Appendix — Florida Citrus Commission v. United States
Supreme Court brief1957
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APPENDIX I
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA,
TALLAHASSE DIVISION
No. 565
FLoripa Cirrus Commission, et al., Plaintiffs,
and
Ezra Tarr Benson, Secretary of Agriculture, et al.,
Intervening Plaintiffs,
Vv.
Unitep States or America, INTERSTATE ComMeRCE ComMis-
sion, et al., Defendants,
and
Atcuison, Topeka AND Santa Fe Rattway Company,
Armour AnD Company, et al., Jntervening Defendants.
Before Jones, Circuit Judge, and Barker and DeVane,
District Judges.
Jones, Cireuit Judge.
The Interstate Commerce Commission entered its order
dated January 9, 1956, on the petition of substantially all~
of the rail carriers of the country, permitting increases in
refrigeration charges to the extent authorized in the Com-
mission’s report of the same date. 297 LC.C. 505. This
action is brought to enjoin, annul and set aside the Com-
mission’s order under the provisions of the Judicial Code
(28 U.S.C.A. $§ 1336, 1337, 1398, 2284, 2321, 2322 and 2325)
and by the Administrative Procedure Act. 5 U.S.C.A.
§ 1009. The action was brought by shippers and repre-
sentatives of shippers of fresh fruits and vegetables in and
from Florida and two agencies of the State of Florida, the
Florida Citrus Commission, a body corporate (Florida
Sa 20 BONS ONE LET POE ANGE OLEATE LO FOL IL O
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Statutes 1955, § 595.01 et seq.) and Florida Railroad and
Publie Utilities Commission, an unincorporated regulatory
agency exercising quasi-judicial powers. Florida Statutes
1955, § 350.01 et seq. By intervention, Western Growers
Association, a trade association of growers and shippers
of melons and vegetables in and from Arizona and Cali-
fornia, California Citrus League, a trade association of
growers and shippers of citrus fruits in and from Arizona
and California, and Ezra Taft Benson, Secretary of Agri-
culture, became parties plaintiff.
The charges made by rail carriers for ref rigeration sery-
ices are separate from the so-called line-haul rates. 49
U.S.C.A. § 6(1). The charges for refrigeration services
are prescribed by the Interstate Commerce Commission or
established by the rail lines. They are set forth in the
published tariffs of W. T. J amison, agent for the railroads.
The refrigeration charges, for the most part, are of two
basic groups, one known as Section 2 charges and the other
being Section 4 charges. The designations come from the
numbering of the sections of Agent Jamison’s tariffs where
the charges are scheduled. Generally speaking, Section 2
charges apply in the transportation by rail of fresh fruits,
vegetables, melons, berries and processed foods. The com.
modities to which Section 4 charges are applicable include
fresh meats and packing house products, fish, dairy prod-
ucts, bananas, coconuts and beer. Section 2 charges are
based, or intended to be based, upon cost of ice in bunkers,
supervision, switching to and from icing stations, damage
to bunkers and cars, ice haulage in bunkers, accounting,
hazard, taxes, and a return on investment. Section 4
charges are intended to include only cost of ice, salt and
switching. Shippers using Section 4 services have urged
that the carriers are compensated for the Section 2 costs
not included in Section 4 charges in the line-haul rates on
Section 4 commodities. A number of types of refrigeration
services are available in order to provide for the different
needs of shippers of various commodities from and to di-
verse points of origin and destination.
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During the period of 1946 to 1951, inclusive, the Inter-
state Commerce Commission authorized increases in re-
frigeration charges aggregating 32.25 per cent. Ex Parte
No. 162, Increased Railway Rates, Fares and Charges,
1946, 266 1.C.C. 537; Ex Parte No. 166, Increased Freight
Rates, 1947, 270 L.C.C. 403. During the same period the
Commission, in ‘‘general revenue’’ proceedings, authorized
increases of interstate freight rates to the extent of 78.9
| per cent. Ex Parte No. 162, Increased Railway Rates,
| Fares and Charges, 1946 supra; Ex Parte No. 166, In-
creased Freight Rates, 1947, supra; Ex Parte No. 168,
| Increased Freight Rates, 1948, 276 LCC. 9; Ex Parte No.
175, Increased Freight Rates, 1951, 281 LC.C. 557. A re-
cent order allows a further freight rate increase of 6 per
cent. Ex Parte No. 196, Increased Freight Rates, 1956,
— LC.C. —. In Ex Parte No. 168, and again in Ex Parte
No. 175, the Commission found the evidence inadequate to
show that existing charges did not compensate the carriers
for their costs in furnishing refrigerating services. In 1951
the rail carriers decided to conduct a survey to ascertain
the costs of refrigeration services as a basis for determin-
ing whether an increase in charges could be justified. The
method of making the survey and the results obtained from
it need not be here recited beyond the extent required for
our determination of the questions before us. They are
fully detailed in the report of the Commission. The rail
lines, basing their conclusion on a report of the survey,
estimated that Section 2 refrigeration costs exceeded reve-
nues by 29.8 per cent.
The rail carriers, by their petition filed with the Inter-
state Commerce Commission, sought increases of 30 per
cent., with some exceptions, of the Section 2 charges, and
specific increases for the charges for ice, salt and switching
in the Section 4 charges. In their petition the carriers
asserted that their cost studies showed that on the basis
of 1951 figures, the cost of refrigeration services was more
than $12,000,000 in excess of the revenues from such serv-
©
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ices. All of the interests before the Court were represented
in the proceedings before the Commission. The Commis-
sion held numerous hearings at various places, built up a
large record of testimony and exhibits, a report was pro-
posed by the Examiner, exceptions to the proposed report
were filed, briefs were submitted, and oral argument was
heard by the full Commission on three different days.
In its report the Commission found that the carriers
were sustaining a deficit of 23 per cent. of their refrigera-
tion charge revenue from Section 2 traffic, and an ice cost
of approximately 17 per cent. in excess of revenue on See-
tion 4 shipments. But, finding that a substantial portion
of the affected traffic could not bear increases to the extent
required to fully cover costs of service, the Commission
authorized increases of 15 per cent in the basie refrigera-
tion charges. Petitions for Reconsideration were filed with
the Commission, and while these petitions were pending
this suit was institu‘ed. The Commission denied the Peti-
tions for Reconsideration on April 16, 1956, and, this Court
meanwhile having declined a stay, the increases became
effective April 17, 1956.
At the outset we are met with the contention that no or-
der was issued under Section 15(1) of the Interstate Com-
merece Act, (49 U.S.C.A. § 15(1)), and that no notice was
given under Section 4(a) of the Administrative Procedure
Act, (5 U.S.C.A. § 1003(a)), which relates to rule making
by administrative agencies. More nearly pertinent, we
think, is Section 5(a) of the Administrative Procedure Act,
(5 U.S.C.A. § 1004(a)), providing for notice of agency
hearings. Wherever it appears that the absence of notice
has resulted in prejudice to a complaining party the action
of the administrative agency will be set aside. Pinkett v.
United States, D. C. Md. 1952, 105 F. Supp. 67. But no
prejudice is shown where, as in this case, the party com-
plaining had actual knowledge of and participated in the
administrative proceedings and he will not be heard to com-
plain of the failure to give formal notice. W. J. Dillner
Pore a ee Minis
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Transfer Co. v. United States, D.C.W.D. Pa. 1951, 101 F.
Supp. 906; C. E. Hall & Sons, Ine. v. United States, D.C.
Mass. 1950, 88 F. Supp. 596. We think it doubtful that the
hearings of the Commission in the proceeding we here con-
sider were of the kind contemplated by the section of the
Interstate Commerce Act requiring notice, but the absence
of any showing of prejudice relieves us of the necessity to
decide the point.
By the enactment of the Emergency Transportation Act,
1933, 48 Stat. 211; 49 U.S.C.A. § 15(a)(2), the Congress
gave to the Interstate Commerce Commission the power
and imposed the duty to adjust rates so that carriers as a
whole, or in each of such rate groups or territories as the
Commission might designate, will earn an aggregate net
operating income equal to a fair return upon the aggregate
value of the railway property of the carriers used in trans-
portation service. Under the provisions of Section 13 of
the Commerce Act, 49 U.S.C.A. § 13(1), ‘‘any person, firm,
corporation, company, or association, or any mercantile,
agricultural, or manufacturing society or other organiza-
tion, or any body politie or municipal organization’’, with-
in which inclusive descriptions each plaintiff may find a
designation, may petition the Commission and complain of
anything done or omitted by any common carrier subject
to the Act in contravention of the provisions of the Act.
By Section 15, 49 U.S.C.A. § 15(1), the Commission is em-
powered, upon a complaint or on its own initiative, to de-
termine whether any individual or joint rate, fare or charge
is or will be unjust, unreasonable or unjustly discrimina-
tory, and may determine and prescribe just and reasonable
rates, fares and charges. Under Section 15(a) and the im-
plementing provisions of the Act, the Commission has
exercised jurisdiction in a number of proceedings which
have been commonly called ‘‘ general revenue’’ cases, where
revision has been sought as to all or substantially all of the
rates or charges on all traffic or on particular commodities
or groups of commodities, either nation wide or in a large
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territory, in contradistinction to the ‘‘rate’’ cases, so called,
in which the reasonableness of specific rates has been de-
termined. Among the first, and perhaps the earliest of the
court decisions dealing with a general revenue case, is the
leading Algoma case. Algoma Coal & Coke Co. v. United
States, D.C.E.D. Va. 1935, 11 F. 2d 487.
In the Algoma case, producers and shippers of coal
sought the annulment of rate increases on that commodity,
which increases had been made effective pursuant to an
order of the Commission authorizing rate increases on a
selective basis. Emergency Freight Charges, 1935, Ex
Parte No. 115, in the Matter of Increases in Freight Rates
and Charges, 1935, 208 I.C.C. 4. In a frequently cited
and well reasoned opinion by District Judge Chestnut, it
was held that the plaintiffs could not prevail. The suit
was dismissed. The Court said:
‘‘The plaintiffs have mistaken their remedy in the
statutory scheme of railroad rate making. Their con-
tention is that the Commission, without sufficient evi-
dence or proper findings of fact, has determined or
fixed particular rates for the plaintiffs’ particular
traffic. But this misconceives what the Commission
has actually done. It was not dealing finally with par-
ticular rates for particular traffic, but permitting
increased rates for selected commodities, by a general
order affecting all the railroads in the country. If the
increased rates as applied to the plaintiffs’ particular
situation can be shown to be unjust and unreasonable,
their remedy is clearly by proceedings under Sections
13 and 15 of the act (49 USCA §$13, 15) for indi-
vidual relief, and for reparation orders under section
16(1) of the act, 49 USCA $16(1). Brimstone R. &
Canal Co. v. United States, 276 U.S. 104, 122, 48 S. Ct.
282, 72 L. Ed. 487; Alexander Sprunt & Son v. United
States, 281 U.S. 249, 256, 50 S. Ct. 315, 74 L.Ed. 832;
Eagle Cotton Oil Co. v. Southern Ry. Co. (C.C.A. 5)
51 F. (2d) 443, certiorari denied 284 U.S. 675, 52 S. Ct.
130, 76 L. Ed. 571. Nothing in the Commission case
debars them from such relief. Counsel for the rail-
road companies before the Commission and in this
CAE DR TLS OS FS AE LORS EE ELL OM LPS SOT IS tum
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court proceeding concede that the rule of Arizona
Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S.
370, 52 S. Ct. 183, 76 L. Ed. 348, would not be available
to defeat the plaintiffs’ remedy in this respect before
the Commission, upon a proper showing.
‘It is necessarily inconsistent with the whole
scheme of the Interstate Commerce Act, which re-
quires uniformity and nondiscrimination as to rates,
to permit particular shippers to obtain individual
relief in courts of different jurisdictions, with possible
lack of uniformity in results, in matters committed to
the administrative functions of the Commission, in-
cluding the reasonableness of rates, until after the
Commission has acted on the particular subject. Texas
& Pac. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426,
27 S. Ct. 350, 51 L. Ed. 553, 9 Ann. Cas. 1075; Balti-
more & O. R. Co. v. United States ex rel. Pitcairn Coal
Co., 215 U.S. 481, 30 S. Ct. 164, 54 L. Ed. 292; Great
Northern Ry. Co. v. Merchants’ Elevator Co., 259
U.S. 285, 291, 42 S. Ct. 447, 66 L. Ed. 943. Consistently
therewith, it has been held by the Supreme Court in
a number of cases, that individual shippers may not
maintain suits to annul orders of the Commission
unless they can show an invasion thereby of some in-
dependent legal right, whereby they particularly are
subjected to injury. Alexander Sprunt & Son v.
United States, 281 U.S. 249, 256, 50 S. Ct. 315, 74 L.
Ed. 832; United States v. Merchants’ & Manufac-
turers’ Traffic Ass’n of Sacramento, 242 U.S. 178, 37
S. Ct. 24, 61 L. Ed. 233; Edward Hines Yellow Pine
Trustees v. United States, 263 U.S. 143, 44 S. Ct. 72,
68 L. Ed. 216.’ Algoma Coal & Coke Co., et al. v.
United States, 11 F. Supp. 487.
The plaintiffs and intervening plaintiffs, other than the
Secretary of Agriculture, assert that there is considerable
doubt as to the correctness of the rulings in Algoma. They
do not support their doubt with either a statement of a
contravening principle or the citation of any authority
superseding it as a precedent. The Secretary of Agricul-
ture, with commendable candor, says that the Algoma case
is ‘*still the law of the land on the subject’’. On a number
BRR eon PENIS TICE PE RR gy SURFS OES SPAR LOPLI TY BNP TE MEUE at
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of grounds it is urged that the case before us is not a
general revenue case, but a rate case, and as such the
charges authorized by it are unjust, unreasonable and
discriminatory. It is further contended that even if it
be decided that this is a general revenue case, there is no
competent evidence of any need of additional revenue by
the carriers. Unless the order is based upon a miscon-
struction of the Act or is unsupported by substantial evi-
dence, it is entitled to a presumption of validity. 5 U.S.C.A.
$1099; Baltimore & Ohio Railroad Co. v. United States,
298 U.S. 349, 56 S. Ct. 797, 80 L. Ed. 1209; Amarillo-Borger
Express, Inc. v. United States, D.C.N.D. Tex., 1956, 138 F.
Supp. 411. It has been said by the Supreme Court,
‘* Judicial review of the findings of fact and the expert
judgments of the Interstate Commerce Commission where
the Commission acts within its statutory authority is ex-
tremely limited.’’ Interstate Commerce Commission v.
Mechling, 330 U.S. 567, 67 S. Ct. 894, 91 L. Ed. 1102. See
also Atchison, Topeka and Santa Fe Railway Co. v. United
States, 232 U.S. 199, 34 S. Ct. 291, 58 L. Ed. 568; United
States v. Chicago Heights Trucking Co., 310 U.S. 344,
60 S. Ct. 931, 84 L. Ed. 1243; Ontario Freight Lines Cor-
poration v. United States, D.C.N.J. 1948, 76 F. Supp. 526.
With these general guides we approach the questions so
ably presented by contending counsel.
In the opinion in the Algoma case, supra, the Court
observed that the order of the Commission there under
review was permissive in character, that it prescribed no
particular rates, that the lawfulness of individual pro-
posals was not passed upon, and that it was open to the
plaintiffs, under Sections 13 and 15 of the Act, 49 U.S.C.A.
$$ 13, 15, to present to the Commission their contentions
that particular rates initiated pursuant to its order were
unreasonable and discriminatory. In Algoma it was also
pointed out that the resulting rates fixed pursuant to the
Commission’s order would be subject to complaint and a
ES SP LEP ENG TI PEE TE AEEAL —
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determination of reasonableness, and that the Commis-
sion’s order would not debar the right to reparations in a
proper case. The plaintiffs contend that the Car Unload-
ing Case, Secretary of Agriculture v. United States, 347
US. 645, 74 S. Ct. 826, 98 L. Ed. 1015, is a controlling
precedent for the position they take. There the Com-
mission had entered an order approving maximum
charges for the unloading by railroads of carload ship-
ments of fruit and vegetables at the rail terminals in New
York and Philadelphia. The Supreme Court, reversing the
District Court of the Southern District of Florida, held
that as a general rule line-haul rates included the making
of the goods accessible to the consignee and that the com-
mission had failed to show a legal basis for departing
from this general rule although a majority of the Court
was of the opinion that the Commission had the power in
a proper case to fix unloading charges separate from the
line-haul rates. We do not have here any such factual
situation as was presented in the Car Unloading Case.
It is not disputed that refrigeration charges may be made
} separately from line-haul rates. In the case before us it
is suggested that the line-haul rates on Section 4 traffic
include some of the elements that are in the refrigeration
charges applicable to Section 2 shipments, but it would not
follow from this that we are dealing with a rate case
rather than a general revenue case.
| As in the Algoma case, the Commission’s order is per-
missive, no particular charges are fixed, and the lawful-
| ness of particular charges was not considered or decided.
In its order the Commission said that:
‘¢ * * * to enable the petitioning carriers, under honest,
economical, and efficient management, to provide ade-
quate refrigeration service and specifically to meet
increased costs of rendering that service, the basic re-
frigeration charges may be increased as_ herein
specified, and that the charges so increased will be just
and reasonable for the future.’’ 297 L.C.C. 554.
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It omitted from its order any provision for modification in
specific situations as was done in the order considered in
King v. United States, 344 U.S. 254, 73 S. Ct. 259, 97 L. Ed.
301. We are urged to say that this inclusion and this
omission make the case one fixing rates rather than
authorizing a general revenue increase. The Commission’s
power, whether to fix specific rates or charges or to author-
ize a general increase of rates or charges, does not, of
course, extend to the fixing or authorizing of an unjust
or unreasonable rate or charge, and putting the quoted
words in their context in a general order, they mean no
more than that the overall general increases as author-
ized will be just and reasonable. Such a finding does not
preclude the making of applications to the Commission on
any claim that a particular charge is unjust or unreason-
able. Nor does the omission of a saving clause, such as
was in the order considered in King v. United States,
supra, preclude the making of such applications or alter
the duty of the Commission to consider and decide such
applications. The right to apply and the duty to decide
have been given by the Congress in Sections 13 and 15
of the Act. The Commission has not, and indeed could not,
foreclose the right or renounce the duty in an order
authorizing general increases in transportation rates or
charges. The Commission has said that its ‘‘sanction of
a general adjustment does not carry with it the approval
of any particular rate.’’ Steel & Tube Co. v. Director
General, 61 I.C.C. 526. This decision has had the approval
of the Supreme Court in Brimstone Railroad & Canal Co.
v. United States, 276 U.S. 104, 48 S. Ct. 282, 72 L. Ed. 487,
and of the Court of Appeals for the Fifth Cirenit in
Eagle Cotton Co. v. Southern Railway Co., 51 F. 2d 443.
In its order the Commission suggested that:
‘After the establishment of the increases herein
authorized, the petitioners (rail carriers) should con-
duct thorough and comprehensive studies that will
permit sound determinations as to the effect of in-
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creases upon the movement of traffic, and as to any }
inequities or improper relations that may have de- E
veloped from changed conditions since their original 3
establishment.’’ 297 I.C.C. 554. :
_ This language indicates a recognition by the Commission
_ of its continuing duty to determine and prescribe just and
_ reasonable individual rates and charges notwithstanding 3
the entry by it of a general order authorizing increases.
We see nothing to prevent this case from being governed
by the same rules as are applied in general revenue cases
by the styling of the proceeding before the Commission as
‘‘Proposed Increased Refrigeration Charges’’, rather than
the ‘‘ Ex Parte’’ designation usually given to such proceed-
ings. No different principles are to be applied in this, a
general revenue case where revenues are intended to be no
more than compensatory, than in the general revenue cases
involving line-haul rates where revenues are expected to
include profits.
We come now to the contention of the plaintiffs that if
we should hold this to be a case governed by the doctrines
of the general revenue cases, and we do so hold, neverthe-
less the evidence does not show nor the findings support
the Commission's conclusions or warrant the entry of its
order. The evidence, for the most part, was obtained by
means of the traffic study made on behalf of the carriers.
_ In the making of the study, data were accumulated from
a large number of icing stations under procedures designed ,
to obtain a sample of approximately 10 per cent. of ship-
ments under standard refrigeration moving under Section
2 tariffs. The methods used in the study are recited at
length and in detail in the Report of the Commission. They
need not be set forth here. It is enough that we say that
the evidence submitted was of a kind and quantity suff-
cient to permit a generalization upon which findings could
be based and conclusions drawn. The Supreme Court of
SL FREE RN LM RGEPS INR TE AOI TSE RE RE RELIES MES AE:
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the United States has approved basing findings on such
evidence, saying:
‘‘When an investigation involves shipments from
and to many places under varying conditions, typical
instances justify general findings. * * * To require
specifie evidence and separate adjudication in respect
to each would be tantamount to denying the possibility
of granting relief.’’ Georgia Public Service Commis-
sion v. United States, 283 U.S. 765, 51 S. Ct. 619,
75 L. Ed. 1397.
We are unpersuaded that the factors used in the study
were not such as reflected existing conditions and, this
being so, it is not a part of our function to review the
determination based thereon. As said by the Supreme
Court:
‘*Tt is not our province to inquire into the soundness
of the Commission’s reasoning, the wisdom of its de-
cisions or the consistency of its conclusions with those
reached in similar cases.’’ Georgia Public Service
Commission v. United States, supra.
The Commission found a vast multitude of specific facts,
it made an ultimate finding that the rail carriers were
‘‘sustaining a total deficit exceeding 23 per cent. of the
aggregate revenue accruing from the rendition of their
refrigeration services’’. Because of the increasing diver-
sion of this type of traffic from railroads to trucks, because
of instances where increased charges would keep goods
from shipment to markets, and other considerations, the
Commission found ‘‘that an inerease in the specified re-
frigeration charges in excess of 15 per cent. is not justified
by the indicated cireumstances’’, The Commission con-
cluded that to enable the carriers, ‘funder honest, economi-
cal, and efficient management, to provide adequate refrig-
eration service and specifically to meet increased costs of
rendering that service, the basic refrigeration charges may
be increased as herein specified, and that the charges so
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increased will be just and reasonable for the future’’. The
findings are supported by substantial evidence and afford
an adequate basis for the Commission's conclusions.
It is strongly insisted by the plaintiffs that the differ-
ences in the treatment accorded by the Commission's order
with respect to Section 2 charges on the one hand and
Section 4 charges on the other result in unlawful diserimi-
nation against and unjust treatment of the users of Sec-
tion 2 services. It is true that Section 4 charges reflect
only the cost of ice and salt, and the cost of switching,
while Section 2 charges include also ice haulage, bunker
damage, supervision and other ef. If there be any
discrimination between Section 2 aed Seetion 4 traffie, and
this we do not decide, it is a discrimination which existed
prior to the proceedings before the Commission whence
issued the order under attack. Such discrimination, if any
there be, did not result from nor was it substantially
altered by the Commission's order. Whether there be an
unjust discrimination is a question for the Commission.
The Commission has found that the Seetion 2 charges and
the Section 4 charges do not apply to like traffie and that
no showing is made of any disadvantage or injury to See-
tion 2 traffic or the shippers thereof. ‘‘In these cireum-
stances’’, the Commission found, ‘‘any existing deficiency
in the Section 4 charges does not relieve Section 2 traffie
of the responsibility of bearing the full cost of that service
and is not a consideration in the determination of the
lawfulness of the increase proposed in the Section 2
charges’’. The finding is supported by the evidence. Dif-
ferences in rates and charges as affecting different classes
of non-competing shippers or consignees are not per se
unjustly discriminatory. We find ourselves in accord with
the Commission’s position. See Board of Trade v. United
States, 314 U.S. 534, 62 S. Ct. 366, 86 L. Ed. 432, reh. den.
315 U.S. 826, 62 S. Ct. 621, 86 L. Ed. 1222.
On the theory that we have under review a rate case
rather than a revenue ease, the plaintiffs assert they will
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have no opportunity for redress from the discriminatory
effects of the increases in the charges as applied to specific
situations unless we set aside the Commission’s order.
But, it appears, the plaintiffs in this case as in Algoma
Coal & Coke Co. v. United States, supra, and in Koppers
Company v. United States, D.C.W.D. Pa. 1955, 1382 F.
Supp. 159, have mistaken their remedy. The situation in
the latter case is so nearly parallel to that before us and
the opinion of thé Court so expressive of our views, we
quote at some length from it. There it is said:
‘*Plaintiff’s suit before this court seeks to have the
court direct the Commission to grant the relief sought
in plaintiff’s petition for reconsideration initially filed
before the Commission, which is to require the south-
ern carriers to maintain the same rate on transpor-
tation of coal from the southern mines to Hampton
Roads ports for subsequent transshipment by water,
whether the ultimate destination is the plaintiff’s
lant at Seaboard, New Jersey, or its competitors
ocated at New England ports.
‘The crucial issue, therefore, is whether this court
may set aside and annul a permissive order entered
by the Commission when plaintiff has failed to exhaust
his remedy under Sections 13 and 15 of the Interstate
Commerce Act, but has interceded as an intervenor for
reconsideration and modification of the Commission’s
findings.
‘‘In the case of a permissive order, the carrier is
the only necessary party to the proceeding. The Com-
mission represents the public, While it is proper and
customary for shippers interested to participate in
hearings, there exists no provision for notice to them.
They are not bound by the order entered and the
tariffs filed. If the rates made by tariffs filed under
the authority granted seem to them unreasonable, or
unjustly discriminatory, Sections 13 and 15 afford
ample remedy. To permit shippers to seek redress
for such grievances in the courts would invade and
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often nullify the administrative authority vested in
the Commission. The attempt of the court to remove
some alleged unjust discrimination might result in
creating more. United States v. Merchants’ & Manu-
facturers’ Traffic Association, 1916, 242 U.S. 178,
37 S. Ct. 24, 61 L. Ed. 233.
‘*Sections 13 and 15 of the Act speak with clarity,
and explicitly specify the procedure which complain-
ants must pursue before the Commission in order to
seek redress of grievances.
‘*The plaintiff has mistaken its remedy in the statu-
tory scheme of railroad rate making. Its contention
is that the Commission, without sufficient evidence or
proper findings of fact, has determined or fixed par-
fieular rates for the plaintiff’s particular traffic. But
this miseonceives what the Commission has actually
done. It was not dealing finally with particular
rates for particular traffic, but permitting increased
rates for selected commodities, by a general order
affecting all the railroads in the country.
‘If the increased rates as applied to the plaintiff’s
particular situation can be shown to be unjust and un-
reasonable, its remedy is clearly by proceedings under
Sections 13 and 15 of the Act for individual relief,
and for reparation orders under the Act of Congress.
49 U.S.C.A. $16(1); Brimstone R. & Canal Co. v.
United States, 1928, 276 U.S. 104, 48 S. Ct. 282,
72 L. Ed. 487; Alexander Sprunt & Son v. United
States, 1930, 281 U.S. 249, 50 S. Ct. 315, 74 L. Ed. 832;
Eagle Cotton Oil Co. v. Southern R. Co., 5 Cir. 51 F.
2d 443, certiorari denied, 1931, 284 U.S. 675, 52 S. Ct.
130, 76 L. Ed. 571; Algoma Coal & Coke Co. v. United
States, D.C, E.D. Va, 1935, 11 F. Supp. 487. The
plaintiff must proceed to exhaust its administrative
remedies by challenging the rates filed by the railroads
pursuant to the authorization granted it by the Com-
mission in the ex parte proceeding.
. ao * . >
‘*It is not for this court to tinker with the delicate
and fragile machinery of rate fixing and tate appor-
tionment until the administrative process has been
l6a
meticulously and stringently followed and exhausted
in accordance with statutory requirement. The Com-
mission must be afforded every available opportunity
to utilize its vast reservoir of knowledge, experience,
and know-how—in a proceeding wherein an un-
equivocal compliance with Sections 13 and 15 has been
made with a complaint filed and defendant or defend-
ants served, and clear-cut adversary contests evalu-
ated and conclusively ruled upon, before the arm of
the court should intercede upon the merits.’’ Koppers
Company v. United States, supra.
It has been settled that the Interstate Commerce Com-
mission is without power to award reparations with respect
to shipments which moved under rates approved or pre-
scribed by it. Arizona Grocery Co. v. Atchison, Topeka &
Santa Fe Railway Co., 284 U.S. 370, 52 S. Ct. 183, 76 L. ld.
348. Cf. Atlantic Coast Line Railroad Co. v. State of
Florida, 295 U.S. 301, 55 S. Ct. 713, 79 L. Ed. 1451. But
this rule has no application under the permissive provi-
sions of an order in a general revenue case such as is this
case. Supported by substantial authority it was held in
the Algoma case, ‘‘If the increased rates as applied to the
plaintiffs’ particular situation can be shown to be unjust
and unreasonable, their remedy is clearly by proceedings
under Sections 13 and 15 of the Act (49 U.S.C.A. $§ 13, 15)
for individual relief and for reparation orders under Sec-
tion 16(1) of the Act, 49 U.S.C.A. § 16(1). (Citing cases)
Nothing in the Commission case debars them from such
relief.’’ This, we think, as expressed by the Secretary of
Agriculture, is the law of the land, and it is applicable to
the instant case.
Other questions are posed by plaintiffs. These have been
considered and found to be without merit or inapplicable
here. Adding to the length of this opinion by a discussion
of them would not serve a useful purpose. For the reasons
herein given the relief sought must be denied and the com-
URIS VARE RAYS OP
Seer.
17a
plaints must be dismissed. An appropriate order will be
entered.
/s/ Warren L. Jones
Warren L. Jones
United States Circuit Judge
/s/ Wiu1aM J. Barker
William J. Barker
United States District Judge
DeVanez, District Judge, concurring specially :
The legal line separating North Carolina v. United States,
325 U.S. 507, and similar cases on the one hand, and King
et al v. United States, 344 U.S. 254, and other like cases on
the other hand is so thin it is sometimes difficult to follow.
This is such a case.
I agree with my associates that this is a revenue case and
not a rate case, and that the Commission had sufficient in-
formation before it to support an appropriate general or-
der applicable in such cases—in fact, the evidence is insuffi-
cient to support any other kind of order.
I also agree with much said by Commissioner Clarke in
his dissenting opinion, particularly with his statement that
flat percentage increases in this case ‘‘ results in increasing
charges which are already equal to or above total costs,
and overcharging certain commodities, or certain move-
ments, or certain typés of service may be moved at a loss.’’
The answer to this criticism, however, is ably made in
Judge Jones’ opinion, in which he points out that the varia-
tions in the rates prescribed for Section 2 commodities as
compared with Section 4 commodities has been in effect
for many years and is not the result of this ease. All this
case does is to increase the discrimination a little more.
The troublesome question to me in the case is the failure
of the Commission’s order to provide, as it has provided
in other similar cases (see King et al v. United States et al,
18a
supra), that if the parties affected are entitled to relief
insofar as any specific rates are concerned, they may take
their cases to the Interstate Commerce Commission and
there secure the relief to which they are entitled. That
provision is to be found in most if not all prior general
revenue orders heretofore entered by the Commission. It
does not appear in this case. However, I agree with Judge
Jones that the failure to incorporate it in the opinion or
order in this ease has no legal effect on the rights of the
parties to be heard. If the Commission holds otherwise,
then the case will have processed under administrative pro-
cedure to a point where the court will be in a position to
deal with the issue. It is clear to me that this case has not
been processed administratively to a point where the court
may rule upon the lawfulness of the rates prescribed in
this general order. Comp. Myers v. Bethlehem Corp., 303
US. 41 Text 50-51.
; /s/ Dozier A. DeVane
Dozier A. DeVane
United States District Judge
19a
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA
TALLAHASSEE DIVISION
No. 565
Fiorina Cirrus Commission, et al., Plaintiffs,
and
Ezra Tarr Benson, Secretary of Agriculture, et al.,
Intervening Plaintiffs,
Vv.
Usirep States or America, Interstate Commerce Commis-
sIon, et al., Defendants,
and
Atcuison, TopeKA AND Santa Fr Rattway Company,
ARMOUR AND Company, et al., Intervening Defendants.
Order
This cause having been considered by the Court consist-
ing of the undersigned Judges convened pursuant to law,
upon the pleadings and evidence and the briefs and argu-
ment of counsel, and the Court being advised, it is
Orpverep that the relief sought by the plaintiffs and the
intervening plaintiffs herein should be and is hereby de-
nied and the complaints herein filed and this cause are
hereby dismissed.
Done anv Orverep this 7th day of September, 1956
/s8/ Warren L. Jones
United States Circuit Judge
/s/ Wiu1aM J. Barker
United States District Judge
/8/ Dozier A. DeVane
United States District Judge
ee Stace : - LA PO LES UE POLLAN ILS SEE EL EE
ss INTERSTATE COMMERCE COMMISSION
No. 31342
PROPOSED INCREASED REFRIGERATION CHARGES
Decided January 9, 1956
Upon petition of rail carriers for authority to increase their refrigeration charges
throughout the United States, just and reasonable increases authorized.
Robert H. Bierma, 1. D. Boynton, John J. Burchell, J. Carter Fort,
Jr, M. L. Cassell, Jr., J.T. Clark, S. 8. Clark, John H. Colgren, A. P.
Donadio, R. B. Elster, F. W. Gwathmey, Alfred S. Knowlton, Roland
J. Lehman, E. R. Leigh, John C. Lyon, W. H. Ploeger, J. C. Smith,
and £. J. Zoll, Jr., for petitioners.
Wilbur C. King, Jerry W. Carter, Richard A. Mack, R. Y. Patter-
son, Jr., Lewis Petteway, and Fred Pettijohn for Florida Railroad
Commission.
Paul E. Blanchard, Charles E. Bowling, Robert L. Farrington,
Walter D. Matson, J. L. Pease, Harry Ross, Jr., and Leon Schilt for
United States Department of Agriculture.
B. M. Angell, Harold H. Angier, Austin F. Anson, William J.
Augello, Jr., W. J. Augello, Nuel D. Belnap, Frank C. Brooks,
A. Robert Cunningham, Willis R. Deines, Lloyd C. Dell, John F.
Donelan, James T. Duncan, William C. Ehalt, Ernest Falk, Samuel
Fraser, Ray V. Harron, Walter Hoffman, J. Perry Jones, R. E.
Kidwell, P. C. King, Jr.. W. A. Knight, Robert L. Knott, Dickson R.
Loos, Karl D. Loos, Christian Leresch, Jr.. E. Alan Mills, John A.
Montgomery, C. B. Moore, Clark Munn, Jr., Robert C. Neill, H. J.
Owens, T. R. Phillips, Durward Seals, George P. Shuler, A. Silver-
man, Gordon Stedman, R. L. Stevenson, Fred II. Tolan, R. 1. Toolin,
Scott Toothaker, Warren H. Wagner, M. W. Wells, Eli Weston, and
Warren Whitham for other parties.
Report oF THE CoMMISSION
By tHe Comission :
Exceptions to the report proposed by the examiner were filed by the
petitioners and the protestants generally, and we have heard the
parties in oral argument. Exceptions and requested findings not dis-
cussed in this report nor reflected in our findings or conclusions have
been considered and found not justified.
By a petition filed on August 31, 1953, as amended at the hearing,
practically all of the railroads of the country, herein collectively
termed petitioners, ask the Commission to authorize increases in their
207 I.C.C,
505
362168—56—No, 200-—1 ,
SNELL EY eT CRG OAM
ae ee
ph ls a i bs ti cD AEE BIE. DADE
506 INTERSTATE COMMERCE COMMISSION REPORTS |
refrigeration charges and modify all outstanding orders so that in.
creases may be made effective. Hearings were held on the petition,
It is opposed by a great majority of the Nation’s shippers? of com-
modities that would be affected by such increases, hereinafter some-
times called protestants.
Appendix A hereto shows, in detail, the increases proposed by the
petitioners. Generally, the proposal is to increase by 30 percent, with
the exceptions indicated in appendix A, the charges published in sec-
tion 2 of Agent Jamison’s perishable protective tariff I. C. C. No. 31,
hereinafter called section 2 charges, and those provided in other sec-
tions thereof that are based thereon, and to increase by specified
amounts the charges published in section 4 of the same tariff, herein-
after called section 4 charges. As indicated in appendix A, no in-
crease is sought in the charges provided in the several rules therein
enumerated.
The section 2 charges apply generally for refrigeration services in
connection with the movement of fresh fruits and vegetables, berries,
melons, and processed foods moving under refrigeration, while those
provided in section 4 embrace all other commodities. Typical of the
commodities ordinarily transported subject to the section 4 charges
are bananas, coconuts, beer, dairy products, fish, fresh meats, and
packinghouse products.
The present charges, exclusive of general increases authorized, in-
clude those prescribed by the Commission in Refrigeration Charges
on Fruits, etc., from the South, 151 1. C. C. 649 (February 12, 1929)
and 172 I. C. C. 3 (February 3, 1931), hereinafter referred to as the
first prior proceeding; Charges for Protective Service to Perishable
Freight, 215 I. C. C. 684 (June 2, 1936), 241 I. C. C. 503 (October 1,
1940), and 253 I. C. C. 351 (September 5, 1942), hereinafter referred
to as the second prior proceeding; Half Stage Refrigeration Service,
256 I. C. C. 213 (August 31, 1943) ; and those voluntarily established
by the carriers. The prescribed charges were predicated on the deter-
mination that they should be sufficient to cover the cost thereof plus
2 Shippers and groups of shippers actively opposing the proposed increase include the
following: Growers and Shippers League of Florida; Florida Citrus Commission ; Florida
Canners Association; Florida Citrus Mutual; Florida Fruit and Vegetable Association;
F. H. Vahlsing, Inc., of Texas; Texas Citrus and Vegetable Growers & Shippers; Cali-
formia Citrus League; Western Growers Association; Northwest Horticultural Council;
Washington Pota.oe and Onion Shippers Association; Idaho Shippers Association, Inc.;
Idaho State Grange; Idaho Horticultural Society ; Idaho Potato Producers Association;
International Apple Association; United Fresh Fruit and Vegetable Association ; National
Association of Fruit Packers; Fairmont Foods Company; General Foods Corp.: The
Great Atlantic & Pacific Tea Company; Stokely Van Camp, Inec.; National Fisheries
‘nstitute, Inc.; Northwest Fish Traffic Committee; Booth Fisheries Company; Armour &
Company; The Cudahy Company; Emmert Packing Company; George A. Hormel &
Company ; Henry Fisher Packing Company ; John Morrell & Company ; Kingan & Company;
Louisville Provision Company ; Oscar Mayer & Company; Kath Packing Company; Swift
& Company ; and Wilson & Company.
297 1.C.C.
ge ie, a a “ “ ahs NOME RAR? ACI RAIL £8) i
PROPOSED INCREASED REFRIGERATION CHARGES 507
a fair return on the investment in facilities required for the perform-
ance of the services. Being accessorial to the basic line-haul service,
these charges were prescribed as exact charges, necessary to cover the
additional cost incurred by the carriers in performing the services.
Also set forth were unit costs of the several elements? that had been
recognized as contributing to the cost of rendering refrigeration serv-
ice, in connection with which it was concluded that the application
of such of those unit costs as might be pertinent to the particular class
of service used would indicate the proper charge. The prescribed
section 2 charges are predicated on those elements, which will be dis-
eussed hereinafter in more detail. The present section 4 charges in-
clude only the elements of ice, salt, and switching. As indicated by
the exceptions enumerated in appendix A hereto, no increase is sought
in the charges for hazard and repairs of damage to the bunkers and
bodies of cars.
There are numerous types of refrigeration services available to the
shippers of perishable commodities, the maximal being standard re-
frigeration with re-icing to capacity of the bunkers at all regular re-
icing stationsen route. Illustrative of the lesser, or so-called modified.
services are those provided in tariff rules Nos. 239, 240, 242, 243, 245,
247, 248, 249, 251, 252, 254, 255, and 258. The inherent nature of the
commodity, the market to which it is consigned, and the time of move-
ment are the principal factors which influence the choice of the par-
ticular type of service used.
Appendix B hereto lists some of the principal types of the various
refrigeration services provided in the perishable protective tariff. In
addition to the charges for icing or re-icing to capacity of bunkers as
provided in each of the various rules covering bunker icing services.
the tariff also provides charges for corresponding half-stage refriger-
ation service (icing to half capacity of the bunkers), which are about
22 percent lower. Shipments that are accorded top or body icing
service usually require, in addition thereto, the placing of ice in the
bunkers in accordance with one of the various bunker refrigeration
services described in appendix B. Green corn, for example, would
require standard refrigeration service, while one of the lesser bunker
refrigeration services would be used for some other commodities.
When both top icing and bunker refrigeration services are rendered,
the shipment is subject to the charges provided for each service.
*The elements of expense that enter into the cost of furnishing refrigeration services
fall into the following groups: Cost of ice in bunkers ; supervision ; switching to and from
icing stations: bunker repairs, repairs of damage to cars caused by top or body icing;
haulage of ice in bunkers ; station and auditor's accounting cost; hazard; taxes; return
investment in facilities devoted to the performance of refrigeration services; and cost
of precooling.
7 1.C.C,
a ws Rey SER Gg IE MAMED PIELER RES
— eee AM EY UT ot A
508 INTERSTATE COMMERCE COMMISSION REPORTS
The charges for the various refrigeration services differ widely de-
pendent upon the character of the service rendered. For the several
types of modified services they range from about 15 to 55 percent of
the charge for standard refrigeration between the same points, the
lowest being for rule 242 service when 10,000 pounds of ice is used,
and the highest applying in connection with shipments accorded rule
245 service with, for example, precooling, preicing and replenishing
by the carrier, and re-icing three times in transit. For the maximal
service, or standard refrigeration service, there are about six different
sets of charges dependent partly upon the commodity involved, among
the highest being for shipments of melons with icing to capacity of
bunkers and preicing by the carrier.
Among the highest charges maintained by the carriers for refrig-
eration services are those from California group A origins, which in-
clude Los Angeles, to Boston, Mass. The maximum increase per car
proposed for standard refrigeration from and to those points would
amount to about $41 when no salt is used and approximately $62 when
the authorized maximum ratio of salt is used, which is 30 percent of
; the weight of ice in the bunkers of the car. For the various lesser or
5 modified services, the increases proposed from and to the same points
‘ would range from $4.37 to approximately $33. When salt is supplied
by the carrier in icing or re-icing perishable shipments, it is subject
to varying charges in addition to the stated refrigeration charge. The
maximum addition is 50 percent of the stated charge for standard
j refrigeration, and lesser additions apply when less than the stated
2 maximum of salt is used. The table below shows the present and pro-
4 posed charges, per car, for standard refrigeration without salt from
4 representative origins to representative markets; in addition to these
4 charges as they may be affected by the amount of salt used, there is also,
: on shipments of citrus fruit from California, a charge of $6.61 when
4 preicing is performed by the carrier:
: : coer
4 Standard refrigeration charges to—
‘ From— Chicago, Ill. New York, N.Y. Boston, Mass.
4 Point! Proposed | Present Proposed ° Present , Proposed
i ed ee ee ee $117.78 | $43, 48 $82. 42 $48. 77 $9 0
3 Harlingen, Tex... -- -| 96.54] 125.50] 111.09 144.42) 117.70) ISO
; 1.08 Angeles, Call... .cccencccosenscosesece 101, 83 132. 38 125. 04 163. 33 132. 25 | 171.8
‘ The so-called perishable traffic embraces a large number of commodi-
F ties, such as the numerous fresh vegetables; the various kinds of fresh
3 fruits, including bananas and coconuts: berries: melons; fresh meats
3 and packinghouse products; dairy products; eggs; fresh fish, inelud-
297 1...
anal ee ee 34 Aw Sue, Ce NOR we iY te
PROPOSED INCREASED REFRIGERATION CHARGES 509
ing clams, crabs, lobsters, oysters, and shrimp: ale, beer, and bever-
ages. The annual velume, about 1,100,000 carloads, constitutes one
of the most important segments of railroad traflic. Some of it is ac-
corded ventilation or heater service during certain seasons of the year,
but the great bulk of it moves under refrigeration. Illustrative of the
traffic that would be affected by the increase proposed is the movement
during the 1952-53 season of approximately 100,000 carloads of fresh
fruits and vegetables from Florida, 40,000 carloads of fresh fruits and
vegetables from Texas, 265,000 carloads of fresh fruits and vegetables
from California and Arizona, 35,000 carloads of fresh fruits, vege-
tables, and fish from Oregon and Washington, and 351,000 carloads of
fresh meats and packinghouse products between points in the United
States,
In Ex Parte No. 162 /ncreased Railway Rates, Faves, and Charges,
i946, 266 1, C.C. 537, we authorized an increase of 1) percent, effective
January 1, 147, in the rates and charges for protective service. A
like increase was also authorized in the final report in Ex Parte No.
166, decided July 27, 1948, Znereased Freight Rates, 1947, 270 1. C. C.
403. In Ex Parte No. 168, /nereased Fre taht Rates, 1948, 2761. C.C.
9, we declined to authorize an increase in these rates and charges, point-
ing out that the evidence did not enable us to determine that the present
charges, which included substantial increases effective in 1947 and
subsequently, were insufficient to compensate the petitioners fully for
all costs incident to furnishing these services. In that report it was
further pointed out, at page 10s, that the actual cost of ice in the year
1948 of $5.69 per ton was only 1 cent higher than the cost in 1946, and
that the petitioners’ estimated cost for the year 1949 of $6.13 per ton
was 13 cents lower than the estimated cost for 1947 of $6.26, which
the petitioners relied upon in Ex Parte No. 166.
In Ex Parte No. 175, /nereased Freight Rates, 1951, 281 1. C. C. 557,
we again declined to authorize a further increase in the charges for
protective service, indicating that the evidence was not convincing that
an increase in the rates and charges for that service was justified. In
that report it was pointed out that the cost of ice in 1950, to the selected
companies, of $5.84 per ton was only 16 cents higher than the cost
in 1946, and that, since then, increases in the charges for protective
service amounting to 32.25 percent had been authorized. It was fur-
ther stated that the cost was also 29 cents lower than the estimated cost
for the year 1949 of $6.13 upon which the same petitioners relied in
Ex Parte No. 168.
At a joint meeting of the several railroad traffic executive commit-
tees representing practically all of the railroads of the country, held
on October 3, 1951, it was concluded to conduct a comprehensive study
277 1...
EE eee — |
a a va
510 INTERSTATE COMMERCE COMMISSION REPORTS
of the costs of providing refrigeration service for the purpose of deter-
mining whether the revenue therefrom was suflicient to cover the en-
tire cost of performing the service, plus a fair return on the investment
in facilities devoted to the performance thereof. The National Per-
ishable Freight Committee, hereinafter called the freight committee,
Was given the responsibility of conducting the study.
Because of the magnitude of the task, the freight. committee con-
cluded that the study necessarily should be limited to ascertaining the
total costs of ice and salt for all perishable traflic, and the total costs
for the complete refrigeration service rendered for a representative
number of shipments accorded bunker re-icing service subject to the
section 2 charges. It covered the full year of 1951,
A report of the study was submitted to the trafic executive commit-
tees on September 30, 1952, which indicated that the service was being
performed at a deficit in excess of 812,000,000 per annum based on the
test made, which included a total of 13,975 carloads comprising the
sumple used in the study. It was estimated that the cost on shipments
subject to the section 2 charges exceeded the revenue by 29.8 percent,
and that the deficits on section + shipments would vary depending upon
the particular element of expense involved and the territory in which
the service is performed. After due consideration of the situation,
the executive committees decided, on January 21, 1953, to proceed with
the filing of the instant petition with us.
In the development of the data presented herein by the freight
committee, the railroads and the Pacifie Fruit Express Company,
Fruit Growers Express Company, American Refrigerator Transit
Company, Burlington Refrigerator Express Company, Western Fruit
Express Company, and Merchants Dispatch, Inc., hereinafter re-
ferred to collectively as the carlines, were requested to furnish the
freight committee certain information called for in an ice-cost formula
prepared for that purpose. Generally, it provided for taking, at each
station, the sum of the overhead costs, including a return on investment
and working capital rental, and depreciation; the direct costs, which
are the cost of ice purchased, harvested, or manufsctured: and the
indirect costs, which inelude labor on icing platforms, maintenance of
facilities, taxes, insurance, et cetera, and dividing the total of these
costs by the number of tons of ice placed in cars, to arrive at an average
cost per ton of ice at the station. It differed somewhat from the
formula developed by us in the second prior proceeding, in that (1)
the company haul rate for transporting ice to platforms is increased
to 10 mills per ton-mile; (2) interest on working capital is included in
the cost study; (3) provision for Federal payroll and income taxes is
made; and (4) return on investment is computed at 6 percent of
297 1.C.C.
| NESE I PA STINE EAE AS ALCS LEIP BTA EN eo Mic a seats
PROPOSED INCREASED REFRIGERATION CHARGES 511
original cost without deducting accrued depreciation. In addition
to these costs, the petitioners’ study contemplated the development of
data as to the other cost factors, hereinbefore enumerated, which were
considered by us in our determinations in the prior proceedings.
The carlines were organized by the various railroads or groups of
railroads with the object of rendering more eflicient protective service.
For example, the Pacific Fruit Express is owned jointly by the
Southern Pacific Company and the Union Pacific Railroad Company,
and the Fruit Growers Express is owned by 19 eastern and south-
eastern railroads. Those services are performed for the account of
railroads under appropriate contracts. The six carlines and The
Atchison, Topeka and Santa Fe Railway Company, hereinafter called
the Santa Fe, which maintains a refrigerator department, provide
by far the greater number of refrigerator cars in this country.
Every carrier listing 1 or more icing stations on its lines, and the
6 carlines, were requested to report the cost of all ice and salt supplied
for refrigeration of perishable freight. A total of 1,678 locations on
124 railroads were covered by the more than 2,000 reports of the
carriers.
Petitioners’ traffic study.—In the study of the section 2 charges and
costs, a total of 13,975 shipments subject to that section were selected
as representative. ‘They were selected from all shipments originated
on the Santa Fe, the International-Great Northern Railroad Company
(Guy A. Thompson, trustee), The St. Louis, Brownsville and Mexico
Railway Company (Guy A. T hompson, trustee), and the other
railroads that originate the great bulk of the perishable traffic. With
the view of obtaining a sample approximating 10 percent of the ship-
ments accorded bunker re-icing service, the procedure set up by the
freight committee required the inclusion of selected shipments in
efrigerator cars having numbers terminating in the digit 5. The
election of the origin and destination territories was designed to em-
race a major portion of all refrigerated traffic. They are listed
low :
Origin territory Destination territory
|
rizona, Arkansas, California, | Missouri groups 1 (St. Louis) and 2 (Kansas City); Minnesota group 1
Colorado, Idaho, Oregon, Texas. | (St. Paul-Minneapolis); Minois group 2 and Indiana group 4 (Chi-
Utah, and Washington. | cago); Ohio group 3 (Cleveland), Michigan group 4 (Detroit), New
York group 1 (Buffalo) and Pennsylvania group 1 (Pittsburgh),
consolidated into one reporting group; New York group 3 (New
York City), Delaware, the District of Columbia, Maryland group
3 (Baltimore), New Jersey group 1 QWersey City), and Pennsyivania
group 4 (Philadelphia), consolidated as one reporting group; Massa-
chusetts group 1 (Boston).
oo++----------------.-..| Primary markets of Chicago and east, and St. Louis, Kansas City
| and St. Paul-Minneapolis, wherever records disclosed substantial
movement.
jabama, Florida, Georgia, North Same destination territory as from western origins, also Atlanta, Ga.,
ow York.
Carolina, South Carolina, Ten- Birmingham, Ala., and Cincinnati, Ohio, wherever records disclose
hessee, and Virginia. substantial movement.
297 I.C.C.
Basis ; wig SH
512 INTERSTATE COMMERCE COMMISSION REPORTS
The sample was selected in the following manner by the designated
originating carriers:
Number of
shipments
All section 2 shipments from selected producing areas__-_-~--~------- 414, 416
Shipments in cars with numbers ending in digit “5” selected therefrom__ 41, 25s
Shipments other than to major destinations, excluded____- ---.-------- 18, 870
Leaving those to the major destinations___.__-__.-___-_-------_- 22, 388
Rule 240, rule 242, and rule 243 shipments, excluded_______----------- 8, 832
Remaining shipments accorded bunker re-icing services from and to
SION SEN Be CG a nisi ie ere enn eaeiwmgnnnnians 13, 556
Digit 5 shipments ‘on other lines, included____----_-----------------_- 419
Sa IU NE a anise seniercnonirtnshcorciosiosenin annie ecustinosinatiuiniavesbeiadae 13, 975
Of the 13,975 section 2 shipments, 9,442, or 67.56 percent of the total,
were accorded standard refrigeration service. For those shipments,
the reported aggregate cost of ice, total refrigeration cost, total rev-
enue collected, and the resulting deficits were $844,805, $1,348,872,
$1,032,925, and $315,947, respectively. Each of the remaining 4,533
section 2 shipments was accorded one of the so-called modified sery-
ices. For those shipments, the cost of ice, total refrigeration cost, and
the revenue collected were $278,754, $428,275, and $336,043, respec-
tively, indicating a revenue deficit of $92,232. The aggregate deficit
of $408,179 on the selected section 2 shipments amounted to 29.8 per-
cent of the aggregate revenue of $1,368,968. Segregated by origin
territories, the resulting numbers of shipments were 9,443 from the
West, 67 from New York, and 4,465 from the Southeast, anc the per-
centages of the indicated revenue deficits were 31.6, 22.6, and 27.9,
respectively. The cost data presented in this proceeding will be dis-
cussed hereinafter in greater detail.
The items of expense, as computed in the carriers’ study, and the
percentage relation of each to the total cost are shown in the table
below:
| |
Cost factor | Amount ———-
tivahuacedeuthamewcsedseawiies Jue taaniaeebsien oe awanhcumaasue rpinwneniedins | $1, 124, 301. 35 63.3
Se OR be. Sa aE FR — ne ee <a = 73, 529. 26 41
SRN oe is aces ccs Seieas cil eclo suaese eee aca iaseieeias < --} 135, 448. 93 7.6
PO at a Oita BOL tea lel cabetals os ela raaetisieoereaed 5 RR Oe 159, 746. 19 90
RS SE EAS Se ee ae ae 163, 500. 91 9.2
ees Loipicde wan deeereee SWekthbesase -| 92, 368. 14 5.2
Station and auditors accounting... ....__.._...._....-- Sepa eae 13, 414. 08 A
PI accciswmeaivasine benees Kea esae ws ibe hae epee iint sriskidenenci meat 9, 668.01 | 5
a oii eaten bo SN Se a SS 100
297 1.C.C.
7
PROPOSED INCREASED REFRIGERATION CHARGES 513
A major portion of the 9,445 shipments from the West, principally
from origins in Arizona, California, Colorado, Idaho, Oregon, Texas,
Utah, and Washington originated on the contract lines of the Pacific
Fruit Express and on the lines of the Santa Fe, which amounted to
6,597 and 2,477 shipments, respectively, or a total of 9,074. During
the study period, a total of 247,851 section 2 shipments originated on
the contract lines of the Pacific Fruit Express, of which 122,785 were
accorded bunker re-icing service. The 6,597 selected shipments, or
so-called digit 5 shipments, amount to 5.37 percent of the latter num-
ber. Table 1 below shows a segregation of that data by commodities.
Table 2 shows similar information as to shipments originated on the
lines of the Santa Fe. Table 3 shows like information as to the 86.937
section 2 shipments originated on the contract lines of the Fruit
Growers Express, of which 4,482 digit 5 shipments amount to 7.57
percent of the total.
| Ratio
Section 2 | Shipments Digit5 = digit 5
| shipments re-iced | shipments | to re-iced
| | | shipments
Commodity
1 | Percent
30,001 | 23, 676 1,321 5. 58
17, 523 | 17, 207 | 1,013 5.89
19, 065 16, 530 1,005 6.08
2, 800 | 1,556 | } 2.25
24,7 24, 738 1,483 5.99
56, 609 | 3, 786 | 195 5.15
26, 569 21,411 | STS 4.10
10, 227 | 3.410 168 4.98
> Se Saniemgisithnaiaencods 53, S77 4,075 200 4.91
EE ee ene 6, 396 | 6, 396 | 299 | 4.67
_ ES he aes 6 eee | 247,851, 122, 785 | 6,597 5.37
24, 501 18, 347 | 876 4.77
11, 242 10, 977 | Si6 5. 14
3, 333 3, 230 192 | 5.
none | none | 7 ee
5, 733 5, 718 | 343 6.00
9, 432 | 2 | Og,
15, 107 | 13, 345 414 3.10
556 a9 9 | 2.74
8,383 — 516 21 4.97
1,341 | 1,341 6 4.18
79, 628 53, 805 — 2. 477 4. 60
|
9, 40 | a | 7" j 7.67
19) i . 67
25, 110 21,056 1, 34 7.29
z | 38 | 2/ 5.26
_, ESS areal ees | 24 | 4 a df Ce ee eee
Frozen commodities... ___ ETRE TA ERE SEL LUIS eo PS Ses | 1,879 1,864 | 163 | 8.74
EE ee aE j 35 35) 1 2.865
aS, ECS E EG Saiki 2,7 | 853 | 10. 08
kat is ARC Ta eae 5, 745 2, 296) 156 6.79
2 RE Se egies eT 6, 306 | 3,378 | 270 7.99
RE NN gp gk Se Sag } 35, 111 19,711 | 1,520 , 7.71
RES RR I RR Sh eh ar oa 12 | 3) Sd SR
Sead pen DETTE IIN EET ae Se AN | 424 200 | 17 | 5. 86
M fruits and vegetables... .......... 2... 2... 2-28. | 13 6 WN Te
5 ee aE ess Re! 86, 937 59, 223 4,482 7. 57
297 1.C.C.
362168—56—No. 200-——2
RE GA ERT EREIOTNE, “RE
BEL LIAS hE EN
LAL EEL RW Ns PVCS SLI CLE NS IM NEA IRAN RTE REI 2 OR me 2 La PAA Bs Dib EIEN 5 Han N AO RTET Me Al eT CARAT Lt Se AC,
514 INTERSTATE COMMERCE COMMISSION REPORTS
The protestants generally contend that the sample obtained by the
carriers does not meet the basic requirements of probability-sampling
of the affected traffic, and is deficient and unreliable in various re-
spects for the purpose intended in that, for example, it contains a
disproportionately large number of shipments accorded standard
refrigeration service, which amounted to approximately 67 percent
of the total sample; that it does not include any shipments moved
under any of the various modified services, such as rule 240, where
no bunker re-icing service was performed; that it is overloaded with
long-haul shipments; that it is not proportionate as to the numerous
commodities affected; that it excludes many origin and destination
areas; and that the year selected was not representative.
Evidence presented by the protestants in support of their position
concerning the inadequacy of the carriers’ sample tratlic study includes,
among other things, various comparisons of the results thereof with
those taken from a 1-percent waybill analysis covering the same period,
made for general use by the Commission’s Bureau of Transport
Economics and Statistics, hereinafter referred to as the waybill study.
The sample in the waybill study was initially selected on the basis of
waybills numbered “1” and those with the terminating digits “01.”
The difficulties encountered in the use of these two samples are ap-
parent when their basic methods of selection are considered. Al-
though fully aware of the requirements in probability sampling of
covering all the affected traffic, all the carriers, and all origin and
destination areas, the petitioners found it expedient to limit their
actual study to selected carriers and for selected traflic between a
limited number of areas. This initial selection of carriers and areas
was based upon judgment and so must be considered as a judgment
sample from the total traffic of all carriers in all areas. The protes-
tants argue that there is no method of proving the representativeness
of a judgment sample since it is necessarily based upon opinion. After
selecting the traflic, carriers, and areas to be covered, the petitioners
then took a probability sample of that traffic by the described means
of the terminating digit in the car number. They rely upon it as
being representative of the total body of traffic. It should, and ap-
parently did, produce a valid sample of the traffic thus selected.
Further consideration will be hereinafter given to its representative-
ness of the total traffic.
In some-of the protestants’ comparisons, the annual volume of ship-
ments of fresh fruits and vegetables and frozen food products origi-
nated or terminated on class I railroads in the United States is stated
and segregated by commodities, and the relative proportions of the
297 1.C.C.
> Soe ae
eT wT VW = ove
saad . ie Oe PS Re IM I 8 Nd a Hh BALA Ta NRE NI eer AO MO nS es PE Ded
PROPOSED INCREASED REFRIGERATION CHARGES 515
total reflected by the samples in the carriers’ traflic study and in the
waybill study are given. Of the total shipments of apples originated,
the respective relative proportions included in the carriers’ traffic
sample and in the waybill study are 0.42 and 0.91 percent, and of the
shipments of potatoes they are 0.60 and 0.90 percent. With respect
to other fruits and vegetables, the relative proportions reflected by
the carriers’ sample exceed those embraced in the waybill study in all
instances, being most pronounced as to melons, fresh fruits, and frozen
food products. The greatest disparity shown is in connection with
fresh fruits n. o. s.,* not frozen, for which the respective proportions
are 8.48 and 0.78 percent.
The protestants contend that the carriers’ sample is overweighted
as to fruits, melons, and frozen food products, which constitute ap-
proximately 66 percent of the total sample as compared with 32 per-
cent of the total sample in the waybill study. They point out that,
although vegetables comprise approximately 60 percent of the total
volume of fruits and vegetable shipments, the proportion of vegetables
reflected by the carriers’ sample is only about 29 percent. They show,
for example, that as to shipments of potatoes, which amount to about
31 percent of the total volume of fruits and vegetables terminated in
the United States, the proportion of those shipments in the carriers’
sample is only about 9 percent, as compared with 31 percent in the
waybill study. The protestants argue that the disparities between
the carriers’ sample and that in the waybill study, which was obtained
through the accepted method of probability-sampling over the whole
body of traftic, indicated by the foregoing comparisons, support their
contention that the carrier’s sample is deficient and unreliable. Re-
garding this comparison, however, the samples gathered in the way-
bill study were not confined to shipments of fruits and vegetables
accorded refrigeration service, but included many shipments moved
under other types of services, and are not directly comparable as to
the affected traffic, a notable example being potatoes which move also
under ventilation or heater service.
Concerning the claim that the carriers’ sample contains a greater
portion of high revenue-deficit commodities than normally would be
found in the section 2 traffic as a whole, there is shown in the table
below a comparison of the distribution, by commodities, of the carriers’
sample and the computed revenue losses thereon, and similar data as
to shipments embraced in the waybill study, the latter being expanded
5.65 times to make them comparable as to volume.
ee
* Not otherwise specified by name.
27 1.C.C.
AE
516 INTERSTATE COMMERCE COMMISSION REPORTS
Shipments in carriers’ sample Shipments in waybill study
| | bbe dag | Loss on
. a , | study ex- | shipments
Commodity Number of; Loss by Loss per | Catloads | panded to | distributed
carloads in commodi- | “SS Pe | in waybill | number of among com-
eg | ties car study cars in peti- moditiesas
sampie tioners’ | in waybill
| | sample study
Apples____ octen ean 131 $1,946.80 $14.86 93 | 525 7, 802
) ee rs aareere 1,831 50, 926. 35 27.81 283 1, 599 44, 468
Total fruit 3,618 93, 206. 38 25. 76 51S 2,927 | 75, 400
en, EO Ee a 3,731 | 87,605.55 | 23.48 611 3, 453 | 81, 076
Vegetables__ Sh ape 2.521 39,905.08} 15.83 | 2565 1, 447 |
ND critic tatsinnascomemocaest 1,294 64,046.12 | 49.49, 447 2, 526 125, 012
Tomatoes. __- ; Le ana 240 6,804.45) = 28.35 78 | 441 502
Frozen foods__ 5 568 | (62,902.58 > 110.74 | 186 1,051 115, 388
Miscellaneous... _...-_- : 41 835.95 | 20. 39 | 1} 6. 12
Total. ee 13, 975 | 408, 179. 26 |....-... -| 2,473 | 13, 975 | 485, 676
l ! i
d ey me Fee nS ee ee oe eee
d Amount of uriderstatement of loss by petitioners based on this comparison
It will be observed from the foregoing table that the volume of
frozen food shipments in the waybill study, said to be high-deficit
; traffic, is almost double that contained in the carriers’ sample. The
; comparison also indicates that the cost data developed by the peti-
: tioners understates the costs as to those commodities.
q It is stated that, although 29 percent of the melon shipments origi-
3 nate in the southern district, none of them is included in the carriers’
4 sample. It appears that practically all shipments of melons from that
4 district consist of watermelons, which do not ordinarily move under
refrigeration. Cantaloups, which do normally require refrigeration,
originate, for the most part, in the western district, and principally
in the central western district where about 62 percent of the total
volume of shipments originate. About 99 percent of the total ship-
ments of melons included in the carriers’ sample originated in the
central western district, which the protestants suggest is dispro-
portionately large for that district. It is not shown that a better
proportioned sample would have produced materially different results
as to unit costs from those indicated by the sample taken.
The protestants further observe that, although 20 percent of the
total volume of grapes, peaches, and pears originates in the territory
east of the Mississippi River, none of those shipments is included in
the carriers’ sample, but as to fruits n. o. s., not frozen, of which only
about 10 percent originated in the southern district, the proportion
from that district reflected by the carriers’ sample is approximately
72 percent of the total volume. In another example they show that
of the total volume of fresh vegetables, of which 76 percent originated
in the western district and 21 percent in the southern district, the
proportion from the southern district, picked up by the carriers’
sample, is 80 percent, and only about 18 percent from the western
297 I.C.C.
3
&
zg
%
:
$
ee are rents WiaweaL oy Vara a
eee aah
5 Ph hee
7
I Aa Ba ae AT IS i Le Sa ei SN ester
PROPOSED INCREASED REFRIGERATION CHARGES 517
district. In summarizing their analysis, the protestants indicate
that the carriers’ traffic study is shown to be underweighted from the
western district, extremely underweighted from the eastern district,
and overweighted from the southern district.
In regard to the alleged overloading of the carriers’ sample with
long-haul shipments, the protestants show, for example, that 54.36
percent of the shipments in that sample originated in Florida or Cali-
fornia and moved to destinations in New York or Ohio. Those from
California to destinations in New York alone. amounting to 3.383 out
of the total sample of 13,975 shipments, constituted 24.21 percent
thereof, as compared with 353 carloads out of a total of 6.381 carloads
in the waybill study, or 5.53 percent thereof. Of the total number of
shipments in the carriers’ sample, 43.46 percent terminated at points
inthe New York group, as compared with only 12.65 percent of those
in the waybill study. As pointed out by the protestants, more than
#0 percent of the shipments in the carriers’ sample terminated in the
eastern district.
In connection with the allegation that the carriers’ sample is over-
loaded with long-haul shipments accorded standard refrigeration,
there is the contention that such traffic shows la rge deficits in revenue,
and that the inclusion of a disproportionately large sample of those
shipments tends to produce an inflated factor for use in computing an
average cost for national application to the whole body of section 2
traffic. Some of the protestants point out that the petitioners’ cost
study itself shows numerous instances where the revenue from some
of the modified services yields profits. Pursuant thereto. the peti-
tioners presented data depicting the revenue situation as to the various
services rendered in the movement of 2.319 shipments referred to by
the protestants. They show for the services rendered the distribu-
tion of shipments, and the computed deficits in percentages for full-
bunker refrigeration, respectively, as follows: Standard refrigera-
tion, 1,599 and 30.6; rule 239, 66 and 24.1: rule 245, 63 and 12.2: rule
247, 273 and 33.7; rule 249, 54 and 7.2: rule 251. 193 and 12.3; rule 252,
Zand 6.7; rule 254, 54 and 22.1; and rule 258, 7 and 23.6: or an average
of 27.9 percent. For 54 additional shipments the deficits for half-
stage refrigeration service averaged 42.9 percent, and for the composite
of the 2,473 shipments the deficits averaged 28.9 percent. The deficits
by commodities included in those shipments ranged from a minimum
of 12.75 percent for apples to a maximum of 76.77 percent for frozen
foods. In the establishment of a structure of charges of national
scope, it is impracticable to accomplish uniformity in the relation to
costs. The table below shows the distribution of those shipments, by
services, and their percentage relations to the stated total compared
with similar data compiled from the waybill study. It will be seen
297 I.C.C.
‘ 5A REST AP ONG ENP EGON SAL Ne EE
PRE esac mise. “* Leen
}
:
4
g
PW REG:
a
ee
eh SAnte ea
WAR Mes DRT OWA S| 1 TN Ra TR ARNE oy IO KN A DOA 1S AE ea RE NR ri Sl sa enc NRT REA
518 INTERSTATE COMMERCE COMMISSION REPORTS
from these comparisons that the relative distribution, among services,
reflected by the carrier’s sample approximates that in the waybill
study.
|
| Number of shipments | Percent of total
Type of service
| Waybill Carriers’ Waybill Carriers’
| study sample study | sample
| ]
| Percent Percent
I PIE (on Sb i cSSii cn rexsastsaininescnate | 1, 738 10, 417 70.3 74.6
I oo ened edn odtwnbe Srsentkawcackrser Riverenssas] 71 461 29 | 3.3
Rule 305... ..-------.---- eo swenecewes ence seatswseue 66 546 2.6 | 3.9
OO ey ee | 279 953 11.3) 6.8
> RAEN ones sie Eee REE es WaT 54 311 22} 22
Rules 251 and 252____--- SEE GS EA ere | 195 823 | 7.9 | 5.9
(aaa in bare-tuiinbnrdenieanieal 55 325 22) 23
PR Cais Gin yaadanny een chend neh canaknekeaweseuses 15 139 6] 1.0
Uc peckcenvukbamindns daddies. Opn cehtina cha eiesing 2,473 13, 975 100.0 | 100.0
In regard to the alleged disproportions in the carriers’ sample as
between the various refrigeration services performed, the protestants
compare the proportions in that sample with those in the waybill study.
The 9,442 shipments in the carriers’ sample that moved under standard
refrigeration, as hereinbefore noted, were 67.56 percent of the total
sample, as compared with the 1,599 carloads out of the total of 6,381
in the waybill study, or only 25.06 percent thereof. As to other
services, comparisons of the carriers’ sample and the waybill study do
not disclose substantial differences, percentagewise, between the result
of the two studies, except as to rule 240 and services other than re-
frigeration. Included in the total number of shipments in the way-
bill study are 984 that moved under rule 240 service and 2,905 which
were not accorded any refrigeration service, representing 15.42 and
45.43 percent, respectively, of the total, with no similar shipments in
the carriers’ sample. The inclusion of shipments not moving under
refrigeration distorts the percentage relations of the various types
of refrigeration under consideration.
Some of the protestants object to the exclusion of rule 240, 242, and
243 shipments from the carriers’ sample, laying particular emphasis
on the large number of such shipments, as indicated by the table on
page 512 hereof, which approximated 43 percent of the total. Such
shipments are iced initially by the shipper and are not re-iced in
transit. Therefore, the amount of service given them and the revenue
therefrom are minor compared with bunker re-iced shipments. Al-
though the number of excluded shipments appears large, the revenues
and costs are relatively small, indicated by the petitioners to be less
than 2 percent of the total.
The 4 elements of cost of providing rule 240 service, for example,
are hazard, station and auditors accounting, and bunker repairs,
297 I.C.C.
mann “ a TAA MA AP SEATED A OA oe tee i ear
PROPOSED INCREASED REFRIGERATION CHARGES 519
whereas there are 9 elements of cost in bunker re-iced service. It is
not apparent that the unit costs of providing the individual elements
of service are different for the various services or that the exclusion
of those shipments has any material effect upon the overall results
under the carriers’ sample. The percentages in the waybill study
recomputed for each of the various services embraced therein, exclu-
sive of rule 240 shipments and those not accorded refrigeration, are
comparable with those shown in the carriers’ sample as illustrated by
the foregoing table.
With the advent of vacuum precooling and the described changes in
packaging since 1951, there has been, as herein noted, an important
shift from the use of modified services to standard refrigeration from
origins in Texas, Arizona, and California, tending to minimize any
deficiency of the traffic sample resulting from the exclusion of ship-
ments not accorded re-icing in transit. A notable example is the shift
from rule 242 service to standard refrigeration in the movement of
lettuce and carrots from Arizona and California. There has been a
sharp increase also in the use of half-stage refrigeration service, from
a total of 13,008 shipments originated on the lines of contract carriers
of the Pacific Fruit Express in i951 to 26,811 in 1953 and 34,420 in
1954. The revenue deficit estimated by petitioners, in the rendition
of that service, 44.8 percent, is represented as being relatively greater
than that incurred in connection with any of the other services. With
the increased volume of traffic accorded that service since 1951, they
argue that the deficits must have increased.
Also concerning the distribution of shipments embraced in the
carriers’ sample, the table below shows recapitulations (segregated by
lengths of hauls graduated by 500-nile blocks) of the volume of ship-
ments, cost of performing the refrigeration services accorded, the
revenue therefrom, the indicated loss in revenue, and its percentage
relation to the total revenue for the respective mileage groups:
Number of | Relati "aie
. Number 0! elation — Of 108s
Distance shipments | to total Cost Revenue Loss to total
revenue
E Percent Percent
Under 500 miles__.--.._. 69 0.49 $6, 372. 24 $5, 356.7 $1, 015. 53 19.0
500 to 999 miles_____..__ 1, 028 7.35 111, 413. 37 87, 482. 11 23, 931. 26 4
3, 482 24.92 342, 712. 46 286,188.49 | 76, 524.06 Ly
594 4.25 | 72, 904.15 | 51,512.09 | 21, 392. 06 5
1, 945 13. 92 | 244, 323.17 185, 464. 20 58, 858. 97 7
1
.t
4, 227 | 30. 25 626, SIS. 35 | 493, 544. 93 133, 272. 42
295 | 2.11 | 51, 335. 04 | 39,822.93! = 11,512.11 |
27.
28
41
ay , 4 | | . 31,
a 2, 335 16.71) 321, 268.03 | 239, 594. 20 $1, 673. 83 34.
i ”
-| 27
2s.
2
ow |
13, 975 100. 00 1, 777, 146. 81 1, 368, 966. 57 408, 108. 24 |
520 INTERSTATE COMMERCE COMMISSION REPORTS
Except for hauls under 500 miles and those within the 1,500 to 1,999
mileage group, the ratios of losses shown in the above table do not
rary substantielly. The results of the sample are relatively unaffected
by short-haul traflic because the percentage of loss does not progress
according to length of haul, as indicated by the foregoing table, and
because there is relatively little section 2 traffic accorded bunker re-
icing service for hauls of less than 500 miles.
A tabulation for 1,000-mile groups shows the following results:
Number Relation of loss
Distance of ship- spent
ments to total revenue
| | Percent
Under 1,000 miles... 2... spat Piel : ipa | 1,007 | G
1,000 to 1,909 miles... . : ' ; 4,076 41
2,000 to 2,000 miles... .... noe 4, 280 M4
3,000 miles and over................... : oat 4, 522 | a
Total.... SOY See F : a actdeaneoul 13,975 | Average........ %
The above figures indicate that, if a greater part of the sample had
Ps consisted of shorter movements, the percentage of loss would have
changed very little. Considering its nationwide scope and the overall
; results of the traffic test, together with the variations in costs prevail-
3 ing in the several groups through which the sample shipments moved,
it does not appear that these variations exceed reasonable tolerances
or that the costs for the longer hauls are improperly related to those
for the shorter hauls.
In support of their position that the carriers’ sample is not repre-
sentative, the protestants presented data concerning the volume of
deliveries of certain vegetables originated at points in Florida, Ari-
zona, and California, and terminated at 100 specified cities (in 39
States, the District of Columbia, and inclusive of 5 cities in Canada).
2 for each of the years 1931 through 1952, except vegetables from Ari-
zona and California for the years 1937 through 1949. These cities
4 embrace the 29 from Florida and 19 from California, used in the
, carriers’ sample. From the Florida origins, the total of such de-
liveries to these 29 cities was 86.8 percent of the total to the 100 cities
during the 16-year period covered, and from the Arizona and Cali-
fornia origins to the 19 cities the total thereof during the 9-year
period was 65.06 percent of the total to the 100 cities. These per-
centages indicate that a great preponderance of the movement of the
: commodities considered is to the destinations used by the carriers in
their study.
Because of the freezing weather in Texas and the Kansas-Missouri
flood conditions that occurred in 1951, together «ith subsequent
: changes in packaging and the advent of vacuum precooling, discussed
207 I.C.C.
PROPOSED INCREASED REFRIGERATION CHARGES 521
elsewhere herein in greater detail, it is claimed that the study period
selected was not representative. The freeze caused some shrinkage in
the volume of refrigerated traffic from Texas. Although there is
some indication that the unit costs at certain stations are affected
slightly by fluctuations in the volume of refrigeration operations, it is
not indicated that the aforementioned shrinkage in traffic caused any
appreciable change in the unit costs thereof.
The flood conditions caused delays to 61 shipments originated by
the Santa Fe and 126 originated by the carriers served by the Pacitie
Fruit Express, which resulted in additional refrigeration expense.
They represented about 2 percent of the study traffic of those carriers,
If distributed over all that traffic, the additional ice consumed, as a
result of the delays, would amount to only about 130 pounds per car.
Any inflationary effect upon the overall costs caused by that addi-
tional expense would be extremely small. The petitioners maintain
that operations in the railroad industry are such that no year is free
from disruptions of some kind, and they cite typical examples of dis-
ruptions in other years from various causes, such as strikes and earth-
quakes, It does not appear that 1951 was an abnormal vear for the
purpose of the study.
Since 1951, as noted, there has been a substantial shift to the use
of standard refrigeration as a result of the described changes in
packaging and precooling, tending to enhance the representativeness
of the sample as to that service, which the protestants contend was
disproportionately large.
The petitioners’ study afforded no mathematical chance for all of
the railroads, all origin and destination areas, and all of the affected
traffic to be included, and may have rendered it unrepresentative as to
the whole body of traffic. The sample, however, was used principally
to weigh unit costs for the purpose of determining an average per-
centage increase in refrigeration charges for section 2 traffic. The
origin and destination areas selected produce and consume, respec-
tively, a majority of all fruits and vegetables shipped, and a great
preponderance of the movement of that traffic is over a relatively few
routes. This concentration of movement and the resulting heavier
volume of icing operations tend to produce lower unit costs than pre-
vail in connection with the traftic to, from, or between the excluded
areas where the volume of movement is much less. Thus, the con-
clusion is warranted that the computed costs of performing the
refrigeration service required in the movement of the selected ship-
ments do not overstate the average costs for the traffic as a whole.
Position of the protestants.—Of the numerous parties appearing in
Opposition to the proposed increased charges, evidence was presented
“97 1.0.6,
362168—56—No. 200-—3
"7
Td Sars
Tene Sek sed
tae
522 INTERSTATE COMMERCE COMMISSION REPORTS
by the Growers and Shippers League of Florida, Florida Fruit and
Vegetable Association, Stokely Van Camp, Inc., National Association
of Fruit Packers, Texas Citrus and Vegetable Growers and Shippers,
F. H. Vahlsing, Inc., of Texas, the Western Growers Association,
California Citrus League, California Grape and Tree Fruit League,
Northwest Horticultural Council, Washington Potato and Onion
Shippers Association, Northwest Fish Traflic Committee, the princi-
pal meat packers, and the United States Department of Agriculture.
This representation embraces practically all the growers, shippers,
and processors of fruits, fruit juices and concentrates, vegetables, and
frozen foods in Florida, Texas, Arizona, California, Oregon, and
Washington, and fresh meats and packinghouse products throughout
the country.
It is the position of these protestants that, considering the overall
result of the present charges, there is no warrant for any increase
therein, and that the charges proposed would affect adversely both the
carriers and the shippers, it being their contention that the perishable
traflic affected cannot bear an additional burden. In support of their
position, they presented evidence concerning, among other things, the
deteriorating economic condition of the producers, the shrinking per
‘apita consumption of certain fruits and vegetables over a long period
of years, attributed to the rising costs thereof, and the rapidly increas-
ing volume of perishable traflic diverted to motor vehicles.
The Northwest Fish Traffic Committee and the Washington Potato
and Onion Shippers Association would not oppose a reasonable in-
crease shown to be justified upon substantial evidence. They do,
however, request the elimination of certain alleged inequities in the
refrigeration charges so that they may be on a competitive basis with
other shippers in the same general area. For example, they claim
that fresh fish from Prince Rupert, British Columbia, Canada, is
given an advantage over that from the Puget Sound region, amount-
ing to $30 or $40 per car, which would be $100 with the increase pro-
posed. It is claimed that the Washington potato shippers are in a
disadvantageous competitive position in relation to those in Oregon
and Idaho because of the lower switching charge per icing in Oregon
and the more favorable refrigeration charges from Idaho.
The Western Growers Association requests that the Arizona and
California vegetable shippers be given the privilege of initially icing
all cars in which their shipments are loaded, regardless of the type of
service used, instead of being limited to those moving under certain
of the modified services as at present. Somewhat similar requests
were made by Texas and Florida shippers. The Texas shippers also
urged that the carriers be required to make available to them rule 247
207 1.C.C.
8A, ATVI POON KAO NA DUETS Hebe RANTS hr IE 1 tl Be he RRIF
PROPOSED INCREASED REFRIGERATION CHARGES 523
service maintained from other producing districts, which has subse-
quently been established. Consideration of such requests would
unduly broaden the issues presented i in this proceeding.
The Arizona and California shippers of vegetables and deciduous
fruits also request that, if an increase is authorized, a holddown be
prescribed sufficient to maintain their present competitive relation to
other producing districts, Such treatment would be contrary to our
indicated purpose in the determination of charges, as nearly as
practicable, sufficient to cover the cost of providing refrigeration serv-
ives. An adjustment of that nature, if appropriate, should be accom-
plished by modification of the line-haul rates,
An objection by the petitioners to the presentation of evidence on
behalf of the Western Growers Association concerning car-mileage
revenue received by the carlines or railroads for the use of their
refrigerator cars Was sustained by the examiner, and thereafter, upon
request, counsel for those shippers was permitted to present proof for
our consideration. It consisted merely of a statement as to the car-
mileage revenue which the carlines would receive, for example, for a
2,000-mile round-trip movement of a refrigerator car at 4 cents a mile.
Revenue received for car service is not a factor in the determination of
reasonable charges for refrigeration service.
An overruled objection to the receipt in evidence of the petitioners’
exhibits Nos. 4, 5, 6. 7, 8, 9, 19, 20, and 21, as amended, interposed by
counsel for the Western Growers Association, on the grounds that he
was not afforded a “reasonable opportunity to examine both the docu-
ments and the abstract.” as contemplated by the provisions of rule 83
of our General Rules of Practice, is renewed on brief. Those
exhibits were compiled from voluminous detailed cost data and are
basic to the entire cost study. They were introduced at the initial
hearing on December 9, 1933, but were not received in evidence until
after the completion of cross-exaimination thereon during the follow-
ing hearing more than 2 months later, and after the underlying data
had been made available for examination. This procedure afforded
all parties a reasonable opportunity to examine both the documents
and the abstract. The ruling is sustained.
The section 2 charges, as noted, cover the several enumerated ele-
ments of expense, while the section 4 charges cover only the elements
of ice, salt, and switching. The elements of expense for supervision,
station and auditors accounting, and ice haulage, which are covered
by the section 2 charges, but not included in the section 4 charges,
amount to about 19 percent thereof. The section 2 shippers, generally,
allege that the subjection of their traffic to charges for those elements
without subjecting section 4 traffic to like treatment, causes unjust
27 1.0. C,
eats ag
524 INTERSTATE COMMERCE COMMISSION REPORTS
discrimination against their traffic and gives undue preference of
section + traffic.
After extensive investigations in the prior proceedings, we made
definite determinations as to the costs of the several elemens of eXpense
and required the establishment of charges accessorial to the line-laul
rates to compensate those costs on both section 2 and section 4 tratlic.
The section 2 charges became effective and have been applied for many
years, but because our orde® as to the section 4 charges for the elements
stated was stayed temporarily by the United States District Court for
the Northern District of [linois, and was subsequently vacated, those
charges never became effective.
Concerning the allegation of discrimination, it is noted that the
section 2 and section 4 charges do not apply on like traffic, and that.
us to the alleged undue prejudice, there is no showing that any failure
of the section 4 charges to cover the above-mentioned elements |yas
caused, or is likely to cause, any disadvantage or injury to the section 2
trafic or any shippers thereof. Thus, the claim of unjust diserimina-
tion or undue preference is not soundly based. In these circumstance=.
uny existing deficiency in the section 4 charges does not relieve section 2
traflic of the responsibility of bearing the full cost of that service and
is not a consideration in the determination of the lawfulness of the
increase proposed in the section? charges.
Cost of ice.—The cost to the carriers of supplying ice in the per-
formance of refrigeration service is much the largest of the several
elements of expense enumerated. It amounted, for example, to 65.5
percent of the total cost of the refrigeration service rendered in con-
nection with the sample section 2 shipments, herein described. for
which only “bunker ice” was supplied. So-called “body ice,” and ice
placed ‘n bunkers by shippers is not included in this computation.
The increases proposed are intended to cover the cost of both body
and bunker ice supplied by the carriers.
Ice used by the carriers in rendering refrigeration service is either
placed in the bunkers or bodies of refrigerator cars by themselves from
supplies which they have manufactured, harvested, or purchased and
stored in icehouses adjacent to icing platforms, or by contractors at a
price per ton as agreed upon. The carriers manufacture ice at only
a few points, the great bulk of their requirements being supplied by
contractors who, in most instances, also place it in the bunkers, The
harvesting of natural ice became uneconomical and has practically
ceased.
The Santa Fe maintains its own refrigeration department. Other
railroads’ responsibilities as to refrigeration are discharged for their
account, under contract, by carlines directly, or through them by inde-
207 1.0.6.
PROPOSED INCREASED REFRIGERATION CHARGES 525
pendent contractors. A sv)stantial portion of the Santa Fe’s service
is performed also by independent contractors. Those contractors are
generally commercial concerns deing a general ice business but, in a
number of instances, under long-term contracts with the carriers, they
have built plants within railroad yards. These plants are usually
not so situated as to be suitable for serving the general public.
Sc.ne of the protestants introduced evidence purporting to show
that, in many instances, the contract prices of ice were excessive.
These prices per ton, which may vary widely as between individual
stations, are represented by the carriers as being influenced by the
conditions existing at each station, such as the volume of ice used, the
investment in facilities, labor and other costs, ice shrinkage, and the
required purchase of minimum quantities of ice at certain stations
in order to insure the maintenance of supplies sufficient to meet all
requirements. The failure to use the contract quantity may result
from unforecastable conditions, such as crop failures and variations
in the volume of consumption, or because of the necessity of providing
compensation sufficient to induce contractors to invest in the plants
and equipment necessary to meet the contemplated requirements where
no other ice is available. Owing to inadequate supplies or variations
in requirements at a station, there are instances when it must obtain
ice from some other point. The evidence does not warrant a conclu-
sion that the carriers have not exercised due diligence in negotiating
the contracts.
Some of the shippers of fruits and vegetables contend that the com-
putation of section 2 costs should be based upon the cost of ice on a
statewide rather than a territorial group average used by the carriers.
They computed costs for either all or representative shipments in-
cluded in the carriers’ sample from Florida, Texas, Arizona, and Cali-
fornia using, in some instances, the same basis as was employed by the
carriers and, in others, the actual cost of ice at each icing station. The
computed deficit in revenue on 1,371 carloads of fruits and vegetables
moved from Florida under standard refrigeration, including both
those with salt and those without salt, using the group-average costs
of ice, amounted to 21.3 percent. Similar computations for repre-
sentative shipments given standard refrigeration service, or a modified
service under rule 240, rule 251, or rule 252, showed revenue results
ranging from a maximum profit of 9.12 percent to a maximum deficit
of 28.91 percent.
Computations were made by Texas shippers as to 97 carloads of
fruits and vegetables from that State, based on the cost of ice at indi-
vidual icing stations, which indicate a revenue deficit of 29.7 percent
as compared with a deficit of 40 percent indicated by the carriers’
297 1.C.C.
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LOO TRAY
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526 INTERSTATE COMMERCE COMMISSION REPORTS
computations. They also show computations, on the same basis, for
a few shipments accorded standard refrigeration service, or rule 247
service, indicating deficits ranging from 6.79 to 7.57 percent.
The Arizona and California shippers presented recapitulations of
the carriers’ claimed costs of rendering the various refrigeration sery-
ices for 2,197 carloads of citrus fruit from those States embraced in the
carriers’ sample, the revenue thereon, and the resulting deficits as
shown in the carriers’ computations. The respective deficits on ship-
ments accorded standard refrigeration service, the various modified
services, and on all the services used are indicated as 41.79, 15.34, and
28.07 percent.
In prescribing charges for ice on a group or zone basis, rather than
by individual stations, we gave consideration to proposals of shippers
similar to the contentions advanced herein. The cost data developed
in the prior proceedings, like that herein, disclosed that, in numerous
instances, the cost of ice varied substantially as between individual
icing stations, but that the practical necessity of publishing charges
on the group basis was recognized. The shippers’ proposals as to the
method of arriving at charges were regarded as being based upon an
inadequate conception of the scope of the present-day refrigeration
service. We then observed that the handling of refrigerated trattic
should be considered as an integrated national service, and, when so
considered, it was clear that charges should be fitted to its support by
the use of the group basis, and that the shippers’ proposals were in-
compatible with that view. No modification of that determination is
warranted by the evidence in this proceeding.
The ice-cost formula is designed to develop at each icing station
the cost of (1) ice per ton to the carrier, whether purchased, manu-
factured, or harvested, (2) moving ice to the icing platform, (3) opera-
tion of the icing platforms, and (4) placement of the ice in the refrig-
erator cars. It includes such elements as return on investment,
depreciation, interest on working capital, cost of transporting ice to
platforms, labor of icing cars, indirect costs, and taxes. The data
reported by the carriers for the section 2 traffic sample were developed
in accordance with that objective, and the procedures and resulting
computations will be discussed in sufficient detail below.
The table below shows a summary of the reported aggregate ton-
nage and the computed cost of ice supplied in bunkers of cars, seg-
regated by territorial groups, the average cost thereof per ton, the
section 4 charge per ton, and the amount of the deficiency of such
charge in each group. As to ice supplied in bodies of cars, it shows
the total tonnage for all territories, total cost thereof, average cost
per ton, the section 4 charge and the deficiency of the charge. The
207 I.C.C.
1
PROPOSED INCREASED REFRIGERATION CHARGES 527
areas embraced in the groups listed below are the same as those in
the corresponding groups defined in the perishable protective tariff.
Amount + Average Section 14 Silas
Territory supplied Cost cost charge Deficiency
Punker ice Tons Perton Perton Per ton
Group 1 $5. 07 M4 $1.08
Group 2 | &. 70 4% 3.74
} ee 21s S 4 5. 43 2 91
Group 4...... 33 0 5.71 5.49 22
Group 5 506 6. 93 62 1.31
Group 6__.. - 2 | 6.73 5. 69 1.4
Group 7... y 7. 06 5. 75 1.31
Group 8. BS, 368, 7.03 601 1.02
Ey SERGEY TRESS eae PS eee 285,616 , 2,217, 761 7. 76 6 2s 1. 48
Group 10... .... nkGt egawae uae ethincatarh idk 438, 977 3, 142, 765 | 7. 16 oS 4s
Pody ice | } |
All territories... See ee 126, 953 | 1, 066, 738 | 8.39 6.61 | 1,78
i iccocatiidae sath alt handeisiod dae rcaasescie Mme 8 ae 8: 8 eo —e-
The cost of ice, computed by the carriers, includes an item represent-
ing 6 percent of original cost without deducting related depreciation
reserves. In lieu of conducting valuation studies at each station, which
they claim would have been too expensive, the petitioners presented
data to show that reproduction cost less depreciation, computed on
the basis of studies of the condition percent made by the Commission’s
engineering section, is greater than the original cost, which they used.
The protestants generally used a rate of 4+ percent for return, point-
ing out that, over a long period of years, the carriers’ average net
return for all their operations has not exceeded that amount. In the
restatement by one group, the base for return was original cost less
accrued depreciation on the base of an engineering condition percent
(56). The base used by the other group was original cost reduced by
a depreciation reserve computed on the basis of a 4-percent deprecia-
tion accrual each year since acquisition of the property. The protes-
tants contend that the 4-percent rate should be applied to a base which
is the original cost of all property, other than land, less the cost of
any of such property over 25 years old.
After careful consideration of all facts herein contained, including
appreciation, depreciation, going-concern value, but excluding work-
ing capital, which is considered separately hereinafter, and all other
matters which appear to have a bearing upon the valuation, the value
as of December 31, 1951, for the purpose of this proceeding, of the
property owned or used by petitioners for furnishing refrigeration
services is found to be $22,484,000, and this amount will be used in the
restatement of ice costs.
The return on facilities devoted to the performance of refrigeration
service should not be expected to exceed the average rate for all opera-
297 1.C.C,
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4
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3
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ee
528 INTERSTATE COMMERCE COMMISSION REPORTS
tions of the class I railroads as a whole. The allowance for return in
the restatement, hereinafter, will be computed at a rate of 4 percent
after Federal income taxes. In computing the allowance for Federal
income taxes, fixed charges were taken into consideration.
The primary purpose of any system of depreciation is to recover
(or charge to cost of operation) the full original cost of property
through periodic charges to operating expenses during the service life
of the property. The rate of 4 percent used in the ice-cost formula
contemplated the group plan of depreciation based on a weighted-
average service life of 25 years, which is based on varying service lives,
Under the group plan, property which is destroyed, retired, or other-
wise withdrawn from service is taken out of the base on which the
depreciation charge is computed, but all property which remains in
service continues to be subject to depreciation regardless of the amount
reflected in the depreciation reserve.
The protestants propose to modify the group plan used in the ice-cost
formula by discontinuing depreciation on property older than 25 years,
Under this modification the full original cost would be charged off on
property which reaches 25 years of age, but on property with a shorter
life which is retired before 25 years, the full original cost is never
recovered through charges to operating expenses and the cost is under-
stated. For this reason, under the group plan of depreciation, all
property in service regardless of its age should continue subject to
depreciation.
Included in the carriers’ computations is an item of return. at the
annual rate of 6 percent for one-sixth of a year, on the working capital
said to be required in the performance of icing operations at each of
the numerous icing stations maintained. The determination of the
period used in the computations was based upon the representation
that there is a time lag of approximately 2 months from the time an
icing service is retidered until payment therefor is received from the
connecting carriers. The amount of the working capital allocated to
each icing station, reflecting one-sixth of the annual expense of operat-
ing the station, is designed to provide funds sufficient to cover operating
expenses during those periods.
Under the established procedure of effecting payment to the par-
ticipating carriers for icing service performed by them, the total
refrigeration charge collected at the destination, less the amount
accruing for ice haulage, station and auditors accounting, and hazard,
which is retained by the delivering carrier, is credited by it to the
originating carrier and paid to the latter in the next interline settle-
ment. Thereafter, upon receipt of bills, distribution of portions of
that residue is then made by the originating carrier to other partici-
pating carriers on the basis of the amounts published in the governing
297 I.C.C.
ao PTL AEE LR ESA LEGIT ENE SED 5 ON el A te aaeeeeeteien eee a ae PA CNS Ee ee
PROPOSED INCREASED REFRIGERATION CHARGES 529
division sheet. The amount deducted and retained by the delivering
carrier is divided between the participating carriers in the same manner
and upon the same percentage basis as are observed in dividing freight
charges. Under these procedures, there is generally a lag of more than
amonth after delivery of a shipment before the participating carriers
receive their respective proportions of the revenue.
Icing operations, including the furnishing of ice and salt, are per-
formed largely by independent contractors under a contract with &
either the carlines or directly with the railroad, which names the a
unit prices for the service involved. The contractor is usually paid Fs
about the middle or latter part of the month following the month in &
which the service is rendered. There are longer lags in instances %
where any question is raised as to the accuracy of the bill rendered £
by the contractor and an investigation is required. It is not uncom- 4
mon for Pacific Fruit Express to withhold payment to its contractors :
for as much as 2 or 3 months during such investigations. e
The time in transit for a transcontinental movement from Lodi, =
Calif., to New York, for example, is usually about 10 days. The
protestants point out that the maximum time elapsing from the time
of shipment until the charge is paid at the destination is only about 14
days, and for shorter nauls, such as from Florida to New York, it may
be only about 5 or 6 days. They urge that there is no justification for
the imposition of any interest charge on working capital after the
collection of the refrigeration charge at the destination. Of the
numerous carlines and railroads reporting ice costs, only the Fruit
(ivowers Express maintains a definite working capital figure for
refrigeration expense in its accounting. The protestants generally
contend that the period during which interest is imposed should not
exceed one twenty-fourth of a year, which is the same as that used by
he Fruit Growers Express in its accounting. The use of a longer
period does not appear reasonable. A rate of 4 percent for a 2-week
period will be used in the restatement, which is equivalent to adding
he sum of $1,145,316 to the property value as a base for a return on
vorking capital.
In computing the transportation cost for ice shipped to platforms,
he petitioners used the pub’ vaed tariff charges when the movement
vas over the lines of a carrier other than the one using the ice, and 10
nills per ton-mile when it moved over the lines of the carrier using
he ice, except that for those served by the Fruit Growers Express, a
ate of 8.75 mills was used. For switching movements the tariff
harge was used.
Some of the protestants maintain that, in many cases, such trans-
ortation of ice was in refrigerator cars which would otherwise have
297 1.C.C.
362168—56—No. 200-—4
~ ~ > . aa
NRA ANAT ITS ND NRE ROE Ss ey te = - .
530 INTERSTATE COMMERCE COMMISSION REPORTS
been returned empty, and that 1 mill per ton-mile would be a proper
cost. They refer specifically to 9,836 tons of ice shipped from Chicago
and Silvis, Il., over the lines of the Chicago, Rock Island and Pacific
Railroad Company to Dalhart, Tex., a distance of more than 1,000
miles.
The volume of shipped ice transported over the lines of the carrier
using it is of appreciable importance at only a few points. Much of |
the shipped ice moves relatively short distances. In cases where the
ice is shipped in refrigerator cars which would otherwise be returned
empty, the cars receive the following services: (1) Selection of the
car, (2) cutting the car out of the train if it is a return-empty move-
ment, (3) switching the car to the iceplant for side-door loading, (4)
holding it for loading of block ice, (5) switching it back to the yard,
(6) classifying it as dead freight, (7) switching it to the train for line-
haul movement, (8) clerical work to see that the car is properly cut
out at destination, (9) classification and separation from other cars,
(10) switching out of the train if necessa ry, (11) holding the car unti|
it is unloaded, (12) switching it back to classification, (13) classifica-
tion and restoration into a train, and ( 1+) additional clerical account-
ing; also such items as damage caused by the transportation of block
ice in the body of the car. It does not appear that the unit costs used
overstate the average cost. and they will be used in the restatement.
The cost of labor includes the labor, on the icing platform, of putt ing
the ice into the cars, but should not include any supervisory expense,
Gang foremen who work along with their men properly are includible,
but supervisors who do not physically handle the ice should be ex-
cluded, because their compensation is included in the item of super-
vision, a separate expense element. ‘The contract price of ice gener-
ally includes delivery into the cars, in which case no separate labor
cost Is allowable.
An exhaustive investigation of this item, by certain of the protes-
tants, developed numerous instances where supervisory salaries were
originally included in the petitioners’ computed cost of labor, such as
at all Northern Pacific and Pacific Fruit Express icing stations. Pur-
suant thereto, corrected data were subsequently submitted by the
petitioners, which eliminated practically all of the duplications by
those carriers, and some of the errors appearing in the reports of other
carriers, Other assailed items, which the petitioners considered cor-
rect, however, were not changed. For example, these protestants take
the position that no separate item of labor for placing ice in cars was
allowable at stations where all of the ice was purchased under contract,
because it was included in the price of the ice. The petitioners point
out that, in many instances, the contract price of the ice covers only
delivery to the platform, and that there is, in addition thereto, the
297 1...
ANY EEE DIES CREAT ates ALAA La? PS MT IN prem AAAI A SAEED ce ci aaa
—e—_—_
PROPOSED INCREASED REFRIGERATION CHARGES 531
labor cost of placing it in the car. There are several stations, men-
tioned by these protestants, where items of supervisory expense still
remain in the corrected labor cost.
The corrected cost of labor eliminated practically all items of a
supervisory nature, but failed to eliminate those at the following
stations:
E
2
Station Railroad Type of work | om of
| j
ae Log. SR ew ee eee Northern Pacific._...___. | Supervisory __- $828. 95
Spokane, Wash___ 5 eee | do 3 | ene 1, 264. 35
OST D2 COS a ae capi | Rock Island 2770-27272 bcad MMO) ites coon 1,010. 25
ee A See eee a ET nae EE RE ERA Inspection. __ 5, 743. 09
ON MND ois Sota ae Indiana Harbor Belt__.____- Supervisory ___ 9, 587, 38
oe ERE SSIES ee aN ASU Powe sce cewareeveusscuswunelworscecenaececce 18, 434. 02
It is concluded that, after the elimination of the amount shown above,
the remaining expense will be approximately correct.
Indirect costs include maintenance of icing facilities, injuries to per-
sons, insurance, telephone, heat, light, power, water, tools and supplies,
taxes, and other expenses. Many of these items are relatively small
and had minor effect upon the final results. Some carriers averaged
their maintenance over a 3-year period. The protestants questioned
this procedure as a means of obtaining normal maintenance expenses.
This average may produce more normal current maintenance expenses
than would be obtained by use of such expenses for a single year, In
a study involving a large number of icing stations, the averaging
process will have negligible effect upon final results.
Objection is made by the protestants also to the consideration of
costs representing the ice department of the Santa Fe. which they con-
sider improper. Expenses of the Santa Fe’s ice department are allo-
cated among manufacture, storage, and ice delivery. The icing facili-
ties are operated by that department, whose employees consist of the
superintendent and those in his Los Angeles oflice, plant superintend-
ents, and those in local plant offices, none of whom physically place
iee in cars, The petitioners contend that this expense is properly in-
cludible in the cost of ice because it relates to the management of ice
plants and the physical handling of ice at platforms rather than super-
vision of refrigeration service. As already noted, the cost of labor
includible in the cost of ice may properly include only the salaries of
those who do the physical labor, and all others Who are in a supervisory
capacity are charged to the separate element of supervision. It is
concluded that the Santa Fe’s ice department expenses are a part of
Supervision, and the amount of such expenses, namely, $81,938, will be
excluded from the restated ice cost.
297 1.0. C.
PELL EL II NE FONT PAN
DE ASE A RoI CD AERC 6b eS wrx ” ee _ BARE A tT PW OR en IE ae
532 INTERSTATE COMMERCE COMMISSION REPORTS
The amount of income tax is computed to be that which will allow
the payment of such income taxes and still leave the carriers with a net
return of 6 percent on the investment in icing facilities. In their re-
statement of costs, the protestants used the same formula, but point
out that a reduction in the return on investment and working capital
will substantially reduce the amount of income tax. The inclusion of
an amount for Federal income tax required for a net return of 4 percent
is proper and will be allowed in the restatement.
The table below summarizes, by territorial groups, the cost of ice
delivered in bunkers and bodies of cars, restated to reflect the adjust-
; ments contemplated by the above conclusions, together with the
7
; petitioners’ computed costs :
a ees Cost
x . = Restated
Territory — — hy of | cost oi
2 ‘Petitioners’ Restated ton
3 os Area: wi fee |
Runker ice
| $7,042, 866 | $6, 385, O66, 1, 388, O2u | <4 Ww
| 1,601,172 | 1,490, 200 Is4, OM | Par
| 3.158.370 | 2,012, S04 STs, 2is 7.7
mes } | 447, 633 at)
| im 272, OH 6.4
| } 269, 142 66
j 729, 282 6.81
; 763, 686 9]
ee nt i Ae ree ee 285, 616 7.2
_0ClUl! Iie cctentewccssans | 438, 977 6.06
a : | 34, 059, 586 | 32, 301, 975
; Rody ice | |
' '
Total—All groups. -_.-___- . --| 1,066,738 1,028, 134 | 126, 943 Sh
; Total ice............- seiineckau<Cecuweuusaescnis Meas 00 an eI :
The present ice costs increased as hereinafter authorized would
exceed slightly the foregoing 1951 restated costs in groups 1, 4, and 10,
but when effect is given to the subsequent increases in purchitsed ice,
indicated for 1952 and 1953, the resulting costs under the authorized
increase would be lower in each group. The record shows that, in terms
of the total tonnage reported in 1951, there was an increase since that
year of at least 53 cents per ton, or 10.3 percent, in the cost of ice
purchased by the petitioners.
Cost of salt-—The cost of supplying salt in bunkers of cars is one
of the three elements of expense for which charges are specifically
named in section 4 of the protective service tariff, and it is embraced
also in the charges provided in section 2 thereof. The carriers show
that the cost of salt supplied in connection with the sample shipments
in 1951 amounted to $73,529.26, or 4.1 percent of the total of the various
expenses incurred in the rendition of refrigeration service. A total
of 380,130,055 pounds of salt was supplied that year by the carriers in
297 1.0.6.
SOT ANS elie SAIS Os ie: é LO RATES TNO CARIES Bis Pei Ber? ew ihe A NS he aati a BD Sols
PROPOSED INCREASED REFRIGERATION CHARGES 533
rendering refrigeration service, including both section 2 and section 4
shipments, at a total cost of $3,938,375, or an average of $1.04 per 100
pounds. ‘The section 4 tariff charge was 99 cents per 100 pounds, indi-
cating a deficiency, as to shipments subject to that charge, of 5 cents
per 100 pounds. Since 1951, the prices paid by the carriers to their
contractors for salt have been increased at many stations. It is pro-
posed to increase the present charges for salt to $1.02 per 100 pounds.
At the various icing stations, small quantities of salt, in relation to
the amount of ice used, are placed in the bunkers of cars, With many
getting no salt at all. The proportion of labor expense and of platform
expenses, such as interest on investment, maintenance and taxes, which
are allocable to salt, therefore, is small in relation to that apportioned
to ice. At some of the stations where substantial amounts of salt
were used, an allocation of these expenses was made; but at miuny other
stations it was considered impracticable to make any allocation, and
only the purchase price and transportation expense of the salt were
reported. Nosuch allocation was made as to at least 34,000,000 pounds
of salt used. For this reason the computed cost of salt omits much of
the labor expense and most of its share of platform expense resulting
in an wi.lerstatement of costs. These expenses which were not allo-
ated to salt, however, remained in the cost of ice and were included as
part of that cost. There is insuflicient data of record to permit any
computation or estimation of such expense. In the adjustment of
costs hereinafter, an amount of $1.04 per 100 pounds is used for the
salt factor.
Switching —Vhe cost of switching refrigerator cars to and from
icing facilities is, as hereinbefore indicated, one of the elements of
expense incident to the rendering of refrigeration service for whieh
charges were prescribed by us and for which charges are presently
provided in sections 2 and 4 of the tariff. The present and proposed
charges and their territorial applications are shown in appendix A
hereto, The present switching charges of 60, 67, and 106 cents shown
therein include increases authorized in Ex Parte Nos. 162 and 166
totaling 32.25 percent over the prescribed charges of 45, 50.5, and So
cents, respectively. The respective increased charges here proposed
are approximately 70, 72, and 72 percent over the present charges.
In their study of switching costs, the carriers concluded that a new
and comprehensive study of such costs for the year 1951 would be
impracticable and exceedingly burdensome. In lieu of a new study,
the prescribed charges of 45, 50.5, and 80 cents were factored up to
reflect the relationship ratio of 2.27 to L of yard transportation expenses
per yard-switching locomotive-mile for the year 1951 to like expenses
for 1932. ‘These added expenses produced the respective amounts of
297 1.C. C,
ae si
LR SRSA ORS TO a ee:
“~
en Se RE iene SH 6nd Na a Set lal shina Ts aii oi Pe eer. ee wie
534 INTERSTATE COMMERCE COMMISSION REPORTS
$1.02, Sl.15, and Sl.sz, or the charges proposed. With no indicated
intention that, as to the switching charges proposed, the petition
should be amended, it was stated on behalf of the petitioners at one of
the hearings herein that the index figure of 2.27 was based on a cost
per yard locomotive-mile of $2.68 for 1951, erroneously calculated by
using the total freight and passenger-yard locomotive-miles instead of
only the freight portion which would have produced a figure of 2.43,
The charge of 45 cents prescribed for application at stations on the
lines of the Santa Fe, Southern Pacific, Union Pacific, and the Western
Pacific in Arizona, California, Nevada, and Oregon was based upon a
stipulation by those respondents of the average of the costs of perform-
ing the services at those stations. The presrcibed charge of 50.5 cents
at stations in certain southeastern States was based on 1926 costs, and
the prescribed charge of 80 cents for the rest of the country was based
on Weighted-average costs.
The stated index figures of 2.27 is based on incomplete costs for both
years. Those not included are for maintenance and repair, deprecia-
tion, taxes, and return on investment of yard locomotives and yard
tracks. Whether the inclusion of such expenses would have a material
effect upon the index figure is not apparent. The figure is also deti-
cient in that it fails to evaluate the element of technological change
that has occurred during the past 20 years, and it does not give etfect to
the difference in productivity of the yard locomotives as measured by
the cars handled per engine-hour. ‘A swite hing cost per loaded-car
comparison would be more suitable than a cost per engine-hour com-
parison where so much time has elapsed between the studies and the
methods of operation may have changed to a considerable degree.
In their computation of costs the petitioners applied the switching-
cost factor to all icings regardless of whether any switching was per-
formed, which is in accordance with the Commission's formula. When
the switching charges were originally prescribed, however, some of the
icing docks were much shorter than the present facilities, and usually
required a second spotting of the cars, while some of those presently
maintained will accommodate the entire train. In a greater number
of instances, therefore, re-icing of entire trains is performed without
any switching, particularly at some of the important icing stations in
the West.
The meatpackers show that the switching charges per icing, in-
creased as proposed, would exceed, by amounts ranging from 11.5 to
$2.5 cents, the prescribed charges plus the cumulative increases author:
ized for other switching services since June 30, 1946. They, and some
of the section 2 shippers, contend that any increase authorized should
be limited to such amounts as will reflect the changes in service since
1932, but that in no event sould the increased charges exceed the
297 1.C.C.
i ad
FA Ot BROW ROI ae! es ne fe a ee Cao
PROPOSED INCREASED REFRIGERATION CHARGES 535
prescribed charges plus the cumulative increases. The evidence pre-
sented is insuflicient to permit a determination of accurate costs,
prerequisite to the authorization of the specified charges proposed.
The prescribed charges plus the cumulative increases will be used in
the restatement of these costs.
| Supervision—In discussing the cost of supervision in the second
prior proceeding, at page 702 of the first report therein, we observed
that, generally, the cost of supervision represented the outlay incurred
for salaries, wages and office traveling expenses of officers, their clerks
and attendants, general, district, and t ‘aveling agents, and icing fore-
men and inspectors, who devoted all or a part of their time to the
handling of refrigerated shipments. We concluded that such outlay
was an element of the cost of furnishing refrigeration services, and
approved, as factors, amounts per icing, for the supervision of refrig-
eration services, of 82 cents in the territory west of the Mississippi
River, 97 cents in the territory east of the Mississippi River and north
of the Ohio River and the southern boundaries of Virginia and West
Virginia, and 69 cents in the territory east of the Mississippi River and
south of the Ohio River and the southern boundaries of Virginia and
West Virginia, Under the authorized increases they have become
108, 129, and 91 cents, repectively,
As to supervision costs, the petitioners’ study was confined to those
of the Pacific Fruit Express and the Fruit Growers Express, and were
computed, generally, in accordance with the method used in the a fore-
mentioned proceedings. Supervision costs of the Pacitie Fruit Ex-
press were considered as representative of those west of the Mississippi
River and the costs of Fruit Growers Express as representative of those
inthe East. The petitioners use ave ‘age supervision costs per icing
of $1.83 in connection with icings performed in the territory west of
the Mississippi River, and $1.64 in connection with all icings performed
in the territory east thereof instead of amounts for the two eastern
territorial divisions described above.
No extra charge is collected for ventilation service: therefore, in
theory, the line-haul rate covers the cost of supervision or inspection of
a ventilated shipment. Thus, only the excess cost of supervision of a
refrigerated over a ventilated shipment would represent the additional
vost that should be borne by the refrigeration charge. It should in
clude those costs in general account LL, Other Refrigeration Service.
except those occasioned by bunker repairs, diversions, and precooling,
and also a part of general expenses. It should include direct icing
platform supervision because that is eliminated from the cost of ice,
but it should not include supervision directly incurred in ice manu-
facture, storage, or harvesting since that is included in the cost of ice,
297 1.0. C,
es vy OHNE RIL GENRES RRL AEE CESS Et I ANE ce
oe i
536 INTERSTATE COMMERCE COMMISSION REPORTS
The petitioners allocated general expenses to refrigeration service on f
basis of the direct supervision costs in each service, whereas the pro- »
testants allocated them on a basis of the ratio of general expenses to all ti
expenses, other than general. The protestants in computing the rat’o, tl
however, included the substantial expenses in account IL, lee and Sast, 6
but in applying the ratio they omitted these expenses. When their u
method is properly applied, there is little difference in the results v
: produced by the two methods. o
\@ An amount equivalent to supervision of ventilated shipments is h
M4 deducted from refrigeration supervision costs In order to leave therein a
only the excess over the costs that would have been incurred tf the ship- n
ments had moved in ventilation service. In restating supervision Py
expense from the figures of Pacitie Fruit Express, the protestants er- iN
roneously eliminated the total expenses in sSubaceounts 401-2, Supervi- a
sion—-Shipments, and 401-4, Tnspection--Shipments, for the reason it
that these expenses for similar services were also included in subae- SI
counts of account 501, Ventilation Service. ‘This procedure excluded «
the total supervision for refrigeration service in lieu of only omitting a
an amount equivalent to ventilation supervision cost so that the excess \
would be ineluded in the costs of refrigeration service, tl
No adjustment of the petitioners’ computations of the cost of super- f;
vision appears warranted,
Haulage of ice—-Vhe factor of ice haulage represents the cost of tl
hauling ice in the bunkers of refrigerator ears, including additional ion
train service resulting from the added weight of the ice hauled. and i!
the oceasional movement of empty curs out of line for the purpose of wu
icing at origin, The amount of ice hauled in bunkers of cars, as used ol
in the petitioners’ computations, was determined by subtracting from t
the weight of the initial icing one-half the average weight of inter: tc
mediate icings. An allowance is thus said to be made for normal melt- fe
age. The failure to consider the amount of ice remaining in the «1
bunkers of cars at the destination, the protestants argue, results in an fi
overstatement of the average weight of ice hauled. It is their position, w
apparently, that the rate of meltage between the last icing station r
and the destination is greater than that assumed in the carriers’ compu- el
tations. Such greater meltage could occur in instances where there
is an extremely long haul from the last icing station to the destination, by
for example, in connection with a shipment moving from California
to New York under one of the modified services with one re-icing at '
Laramie, Wyo. Ww
The rate of ice meltage, which is fastest during the first day or two a
after the car is loaded, becomes progressively slower as the temperature
of the lading is reduced. The rate of meltage, therefore, would be- .
come slower as the car approaches the destination. There are several in
297 I.C.C.
PROPOSED INCREASED REFRIGERATION CHARGES 537
factors which affect the rate of ice meltage, such as the efficiency of the
particular refrigerator car used, the season of movement, the outside
temperature encountered, which may vary widely over different routes,
the temperature of the lading, and the preicing of the car. In view
of these circumstances, it clearly is not feasible to devise a method
under which there would be an accurate determination of the average
weight of the ice hauled in each instance. As to about three-fourths
of the traflic there may be some understatements of the weight of ice
hauled, particularly when standard refrigeration is used with re-icing
at all regular icing stations, but with the probability of the overstate-
ments and understatements being offset by each other, it does not
appear that the overall results in the petitioners’ coniputations are
inaccurate to any imporamt extent when the method is properly
applied. It is indicated however, that there were some instances of
improper application of the method in the computations, which re-
sulted in the use of an inflated weight factor, such as those where the
combined weights of the ice initially placed in the bunkers and that
added in the retouching, before the car was loaded, were used as the
weight of the initial ice. Thus, a weight in excess of the capacity of
the bunkers was used, resulting in an overstatement of the basic weight
factor,
The cost per ton-mile of hauling the ice is computed on the premise
that bunker ice should bear only its proportionate part of those ex-
penses chargeable to the movement of trains over the line that are
increased by weight, and that it should not be charged with a share of
ay expenses that are not increased by weight or that are due to
obsolescence or action of the elements and accrue whether or not any
trains are run, The computed additional cost per ton-mile incidental
to the haulage of ice in bunkers of refrigerator cars is 1.15816 mills
for 1951 and 1.13852 mills for 1952. In computing the bare expense
caused by the weight of ice in the bunkers of cars, the petitioners
followed the Commission's formula in the second prior proceeding,
with a few exceptions. These data were obtained from the annual
reports of the 14 selected railroads * used in our computations in the
cited proceeding.
Appendix C hereto shows the computations and the method observed
by the carriers. Similar computations for the same years of 1951
‘The Atchison, Topeka and Santa Fe Railway Company, the Chicago and North Western
Railway Company, The New York, New Haven and Hartford Railroad Company. the
Wabash Railroad Company, The Baltimore and Ohio Railroad Company the Erie Railroad
‘ompany, The Pennsylvania Railroad Company, The Western Pacific Railroad Company
the Chicago, Rock Island and Pacific Railroad Company, the Missouri Pacific Railroad
Company (Guy A. Thompson, trustee), the Southern Pacific Company, the Chicago,
Milwaukee, St. Paul and Pacific Railroad Company, The New York Central Railroad
Company, and the Union Pacific Railroad Company. These carriers and those listed
n the footnote below are referred to herein by their short titles
207 1.0. ¢.
—
tet ct ee tn
“oo
538 INTERSTATE COMMERCE COMMISSION REPORTS
and 1952 were also made for 20 of the principal carriers * of perishable
shipments, indicated as 1.13953 and 1.13131 mills. In those compu-
tations an amount was added for payroll taxes to cover railroad re-
tirement costs, which was not included as an expense item in the
Commission’s formula, it having originated subsequent thereto.
One-third of the maintenance-of-way expenses are assumed to vary
with use. From this is deducted the terminal portion which is covered
by the line-haul charge and by the factor of switching per icing. The
remainder is the portion of maintenance of way affected by the weight
of ice.
The maintenance-of-way equipment expenses remaining after de-
ducting the portion assignable to terminal and to freight-train cars
is considered 80 percent variable with weight including the weight of
the ice. In the transportation group of accounts, only superintend-
ance less the terminal portion, train fuel and power, water, lubricants,
and other supplies for train locomotives were included as varying
with the weight of the ice carried. A payroll tax of 6.5 percent of
60 percent of the sum of the above costs is added. The sum of these
costs was divided by the gross-ton miles including locomotives, tend-
ers, and cabooses, but excluding nonrevenue ton-miles and their share
of tare weight ton-miles to produce a cost in mills per ton-mile.
The inclusion of all of the cost of superintendance related to line
haul, except the transportation wages and salaries, does not appear
justified because supervision is closely related to the personnel super:
vised as reflected in the wage and salary accounts. The payroll tax
is applied to 60 percént of the expense included in this formula. It
does not appear that so large a portion of this group of expenses is
properly chargeable to wages and salaries. A rough test applied to
expenses on the Santa Fe indicates that not more than 47.5 percent
is assignable to payroll.
In the prior proceedings, the computed cost per ton-mile was in-
creased by 49.265 percent to compensate for the additional train service
caused by the weight of ice and extra hauls incidental to icing at
originating points. These factors could not be measured but had to
be assumed. To compensate for these expenses, the increase in the
freight portion of railway operating expense per ton-mile of ice hauled
in refrigeration service, determined to be 0.502463 mill, was increased
to 0.75 mill, amounting to an increase of 49.265 percent in the Com-
mission’s formula,
Includes the railroads named in the preceding footnote, except the Western Pacitic
and includes also the Chicago, Burlington & Quincy Railroad Company, The Chesapeake
and Ohio Railway Company (for 1951 only), the Great Northern Railway Company (for
1952 only), the Illinois Central Railroad Company, The New York, Chicago and St. Louis
Railroad Company, the Atlantic Coast Line Ratlroad Company, the Seaboard Air Line
Railroad Company, and the Southern Railway Company.
297 1.C.C.
PROPOSED INCREASED REFRIGERATION CHARGES 539
The use of diese] power has resulted in substantial increases in the
per train tonnage hauled. In some instances, the increases amount
to as much as 40 percent over the tonnage hauled when the use of the
aforementioned 49.265-percent increase was allowed. The assumption
that the weight of ice in the bunkers of refrigerator cars might cause
additional train service, therefore, was based on operating conditions
materially different from those now prevailing. With the greatly
increased tonnage that can now be handled in a train, and the improved
operating efficiencies, the probability that additional train service may
be required occasionally by the weight of the ice hauled has lessened
substantially. The method of computing the cost of ice haulage, how-
ever, omits certain items of expense, such as the wages of traincrews,
which would be incurred if additional train service were required as
a result of the weight of ice in the trains handling the perishable
traffic. The omission of these items acts as a substantial offset to the
changes in the method of operation. The difference between the in-
clusion of these expenses and the reduction due to the changes in opera-
tion must be regarded as of a minor nature. No adjustment in the
computed cost of ice haulage appears warranted.
Damage to bunkers and bodies of refrigerator cars—To compensate
for the expense of repairing damages found to result from bunker and
body icing of refrigerator cars, we concluded, in the second prior pro-
ceeding, that a charge of $5 per car per trip for bunker repairs and a
like charge for repairs to bodies of cars would be reasonable. Under
the authorized increases, the factors became $6.61. In the initiation
of their study in this proceeding, the petitioners concluded that a
comprehensive study, required to determine the present costs of such
repairs, would be impracticable. They seek no increase in the present
factor of $6.61, which was used in computing the costs shown in their
study. They, nevertheless, presented the results of a record main-
tained by the Fruit Growers Express of the cost of repairing refrig-
erating devices of its cars during the first half of 1953, which averaged
$8.45 per car per trip.
Station and auditors accounting cost—The inclusion of a charge
of 35 cents per car per trip to cover the cost of accounting work in
connection with icing service on refrigerated shipments, proposed by
the respondents in the second prior proceeding, and unopposed by
the shippers therein, was approved by us. Under the authorized in-
creases it has become 46 cents. An increased factor of 96 cents per
car per trip is used by the petitioners in computing the present costs
shown in their study. It was arrived at by adjusting the original
factor of 35 cents to reflect the increased accounting labor expense
prevailing in 1951, by the use of a percentage relation of the straight
time hourly pay of class B and class C railroad clerks in December
297 L.C.C.
Pe BAI OP tN eae. |
hm Bye Beate
eo es
eel eileen Raa
540 INTERSTATE COMMERCE COMMISSION REPORTS
1951, to that existing in December 1930. The respective rates of pay
were $1.792 and 64.2 cents, which produced a relation of 279 percent,
The increased charge proposed for this element of expense substan-
tially exceeds the total of 67.7 cents that would have resulted by
applying to the prescribed charge of 35 cents the cumulative increases
authorized for freight rates generally since June 30, 1946, which some
of the protestants contend should be the maximum.
The protestants argue that the method of adjustment employed by
the carriers is defective, in that it does not give effect to any increased
efficiency, changed method, greater mechanization, or different re-
quirements of service taking place during the 21-year period involved.
In order to accord full weight to an adjustment based solely on salary
comparisons, it requires an assumption that the clerk's productive ef-
ficiency remained constant throughout the entire period. Evidence of
record indicates that, during that period, the railroads have made
material changes and improvements in the operation of their offices,
which has resulted in substantially greater efficiencies in the handling
of clerical work, but it also appears that the complexity of the tariff
provisions for the various refrigeration services has increased
materially since the disposition of the prior proceedings, necessitating
an increase in the clerical force having the responsibility of determin-
ing applicable charges.
Comparisons of the relation of the average clerk's total compensa-
tion with traffic units and operating revenue, presented by the pro-
testants, indicate that the clerk’s compensation per traffic unit rose 16
percent, and compensation of $1 of revenue decreased 3 percent, dur-
ing the period from 1930 to 1951. These comparisons ignore the im-
portant changes in the nature of the traffic occurring during that
period, whicii nave resulted in a decrease in the relative number of less-
than-carload shipments to carload shipments, and an increase in the
lengths of haul per shipment. It appears that clerical cost varies
more closely in proportion to changes in the number of shipments than
with other measurements of service performed.
The evidence presented by the petitioners fails to show the 1951 cost
of this element in the refrigeration charges. The prescribed charge
itself, which merely has been factored up by the petitioners in the
manner above described, has never been established as an actual cost.
The proposed charge would disrupt the long existing relations result-
ing from the several prescribed component elements of the refrigera-
tion charges. There is insufficient cost data to justify any charge for
this element of expense in excess of the prescribed charge plus the
cumulative increases authorized for general application on other
traffic.
297 1.C.C,
coe ee or ee “ i ee het De Ee : Ae me ——
PROPOSED INCREASED REFRIGERATION CHARGES 541
Hazard.—I\x the second prior proceeding it was determined that
the aggregate costs per car per trip incurred by the respondents therein
as the result of so-called hazard which were properly chargeable
against refrigeration service on shipments under section 2 from
Arizona and California, were as follows:
Apples Deciduous |
and citrus frultsand Vegetables
fruits melons |
Det a |
Cents Cents Cents
Loss and damage claim payments _.. - 5 10
Cost of Inspection at destination 15 15 15 i
Uncollectible refrigeration charges - ‘ } i | 1
Total cost of hazard per car per trip : swuee 21 Pi} w
The foregoing amounts were factors in the charges published pur-
suant to the findings in that proceeding. As a result of authorized
increases, hereinbefore referred to, they became 28, 35, and 47 cents,
respectively. ‘The petitioners’ computed costs as to hazard, shown
in their study in this proceeding, are based on these amounts. They
introduced no evidence in support of any further increases in such
factors. Evidence presented by certain shippers as to claims paid
for loss and damage affords no basis for any modification of these
factors.
Precooling.—The practice of precooling refrigerator cars and the
ladings was developed about 1930, and as to California shipments it
became general in 1948. It is performed largely by the shippers. In
California, precooling plants are operated at Colton and Los Angeles
by the Pacific Fruit Express and at San Bernardino by the Santa Fe.
The precooling operations at these points consist of placing cars loaded |
k.
.
CEE ESL AIO FS
1
with fruit or vegetables on tracks adjacent to the precooling facility
and forcing cold air through the lading for periods ranging from 4
to 12 hours, usually 8 hours. This service is performed in connection
with shipments under rule 245, as well as those moving under standard
refrigeration. In their precooling operations, the shippers also cool
the lading by circulating cold air through the car, which is usually
accomplished by the use of portable fans blowing air over ice into
the car.
In the second prior proceeding, we found reasonable for the future
a charge of 86 per car to cover the cost of precooling at Colton and San
Bernardino when performed by a carrier, the Los Angeles plant not
having then been put into operation. It is proposed to increase the
present charge of $7.94 to $10.23, or by 30 percent, the same as proposed
for other section 2 charges. The cost in 1951 of rendering precooling
service at Colton, San Bernardino, and Los Angeles, as originally
207 1.C.C,
_ ea
ee eee
542 INTERSTATE COMMERCE COMMISSION REPORTS
developed by the petitioners and used in the computations, were 315.15,
$9.33, and $11.77, respectively. At San Bernardino, for example, they
were based upon an average ice equivalent of 3.08 tons per car at 33.05
per ton, the cost of manufacturing ice at that point. The adjustments
in the cost of ice as restated herein have been applied to the precooling
factor, resulting in a precooling cost per car of $15.55 at Colton, 87.54
at San Bernardino, and $10.40 at Los Angeles.
The protestants contend that, in addition to effecting a better arrival
condition of the lading, precooling results in substantial economy in
the use of bunker ice by retarding meltage. More than 9S percent of
the fresh deciduous tree fruits and grapes that move to interstate
markets by rail are precooled by the shipper either before or after
loading. In recent years his average cost per car for precooling ex-
ceeded $40. At the time of precooling, a shipper may also fill up the
depleted bunker at its own expense, and this is done to a large extent.
If this were not done the ice would be replenished at the first icing
station by the railroad at the shipper’s expense, as provided in rule 246
of the tariff. The western shippers state that precooling and good
refrigeration practices are particularly necessary in connection with
their shipments, in order to enable them to compete in the eastern
markets with shippers more advantageously situated in relation to
those markets.
It is urged by the protestants generally that precooling is beneficial
to the carriers as well as to the shippers. Prior to its development,
about 50 percent of loss and damage claims were based on condition.
One shipper shows, for example, that its claims do not now exceed 1)
a year, as compared with approximately 1,000 to 1,500 a year prior
to the use of precooling.
The vacuum process of precooling commodities prior to loading
was not developed until 1952. Under this process the commodities
are placed in a large metal tube, after which doors at each end are
closed and a vacuum is drawn, reducing the temperature of the com-
modity to approximately 33 degrees or lower if desired. Lettuce,
strawberries, celery, artichokes, spinach, sweet corn, cabbage, and
endive can be vacuum cooled satisfactorily. The amount of bunker
ice used for commodities that are vacuum precooled is substantially
less than that for other commodities not vacuum precooled, but the rate
of ice meltage in connection with shipments thus precooled is slightly
higher than that for those accorded top or body icing.
The vacuum-precooling plants are centrally located in the heavier
shipping areas, and have rail track facilities sufficient to accommodate
from 16 to 30 or more cars, as compared with the widely scattered rail
sidings and packing sheds formerly used, which accommodated only
a few cars. This greater concentration of loading has resulted in
297 1.C.C.
4
PROPOSED INCREASED REFRIGERATION CHARGES 543
reducing the amount of switching per car previously required. All
the vegetable-growing areas of Arizona and California, where there
is substantial production of lettuce and the aforementioned commodi-
ties, are now served by vacuum-cooling facilities. Similar facilities
are being constructed to serve the shippers in the Rio Grande Valley of
Texas.
The table below is a restatement of the results of the petitioners’
cost date, adjusted as hereinbefore indicated, as to the sample section 2
shipments,
Elements Cost | Adjustment | Adjusted
cost
le $1,124,301 | $55, 091 | $1, 060, 210
salt 73, 529 . 73, 529
switching. . 135, 49 | 19, 911 | 115, S38
supervision ‘ 1M, 746 : | 150, 746
lee haulage . . . 163, SH 143, 501
Bunker damage 2, 368 ; 92, 36s
Accounting ‘ M44 3,971 | 9, 443
Hazard 5,170 5,170
Precooling . ° 9. fos 1, 368 8, 300
Total. ... ‘ . 1, 777, 146 SO, 341 1, 606, 805
Total revenues é 1, SAK, O88
Total loss ; , iditdiene 327, 837
Percent of loss. .. : . ; eect 23.9
Types of refrigerator cars and their utility —In October 1954, the
railroads had in service more than 120,000 refrigerator cars, refriger-
ated by means of ice and salt, and approximately 600 refrigerated
mechanically, with about 200 more of the latter type on order. The
mechanically refrigerated type of car was put into service originally
in February 1949. The slow augmentation of these cars has been due
to the necessarily long period of experimentation and the limited
demand for them.
The charge for a shipment transported in a mechanically refriger-
ated car generally is the same as that for standard refrigeration, ex-
cept that for frozen commodities it is 150 percent of that for standard
refrigeration, which is substantially higher than any of the charges
provided for the various modified services. The use of mechanical
cars has been limited to shipments of frozen foods and frozen fruit-
juice concentrates. From Florida, during the 1952-53 season, ap-
proximately 48 percent of the total volume of frozen-fruit concen-
trates by rail moved in mechanically refrigerated cars. The propor-
tion during the 1953-54 season through April 17, 1954, increased to
65 percent, and will increase further when more cars become available.
It is indicated that a reasonably stable temperature of zero or lower
is required to insure adequate protection of frozen concentrates in
transit, and for that reason the mechanical car is used when available.
297 L.C.C.
mee
wae
Rial. ect es
TO
SE PIRES EPO OE LEO LY ES
ba ie a
se
544 INTERSTATE COMMERCE COMMISSION REPORTS
Mechanically refrigerated trucks also provide satisfactory tempera-
tures. The minimum temperature attainable under ice and salt (50
percent salt) refrigeration is about 15° Fahrenheit. The refrigera-
tion charge is increased 50 percent when 30 percent salt is used, or to
the same level as applies on shipments in the mechanical cars. The
total transportation charge by rail, including the increase proposed
for standard refrigeration, would exceed the total transportation
charge for frozen foods by truck from Winter Haven, Fla., to numer-
ous important markets by amounts per 100 pounds ranging from 6
cents at Detroit, Mich., to 50 cents at Pittsburgh, Pa. The charge by
truck generally covers both line-haul and refrigeration services. A
substantial proportion of this traflic is moved by truck. For example,
during the period from September 1, 1952, through August 31, 1953,
approximately 39 percent of all the shipments of frozen citrus con-
centrates from Florida moved by truck. The number of mechanically
refrigerated trucks in service is being increased substantially.
It is proposed to increase the section 2 charges applicable to ship-
ments transported in mechanical refrigerator cars by 30 percent, or
the same as is proposed for those transported in the ice-refrigerated
ears. Although the cost of the mechanical cars is said to be about
double that of the ice refrigerator cars, there is no evidence of record
concerning the cost of rendering mechanical refrigeration service.
Without such information, the lawfulness of the increase proposed
cannot be determined.
Changes in packaging. —The packaging of certain vegetables is
undergoing radical changes because of consumers’ demands and the
increasing costs of wooden crates. During and since 1952, in Arizona
and California, and a year later in Texas, shippers have been chang-
ing to the use of fiberboard or cardboard cartons for packing lettuce
and polyethylene bags for carrots. The principal Arizona and Cali-
fornia producers of lettuce and carrots estimate that the use of the
described packaging will expand to about 90 and 50 percent, respec-
tively, of the total shipments of those commodities in 1954. It was
reported in The Marketing News that, up to May 7, 1954, 91 percent
of the lettuce shipped from Arizona was packed in cartons and moved
under standard, full, or half-stage refrigeration. The percentage of
such shipments from the Imperial Valley in California, up to April 2.
1954, was 83.33, and from the Salinas-Watsonville area in California
up to September 24, 1954, it was 71. Changes in packaging are being
extended also to other producing areas and to additional commodities.
The inability of the various types of tiberboard, cardboard, or plastic
packages developed, thus far, to withstand the moisture from top or
body icing necessitates the elimination of such refrigeration when
those types of packages are used. In those instances the lading is
297 1.C.C.
Oe -
Pe et eitnenitie ieee hae ae
PROPOSED INCREASED REFRIGERATION CHARGES 45
precooled by the shipper, in specially designed cooling plants, and
generally is shipped under standard refrigeration. Many of the pre-
cooling plants use the yacuum-cooling process, hereinbefore discussed.
Experiments are under way with a view to developing a container that
will withstand the moisture from ice meltage.
The expanding use of the described packaging requires greater use
of standard refrigeration. ‘The protestants point out that the greater
charge for such refrigeration results in a substantial increase in the
| per car revenue, that the required use of ice in greater volume results
in a lower unit cost of providing refrigeration service, and that the
elimination of top icing avoids damage to the floors and walls of ;
ears ordinarily caused by meltage and shifting of ice. Another indi-
cated benefit, accruing to the carriers as well as to the shippers, from
the use of such packaging is its aid in maintaining the fresh condition
of the vegetables and thus tending to stimulate the volume of sales
and in turn the volume of movement and to minimize the damage
claims,
Diesclization of motive power—Dieselization of railroad motive
power, in progress for more than a decade, has been completed
by many of the carriers, and is in varying stages of completion on
other railroads, Of the 41,604 units of motive power maintained by
all the railroads of the country in 1951, 19,014 were diesel powered
(including cliesel-electric), or approximately 45 percent of the total.
Their use over the routes over which the great bulk of the perishable
traffic moves is almost, if not already, complete. The use of diesel
power, improved rolling stock, and other operating efficiencies result-
ing in higher train speeds, have permitted substantial reductions in the
time in transit of perishable shipments to the primary markets, and
increases in the per train tonnage of as much as 40 percent in some
' instances,
Some of these improvements have been effected since 1951. For
example, in 1953 the carriers operated an expedited service from
origins in Florida to New York, N. Y., which permitted third-day
delivery, and from California to Chieago, TL, they established a sched-
ule of 62 hours. Prior to the use of diesel power the respective nor-
mal schedules were about 5 and 10 days, At present, for normal
service, guaranteed schedules of 3 and 6 days are maintained; during
1951, the guaranteed schedule from California to Chicago was 7 days.
The faster schedules permit the elimination of some icing of ship-
ments, as well as reductions in the consumption of ice en route. The
regular icing stations on several of the more important routes from
the West, aggregating 276 on August 21, 1948, had been reduced to
268 in August 1951, and to 253 in March 1934.
27 1...
b. VHA es eee let gt eT RENIN TT Te RPT YE ETRY YN tee eee a dl
~
546 INTERSTATE COMMERCE COMMISSION REPORTS
As to the operating economy of diesel-powered units, it is shown
that their national average cost per locomotive-hour in yard service
during 1948 was $5.8783, as compared with $10.5054 for steam loco-
motives, or slightly more th
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