Freight Rates, 1970 and 197] 339 LC.C. 125 (1971),' ; , rac oe ( 1),' and on all known consumer and - onmental interests. The orders also were published in the e eral Register. As a consequence, all persons interested in the This included service on Students Challenging Regulatory Agency Procedures (SCRAP) One of that group's principal arguments, before this Commission as well as in the US) Diserics Court tor the District of Columbia (Seadents Challeneine Reeulators Aeeonoy Procedur (SC RAP dand Council on Environmental Quality y. United States of America and the Int hettit Commerce Commission, 440-& Supp. 189(D DC. 1972). referred to later uw this report) had been that the mereases violated the terms of the NEPA and were. therefore. invalid SCRAP. also argued that this Commussion should order a retund of moneys paid under these mvalid rates. and ‘ Cy ony ° ’ ' uspe nd \ " Tere rathon oof any additional uf further requests hoor treight rule mereases by h ‘ ‘ ! ' Nation's rathrouds, pending a bearing” on SC RAP ’S contention 346 LCC 11 90 INTERSTATE COMMERCE COMMISSION REPORTS environmental issues have received due notice of our intention to consider such issues and have been accorded every opportunity to participate at all stages of this proceeding. By order entered February |, 1972, it was found that approval of the request by the Nation's railroads to impose a 2.5 percent emergency surcharge on al! freight shipments beginning February 5, 1972, would appear to have no significant effect either on the movement of traffic by rail or on the quality of the human environment within the meaning of the NEPA. In approving that temporary increase (then conditioned to expire on June 5, 1972), it was further concluded, among other things, that the railroads have a critical need for additional revenue to offset, in part, recently incurred increases in their operating costs. By order dated March |, 1972, and served March 6, 1972, a draft environmental impact statement (a copy of which is reproduced as appendix C to the report entered September 27, 1972, Increased Freight Rates and Charges, 1972, 341 1.C.C. 288, at 551), was served on all parties to this proceeding and on other governmental agencies [including the Council on Environmental Quality (CEQ), Environmental Protection Agency (EPA), and the Office of Environmental and Urban Systems, Department of Transportation ] which might have an interest in that matter. Thereafter, the United States District Court for the District of Columbia enjoined the collection of the 2.5 percent interim surcharge on goods being transported for purposes of recycling after July 15, 1972, because it found that in declining to suspend the temporary surcharge this Commission had failed to give adequate consideration to the environmental amenities.’ That statement, it bears noting here, recognized that additional evidence would be needed for @ more complete assessment of the potential environmental impact of the selective freight rate increases under consideration. In the report of September 27, 1972, Increased Freight Rates and Charges, 1972, There had earher been denied, by order entered January 7, 1972, a petition filed December 20, 1971, by SCRAP. secking a 2-week extension of time beyond January 20, 1972, tor filing protests against the proposed surcharge and an additional 2-week extension of the date (February § 1972) on which such surcharge was to become effective SCRAP © United States. supra. On July 19, 1972, in Aberdeen Ro Cov SCRAP, 409 US 1207. 93S Cr 1 (1972), Chiet Justice Burger. acting as Circunt Justice tor the District of Columbia Circunt. denied an application for a stay of the District Courts judgment pending appeal While expressing grave reservations regarding the decision of the lower court, he concluded that. on balance. the District Court did not abuse its discretion in deciding “that there was danger to the environment ourweighing the loss of income and consequent tinancial threat to the railroads.” This matter is now on appeal to the Supreme Court which has heard arguments in the matter 346 1LC.C INCREASED FREIGHT RATES AND CHARGES, 1972 91 Supra, it was stated that, based on an analysis of the increases Proposed within particular commodity groups and of recent general increases in railroad freight rates and charges, our authorizations would not substantially affect the use, consumption, or shipping of secondary materials, and that the increases at the levels authorized would neither actually nor potentially significantly affect the quality of our human environment. It was concluded that a likely result of the overall limitation and the specific holddowns otherwise found to be just and reasonable might be to encourage the movement of recyclable commodities. As the environmental issues had been considered fully, no formal impact statement was thought necessary. Petitions’ were filed objecting to the decision not to issue a formal impact statement and seeking reconsideration of the discussion of the environmental impact of increased rail rates and charges on the movements of commodities being transported for the purposes of recycling. By order of November 7, 1972, this proceeding was reopened in order further to evaluate the environmental effects of increased railroad freight rates and charges on the movements of commodities being transported for the purposes of recycling as defined in paragraph (m) to the General Exceptions to the Tariff of Increased Rates and Charges X-281-B.° ‘Petitions were filed individually by SC RAP. CEO. EPA. the Institute of Scrap Iron and Steel. Ine. National Association of Secondary Materials Industries. Inc (NASMI), Northwestern Steel and Wire Company, Copperweld Steel ¢ company, and the Environmental Detense Fund (FE DF) That definition reads as tollows Secondary Materials listed below (being transported for purposes of recycling) Recycling tor purposes of this tariff shall mean processing of waste. L¢.. any product which has been of would ordinarily be discarded as worthless. defective of of no use. and the processing of such commodity transported in order to produce a commodity of the same kind as the Commodity transported of to produce a previous state of the commodity transported A certification by the consignor must appear on the Bill of Lading as follows “The mereases published in Ex Parte 281 do not apply because the involved gouds are being transported tor purposes of recycling in a movement trom ———~ 22 941 Textile Waste garneted or 33.312 Copper matte. speiss of flue dust processed, 22 973 15 Noils, ramie 43.322 Lead matte. speiss or flue dust 22 973 25 Nols (combings of comber 33.332) Zine dross. residues. ashes waste). cotton thru 33 342 Aluminum residues 22 973 68 Rovings. jute and istle (ixtle), 33 398 Miscellaneous Nonferrous metal residues 32 299 24 Cullet (broken glass) 40 1 Ashes 4119 Blast furnance of coke oven 49 2? Waste or Scrap products, nec (footnote continued on next page) 346 LCC. 13 92 INTERSTATE COMMERCE COMMISSION REPORTS The United States District Court for the District of Columbia by order filed January 9, 1973, declined to enjoin preliminarily the increases we approved on commodities other than those being transported for the purposes of recycling. The court stated that its decision was influenced, in part, by the substantial and irreparable harm to the Nation's railroads that such an injunction might cause. The draft impact statement dated March 5, 1973, reflected a good faith effort to satisfy fully the requirements of NEPA. It was believed that every reasonable and practicable method of examination that could be accomplished within the time and many other constraints imposed upon this Commission by statute and otherwise, had been exhausted so as to assure concerned citizens that all issues were carefully and thoroughly considered. Yet again, we have scrutinized the record in this proceeding, including the environmental representations which are summarized in appendix D to the prior report herein. The statement of facts in that report, which was based upon a full and fair hearing, has not been challenged. It is hereby incorporated by reference in this report, and we shall repeat only such facts as are necessary for clarity of the discussion below. In addition, all available literature on this subject has been carefully studied. Attached as appendix A hereto is a list of such material. To satisfy ourselves as to the thoroughness of this research, this bibliography was submitted to the railroads and to each of the petitioners named in footnote 4, supra, with the understanding that they would notify us as to any other relevant data of which they were aware.° In addition, our staff contacted knowledgeable individuals in this subject area in person, by mail, and by telephone in order to assure full compliance with the NEPA requirements. In the comprehensive draft environmental impact statement, released March 13, 1973, it was concluded that the selective freight (fowinote S continued) The STCC Numbers referred to shall also embrace all articles assigned additional digits listed thereunder This exception shall not apply to goods that are being processed solely by reasons of contamination of detect in geade of quality, nor to byproducts having a commercial market This exception is published solely in compliance with preliminary injunction issued on July 10, 1972. by the United States Distret Court for the District of Columbia in Civil Action No, 971-72, SC RAP versus United States Responses were received from the railroad respondents, the Institute of Scrap Tron and Steel. Inc. NASMI. SCRAP... EPA. Copperweld. and EDF. Additional pertinent source materials were presented by each with the exceptions of SC RAP. and EDF. This additonal material has been considered and dentitied in the “Supplementary Bibliography” in appendix A. Although the response of NASMI to our bibliography was fully considered, we inadvertently omitted any reference to the said response in our dratt impact statement 346 LCC. 14 INCREASED FREIGHT RATES AND CHARGES, 1972 93 rate increases approved in this proceeding as to commodities moving for the purposes of recycling would not have a significant adverse impact upon the quality of the human environment. It was found that any environmental costs which may result from that action would be outweighed by the economic benefits derived by the railroads, and the resultant quality of rail service that such benefits would ensure. Interested persons were requested to submit their views concerning the draft impact statement within 30 days of the date of service thereof. Comments have been filed individually by S.C.R.A.P., the Institute of Scrap Iron and Steel, Inc., Genera! Services Administration of the United States, NASMI, C opperweld, United States Department of the Interior, United States Department of Commerce, EPA, and CEQ, and jointly by EDF, National Parks and Conservation Association, and Izaak Walton League of America, and the railroad respondents. These comments have been Summarized and are attached as appendix D to this statement. In general, the Institute, S.C.R.A.P., and Commerce contend that the draft impact statement was written to support our prior conclusions and not to inform the public. EDF, NASMI, and the Institute assert that additional environmental hearings are required, as is the cross-examination of this Commission's staff members that participated in the drafting of the prior impact statement, and that the instant report should be a second draft impact statement to which the parties herein may comment. Certain parties seek our consideration of alternatives such as the deregulation of the transportation of recyclables (GSA), the increasing of rates on primary commodities (EDF et al.), and the deregulation of motor carriage (EDF et al.). S.C.R.A.P., EDF et al., and CEQ request that increases on the rates of recyclables be postponed until the conclusion of our review in Ex Parte No. 270, of the validity of the existing rate structure. Interior and Commerce seek clarification of the issue of elasticity of demand, while EPA avers that basic economics dictate that some decreases in recycling will result because of the proposed increases in freight rates for secondary materials. In their comments on our draft impact statement, certain parties have referred to specific literature not previously brought to our attention. S.C.R.A.P. suggests that we consider an EPA Report to Congress on Resources Recovery dated February 22, 1973. We are not aware of the existence of such a report and EPA's Office of Federal Activities, after inquiries with EPA's Office of Solid Waste Management, has disavowed the existence of such a report. 346 LCC. 15 94 INTERSTATE COMMERCE COMMISSION REPORTS NASMI takes the position that the draft impact statement in this proceeding differs from the position taken by the Federal Maritime Commission which, in draft impact statements issued by it, allegedly has stated that transportation rates may preclude recycling. It appears, however, that FMC has never found that transportation rates do inhibit recycling, but merely seeks in its draft statements to outline all possible issues in a particular proceeding including the possible effects of increased rates on recycling. FMC’s approach concerning the relationship between recycling and transportation rates is, therefore, not contradictory to that reached herein. NASMI's further complaint that the draft impact statement overlooked a report issued by the National League of Cities and the United States Conference of Mayors on March 22, 1973, entitled “Cities and the Nation's Disposal Crises” is not well taken. The findings of a report issued over 2 weeks after the draft impact statements were adopted, plainly could not have been incorporated in that statement. The draft environmental impact statement was complete when issued and is not deficient either because it did not embody reports which were not available or because it is said to be in conflict with “non-decisions” by our sister agency, FMC. The report referred to by NASMI was written by urban groups, and the validity of its undocumented conclusions regarding freight rates and recyclables is open to substantial doubt as demonstrated in the instant statement. EDF et al., refer to a Ph. D. dissertation by James Sawyer entitled A Regional Analysis of the Automobile Scrap Processing Sector of the Economy and to a linear programming model, created by Clifford Russell, of steel producing firms which have some choice of processing and can choose between inputs of scrap or virgin material. These theses represent price-sensitivity studies indicating reasons for fluctuations in scrap prices. We believe that such price fluctuations and the elements generating them have been fully recognized in the instant report and that these studies would shed no new light upon this subject. We offer one further comment before discussing the involved issues. Much of the criticism that has been leyeled at us in this area may be described as one dimensional. Those critical of our actions in this proceeding generally advance only environmental issues; to them, nothing more seems to exist. We are not, however, a one- dimensional agency, and the NEPA is not a one-dimensional statute. The NEPA recognizes that existing agencies have other respon- sibilities and expects such agencies to incorporate environmental 346 LCC. 16 INCREASED FREIGHT RATES AND CHARGES, 1972 95 considerations into their present decisionmaking formulas. Throughout this proceeding we have endeavored to consider all significant environmental factors, long range as well as short term, local as well as national, direct as well as indirect, but we have not lost sight of our other responsibilities. Our views continue to be best summed up in the following statement issued by this Commis- sion in December 1970: We share the rising public concern with our environment and with the deterioration of our natural surroundings caused by pollution and by the misuse and depletion of our land and natural resources. We do so first as proud citizens of an involved community and secondly, as Commissioners charged by the people of the United States, acting through their President and Congress, with the regulation of this Nation's surface transportation system in the public interest. Transportation of “Waste” Products for Reuse, 114 M.C.C. 92, 121. Our determination to participate fully in the Nation's effort to stem the pollution of its environment and the depletion of its resources was further evidenced in Ex Parte No. 55 (Sub-No. 4), Implementation of Public Law 91-190, National Environmenial Policy Act of 1969 and Related Requirements. The order announcing the institution of that rulemaking proceeding, entered April 16, 1971 (339 I.C.C. at 511), made it clear that: This Commission must and wil! implement the directives of the NEPA and related pronouncements. We must and will investigate the methods of meeting these statutory directives to create a more meaningful relationship between this Commission's regulatory responsibilities and the Nation's tattle to save the environment. Our environmental procedural rules, closely reflecting the guidelines enunciated by CEQ, as well as the ruling in Calvert Cliffs’ Coordinating Committee vy. U. S. Atomic Energy Commission, 449 F. 2d 1109 (D.C. Cir. 1971), decided in the interim, were promulgated by order of January 14, 1972 (340 I.C.C. 431), and became effective shortly thereafter. With this background in mind, we shall turn now to the specific environmental questions here at issue. PRELIMINARY DISCUSSION Pollution threatens our existence. We believe that any plan to protect our surroundings must receive the cooperation of Government, industry, and the public. The environment, however, does not exist in a vacuum. It affects and is in turn affected by many 346 LCC. 17 96 INTERSTATE COMMERCE COMMISSION REPORTS other facets of our lives. To examine and deal with the environment without considering these other factors would be like a doctor examining and treating a patient's heart without regard to the reaction of the remainder of his body. The doctor may cure the heart ailment, but lose the patient. For example, the Department of Interior claims in its poststatement comments that consideration of freight rate data is not appropriate in an impact statement. It believes that we should only assess the effects of the proposed action on the environment. We fear that such an approach to this proceeding would bar an effective evaluation of the full scope of environmental effects as intended by the NEPA. Some of the parties to this proceeding, in our judgment, have failed to take a practical view of the total problems here involved. Instead, those parties plainly advance their own individual (and, in certair instances, economic) interests. They do not seek to balance interests, but rather to exclude opposing interests. To illustrate, the submitting railroads contend that they should not be required to finance industrial ecological programs through the maintenance of unduly low freight rates; the shipping interests request that their products not be subjected to the proposed rate increases or that those products should be subject to certain holddowns; certain of the environmentalists maintain that rates on secondary materials (which assertedly should move in greater volumes for recycling purposes) ought to be preserved and protected (if not lowered) at all costs; and the governmental interests together with the private environmental sector seek to demonstrate that this Commission should investigate environmental matters and effects more extensively with our own resources. It is such one-dimensional approaches as these that we are knowingly seeking to avoid. The NEPA 142 U.S.C. 4331(b)] itself requires us “to use all practicable means, consistent with other essential considerations of national policy, *** to the end that the Nation may *** las here particularly pertinent] enhance the quality of renewable resources and approach the maximum attainable recycling of depletable resources.” As Chief Justice Burger stated in Aberdeen R. Co. v. S.C.R.A.P., supra: Our society and its governmental instrumentalities having been less than alert to the needs of our environment for generations, have now taken protective steps. These developments, however praiseworthy, should not lead courts to exercise equitable powers loosely or casually, whenever a claim of ‘environmental damage’ is asserted. The world must go on and new environmental legislation must be carefully meshed with more traditional patterns of federal regulation. The decisional process *** is one of balancing and it is often a most difficult task. 346 LCC. 18 INCREASED FREIGHT RATES AND CHARGES, i972 97 It is our responsibility to balance fully, and without tipping the scales in favor of any single factor, the costs and benefits of our actions and any reasonable alternatives that may be presented. We trust that this impact statement accords appropriate weight to economic and social considerations in addition to that which might be given environmental matters. It further should be noted that many persons participating in this proceeding seem to have adopted the position that, if a problem is incapable of a definite or mathematically precise solution, then it can best be solved by a large quantum of detailed evidence and Statistics. This position, characterized by some as the “Dwarfing of Soft Variables Syndrome,” is a familiar one: if you can't count it, it doesn't exist. But no absolute or mathematically conclusive method of balancing the environmental, economic, and social values involved in a general rail freight increase proceeding currently exists. Instead, there are present a wide variety of unquantifiable factors which this Commission must bring to bear in such decision- making matters and which under the law, can be brought to bear only by this Commission, because of our expertise in surface trans- portation recognized by the Congress and the judiciary. We admit, of course, that readily quantifiable factors are easier to process—and hence more likely to be recognized and then reflected in the outcome—than are those that resist quantification. Nevertheless, the result, despite what turns out to be a spurious appearance of accuracy and completeness, is likely to be significantly warped and hence highly suspect. In our attempt, therefore, to analyze the probable results of any action we take in this proceeding upon the quality of our human environment, we have carefully examined the evidence of record, applied our expertise in surface transportation, and utilized to the fullest extent possible all available expertise in the ecological, economic, and social areas. It is the purpose of the NEPA to have Federal agencies such as this Commission, in cooperation with State and local governments and other public and private organizations, use all practicable means and measures to create and maintain conditions under which man and nature can exist in productive harmony. To this end, section 102 of the NEPA specifically requires that, to the fullest extent possible, we shall— (B) identify and develop methods and procedures, in consultation with the Council on Environmental Quality ***, which will insure that presently unquantified Tribe. Trial by Mathematics. 84 Harv L. Rev 329 (1972) 346 LCC 19 98 INTERSTATE COMMERCE COMMISSION REPORTS environmental amenities and values may be given appropriate consideration in decision making along with economic and technical consideration, (C) mclude in every recommendation of report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on— (i) the environmental impact of the proposed action, (i) any adverse environmental effects which cannot be avowed should the proposal be implemented, (in) alternatives to the proposed action, (iv) the relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity, and (v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented. Prior to making any desmiled statement, the responsible Federal official shall consult with and obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved. Copies of such statement and the comments and views of the appropriate Federal, State and local agencies, which are authorized to develop and enforce environmental standards, shall be made available to the President, the Council on Environmental Quality, and to the public as provided by section 552 of Title 5, United States Code, and shall accompany the proposal through the existing agency review processes,*** The NEPA section 102 impact statement is intended as a device to assure that Federal agencies investigate and give weight to any significant environment effects caused by action which they take, to require the development of less damaging alternatives, and to assure that those effects are made known to the public before the action is undertaken. The guidelines of the Council on Environmental Quality, reproduced in appendix A to our report in Imp!lementation—Natl. Environmental Policy Act. 1969, supra, seek to coordinate the efforts of Government agencies and to allow Federal agencies to assess in detail the potential environmental impact of a considered course of action in order that adverse effects may be avoided, and the environmental quality restored or enhanced, to the fullest extent practicable. In this spirit, we shall proceed next to an analysis of the five separate criteria embodied in section 102(C) of the NEPA as quoted above. The Council on Environmental Quality in its guidelines and subsequent memoranda states that Federal agencies must consider the probable impact of the proposed action on the environment, including the impact on ecological systems such as wildlife, fish, and marine life. Both primary and secondary significant consequences for the environment should be included in the analysis. We are also 346 LCC 20 INCREASED FREIGHT RATES AND CHARGES, 1972 99 directed to consider any probable adverse environmental effects which cannot be avoided, such as water or air pollution, undesirable land use patterns, damage to life systems, urban congestion, threats to health, or other consequences adverse to the environmental goais set forth in section 101(b) of the NEPA. In addition, ali alternatives to major proposed actions must be evaluated even though this may lead to a consideration of effects and options outside this agency's actual control. Cf. NRDC v. Morton, 458 F. 2d 827 (C.A.D.C. 1972). That court concluded that a full discussion of such alternatives is required in order to reach the decision at hand as well as to inform the public of the issues and to guide the decisions of the President and Congress, but that a detailed discussion is not required of alternatives that are deemed only remote and speculative possibilities. The agency, according to the Morton court, need not indulge in “crystal ball inquiry” in assessing the effects of alternatives, but will have taken the “hard look” required by NEPA if it has discussed the reasonably foreseeable effects with a thoroughness commensurate with their severity and the significance of the action. In accordance with the NEPA we must fully consider the relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity. This in essence requires this Commission to assess the proposed action for its cumulative and long-term effects from the perspective that each generation is trustee of the environment for succeeding generations. We are also directed by the NEPA to consider any irreversible and irretrievable commitments of resources that would be involved in the proposed action should it be implemented. This requires us to identify the extent to which the considered action curtails the range of beneficial uses of the environment. It probably would not be possible for us to issue separate environment impact statements for each specific commodity which has been classified as recyclable in this proceeding. Therefore, we have analyzed the overall environmental effects of the proposed rates increases on all recyclables as a class, separately on eight commodity groups of recyclables, and on certain selected and representative commodities individually. We believe that this approach is administratively efficient and practical, and that this Commission has met its expansive obligations pursuant to the NEPA. 346 LCC. 21 100 INTERSTATE COMMERCE COMMISSION REPORTS POSTSTATEMENT COMMENTS RELATING TO PROCEDURAL AND RELATED MATTERS It appears that a substantial difference of opinion has developed among the parties as to the procedures that have been followed in this proceeding even though most such parties challenge the completeness, accuracy, and objectivity of the matters set forth in the draft environmental impact statement. Thus, S.C.R.A.P. complains that the burden of proof in this proceeding has been improperly placed upon those parties (other than the railroads) advocating holddowns or other similar action as to rail freight rates or commodities being transported for the purposes of recycling. Other parties, best exemplified by EDF et al., contend that this Commission must develop more adequate, objective, and systematic data in order to justify the proposed freight rate increases as to recyclable materials, and the draft impact statement wrongfully attempts merely to weigh the arguments and evidence advanced by the parties to this proceeding, rather than comprising the independent and searching inquiry and analysis mandated by the NEPA. On the other hand, the Institute avers that this Commission apparently has assumed the position of a proponent in this proceeding in contrast to its proper role as regulator. The Institute objects to the reliance placed in the draft statement upon what it characterizes as extra-record material which has not been tested by cross-examination. $.C.R.A.P. and the Department of Commerce state that they believe the draft impact statement was written to support the prior conclusions of this Commission and not to inform the public. We strongly reject the validity of all of these assertions. This Commission is required by the NEPA to investigate, evaluate, and report the probable environmental impact of our major proposed action. In S.C.R.A.P., supra, this Commission was informed that it may not sit as an arbitrator of the facts, but must develop a sufficient record on which to base its environmental determinations. We have done so in this proceeding. Contrary to S.C.R.A.P.’s contention, the burden of proof in this proceeding has never been placed upon the environmentalists. Certainly, S.C.R.A.P. presented no relevant or probative data upon which an intelligent decision in this matter could possibly be based. Instead, we have attempted to research all available literature and have contacted governmental and private industry environmental ex- perts in order to develop the complete record found herein. We 346 LCC. bo bo INCREASED FREIGHT RATES AND CHARGES, 1972 101 are not content to sit back and simply weigh the evidence of record because the parties to this proceeding have failed properly to develop the environmental data. Our present conclusion that the proposed action is not likely to significantly affect the quality of the human environment is predicated upon the extensive record developed in this rulemaking proceeding preceding our prior report (341 LC.C. 288), the expenditure of many man-hours of research and study, and the application of our historical expertise in trans- portation generally and ratemaking in particular. The parties to this proceeding, which lack both expertise in transportation and Supporting research data relating to recycling, aver that the evidence has not been objectively weighed. As can be seen by the discussions later in this statement, the data we have developed were properly considered and logically lead to the conclusions reached herein. EDF et al., propose what they consider to be a more systematic and objective approach to resolving these issues. They do not, however, explain or even intimate the length of time that such a four-step procedure would consume, nor whether that procedure could have been completed during the statutory time period within which we must act in suspension proceedings. We have examined the railroad rate structure and the effect of the increased rates and charges upon recyclable commodities and that we have done so differently than some of the parties (such as EDF or the academicians they have employed) would have, does not render our effort suspect. In an area as imprecise, ephemeral, and subjective as the effect of rate increases on the use of secondary materials, there are bound to be disagreements about how best to make the requisite environmental assessments. Each method has advantages and disadvantages, and the selection of one in no way denies the appropriateness of another. Thus, no matter how we might have approached our task, a dissatisfied party might have said our evaluation was inadequate, and that another method would have permitted a more meaningful determination. EDF et al., acknowledge that their four-step procedure is “formidable” and in any event would not be productive of “absolute accuracy.” That we elected a different course does not render our analysis any the less objective or systematic. EDF et al., NASMI, and the Institute assert that this statement should be issued as a second draft impact statement, that additional nearings should be scheduled on the environmental issues, and that 346 LCC. 23 102 INTERSTATE COMMERCE COMMISSION REPORTS our staff members who participated in the preparation of this report should be made available for cross-examination. Oral hearings have been held in this proceeding, and the parties have had an opportunity to present environmental data at oral argument, in petitions for reconsideration, in responses to the bibliography herein, and in commenting upon our draft statement. We see no benefit to be derived by allowing further hearings in this proceeding even if (as we doubt) those hearings could be completed within the statutory suspension period. The procedure is in keeping with the requirements of both the Administrative Procedure Act (5 U.S.C. 553) and the Interstate Commerce Act. The present environmental record has been developed in substantial part by our own independent efforts and there appears no reasonable basis for now concluding that the parties can make any further rational contribution to that record. This report will be a final report. The suspension period for the involved rates terminates June 7, 1973, and we have no statutory authority unilaterally to extend that deadline. For this reason, we cannot continuously issue draft statements and prolong a (inal result in this matter. A proceeding must have a termination. It certainly was not the purpose or function of the NEPA to extend proceedings endlessly to the economic benefit of certain of the complaining parties. The record in this proceeding is complete and further public procedures herein would be impracticable, unnecessary, and contrary to the public interest. In regard to the requests for cross-examination of our staff, the draft impact statement was a part of a report of this Commission and is the subject of administrative and judicial appeals in the same manner as any other report of this Commission. ASSERTED DISCRIMINATION IN THE RATE STRUCTURE It is contended that our approval oi increased rail rates and charges on commodities moving for recycling purposes will serve to aggrevate discrimination already allegedly in the railroad freight rate structure, to the detriment of recyclable commodities and the national recycling effort. Chairman Russell B. Train of CEQ, for example, has conveyed to us his belief that “several rail haul cost biases currently exist,” and certain of the parties herein aver that discriminatory railroad rates and charges impede the movement of waste materials and favor the transportation of primary materials with “obvious” adverse consequences to the environment. 346 LC.C. 24 INCREASED FREIGHT RATES AND CHARGES. 1972 103 As recently as the last railroad general rate proceeding, we pointed out that such a case does not provide an appropriate vehicle for examining these issues. Increased Freight Rates, 1970 and 1971, 339 L.C.C. 125, 189 (1971). Thus, we do not attempt to determine whether the particular rates which result from the increases are maximum reasonable rates, nor does the order constitute a prescription of rates within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 US. 370. If individual rates or groups of rates are believed to be unjust and unreasonable, a shipper or other interested persons has an administrative remedy available in sections 13 and 15 of the Interstate Commerce Act, 49 U.S.C. §813 and IS. General revenue proceedings are inappropriate forums for litigating such issues. “Electronic Industries Assn. vy. United States, 310 F. Supp. 1286 1289 (D. D.C. 1970), affirmed mem., 401 U.S. 967 (1971); Alabama Power Co. y. United States; 11 F. Supp. 337, 338 (D. D.C. 1069) affirmed by a divided court, 400 U.S. 73 (1970): Algoma Coke & Coal Co. vy. United States, 11 F. Supp. 487 (E.D. Va. 1935). | Moreover, we currently have under way a comprehensive investigation of the railroads’ freight rate structure, Ex Parte No. 270, Investigation of Railroad Freight Rate Structure. That proceeding was instituted by us in recognition of the growing concern regarding the pricing of railroad services. More particularly, we felt the need for exploring whether, as has been contended, the application by the railroads of the increases in rates and charges as approved by us (especially when measured as percentages of existing rates) have over the years caused a misalignment of rate relationships and a distortion of proper rate levels. A specific area we have assigned for development in that case is the way in which our prior rate decisions may have an effect on the Government's program of protecting the environment. The Institute of Scrap Iron and Steel, Inc., the National Association of Secondary Material Industries, Inc., and other parties to this proceeding are parties as well to Ex Parte No. 270. This Commission has recently named a Special Counsel to further develop the record in Ex Parte No. 270. We also have proposed new rules governing the presentation of evidence in Ex Parte No. 290 which, if later determined appropriate, would provide for data relative to the revenue contribution of 143 major commodities or groups thereof. Notwithstanding these on-going efforts to eliminate any distortions that may inhere in the rate base and to improve our evidentiary 346 LCC. 104 INTERSTATE COMMERCE COMMISSION REPORTS procedures applicable to proceedings such as this one, we think that the following comments are appropriate at this point in our deliberations. We have made an examination of the presently effective railroad rate structure, and we have done so without ascribing to any of the parties the burden of establishing that it impedes the transportation of recyclable commodities. We recognize full well that the obligation of assessing the ecological implications of our actions, singly taken or in their cumulative effect, is ours. The contention that the existing railroad rate structure contains a bias in favor of primary materials to the prejudice of setondary materials rests, essentially, upon a surface comparision of their raies. Thus, for example, the Institute of Scrap Iron and Steel, Inc., notes that in 1966 the average rail revenue per 100 pounds was 20.6 cents for iron and steel scrap, whereas, the comparable earnings on iron ore were but 8.2 cents. The Institute acknowledges that by 1969 this disparity was considerably less—$5.11 per gross ton for scrap iron compared to $2.67 for iron ore in the United States and $4.70 against $2.58 in official territory. The charge that the rates on iron and steel scrap are more than twice those of iron ore has been repeated by others as well, and underlies the frequently repeated charge that the rail rate structure maintained by the railroads prefers primary materials to the undue prejudice of secondary materials. The allegation that the disparity in rates between iron and steel scrap and iron ore demonstrates &’n unwarranted bias, reflects an untamiliarity with American transportation and a naivety as to ratemaking in domestic commerce that the Institute’s long and sophisticated participation in our proceedings belies. If rates were established on nothing more than a consideration of the weight of the shipment, the Institute's position would have some plausibility. As it well knows, however, that is not and never has been the method followed in this country for establishing transportation charges. It is true that domestic transportation rates are generally stated in terms of cents per hundredweight. In this respect, their method of publication differs from the practice in the ocean trade, in which rates normally are stated on the basis of displacement or cents per cubic foot. Nevertheless, a comparison of the rates, expressed as cents per hundredweight, does not permit a meaningful determination as to whether a discriminatory or prejudicial situation obtains. 346 LC.C. INCREASED FREIGHT RATES AND CHARGES. 1972 105 We have said on numerous occasions that the mere existence of a difference in rates does not establish undue prejudice or preference. Black Hills Glass & Mirror Co. v. C., M., & St. P. & P. R. Co., 313 1L.C.C. 333, 339 (1961); Malt Liquors, Missouri, Illinois, and Nebraska to Okla., 310 L.C.C. 93, 101 (1960); United States Lime Products Corp. v. A., T. & S. F. Ry. Co., 288 1.C.C. 293, 300 (1953): Cinder Concrete Products, Inc.,v. Colorado & S. Ry. Co., 279 L.C.C. 191, 194 (1950); A. C. Jensen Block & Supply Co. v. C., M., & St. P. & P. R. Co., 273 LC.C. 399. 401 (1948); Waygener Paint Co. vy. Chicago G.W. Ry. Co., 308 LC.C. 148, 150 (1959): Commodity Credit Corp. v. Texas & P. Ry. Co., 306 1.C.C. 525, 533 (1959): and State Board of Equalization of Wyo. v. Abilene & S. Ry. Co., 305 1.C.C. 497, 513 (1959). . Our view long has had the approbation of the courts. Nearly 50 years ago the Supreme Court of the United States in United States vy. Mlinois Central R.R., 263 U.S. 510 (1923). expressed its agreement that differences in rates in and of themselves do not establish their illegality under the antidiscrimination provisions of the Interstate Commerce Act. The Court said. supra, 263 U.S. at 524: *** to bring a difference in rates within the Prohibition of $3, it must be shown that the discrimination practiced is unjust when measured by the transportation standard. In other words, the difference in rates cannot be held illegal, unless it is shown that it Is Not justified by the cost of the respective services. by their values, or by other trans- Portation conditions Accord: Southern States Cooperative, Inc., v. Baltimore & O. R. Co., 323 1.C.C. 400, 408 (1964); Southeastern Assn. of R. & Util. Commrs. vy. A., T. & SF. Ry., 321 LC.C. 519, 553 (1964): United States vy. Oklahoma City-Ada-Atoka Ry. Co., 319 L.C.C. 182, 186 (1963); and Seattle Traffic Assn. v. Consolidated Freightways, Inc. 306 1.C.C. 87, 92 (1959). We begin by noting that there are literally hundreds of thousands of commodities that comprise the commerce of this Nation, and that the railroads through their network of connecting lines hold themselves out as common carriers of all of such commodities be- tween each of the tens of thousands of points that they serve. To enable them to render their task of rate publication manageable, our Nation's railroads long have classified the treight that they transport. We think it appropriate to include in this discussion of the alleged discrimination in the rate structure a brief summary of the principles of classification and ratemaking. Our review of these fundamentals is offered at this point not to draw comparisons between any specific $46 LCC 106 INTERSTATE COMMERCE COMMISSION REPORTS commodities, whether they be primary or secondary, but simply to suggest the complexity and diversity of the factors that go into classification and ratemaking. A classification has a twofold meaning in_ transportation parlance." In the one sense, the term denotes the process by which the myriad commodities tendered a carrier are grouped for the pricing of its services. As succinctly stated in Van Metre, /ndustrial Traffic Management, 27 (1953): It must be immediately apparent that the publication of rates for a railroad system as large as that of the United States is a monumental task. Our railroads handle thousands of commodities each day, between thousands of stations. On each commodity handled there is a published freight rate applying to its transportation be- tween each freight station and all other freight stations in the country. If all articles carried were charged an identical rate per hundred pounds, the tariff for a single Station would have to be as large as a good-sized mail-order catalouge. But instead of one article, there are probably as many as 30,000 for which freight rates must be made.” The process by which the publication of transportation charges of the thousands of articles in commerce is made manageable is classification. Classification as so used has been defined by the Supreme Court in Director General vy. Viscose Co., 254 U.S. 498, 503 (1921), as follows: Classification in carrier rate-making practice is grouping,—the associating in a designated list, commodities, which, because of their inherent quality or value, or of the risks involved in shipment, or because of the manner or volume in which they are shipped or loaded, and the like, may justly and conveniently be given similar rates.*** The Commission has variously defined the classification of freight as “a ratemaking scheme devised for the purpose of according the same rate to all commodities of a like character from a trans- portation standpoint,” McCrory Stores Corp. v. Director General, "For comprehensive discussion of this subject. see Colquitt, The Art and Development of Freight Classification (1956), and Way, Elements of Freight Traffic (1956) ‘Drinker in Interstate Commerce Act 193 (1909), observed “Classification,” said the Commission in its first Annual Report, “is the foundation of all rate making.” For the railroads to attempt to fix a separate rate for each commodity shipped, would not only be unduly burdensome to them and entirely impractical, but it would lead to an endless comphication of tariffs. which would undoubtedly be more objectionable to shippers in general than a simpler system of rates adjusted with less theoretical nicety. On all sides it has been found advisable to sacrifice, to a certain extent, mathematical accuracy, for the sake of securing practical simplicit: 346 LC.C. 28 INCREASED FREIGHT RATES AND CHARGES, 1972 107 55 1.C.C. 423, 424 (1919): and Hires Condensed Milk Co. vy. P. R. R. Co., 38 10.C. 441,447 (1916); “a matter of comparison of all the commodities that move as freight and the assignment of ratings such that each shall bear its fair share of the transportation burden,” Classification of Canned Goods, 98 1.C.C. 166, 176 (1925): and Ma determination of reasonable relations between commodities, with groupings of kindred articles.” National Electrical Mfrs. Assn v Atchison, T. & S. F. Ry. Co., 289 LCC. 125, 132 (1953). _ The factors that influence the freight’s classification, the so-called transportation characteristics, are many and varied. In Motor Carrier Rates in New England, 47 M.C.C. 657, 660-61 (1948), these characteristics were listed in the following terms: The characteristics of the commodities which must be considered in fixing Classification ratings are generally as follows: - Shipping weight per cubic foot. - Liability to damage. : Liability to damage other commodities with which it is transported . Perishability. | . Liability to spontaneous combustion or explosion. . Susceptibility to theft. . Value per pound in comparison with other articles. . Ease or difficulty in loading or unloading. . Stowability. . Excessive weight. . Excessive length. . Care or attention necessary in loadin i & and transporting. . Trade conditions. . . Value of service. - Competition with other commodities transported Accord: Ali States Frgt. v. New York, N. H. & H.R. Co., 379 US. 343 (1964); Class Rate Investigation, 1939, 262 1.C.C. 447 508 (1945); Invesrigation and Suspension Docket 76, 25 1.C.C. 442. 463 472-73 (1912); and Proctor & Gamble Co. v.C., H. & D. Ry. Co., 9 1.C.C. 440, 482 (1903). It is because of these many and varied characteristics that bare reliance by a number of parties herein upon certain Burden Study statistics (which represent estimates only) to indicate the contribution a particular commodity may be making to the carriers’ costs is not well taken. This matter will be amplified at a later point in this statement. The first of the listed transportatin characteristics is the shipping weight per cubic foot, or density. As we have noted, domestic trans- portation charges in America generally are assessed on the basis of 346 LCC. 29 108 INTERSTATE COMMERCE COMMISSION REPORTS the weight of the shipment that is, the rates are stated in terms of so many cents per 100 pounds. Obviously, under such a scheme of pricing, the shipper tendering a large shipment in terms of weight will pay more than the shipper tendering a light shipment. In other words, a shipper of a 1,000-pound box ‘vould be expected to pay more than the shipper of a 100-pound box. However, a carrier is limited in how much freight it can carry by the capacity of its equio- ment, and in any one piece of equipment it can carry a heavier load of freight having a low cubic displacement than it can shipments of high cubic displacement. Therefore, in determining the rate relationships of various commodities, that is, in grouping com- modities for the assessmeat of transportation charges, it is natural that the carrier would rate freight of low density higher than freight of high density, all other things being equal. Feathers should be rated higher than lead, as, indeed, they are. Van Metre in /ndustrial Traffic Management 51-52 (1953), says of this transportation characteristic: Since rates are almost all quoted in cents or dollars and cents per hundred pounds or per ton, it is plain that a car loaded to its capacity in pounds earns more than one which is loaded only to a fraction of that capacity. But there are many articles so light IN proportion to their bulk that under no circumstances could enough of them be packed into a car to bring its load up to its weight capacity. Therefore it costs the rail- road much more per hundred pounds to transport such articles than to transport articles so heavy in proportion to the space they occupy that they can fill a car to the limit of its weight capacity. The light, bulky articles take up the earning space of the carriers equipment, and the only way in which a carrier can secure revenue which adequately reflects the cost of transporting such articles is to make a high charge per hundred pounds for their transportation. The significance of density as a transportation characteristic is illustrated by the shipments of bulk cottonseed from Blytheville, Ark., to Memphis, Tenn., and of loose cotton in bags from Arbyrd, Mo. (Paragould, Ark.), to Memphis. Although these shipping points are approximately comparable, the cottonseed takes a rate of 17 cents per hundred pounds for a minimum shipment of 50,000 pounds (St. L. S. W. Ry. tariff 321-C, ICC No. 4853) while the loose cotton in bags takes a rate of $1.83 per hundred pounds (tariff SWL 237-L, ICC No. 4907). This elevenfold difference in rates is explained upon an examination of sample waybills. The cottonseed loads heavily, at over 70,000 pounds per car, resulting in freight revenue of over $120 per car to the carrier. The loose cotton in bags of course loads lightly and, at about 6,000 pounds per car, earns less than $120 per car for the carrier. Since the carrier's costs for moving 346 LCC, 30 INCREASED FREIGHT RATES AND CHARGES, 1972 109 the two cars are similar in this specific situation, except for such items as added fuel costs for pulling a heavier car, the difference in rates enables the carrier to realize comparable revenues on the movements. Another roughly comparable movement of primary and refuse materials is the transportation of cotton linters from Greenville. Miss., to Memphis, Tenn., and the movement of cotton motes from Greenwood, Miss., to Memphis. The linters move at a rate of 32 cents per hundred pounds with a minimum shipment of 60,000 pounds (SFTB 2011-M) while the motes bear a scale of rates: Minimum we ight—pounds Rate—« kA + | tO | | : : “ ty - WY Wastes u | . | | 1964 i ~~ Pa * * L7 as one fer equ - Wt t tt” }, Wastes Pulpwood | — = 1965 : - z ~ f ses 4,5 ,! MY Pe “, YLT, Witla Zh Wastes ‘ 1 Cae - OOOO | pee RE IZ, BLLZ QEX | | Wastes : “a OFA Vip = > sem 1967 7 ad Wastes Pulpwood | 1968 r , ated e > . . = @ . PASOALDLE OL \" E Ss wee S. e et Se ° ae 4 CZ e, yy Wg mS Wastes 7 A ee Te VJ feo: ZA 7 PLLA hs > Pulpwood 1969 Wastes Pulpwood 1970 Wastes Pulpwood Est. 1971 Wastes Pulpwood 346 LCC. 98 INCREASED FREIGHT RATES AND CHARGES, 1972 177 Textile waste.—The environmental issues in regard to waste textiles movements center upon whether, or to what extent, high freight rates or freight rate increases have inhibited, or will inhibit, their movement. More specifically, the statement of Mr. Edward B. Frankel of NASMI in this proceeding contains the following contentions: i. “Freight rate increases totaling approximately 40 percent within a few short years in the face of declining markets and market values have prevented over a billion pounds of these materials from moving ***,""? 2. “Had freight rates not increased at all on | these] commodities, the revenue would have increased to the carriers by 58.59 percent by virtue of the same proportionate share of textile waste produced and recycled in 1970 as in 1964. In other words, had the industry been allowed to market the increased supply brought about by the population explosion, the rail carriers would have benefited much more than by having increased rates on these low valued commodities to the point where they are of such major consequence as to preclude movement.’ The following assertions are made in support of the above contentions: (1) Only about 520 million pounds (below 3 percent) of discarded textile wastes amounting to 1.2 billion tons are sorted each year, and only a small fraction moves by rail; (2) freight rates at prevailing average length-of-haul (as shown in the 1966 l-percent waybill sample) and minima per car are so high, in addition to processing costs relative to value of the commodity, as to preclude movement, (3) transportation costs make up a_ substantial percentage of the delivered costs of low-grade textile waste, as compared with the higher grade textile wastes (wiping rags) referred to in the railroads’ statement; (4) textile waste traffic fell off 40 percent from 1966 to 1969, in official territory as a result of rate increases, while in the South where, assertedly, the carriers “recognize” value of service factors, traffic rose 4 percent; (5) rate increases have a substantial impact on the environment because, for "Verified statement No. 376 of NASMI in Ex Parte No. 281, March 12, 1972, part Il, p. | "Ibid, p. 2. The fact is that if rates had not been increased between 1966 and 1969, and the 1966 loading characteristics had prevailed, the rates would have been below out-of-pocket costs for 1969, and the railroads would have been worse, not better off The rate examples used on page 3 of the cited statement—at 65 cents at 40,000 pounds, 38 cents at 50,000 pounds, 564 miles—would only barely have covered variable costs in 1969 in official territory (the applicable territory of that tariff) and failed to cover full costs Thus, it appears that a rate low enough to make the processing of used textiles in the example profitable, would have caused the railroads to lose money—to subsidize the waste textile shippers 346 LC.C. 99 178 INTERSTATE COMMERCE COMMISSION REPORTS example, in 1970, 2! mills and 27 sorters and processors closed due in part to (increased) freight rates; (6) the increased rates cannot be passed on and must be borne by the processor, (7) rates on rags are scheduled to increase 6 percent, while on rag pulp (supposedly a substitute), only 3 percent; and (8) existing rates were found to be more than fully compensatory. There is little useful information or data available on the diverse and complex reprocessed textile waste industry, or on the transpor- tation of waste textiles. Primary sources of textile waste and scrap are: (1) textile mills; (2) manufacturers of apparel, furniture, et cetera; and (3) social service institutions which collect discarded clothes. The primary uses for reprocessed wasie textiles are: (1) padding and batting; (2) paper and vulcanized fiber, (3) cotton wipers; (4) reprocessed wool fabric; (5) flock and filer; (6) roofing and flooring; (7) used clothing, and (8) export. The Census of Manufacturers 1967 and two recent recycling studies have estimated the reprocessed textile industry as having an annual output of 1.4 to 1.6 billion pounds. NASMI and other industry sources assert that only a fraction of textile wastes move by rail (generally estimated at 10 percent), while the balance moves by private motor carrier. However, on the basis of the 1969 Carload Waybill Sample, 1.760 billion pounds of materials were shipped by rail as “textile waste, scrap or sweepings.” Obviously, most “textile wastes’™* do not flow through the textile reprocessing industry, but are industrial byproducts which are either reprocessed within integrated firms or are sold directly to users by the operator, bypassing commercial dealers and/or processors. All sources do point, however, to a decline in the processing of used textiles, despite the growth of available waste. Seconda textile waste dealers were paying as much as $120 to $140 per ton for mixed rag bundles in the midsixties; the current price range has dropped to between $55 and $65 per ton. Wiping cloths, padding and batting, wool waste, cotton clippings, and old and new rags used in construction material are being replaced by other products, which do not necessarily cost less to reproduce, but which provide a higher standard of performance. The following have been identified as the primary factors affecting used textile markets: (1) Foam has replaced cotton batting and padding almost 100 percent in the auto industry in recent years, at the average of about “The 58 separately coded commodities within this group include thread, rope, worn-out mattresses, wool dust, cotton refuse from cottonseed oil, mills, tire cord, and old clothes, to name just a few. 346 LCC. 100 INCREASED FREIGHT RATES AND CHARGES, 1972 179 30 pounds per car, and on an output of about 8 million cars per year, this alone would cause demand to be lower by 240 million pounds annually. In addition, the demand for reprocessed textiles rs dding, upholstered furniture, mattresses, et cetera, appears ion fallen by about 16-20 million pounds between 1963 and 1967. (2) Usage of rag in papermaking has been steadily declining over the years. Rag is now being replaced by woodpulp and cotton linters, which cost considerably less to produce and do not contain synthetic contamination. According to the census of manufacturers, pulpmills used negligible rag in 1967, and the use of rag in papermills fell 18 percent between 1963 and 1967. In the manu- facture of paperboard, textile waste use decreased about 15 percent during the same period. | (3) New textile and disposable paper wipers are replacing used textiles in the wiper market by virtue of their convenience and overall cost advantage. . | (4) The desire for “quality” wool products, combined with the wool labeling act and competition in export markets, has depressed the demand for reprocessed wool, even though the latter is not technically an inferior product. According to the census, use of reprocessed wool fiber decreased almost 40 percent between 1963 and 1967. . (5) During the 1963-1967 period, the reprocessing of flock decreased by about 20 percent. . . (6) The roofing materials industry, a primary market for inferior quality rag, has recently been substituting pulp for rag due to the synthetic contaminants in lower grade rag bundles (the Price is too low to cover sorting and processing). The building paper industry, according to the census, was the only industry significantly to increase its use of used textiles from 1963 to 1967; however, the synthetic contaminant problem may have been of more recent occurence. . (7) According to a recent report, the market for used clothing, which is largely an export commodity, has been suppressed by ign import policies. or teats Saeimasion while not quantitatively sufficient to ve or disprove the case, indicates that there was a substantial decline in the used textile market even during a period eng rates did not undergo a general increase, i.¢., the early ee 1960's. This market decline, combined with ge cng ~. technological developments and increased labor costs in this — labor-intensive industry, constitutes sufficient evidence to indi 346 LCC. 101 180 INTERSTATE COMMERCE COMMISSION REPORTS that nontransportation factors, not rail rates, have been the primary cause of the declining textile waste industry. Thus, the assertion that railroad rates might be largely responsible for the failure of “over a billion pounds” to move is not supported by the facts. For this reason and that indicated in footnote 83, the statement that 58 percent more traffic would have moved if rail rates had remained constant also appears unsupportable. In addition to the technological shift, the waste textile industry appears to be continuing it geographic shift away from the Northeast and into the South (a movement parallel to that of the companion textile industry). Between 1963 and 1967, total value of the waste processing industry in the South doubled, while it declined by 16 percent in the Northeast. In view of the decline in the industry, and the shift from North to South, it is not surprising that the drop in rail traffic between 1966 and 1969, registered in the waybill data, took place in the official territory. The drop in carloads of 40 percent overstates the actual situation, however, as the average load per car increased substantially in the official territory. Tons moved in the official territory decreased less than 25 percent, but rose almost 5 percent in the South. On the basis of the data presented in the Burden Study, average revenue per hundredweight on all textile scrap in the official territory in 1966, was barely sufficient to cover out-of-pocket costs and covered only 88 percent of fully allocated costs. Between 1966 and 1969, while costs were kept practically constant by encouraging heavier loading of cars, “rates” (average revenue per ton-mile) in the official territory increased about 10 percent bringing revenue to 106 percent of full costs. In the South, on the other hand, the average revenue per ton-mile was above that in the North, while unit costs were lower. In 1966, revenue was 140 percent of out-of-pocket and 120 percent of fully allocated cost on the basis of territorial costs for unequipped boxcars with a 21-ton load and 250-mile haul. Rate changes increased average revenue per ton-mile only 7 percent between 1966 and 1969, while unit costs rose so that revenue fell to 132 percent of variable costs by 1969. Nonetheless, as noted above, traffic in the South increased despite the increasing rates and despite the fact that the average revenue per ton-mile in the official territory, even in 1969, was below that for the South. (Average revenue per hundredweight was slightly lower in the South, due to shorter average haul.) These averages must be used with great caution, however, since analysis of individual movements indicate a wide range of origins and destinations, types of textile wastes, and 346 LC.C. 102 INCREASED FREIGHT RATES AND CHARGES, 1972 181 revenues. With respect to textile waste, NASMI cites two examples, the more extreme of which shows the shipment of a sweeping grade of waste from Buffalo, N.Y., to Toronto, Canada. The se‘e price of the sweepings is stated to be $1.75 per 100 pounds while the “average freight to plant” was $0.78 and “average freight to Toronto” was $0.59. NASMI thus concludes that the freight charges equal 78 percent of sale price. As to textile waste, the railroads state that in the examples sub- mitted by NASMI to show that freight charges on textile waste are high, the two components of freight charges were the “average freight to plant,” which appears to be a local trucking charge to bring the waste to the plant, and “average freight to Toronto,” which is the rail-haul charge. As the local trucking charge was $0.78 per 100 pounds, it is argued that the long-distance rail charge of $0.59 per 100 pounds not only is reasonable but is also a smaller fraction of the selling price. The example, it is asserted, also tends to show that diversion to motor carriage is not likely under the present circumstances. The railroads criticize NASMI for displaying “the banner of environmental protection, | while failing) *** to indicate in any way precisely how an increase in rail rates on textile waste could possibly adversely affect the quality of the environment”: It (NASMI) speaks of the vast accumulation of solid waste that constitutes potential recyclable material, but offers no indication that such normally discarded waste, for example, has ever moved to recycling plants by rail or that rail rates have ever been sought on such material. No discussion at all is devoted to the obvious fact that recycling plants collect their raw materials within short radii and most often by private truck. There is manifestly no relationship between the growing accumulation of discarded textiles and rail freight rates. As to textile waste moving from recycling plants to industrial consumers, nothing is contained in the protest which would indicate that rail rates in the past or rail rates increased as proposed in this proceed- ing would operate to cause substantial diversion of traffic to truck, much less prevent transportation altogether. The railroads who share protestant’s environment also share its concern for ecological improvement They submit that the increasé proposed for textile waste is in no wise inconsistent with that goal. The increases approved herein do not apply to movements within the South where about two-thirds of the total United States textile production occurs. A 3-percent increase on a 50,000- pound shipment for 527 miles would be about $9.46 a carload, in contrast to the value of such lading of at least $5,500 a carload. It is generally agreed that the so-called “substitutes” for waste textiles are replacing waste textiles for reasons unconnected with the cost of transportation. 346 LUC. 103 182 INTERSTATE COMMERCE COMMISSION REPORTS Our conclusions are the following: (1) Rail transportation rates are probably of lesser importance to the declining role of this recycling industry than the technological and market problems discussed above; and unless these latter problems are solved, constant or even decreased rates are not likely to be of substantial or long-run aid to the industry. (2) Regardless of “revenue potential,” in order for traffic to be advantageous to the railroads, the revenues must at least cover the costs of movement. This, the rates in several of the above examples fail to do on the average. (3) Because of the increased use of synthetics, the cheaper bundles of textile waste are becoming less economical to sort and process, and less desirable. This trend cannot be reversed through the mechanism of transportation rates. In summary, there is no evidence sufficent to prove the case for or against the proposed increase on environmental grounds. In the absence of specific cost information, it is not possible to determine whether a particular class of waste materials is carrying a discriminatory rate. However, the preponderance of evidence indicates that the industry's problems and solutions lie largely outside the realm of rail freight rates. Petroleum refinery wastes and waste sulfides.—Merichem is engaged in the recovery of usable chemicals from petroleum refinery wastes. It receives inbound petroleum wastes from refineries, and it ships outbound cresylic acids, phenol, and waste sulfide. This protestant would not object to the proposed rate increases on cresylic acids and phenol, if found to be otherwise warranted, but it requests holddowns on the petroleum refinery waste and waste sulfide. This protestant alleges that it is a financially depressed firm and cannot afford to pay higher freight rates on the low-valued refinery waste and waste sulfide. Moreover, waste sulfide, which is said to compete with caustic soda and salt cake, is shipped in a diluted form of less than 20-percent concentration. Since caustic soda and salt cake are shipped in concentrated forms, Merichem contends that an across-the-board freight rate increase is inequitable because a 2.5- percent surcharge assertedly has the effect of only a 2.5-percent increase in the transportation costs of usable salt cake, a 5-percent increase for caustic soda, and 12.5-percent increase for usable waste sulfide. Merichem also asserts that past rail rate increases have caused diversion of traffic from rail to trucks and barges and that the present proposed rate increase will do so too. 346 LCC. 104 INCREASED FREIGHT RATES AND CHARGES, 1972 183 More directly pertinent to the environmental issue, Merichem States that, before it came into being, the refinery wastes were released into the watersheds, Causing pollution of water resources. Thus, Merichem’s operations not only serve the public interest by removing toxic substances from discharged wastes, but the recovered chemicals are then recycled. To illustrate its contention that freight rate increases impair its ability to remove the pollutants and recycle them, Merichem cites its discontinued collection of wastes from 11 refineries, as a result of rail rate increases, where barge transportation was not available. In sum, Merichem contends that the low-valued and dilute refinery waste cannot bear the proposed rate increases and that the rate increases would be self-defeating due to the loss of rail traffic through diversion. It also argues that any impairment in its ability to remove pollutants from waste discharge will adversely affect the environment. Although it does not allege that the proposed rate increases are unreasonable or are not cost justified, it requests this Commission to grant holddowns on its commodities under our power to adjust rates to meet public needs. The railroads contend that the refinery waste and waste sulfide are already being transported at very low rates due to the carriers’ favorable response to prior requests for reductions in the charges on these commodities. As examples, the railroads show that the present rate on refinery waste is about 25-percent less than the rate for residual fuel oil, another refinery byproduct, between the same points. The carriers dispute Merichem’s claim that freight rate increases would cause it to reduce its operations and perhaps to go out of business. They say that Merichem has received an increasing amount of petroleum wastes by rail despite past rate increases, and that its Houston plant is now operating at capacity. Thus, past rate increases assertedly have not interfered with the collection of refinery waste nor with the distribution of recycled products. According to the rail- roads, the proposed rate increases will not cause any change in the handling of petroleum waste and will not have any adverse impact on the environment, but the modest increase proposed represents only a fair and reasonable share of the increased costs experienced by the carriers. As to Merichem’s claim of inequity due to the low concentration of usable chemicals in its raw materials and products, the railroads point out that it was the shipper’s choice to move these com- 346 LCC. 105 184 INTERSTATE COMMERCE COMMISSION REPORTS modities in dilute form. In fact, Merichem itself sought and obtained the present low rates on waste sulfide containing no more than 20-percent usable material. Moreover, the rate per ton for moving waste sulfide a given distance is substantially lower than the rates per ton for moving salt cake or caustic soda the same distance. With respect to diversion of traffic, the railroads apparently believe that such diversion will occur whenever barge service is available. The railroads argue that the thrust of Merichem’s contention is that the carriers should subsidize the movement of petroleum wastes even if this has to be done at a rate level below costs. The carriers find it significant that when Merichem itself decided that continued collection of wastes from 11! refineries would be unprofitable, it simply stopped collecting there. The railroads suggest that the disposal of petroleum wastes should be considered a cost of doing business, and that the oil companies, who create the wastes, should bear part of the burden of disposal. It appears that Merichem is presently paying refineries for was.es and the railroads conclude that the refineries perhaps should give the wastes to Merichem free or even pay for disposal. In response to Merichem’s allegation that it is in a financially depressed condition, the railroads submitted data from Merichem’s financial statements filed in Texas to show that it had an increase in sales from 1970 to 1971, and that its net income before Federal income taxes rose from about $70,000 in 1970, to more than $520,000 in 1971. The railroads also dispute Merichem's claim that refinery wastes have virtually no market value by pointing to the facts that such wastes are shipped over long distances at con- siderable cost and that some of these wastes can be shipped directly to papermills for use without intermediate processing. Finally, the railroads show, that contrary to the impression con- veyed by Merichem, that refineries either must sell the wastes to Merichem or dump them in the water streams, other methods of disposal are available, including one developed under an EPA grant. Most of these alternative methods of disposal, some of which have been widely used in European refineries for years, involve an element of cost to the refinery. The fact that some refineries apparently already are paying for the disposal of their wastes, instead of selling the wastes to Merichem, is analogized by the rail- roads to the practice of petrochemical plants which pay for the disposal of wastes they created. Statistics show that rail shipments of petroleum wastes to Merichem rose from 97.3 million pounds in 1969, to over 100 346 LCC. 106 INCREASED FREIGHT RATES AND CHARGES, 1972 185 million pounds in 1971. A 4-percent rate increase would result in increased charges of $36 a car or less than | percent per hundred- weight. These rates are presently at a low level. Protestant Merichem continues to receive wastes from over 100 refineries in 21 States and Canada. It recently supported the establishment of a rate of 80 cents per hundredweight from Amoco, Va., to Houston, a distance of 1,431 miles. In contrast, the present rate from American Oil’s refinery at Sugar Creek, Mo., a representa- tive midwestern movement, is only 48 cents per hundredweight. Since it imports wastes for long distances from Canada, Penn- Sylvania, or Virginia, there may be reasons other than freight rates for not serving other plants within that radius. For example, the amount of useful chemicals in any particular batch of petroleum wastes depends on the type of crude processed by the refinery, the processes, and the chemicals employed. Thus, the use of wastes of a particular refinery may largely depend on the amount of recover- able products in the waste and the selling price of such recoverable products. It is also apparent that if Merichem pays the freight and utilizes leased tank cars it is to its advantage to obtain petroleum wastes as Close to Houston as possible where the freight and tank car turnaround times will be minimized. Moreover, the allegation that the increases will result in a diversion from rail to barge is con- tradicted by protestant’s admitted increase in the use of rail service from 1969 through 1971. Finally, when barges are available some traffic may be diverted regardless of the railroad rate level. Protestant’s contentions that refineries depending on rail mcvement may again resort to dumping wastes into watersheds is simply erroneous. Refinery operators are cognizant of the need to control pollution and are required by law to do so. Moreover, there are a number of alternatives available to refiners, including direct sale to papermills or to Merichem’s competitors, and use of fluid bed incineration, a nonpolluting method of waste disposal. Additionally, in the fluid catalytic cracking process the spent caustic waste solution may be stripped of hydrogen sulfide. Furthermore, petroleum products may be treated so as to remove the sulphur directly rather than through caustic washing. The sulphur so recovered is in a salable form and there is no creation of caustic petroleum refinery waste. The trend in the industry is toward this type of process. The adopted increases on these commodities will not in our judgment affect the movement of these commodities for recycling purposes. 346 LCC. 107 186 INTERSTATE COMMERCE COMMISSION REPORTS Scrap glass**—recycling and transportation.—Obsolete scrap glass comprises 6 to 8 percent by weight of the Nation’s solid waste.** Recent estimates, however, indicate that only 4.5 percent of obsolete scrap glass (cullet) is recycled.*’ This rate is low, comparable to the recycling rates for rubber, plastics, and textiles. In view of estimates that 60 percent of the annual glass production is potentially recoverable, we need to consider the various factors impeding progress in increasing the recycling rate.” The major problem in its recovery is that of sorting obsolete scrap glass from solid wastes. As one authoritative source States, “The key economic parameters of cullet acquisition from mixed waste are dependent on the technical process for separation and upgrading of cullet from mixed waste.”** Experiments currently are underway to develop methods for the mechanical separation of obsolete glass scrap from mixed refuse and the Sorting of that glass into its respective colors.” Work is also being done to improve glass crushing and cleaning equipment. Since all these efforts are still experimental, however, their economic feasibility has not been established. The recycling of “home” or “prompt industrial” glass scrap—that resulting from the production of glass end products in the factory—is burdened with fewer problems than obsolete scrap glass recycling. Most of these fabrication or production wastes (1,350,000 tons in 1967) are reused on an in-plant basis.’' This scrap is clean, is free of contaminants, and does not require the arduous and expensive sorting associated with obsolete glass scrap recycling. Manufacturers clearly favor internally generated glass sc rap because they have no question about its chemical Composition and quality.” “In its comments on the draft impact statement, EPA contends that this Commission has failed to address the environmental impacts of increased freight rates on returnable containers. First, it would not be practical for us to consider every recyclable commodity individually. Second, the discussions found later in this report concerning glass scrap and nonferrous metal scrap are applicable to the recycling of glass and other containers and make reference to this specific commodity. Finally, it does not appear that returnable containers are included within the list of commodities which were to be investigated in this proceeding as reopened by order of November 7, 1972 (see footnote 5, supra). “Arsen Darnay and William Franklin, Economic Study of Salvage Markets for Commodities Entering the Solid Waste Stream (for Environmental Protection Agency), Midwest Research Institute, December 1970, p. 7-11. "Loc. cit. “Economic and Environmental Analysis of Glass (draft copy for Council on Environmental Quality), Midwest Research Institute, August 1971, p. 15. “Ibid. p. 7. “Sullivan, P., et al., Electronic Color Sorting of Glass from Urban Waste, Bureau of Mines Solid Waste Research Program Technical Progress Report 45, October 1971, pp. 1-8. "Darnay and Franklin, op. cit., pp. 7-9, 7-13. "bid 346 LCC. 108 INCREASED FREIGHT RATES AND CHARGES, 1972 187 The glass industry is particularly well suited to the recycling of “home” or “prompt industrial” glass scrap. Most glass plants are fully integrated in that they consume virgin raw materials and produce a finished product. As a result, internally generated cullet can be crushed, mixed with the virgin raw materials, and sent through the entire melting and fabrication process without requiring modifications of equipment or processes. In fact, in glassmaking, cullet is a technically and economically functional input material.* The use of cullet actually aids the melting process, since it liquifies at a lower temperature than raw materials. Thus, the thermal efficiency of the furnace is increased. Less fuel is consumed, and the lower melting temperatures required result in longer furnace life and a reduction in repair and maintenance costs. The shortened melting time results in greater output of the finished product per day at reduced costs. . There appears to be no technological limit to cullet usage in certain glassmaking processes. Thus, even if nearly 100 percent of the input were cullet, the enc product could be equal in quality to currently produced glass containers.” TABLE Purchased Cullet Consumption by Sectors of the Glass Industry, 1967 (Aggregates in 1,000 tons) Glass Pressed con- Flat and Total tainers glass blown industry glass Total purchased cullet consumed ----- 100 244 256 600 Total raw materials consumed --------- 12,100 2,500 2,060 16,660 Purchased cullet as a percentage of total raw materials consumption - ! 10 12 3.60 Source: Midwest Research Institute. At present, however, the glass industry's average input of cullet is only 15 percent by weight, and a large portion of that, well over two-thirds, is internally generated. The remainder is composed of cullet purchased by glass manufacturers, and includes both prompt industrial and obsolete varieties. Data are not available which would indicate the relative portions of these three types of cullet which are utilized. As illustrated in the table, in 1967, the glass “Loc. cil. “Economic and Environmental Analysis of Glass, p. 13 346 LCC. 109 188 INTERSTATE COMMERCE COMMISSION REPORTS container industry purchases of obsolete cullet equi only | percent of its input tonnage of raw materials, the flat glass segment purchased 10 percent, and the pressed and blown glass segment purchased 12 percent of its inputs as cullet. When considered along with the percentage of raw materials these sectors of the industry used in 1967 (73, 15, and 12 percent, respectively), it becomes apparent that purchased cullet, including both prompt industrial and obsolete, comprised only 3.60 percent by weight of the raw materials inputs of the glass industry. Taking into account the fact that most purchased cullet is of the prompt industrial type, only 1 to 2 percent of raw materials inputs in the glass industry is obsolete cullet. Manufacturers of glass containers consume virtually all of their internally generated cullet.** Some excess cullet is produced and sold by the flat glass and pressed and blown glass sectors of the industry, but most of it is purchased by other glass plants which need it to supplement internal cullet when their production rates and pack-to-melt ratios do not yield enough internally generated cullet.°° The only processing necessary before purchased commercial cullet (all purchased cullet, excluding that collected by citizens’ groups) is shipped is crushing, a relatively inexpensive and fast process, so costs are kept relatively low. Estimated average delivered prices for commercial cullet in 1971, were $18.50 per ton of clear glass and $16.50 per ton of amber or green glass.”’ Obsolete cullet differs from prompt industrial cullet in supply characteristics. Containers comprise at least 75 percent of obsolete glass found in collected waste, and small portions of flat glass and pressed and blown glass make up the remainder; whereas, flat glass composes a larger share of commercial cullet.* The most important sources of obsolete cullet are found in the Nation’s major population centers, but very little obsolete cullet is actually recycled from muncipal refuse. Most of the recycled obsolete cullet is in the form of refillable or returnable beverage containers which have outlived their usefulness. The glass industry prefers these containers to nonrefillable or nonreturnable containers because of the better quality of the glass from which they are made.” A relatively new development in glass recycling is the growth of *“Darnay and Franklin, op. cit., p. 7-9. “Ibid., p. 6-16. "Economic and Environmental Analysis of Glass, p. 12. “Darnay and Franklin, op. cit., p. 7-19 “Ibid., pp. 7-2, 10, 19 346 L.C.C. 110 INCREASED FREIGHT RATES AND CHARGES, 1972 189 citizens’ groups concerned with environmental quality which have successfully sought the cooperation of the glass industry in recycling a larger portion of nonrefillable containers. In what is generally a volunteer effort, glass containers have been collected, cleaned, sorted, crushed, and transported to the nearest glass factory for a widely accepted price of $20 per ton.'® At $20 per ton the industry participants are absorbing costs that could not be justified in a narrow economic sense. Prices for processing obsolete cullet other than the “citizen-collected” variety range from $18.50 per ton of clear glass to $16.50 per ton of colored glass, as does the commercial cullet. As stated previously, it has been estimated that 60 percent of the annual glass production will be recoverable for refabrication when separating and sorting equipment is perfected and put into use on a broad scale.'*' Thus, glass producers could consume the equivalent of 60 percent of their production as cullet without having to make major processing modifications and with no decrease in quality of the finished product. It has been estimated that capital investment requirements to revamp industrial plants would range from $50,000 to $100,000, depending upon the type and age of the plant.'** Perhaps a more important point is that the changeover could be accomplished within a framework of normal periodic plant improvements practiced by the industry. In addition, if the industry average recycling rate were increased from 15 to 60 percent, total wastes and effluents from glass production would be reduced more than 50 percent and total energy consumption would decline between 30 and 50 percent.'” The materials with which cullet competes in glassmaking are, primarily, sand, soda ash, and limestone. These account for 94 percent by weight of the raw materials used in glass production." These does not appear to be any shortage of these low-cost virgin materials. The estimated average cost of the raw materials necessary to produce a ton of glass containers in 1970 was $18.43, delivered.'* As noted above, the cost of a ton of delivered clear cullet in 1971 was between $18.50 and $16.50. The. materials which “Letter to ICC from Leonard F. Giaco, Assistant Director of Traffic, Glass Container Manufacturers Institute, dated August 8, 1972. '' Economic and Environmental Analysis of Giass, pp. 7-19. Estimated capital costs for a 500- ton-per-day raw refuse plant are $200,000 based on the sortex optical separation technique connected to a Black Clawson processing system. ''Ibid., p. 3. ''Ibid., p. 20. “Ibid., p. 4. “Loc. cit. 346 L.C.C. 111 190 INTERSTATE COMMERCE COMMISSION REPORTS compete indirectly with cullet are those which compete directly with finished glass products, particularly with glass containers. The most important of these are plastic, steel, and aluminum.’ While glass has fallen behind metal cans in its share of the beverage container market, it is difficult to discern any overall trend from the data available as to the glass industry's share of its various markets. There exists the potential in other areas for future increases in cullet usage. The Bureau of Mines has met with considerable success in its experimental fabrication of building bricks using 70- percent crushed glass residue and 30-percent clay."’ The brick produced by use of a tunnel kiln plant is economically competitive with face brick. Cement blocks utilizing crushed glass as 30 percent of the aggregate have been found to be of superior strength to conventional products. Wall panels fabricated from mixtures of up to 90-percent glass cullet have been found to be exceptionally Strong and considerabiy less expensive than some comparable building materials. Experimental production of spun glass insulation using large percentages of cullet, and terrazzo floors utilizing amber cullet, have produced encouraging results. Substitution of cullet for asphalt aggregates in “glasphalt” paving materials have proven technologically successful (in many ways it is superior to conventional asphalt paving) but economically unfeasible.'® Finely ground glass is currently being used in reflective highway paints, a use which promises to increase in future, and has been used for some time in the manufacture of abrasives. Flat glass and pressed and blown glass cullet is most frequently ground or powdered and used for match heads and striking abrasives, ammunition, and reflective materials.'® The total tonnage of glass used in all these products remains relatively small, and these uses do not appear to be on the verge of a dramatic increase. In sum, although various experimental uses of obsolete cullet have been developed, the area of greatest potential for increasing obsolete cullet recovery remains that of refabricating it into new glass products. One of the major reasons for a low demand for obsolete cullet on the part of glass fabricators is the absence of the “steady, trusted, and reliable source of cullet [which] is needed to give continuity to the production process and batch mixtures.” “*Ibid., p. 10. "Tyrrell, Miles, et al., Fabrication and Cost Evaluation of Experimental Building Brick from Waste Glass, Bureau of Mines Report of Investigations 7605, 1972. pp. 18-33 “*Economic and Environmental Analysis of Glass. pp. 21-22. “Drobny, N., et al. Recovery and Utilization of Municipal Solid Waste, Environmental Protection Agency, 1971, pp. 90-91 ‘“Darnay and Franklin, op. cit. p. 7-15 112 346 LCC. INCREASED FREIGHT RATES AND CHARGES, 1972 191 This inconsistency or unpredictability of obsolete cullet supplies may be largely attributed to the lack of technological advances necessary for separating, cleaning, and sorting scrap glass. When such improvements are realized, a steady stream of cullet should be forthcoming from our municipal refuse.''' Conceivably, transportation rates and costs may make the difference between cullet being recycled or being left in sanitary land fill. While there is little useful information available on average freight costs on raw materials and cullet costs, efforts have been made recently to estimate such figures. The average raw materials cost per ton of glass produced in 1970 was estimated to be $18.43.'" Of that total, $5.60, or 30.4 percent, represented freight costs. The estimated average cost of a delivered ton of clear cullet was $18.50,''’ in 1970. If that cullet were shipped via rail 397 miles (the average haul in 1969, the latest year for which data are available), the freight charge is estimated to have been $8, or 43.2 percent of its delivered price.''* The disparity in freight costs relative to delivered prices may have increased since 1970. In Ex Parte No. 265, this Commission granted rate increases of 6 percent on all commodities involved in glass manufacture, including cullet. Rate increases on the same commodities, ranging from 6 percent in the southern territory to 14 percent in the eastern territory, were granted in Ex Parte No. 267. The rate increases under consideration herein, which (as listed in the table below), also limit the increase on collect to 3 percent on southern territory movements, do not appear to have the potential to ameliorate these disparities. Transportation characteristics of cullet appear to explain only a portion of its disproportionately large freight costs. While cullet and its virgin raw materials counterparts move in similar type cars (open and covered hopper cars, gondolas, and a small number of boxcars), the average weight per carload (52.6 tons) of cullet shipped via rail in 1969, was considerably less than the corresponding weighted average (74.1 tons) for the competing virgin raw materials shipped during the same year.''* Cullet may be more difficult to handle than its raw materials counterparts; as a result it may be somewhat more expensive to load and unload. It is difficult, however, to determine precisely what portion of the disparity in freight costs may be attributed to these characteristics. Further study of the rail rate ‘Economic and Environmental Analysis of Glass, pp. 7-8. ‘Tbid., p. 4. ‘Cullet can be competitive at prices up to 10-percent above virgin raw materiais. /bid., p. 10. ‘“Ibid., p. 12 "1969 Carload Waybill Statistics, Department of Transportation Statement TD-1, April 1972. 346 LC.C. 113 192 INTERSTATE COMMERCE COMMISSION REPORTS INCREASED FREIGHT RATES AND CHARGES, 1972 193 Structure in this area will be necessary before charges of discrimination can be dealt with in a totally definitive manner. § 5 5. é Some of the most significant data available are those which 3 5 s& 8 indicate the portion of purchased cullet (both prompt industrial and “oo “ 5 > obsolete) which moves via rail. In 1967, the latest year for which a3 z : comparisons are available, approximately 173,231 tons of an [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_0118%3A02. Public record. Not legal advice.