# Appendix — Aberdeen & Rockfish R. Co. v. Students Challenging Regulatory Agency Procedures (SCRAP) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0458%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1975 - **Citation:** 422 U.S. 289 ## Text “ . SS . 4 ; a TABLE OF CONTENTS “ Page Order of the Supreme Court noting probable jurisdiction, : entered October 15, 1974 ............. cece cece cece eens 1 7 Docket entries in court below! ............0-cee eee eeeees 2 ‘ Interstate- Commerce Commission Final environmental impact statement? of Interstate Com- merce Commission, entitled Ex parte No. 281, Increased Freight Rates and Charges (Environmental Matters), Final Report, May 1, 1973, reported at 346 I.C.C. 88-277 ........ 9 Draft environmental impact statement of Interstate Com- merce Commission, issued March 5, 1973 ............+--- 200 Verified statements (V.S.) and reply verified statements ; (R.V.S.) : ; VS. No. 18, J. W. Hoeland ..............ccceccescees 421 Vie PR Fi 5 ID ini seca te ncecvescececccees 425 VB. Me. 37, A. Paul. Pemoaner ..... ccc ccc ccccces 428 V.S. No. 37, Charles L. Smith .........cccccccccccsecs 430 — V.S. No. 195, A. Paul Funkhouser .......... a sannene ee 438 2 ee eee 443 V.S. No. 203, R. D. Zuest ........... Eeucsyeasukenaues 454 VB. BRR BR, Bis Tic TIO nna cece cece viseccccns 458 V.8. No. 205, Ralph O. Foster ...........cccsccseccees 461 V.8. No. 206, J. J. Warfield .........cccccccccccees .-- 465 R.V.S. No. 17, G. J. Robinson .,..........cccceccccces 468 R.V.S. No. 24, Robert E. Parrish .............-eeeeeeee 472 R.V.S. No. 31, William J. Bolch, et al. ............000- 474 pee GS BS Re PEC ererrrTerrc Try Te 491 R.V.S. No. 39, G. J. Robingon ......... ccc pescccvnecs 494 pas & YS BAP SO | Sr eeerTe Teer T eee 506 R.V.S. No. 65, Joseph Feldman .............sceeveeeee 511 5 WV .B. Bae, FE, Ge. FT. BROWEMOO wn cee cc cn ccccsccccccns 515 R.V.S. No. 77, Edward L. Pepper ...........scccsccece 530 R.V.S. No. 80, F. Wascoe .......... (peineseeedngenbed 556 TV. Pek CS FOO. vc nasties encsesevecsnes 562 1 The opinion and judgment entered February 19, 1974, in the district court are printed as Appendices B and C to the Jurisdictional Statement. 2 The Commission’s order of May 3, 1974, discontinuing the proceeding, is printed as Appendix E to the Jurisdictional Statement. ~ Letter and attachment of Chairman Russell Train, Council on: Environmental Quality, to Chairman George Stafford, Interstate Commerce Commission, dated October 30, 1972. . Letter and attachment of Sheldon Meyers, Environmental Protection Agency, to Robert Oswald, Interstate Commerce Commission, dated October 30, 1972 .............--2005s Letter of Sidney R. Galler, Deputy Assistant Secretary of Commerce for Environmental Affairs, Department of Com- merce, to Secretary Robert L. Oswald, Interstate Commerce Commission, dated April 12, 1973 ............-.eeeeeeee Railroad respondents’ comments in support of draft environ- mental impact statement, dated Apri! 12,1973 ..........-- Comments of General Services Administration on draft en- vironmental impact statement, dated April 12, 1973 ....... Comments of Institute of Scrap Iron & Steel, Inc., in opposi- tion to draft environmental —_— statement, dated April DE FD ei ke ead cnn han nek aeeckstasaaausensrre renee Comments of Environmental Dalene Fund, National Parks and Conservation Association, and Izaak Walton League of America on draft environmental impact statement, dated April 12, 1973, with appendix .............-seeeeeeeeee Comments of S.C.R.A.P. on draft environmental impact state- ment, dated BA AGT ig go ec cnc tcsnscceccepervivecs Comments of Copperweld Steel Company on draft environ- mental impact statement, dated April 12,1973 ............ Comments of National Association of Secondary Material Industries, Inc., on draft environmental impact statement. . Letter of Wm. W. Lyons, Deputy Assistant Secretary of tlre Interior, to Robert L. Oswald, Secretary of Interstate Com- merce Commigsion, dated April 13, 1973 ...............+- Letter of Chairman Russell E. Train, Counsel on Environ- mental Quality, to Chairman George Stafford, Interstate Commerce Commission, dated April 17, 1973 ............. Letter and attachment of Sheldon Meyers, Environmental Protection Agency#to Robert L. Oswald, Interstate Com- merce Commission, dated April 19, 1973 ...............- Letter of John Quarles, Acting Deputy Administrator of En- vironmental Protection Agency, to Robert Oswald, Inter- state Commerce Commission, dated June 6, 1973 .......... Ez parte No. 270 (Sub-No. 6), Railroad Freight Rate Struc- ture, Investigation of Scrap Iron and Steel (38 Fed. Reg. 28600; Oct. 15, 1978) ....ccsscscccccsccesecccecccccecs / Page 566 571 576 580 597 705 707 716 In the Supreme Court of the Anited States Nos. 73-1966 anv 73-1971 ABERDEEN AND RockrisH RarLRoaD CoMPANY, ET AL.,\ APPELLANTS Srupents CHALLENGING RecuLatory AGENCY Procepures (S.C.R.A.P.), ET AL. ~ AND Unirep StaTEs, ET AL., Srupents CHALLENGING RecuLatory AGENCY Procepures (S.C.R.A.P.), ET aL. Appgats from the United States District Court for the District of Columbia. The statements of jurisdiction in these cases having been submitted and considered by the Court, probable jurisdic- tion is noted. The cases are consolidated and a total of one honr is allotted for oral argument. October 15, 1974 Mr. Justice Powell took no part in the consideration or decision of this order. 1972 ao nNnwnvp Docket Entries Filed complaint. Issued summons and complaint. Issued summons and complaint to involuntary plaintiff. Filed motion for appointment of special process servers; filed memorandum in support of mgtion. Filed motion and memorandum in support of motion for prelimi- nary injunction. Filed application and memorandum in support to convene a three-judge court. Issued affidavit of service on involuntary plaintiff. . Issued affidavit of service on defendant Attorney General and U.S. Attorney. Entered order appointing special process servers. Filed motion for extension of time to respond to plaintiff’s motion’; memorandum in support of motion. Filed joint motion to dismiss complaint, memorandum in support of motion and in opposition to pfeliminary injunction, notice. Filed memorandum and notice in opposition to application for three-judge court. Filed motion and memorandum in support for temporary re- straining order. Filed motion of Environmental Defense Fund, The National Rarks and Conservation Assoc. and the Izaak Walton League of America to intervene as plaintiffs, memorandum in support. Filed motion of Aberdeen and Rockfish Railroad Co. et al. to intervene as defendants. Granted motion to intervene of Aberdeen and Rockfish R.R. Granted motion of Environmental Defense Fund, the National ‘Parks and Conservation Association and the Izaak Walton League to intervene. Denied defendants’ motion to dismiss. Denied plaintiffs’ motion for temporary restraining order. Granted motion for three-judge court. Filed order denying motion to dismiss and motion for temporary restraining order. Filed motion and memorandum in support of Environmental Defense Fundy The National Parks and Conservation Assoc. and the Izaak Walton League of America to intervene as plaintiffs. Filed designation of three-judge panel. Filed motion and memorandum in support for preliminary in- junction of Environmental Defense Fund. Filed opposition to motion to dismiss complaint. Filed order granting Environmental Defense Fund, the National Parks and Conservation Association, and the Izaak Walton League of America leave to intervene. July Aug. Nov. 7 Docket Entries Filed notice to enjoin enforcement of orders of ICC regarding freight rates to be determined by three-judge court. Filed motion, affidavit and notice for consolidation with C.A. 806-72. , Filed amended complaint and memorandum in support. Filed supplemental memorandum in support of motion for pre- liminary injunction. Filed memorandum in opposition to motion to consolidate. Filed memorandums of Aberdeen and Rockfish R.R. in opposition to motion to consolidate and to motion for preliminary in- junction. Hearing begun ; concluded ; taken under advisement. Filed memorandum of points and authorities in opposition to plaintiffs’ motion to dismiss. Entered memorandum opinion and order granting plaintiffs’ motion for preliminary injunction and denying defendants’ motion to dismiss. Filed injunction. Filed motion, memorandum in support, and notice for stay pending appeal. Filed order denying application of intervening railroads and ICC for a stay of judgment pending appeal. Filed defendants’ notice of appeal to the U.S. Supreme Court. Filed certificate of mailing of notice of appeal by USA. Entered transcript of proceedings. Entered decision from the Supreme Court of U.S. dated July 19, 1972. Filed notice of appeal to Supreme Court by ICC. Filed notice of appeal to Supreme Court by intervenors. Filed motion of plaintiff for preliminary injunctior and to ex- pedite oral argument, memorandum in support. Entered ordes allowing plaintiff 10 days to file memorandum on the necessity of having expedited oral argument; continuing hearing set 11/10/72. Filed defendants’ opposition to motion for preliminary injunc- tion and for expedited oral argument. Filed plaintiffs’ memorandum regarding expedited oral argument. Filed motion and memorandum in support of intervenor plain- tiffs for leave to file amended and supplemental complaint. Filed motion of intervening plaintiffs for modification of pre- liminary injunction and clarification of jurisdiction. Filed motion of plaintiffs for expedited hearing. Filed memorandum of intervening railroads regarding request for expedited hearing. Entered order directing that ICC and intervening railroads respond to motion for preliminary injunction and motion for modification of preliminary injunction and that ICC respond 3 a” ‘Docket Entries to memorandum concerning expedited oral argument by 12-15-72. Filed memorandum and affidavits of intervening railroads re- ae Eee Filed defendants’ memorandum o/ points and suthorities in opposition to intervening plaintiff's motions to amend com-— plaint. : Filed defendants’ memorandum of points and authorities in opposition to plaintiff's motions for preliminary injunction oral argument. jurisdiction. ° Filed reply memorandum of intervening plaintiffs in re motions to file amended complaint. Filed order denying plaintiff’s motion for preliminary injunction. Filed order directing clerk to prepare and certify the record to the Supreme Court. Filed order denying motion of pltf. for preliminary injunction. Record on appeal delivered to Supreme Court. , Motion of National Association of Secondary Material Indus- tries, Inc., Commercial Metals Co., I. V. Sutphin Co. and Frankel Brothers & Co., Inc. to intervene as pitfs. Motion of defts. U.S.A. and Interstate Commerce Commission for extension of time to respond to motion of Nasmi to inter- vene ; memo. Opposition of pltfs. to motion for extension of time to respond to motion of Nasmi to intervene. Memorandum of Aberdeen and Rockfish Co. in opp. to Nasmi’s ion to intervene. Intervenpr complaint of National Association of Secondary isl Industries, Inc., Commercial Metals Co., I.V. Sutphin Co., In¢. and Frankel Brothers & Company, Ine. Order Granting motion of National Assoc. of Secondary Material Industries, Ineg Commercial Metals Co., 1.V. Sutphin Co. and Frankel Brothers & Co., Inc. to intervene as Pitfs. Motion of Institute of Scrap Iron and Steel, Inc. and Julian C. Cohen Salvage Corporation to intervene as pitfs. Motion of pltf. for preliminary injunction. Motion of pltfs. for Temporary Restraining Order. ‘ ’ Motion for Temporary ining Order heard and taken under advisement. Memorandum by defts. in opposition to interlocutory relief. Order. temporarily enjoining defts. and defts-intervenors Aber- deen & Rockfish Railroad Co. and all other railroad intervenors and each of them until further order of Court from collecting \ 4 Docket Entries \ rate increases. This Order shall apply to shipments originating after June 7, 1973 and moving under transit arrangement. Certified copy of order from the Supreme Court of the United States staying order of June 7, 1973 of the District Court pending further order of the Court. LETTER from Clerk, of Supreme Court of United States in re opinion, Judgment or mandate; Opinion attached. COPY of Letter from Cléerk of Supreme Court of the United Statés in re denial of application of SCRAP to vacate the stay. ORDER nati motion of the Institute of Serap Iron and Steel, Inc. and Julian S. Cohen Salvage Corp. to intervene as plaintiffs; directing parties to submit memoranda’ by 7-13-73. INTERVENOR complaint of Institute of Serap Iron and Steel, Ine: NOTICE of appeal by The Alerdeen and Rockfish Railroad Company to the Supreme Court of the United States. NOTICE of appeal by deft. Interstate Commerce from order of 6-7-73 to the U.S. Supreme Court. NOTICE of appeal by deft. U.S.A. for order of June 7, 1973 to the U.S. Supreme Court. AMENDMENT to the notice of appeal by defts; copies mailed ‘ to Michael’ Boudin, John F. Dienelt, and John F. Banzdolf, III. MEMORANDUM of Institute of Scrap Iron and Steel pursuant to order of court of June 27, 1973. MEMORANDUM of National Association of Secondary Ma- terial Industries, Ine. in response to court order of June 27, 1973. MEMORANDUM of pltf. in response to the court order of June 27, 1973. \ JOINT memorandum of USA and Interstate Commerce Com- mission in response to court order of June 27, 1973. STATEMENT of Environmental defense Fund respecting mo- tion for leaye to file amended and supplemental complaint. MEMORANDUM of Intervening Railroads as to the court of order of June 27, 1973., ANSWER of Intervenor Railroads to the complaint of SCRAP. ANSWER of Intervenor R.R. to the complaint of Environ- _ mental defense funds. ANSWER of Intervenor R.R. to the complaint of National Association of Secondary Material Industries; Inc. ANSWER of Intervenor R.R. to the complaint of the Institute of Scrap Iron and Steel Inc. CERTIFIED copy of Judgment from the U.S. Supreme Court that the judgment of the U.S. District Court is hereby re- versed with costs and remanded to the U.S. District Court for further proceedings in conformity with the opinion of this court. JOINT Answers of defts. to amended complaint. 5 ~ 1973 Sep. 4 MOTION of Intervenor-Pitfs. National Association of Secondary 10 14 Docket Entries Material Industries, Inc. (NASMI), Commercial Metals Co., 1.V. Sutphin Co., Inc., and Frankel Brothers & Co; Ine. for summary judgment. JOINT Motion of defts. for an extension of time in which to respond to intervenor-pltfs’ motion for summary judgment. MOTION of Intervenor-pltfs’ to expedite briefing schdule and hearing on motion for summary judgment. MEMORANDUM of the intervening railroads respecting briefing and hearing schedule. MOTION of pltf. intervenors, Institute of Scrap Iron and Steel, Inc. and Julian C. Cohen Salvage Corp. for summary judg- ment. STATUS Hearing ORDER denying the motion of Environmental Defense Fund to file an Amended & Supplemental Complaint; further order that the Environmental Defense Fund shall have until Sept. 24, 1973 to file a motion for summary judgment. MOTION of Guy Vander Jagt, Member of Congress, for leave to file brief Amicus Curiae. ; MOTION of Environmental. Defense Fund for summary judg- ment ; statement of material facts. MOTION of pltf for summary judgment. JOINT motion of defts for summary judgment. MEMORANDUM of intervening railroads in opposition to motions of pltf and intervening pltfs for summary judgment. LETTER FROM the counsel for defts in re corrected page 12a of memorandum in support of motion for summary judgment; attachment. STATEMENT by pltff. intervenors in opposition to joint mo, tion of the United States of America and Interstate Commerce Commission for summary judgment. ° : ORIGINAL Affidavit of Roger F. Scanlan, Consultant Penn Central Transportation Company. ‘ORIGINAL Affidavit of Norman M. Lorentzsen. INTERVENOR-Plaintiff NASMI’S reply to defts’ memoranda in opposition to pltfs’ motions for summary judgment, and in opposition 'to gefts’ motion’ for summary judgment. MOTION of Intervenor-pltfs. Nasmi, et. al. for leave to submit _ their motion for summary judgment on the papers filed. ~ LETTER from E. Bruce Butler in re certified record of the proceedings before the Interstate Commerce Commission with attachments. CROSS-Motion for summary judgment heard and taken under advisement. EXHIBITS D & E. SUPPLEMENTAL reply of intervenors NASMI’S. ORDER directing the parties to file certain memoranda by 11-22-73. : : ; | ; 6 ) 1973 Nov. 20 1974 Feb. 19 Apr. 19 19 19 June 14 Docket Entries WITHDRAWAL of appearance of John F. Dienelt as attorney for pltf. intervenor Environmental Defense Fund; enter ap- pearance of Jacqueline M. Warren. STATEMENT by defts. #1 & 2 to the court; appendix A. MEMORANDUM of the Institute of Serap Iron and Steel, Ine. to Court’s order of November 15, 1973; administrative record summary. .COMMISSION actions in ex parte No. 281 by deft. #2. CERTIRJED copy of order from the Supreme Court of the United States that the Judgment in these causes be, and the same is hereby vacated with costs; and that these causes be remanded to the United States District Court for further consideration in light of Atchison, Topeka and Santa Fe Rail- way Co. v. Wichita Board of trade, 412 U.S. 800 (1973) and it is further ordered that Aberdeen and Rockfish Railroad Company, et al recover from S.C.R.A.P. One Hundred Dollars’ ($100) for their costs herein expended. MEMORANDUM Opinion vacating orders of 10/4/72 and 5/2/73. JUDGMENT vacating orders of 10/4/72 and 5/2/73 in ex parte 281; remanding case for further proceedings. NOTICE of appeal by Interstate Commerce Commission to the Supreme Court from opinion and judgment of 2/19/74. NOTICE of Cross-appeal to the Supreme Court of the United States by Institute of Scrap Iron and onl, Ine. Deposit $5.00 by Boggs. NOTICE of cross-appeal to the Supreme mee of the United States by Environmental Defense Fund. Deposit by Hellegers $5.00. APPEARANCE of John F. Hellegers entered as counsel for Environmental Defense Fund. NOTICE of appeal to the Supreme Court of the United States from order of 2/19/74 by the National Association of See- ondary Material Industries, Inc. now known as the National Association of Recyeling Industries, Inc. Deposit by Merrigan $5.00. NOTICE of appeal to the Supreme Court of the United States from order of 2/19/74 by the Aberdeen and Rockfish Railroad Company and other carriers listed on attached notice. Deposit $5.00 by Horsky. NOTICE of appeal to the Supreme Court of the United States by United States of America from order of 2/19/74. No fee- Govt. MOTION by pitf., Environmental Defense Fund to dismiss its cross appeal to the Supreme Court of the United States from the judgment of February 19, 1974. 7 2 ley > Docket Entries 1974 June 28 MOTION by Institute of Scrap Iron and Steel, Inc, to dismiss cross appeal and the appeal of the National Association of Secondary Material Industries, Inc. July 3 ORDER granting motion of the Institute of Scrap Iron and Steele, Inc. and the National Association of Recycling Indus- tries, Inc. to dismiss their cross-appeal. ice 30720 INTERSTATE COMMERCE COMMISSION Ex ParTE No. 281 INCREASED FREIGHT RATES AND CHARGES, 1972 (ENVIRONMENTAL MATTERS ) 88 INTERSTATE COMMERCE COMMISSION REPORTS Ex ParTE No. 281 INCREASED FREIGHT RATES AND CHARGES, 1972 (ENVIRONMENTAL MATTERS) y Decided May !, 1973 On further proceedings, the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) construed and applied, and a final environmental impact statement issued. Upon consideration of the prior report in this proceeding (341 1.C.C. 288), of certain selective increases in rail freight rates and charges on the movements of commodities being transported for the purposes of recycling (which increases were found in the prior report to be just, reasonable, and otherwise lawful), of the draft environmental impact statement dated March 5, 1973, and the comments thereon, and the quantifiable and other effects of such increases upon the quality of our human environment, found: a. That such selective rail freight rate increases, when considered in the light of historic and prevailing rate relationships, transport patterns, and the infinite variety of.technological and other variables discussed in this report, are not likely to have a significant impact upon the movement of the involved traffic by rail. b. That any probable adverse environmental effects which cannot be avoided, when balanced against other stated public policy purposes, the lack of probability that the proposed rail rate increases will have a material adverse environmental effect, and the environmental benefits to be ensured by the maintenance of an efficient and reliable railroad system, are not significant. c. That upon a rigorous exploration and objective evaluation of possible alternatives. ~ the proposed action found to have less detrimental effects upon the environment than other reasonable and practicable alternatives. d. That future generations will be assured of the availability of an efficient railroad system and its inherent environmental advantages, and that there is no potentially significant short-term effect upon the quality of the human environment because the movements of secondary commodities will not be significantly deterred and such traffic will not be diverted from the railroads. > e. That there are likely to be no irreversible and irretrievable commitments of resources. Appearances as noted in the prior report, and, in addition: Russell E. Train for the Council on Environmental Quality. Sheldon Meyers for the United States Environmental Protection Agency. W. W. Lyons for the United States Department of the Interior. 346 LCC. 10 INCREASED FREIGHT RATES AND CHARGES, 1972 89 M.S. Meeker, Leonard A. Salters, and Arthur F. Sampson for the General Services Administration of the United States. Irving M. J. Kaplan, Edward L. Merrigan, and Peter H. Meyers for protestants. 47 FINAL REPORT OF THE COMMISSION ON FURTHER PROCEEDINGS By THE COMMISSION: This report represents, in accordance with the National ‘Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 er seq., our final statement as to the environmental effects of these increases in the railroad freight rates and charges on movements of commodities being transported for the purposes of recycling found in our prior report and order (341 I.C.C. 288) to be just, reasonable, and otherwise lawful. BACKGROUND This investigation into the adequacy of nationwide railroad freight rates and charges was instituted, following the filing of petitions by certain railroads and connecting water and motor carriers, by report and orders of this Commission entered December 21, 1971 (340 1.C.C. 358). It was noted in that report, which also denied petitioners’ request for authority to establish an interim surcharge on certain bills for freight charges on less than statutory notice, ‘that the carriers had failed to submit a statement with their petitions regarding the environnrental impact of their Proposal as contemplated by the NEPA. We directed the petitioners to file and serve an environmental impact statement within 10 days from the date of service of those orders, and they responded on January 3, 1972. Our December report and orders were served on all parties to Ex Parte Nos. 265 and 267, Increased Freight Rates, 1970 and 1971. 339 1.C.C. 125 (1971),' and on all known consumer and environmental interests. The orders also were published in the Federal Register. As a consequence, all persons interested in the This included service on Students Challenging Regulatory Agency Procedures (S.C_R.A P.) One of that group's principal arguments, before this Commission as well as in the U.S. District Court for the District of Columbia (Students Challenging Regulatory Aeency Procedures (S.C.R.A.P.dand Council on Environmental Quality v. United States of America and the Interstate Commerce Commission, 340 F. Supp. 189 (D.D.C. 1972). reterred to later in this report) had been that the increases violated the terms of the NEPA and were. theretore. tvalid. S.C RAP. also argued that this Commission should order a refund of moneys paid under these invalid rates. and “suspend consideration of any additional or turther requests for freight rate increases by the Nation's railroads. pending a hearing” on S-C_R-A Pos contention 346 L.C.C. il 90 INTERSTATE COMMERCE COMMISSION REPORTS environmental issues have received due notice of our intention to consider such issues and have been accorded every opportunity to participate at all stages of this proceeding. By order entered February 1, 1972, it was found that approval of the request by the Nation’s railroads.to impose a 2.5 percent emergency surcharge on all freight shipments beginning February S, 1972,* would appear to have no significant effect either on the’ movement of traffic by rail or on the quality of the human environment within the meaning of the NEPA. In approving that temporary increase (then conditioned to expire on June 5, 1972), it was further concluded, among other things, that the railroads have a critical need for additional revenue to offset, in part, recently incurred increases in their operating costs. By order dated March 1, 1972, and served March 6, 1972, a draft environmental impact statement (a copy of which is reproduced as appendix C to the report entered September 27, 1972, Increased Freight Rates and Charges, 1972, 341 I.C.C. 288, at 551), was served on all parties to this proceeding and on other governmental agencies [including the Council on Environmental Quality (CEQ), Environmental Protection Agency (EPA), and the Office of Environmental and Urban Systems, Department of Transportation ] which might have an interest in that matter. Thereafter, the United States District Court for the District of Columbia enjoined the collection of the 2.5 percent interim surcharge on goods being transported for purposes of recycling after July 15, 1972, because it found that in declining to suspend the temporary surcharge this Commission had failed to give adequate consideration to the environmental amenities.* That statement, it bears noting here, . recognized that additional evidence would be needed for @ more complete assessment of the potential environmental impact of the selective freight rate increases under consideration. In the report of September 27, 1972, Increased Freight Rates and Charges, 1972, There had carlier been denied, by order entered January 7, 1972. a petition filed December 20. 1971, by S.C.R.A.P.. seeking a 2-week extension of time beyond January 20, 1972. for filing protests against the proposed surcharge and an additional 2-week extension of the date (February \ §, 1972) on which such surcharge was to become effective. ‘$.C.R.A.P. y. United States, supra. On July 19, 1972, in Aberdeen R. Co. v. S.C.R.A.P.. 409 U.S. 1207. 93 S.C. 1 (1972). Chief Justice Burger. acting as Circuit Justice for the District of Columbia Circuit, denied an application for a stay of the District Court's judgment pending appeal. While expressing grave reservations regarding the decision of the lower court he concluded that, on balance. the District Court did not abuse its discretion in deciding “that there was danger to the environment outweighing the loss of income and consequent financial threat to the railroads.” This matter is now on appeal to the Supreme Court which has heard arguments in the matter. 346 1.C.C. C—O OO EEE INCREASED FREIGHT RATES AND CHARGES, 1972 - 91 , supra, it was stated that, based on an analysis of the increases Proposed within particular commodity groups and of recent general increases in railroad freight rates and charges, our authorizations would not substantially affect the use, consumption, or shipping of secondary materials, and that the increases at the levels authorized would neither actually nor potentially significantly affect the quality of our human environment. It was concluded that a likely result of the overall limitation and the specific holddowns otherwise found to be just and reasonable might be to encourage the movement of recyclable commodities. "As the environmental issues had been considered fully, no formal impact statement was thought necessary. Petitions‘ were filed objecting to the decision not to issue a formal impact statement and seeking reconsideration of the discussion of the environmental impact of increased rail rates and charges on the movements of commodities being transported for the purposes of recycling. By order of November 7, 1972, this Proceeding was reopened in order further to evaluate the environmental effects of increased railroad freight rates and charges on the’ movements of commodities being transported for the purpases of recycling as defined in paragraph (m) to the General Exceptions to the Tariff of Increased Rates and Charges X-281-B.5 ‘Petitions were: filed individually by S.C.R.A.P.. CEQ. EPA. the Institute of Scrap Iron and Stecl. Inc.. National Association of Secondary Materials Industries, Inc. (NASMI). Northwestern Steel and Wire Company. Copperweld Stec! Company. and the Environmental Defense Fund (EDF). That definition reads as follows: Secondary Materials listed below (being transported for Purposes of recycling) Recycling for purposes of this tariff shall mean Processing of waste. Le.. any product which has been or would ordinarily be discarded as worthless. defective or of no use. and the Processing of such commodity transported in order to Produce a commodity of the same kind as the commodity transported or to Produce a previous state of the commodity transported A certification by the Consignor must appear on the Bill of Lading as follows: “The increases published in Ex Parte 281 do not apply because the involved goods are being transported for purposes of recycling in a movement from to 22 941 Textile Waste garneted or 33 312) Copper matte. speiss of flue dust. Processed, 22 973 15 Noils. ramie. 33 322 Lead matte. Speiss or flue dust 22 973 25 Noils (combings or comber — 33-332 Zinc dross. residues. ashes. waste), cotton. thru 33 342 Aluminum residues. 22 973 68 Rovings. jute and istle (ixtle). 33 398 Miscellaneous Nonferrous metal : residues. 32 299 24 Cullet (broken glass). 40 1 Ashes. 33 119 Blast furnance or coke oven 49 2 Waste or Scrap. products, nec. (footnote continued on next page) 346 L.C.C. 13 92 INTERSTATE COMMERCE COMMISSION REPORTS The United States District Court for the District of Columbia by order filed January 9, 1973, declined to enjoin preliminarily the increases we approved on commodities other than those being transported for the purposes of recycling. The court stated that its decision was influenced, in part, by the substantial and irreparable harm to the Nation’s railroads that such an injunction might cause. The draft impact statement dated March 5, 1973, reflected a good faith effort to satisfy fully the requirements of NEPA. It was believed that every reasonable and practicable method of examination that could be accomplished within the time and many other constraints imposed upon this Commission by statute and otherwise, had been exhausted so as to assure concerned citizens that all issues were carefully and thoroughly considered. Yet again, we have scrutinized the record in this proceeding, including the environmental representations which are summarized in appendix D to the prior report herein. The statement of facts in that report, which was based upon a full and fair hearing, has not been challenged. It is hereby incorporated by reference in this report, and we shall repeat only such facts as are necessary for clarity of the discussion below. In addition, all available literature on this subject has been carefully studied. Attached as appendix A hereto is a list of such material. To satisfy ourselves as to the thoroughness of this research, this bibliography was submitted to the railroads and to each of the petitioners named in footnote 4, supra, with the understanding that they would notify us as to any other relevant data of which they were aware.® In addition, our staff contacted knowledgeable individuals in this subject area in person, by mail, and by telephone in order to assure full compliance with the NEPA require ments. In the comprehensive draft environmental impact statement, released March 13, 1973, it was concluded that the selective freight (footnote 5 continued) : The STCC Numbers referred to shall also embrace all articles assigned additional digits listed thereunder. This exception shall not applygéto goods that are being processed solely by reasons of contamination or defect in grade or quality, nor to byproducts having a commercial market. This exception is published solely in compliance with preliminary injunction issued on July 10. 1972, by the United States Distret Court for the District of Columbia in Civil Action No, 971-72, S.C.R.A.P. versus United Siates. "Responses were received from the railroad respondents, the Institute of Scrap Iron and Steel. Inc.. NASMI. S.C.R.A.P., EPA. Copperweld. and EDF. Additional pertinent source materials _ were presented by each with the exceptions of $.C.R.A.P. and EDF. This additional material has been considered and identified in the “Supplementary Bibliography” in appendix A. Although the response of NASMI to our bibliography was fully considered, we inadvertently omitted any reference to the said response in our draft impact statement. 346 L.C.C. 14 INCREASED FREIGHT RATES AND CHARGES, 1972 93 ie rate increases approved in this proceeding as to commodities moving for the purposes of recycling would not have a significant adverse impact upon the quality of the human environment. It was found that any environmental costs which may result from that action would be outweighed by the economic benefits derived by the railroads, and the resultant quality of rail service that such benefits would ensure. Interested persons were requested to submit their views concerning the draft impact statement within 30 days of the date of service thereof. Comments have been filed individually by S.C.R.A.P., the Institute of Scrap Iron and Steel, Inc., General Services Administration of the United States, NASMI, Copperweld, United States Department of the Interior, United States Department of Commerce, EPA, and CEQ, and jointly by EDF, National Parks and Conservation Association, and Izaak Walton League of America, and the rajlroad respondents. These comments have been summarized and are attached as appendix D to this statement. In general, the Institute, S.C.R.A.P., and Commerce contend that the draft impact statement was written to support our prior conclusions and not to inform the public. EDF, NASMI, and the Institute assert that additional environmental hearings are required, as is the cross-examination of this Commission's staff members that participated in the drafting of the prior impact statement, and that the instant report should be a second draft impact statement to which the parties herein may comment. Certain parties seek our consideration of alterratives such as the deregulation of the transportation of recyclables (GSA), the increasing of rates on primary commodities (EDF et al.), and the deregulation of motor carriage (EDF et al.). S.C.R.A.P., EDF et al., and CEQ request that increases on the rates of recyclables be postponed until the conclusion of our review in Ex Parte No. 270, of the validity of the existing rate structure. Interior and Commerce seek clarification of the issue of elasticity of demand, while EPA avers that basic economics dictate that some decreases in recycling will result because of the proposed increases in freight rates for secondary materials. In their comments on our draft impact statement, certain parties have referred to specific literature not previously brought to our attention--S-€.R.A.P. suggests that we consider an EPA Report to Congress on Resources Recovery dated February 22, 1973. We are not aware of the existence of such a report and EPA’s Office of Federal Activities, after inquiries with EPA’s Office of Solid Waste Management, has disavowed the existence of such a report. 346 L.C.C. 15 Be os 94 INTERSTATE COMMERCE COMMISSION REPORTS NASMI takes the position that the draft impact statement in this ~ proceeding differs from the position taken by the Federal Maritime Commission which, in draft impact statements issued by it, allegedly has stated that transportation rates may preclude recycling. It appears, however, that FMC has never found that transportation rates do inhibit recycling, but merely seeks in its draft statements to outline all possible issues in a particular proceeding including the possible effects of increased rates on recycling. FMC’s approach concerning the relationship between recycling and transportation rates is, therefore, not contradictory to that reached herein. NASMI’s further complaint that the draft impact statement overlooked a report issued by the National League of Cities and the United States Conference of Mayors on March 22, 1973, entitled “Cities and the Nation’s Disposal Crises” is not well taken. The findings of a report issued over 2 weeks after the draft impact statements were adopted, plainly could not have been incorporated in that statement. The draft environmental impact statement was complete when issued and is not deficient either because it did not embody reports which wete not available or because it is said to be in conflict with “non-decisions” by our sister agency, FMC. The report referred to by NASMI was written by urban groups, and the validity of its undocumented conclusions regarding freight rates and recyclables is open to substantial doubt as demonstrated in the instant statement. EDF et al., refer to a Ph. D. dissertation by James Sawyer entitled A Regional Analysis of the Automobile Scrap Processing Sector of the Economy and to a linear programming model, created by Clifford Russell, of steel producing firms which have some choice of processing and can choose between inputs of scrap or virgin material. These theses represent price-sensitivity studies indicating reasons for fluctuations in scrap prices. We believe that such price fluctuations. and the elements generating them have been fully recognized in the instant report and that these studies would shed no new light upon this subject. We offer one further“comment before discussing the involved issues. Much of the criticism that has been leveled at us in this area may be described as one dimensional. Those critical of our actions in this proceeding generally advance only environmental issues; to them, nothing more seems to exist. We are not, however, a one- dimensional agency, and the NEPA is not a one-dimensional statute. The NEPA recognizes that existing agencies have other respon- sibilities and expects such agencies to incorporate environmental 346 1.C.C. 16 Be _— _—: Ee INCREASED FREIGHT RATES AND CHARGES, 1972 95 considerations into their present decisionmaking formulas. Throughout this proceeding we have endeavored to consider all significant environmental factors, long range as well as short term, local as well as national, direct as well as indirect, but we have not lost sight of our other responsibilities. Our views continue to be best summed up in the following statement issued by this Commis- sion in December 1970: We share the rising public concern with our environment and with the deterioration of our natural surroundings caused by pollution and by the misuse and depletion of our land and natural resources. We do so first as proud citizens of an involved community and secondly, as Commissioners charged by the people of the United States, acting through their President and Congress, with the regulation of this Nation's surface transportation system in the public interest. Transportation of “Waste” Products for Reuse, 114 M.C.C. 92, 121. Our determination to participate fully in the Nation's effort to stem the pollution of its environment and the depletion of its resources was further evidenced in Ex Parte No. 55 (Sub-No. 4), Implementation of Public Law 91-190, National Environmental Policy Act of 1969 and Related Requirements. The order announcing the institution of that rulemaking proceeding, entered April 16, 1971 (339 L-C.C. at 511), made it clear that: This Commission must and will implement the directives of the NEPA and related , pronouncements. We must and will investigate the methods of meeting these statutory directives to create a more meaningful relationship between this Commission's regulatory responsibilities and the Nation's battle to save the environment. Our environmental procedural rules, closely reflecting the guidelines enunciated by CEQ, as well as the ruling in Calvert Cliffs’ Coordinating Committee v. U. S. Atomic Energy Commission, 449. F. .2d 1109 (D.C. Cir. 1971), decided in the interim, were promulgated by order of January 14, 1972 (340 I.C.C. 431), and became effective shortly thereafter. With this background in mind, we shall turn now to the specific environmental questions here at issue. PRELIMINARY DISCUSSION Pollution threatens our existence. We believe that any plan to protect our surroundings must receive the cooperation of Government, industry, and the public. The environment, however, does not exist in a vacuum. It affects and is in turn affected by many 346 L.C.C. 17 96 INTERSTATE COMMERCE COMMISSION REPORTS other facets of our lives! To examine and deal with the environment without considering these other factors would be like a doctor examining and treating a patient’s heart without regard to the reaction of the remainder of his body. The doctor may cure the heart ailment, but lose the patient. For example, the Department of Interior claims in its poststatement comments that consideration of freight rate data is not appropriate in an impact statement. It believes that we should only assess the effects of the proposed action on the environment. We fear that such an approach to, this proceeding would bar an effective evaluation of the full scope of environmental effects as intended by the NEPA. , Some of the parties to this proceeding, in our judgment, have failed to take a‘practical view of the total problems here involved. Instead, those parties plainly advance their own individual (and, in certain instances, economic) interests. They do not seek to balance interests, but rather to exclude opposing interests. To illustrate, the submitting railroads contend that they should not be required to finance industrial ecological programs through the maintenance, of © unduly low freight rates; the shipping interests request that their products not be subjected to the proposed rate increases or that those products should be subject to certain holddowns,; certain of the environmentalists maintain that rates;on secondary materials) (which assertedly should move in greater volumes for recycling purposes) ought to be preserved and protected (if not lowered) at all costs; and the governmental interests together with the private environmental sector seek to demonstrate that this Commission should investigate environmental matters and effects more extensively with our own resources. It is such one-dimensional approaches as these that we are knowingly seeking to avoid. The NEPA 142 U.S.C. 4331(b)] itself requires us “to use all practicable means, consistent with other, essential considerations of national policy, *** to the end that the Nation may *** [as here particularly pertinent] enhance the quality of renewable resources and approach the maximum attainable recycling of depletable resources.’ As Chief Justice Burges stated in Aberdeen R. Co. v. S.C.R.A.P., supra: Our society and its governmental instrumentalities having been less than alert to the needs of our environment for generations, have now taken protective steps. These developments, however praiseworthy, should not lead courts to exercise equitable powers loosely or casually, whenever a claim of ‘environmental damage’ is asserted. The world must go on and new environmental legislation must be carefully meshed with more traditional patterns of federal regulation. The decisional process *** is one of balancing and it is often a most difficult task. 346 LC.C. 18 > ‘ INCREASED FREIGHT RATES AND CHARGES, 1972 | 97 \e It is our responsibility to balance fully, and without tipping the scales in favor of any single factor, the costs and benefits of our actions and any reasonable alternatives that may be presented. We trust that this impact statement accords appropriate weight to economic and social considerations in addition to that which might be given environmental matters. It further should be noted that many persons participating in this proceeding seem to have ‘adopted the position that, if a problem is incapable of a definite or mathematically precise solution, then it can best be solved by a large quantum of detailed evidence and statistics. This position, characterized by some as the “Dwarfing of Soft Variables Syndrome,” is a familiar one: if you can’t count it, it doesn’t exist. But no absolute or mathematically conclusive method of balancing the environmental, economic, and social values ‘involved in a general rail freight increase proceeding currently exists. Instead, there are present a wide variety of unquantifiable factors which this Commission must bring to bear in such decision- making matters and which under the law, can be brought to. bear only by this Commission, because of our expertise in surface trans-. portation recognized by the Congress and the judiciary. We admit, of course, that readily quantifiable factors are easier to process—and hence ‘more likely to be recognized and then reflected in the outcome—than are those that resist quantification. Nevertheless, the result, despite what turns out to be a spurious appearance of accuracy and completeness, is likely to be significantly warped and hence highly suspect. In our attempt, therefore, to analyze the probable results of any action we take in this proceeding upon the quality of our human environment, we have carefully examined the evidence of’record, applied our expertise in surface transportation, and utilized to the fullest extent possible all available expertise in the ecological, economic, and social areas. It is the purpose of the NEPA to have Federal agencies such as this Commission, in cooperation with State and local, governments and other public and private organizations, use all practicable means and measures to create and maintain conditions under which man and nature can exist in productive harmony. To this end, section 102 of the NEPA spect nay requires om, to the fullest extent possible, we shall—_ (B) identify and develop methods and procedures, in consultation with the Council on Environmental Quality ***, ‘which will insure that presently unquantified Tribe. Trial by Mathematics, 84 Harv. L. Rev. 329 (1972). 346 I.C.C. 19 98 INTERSTATE COMMERCE COMMISSION REPORTS environmental amenities and values may be given appropriate consideration in decision making along with economic and technical consideration, (C) include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on— (i). the environmental impact of the proposed action, (ii) any adverse environmental effects which cannot be avoided should the proposal be implemented, , ( _ Gi) alternatives to the proposed action, (iv) the relationship between local shor{-term uses of man’s environment and the maintenance and enhancement of long-term productivity, and “~(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented. Prior to making any detailed statement, the responsible Federal official shall consult with and obsain the comments of any Federal agency which has jurisdiction by : law or special expertise with respect to any environmental impact involved. Copies of such statement and the comments and views of the appropriate Federal, State and local agencies, which are authorized to develop and enforce environmental standards, shall be made available to the President, the Council on Environmental Quality, and to the public as pravided by section 552 of Title 5, United States Code, and shall accdmpany the proposal through the existing agency review processes,*** The NEPA section 102 impact statement is intended as a device to assure that Federal agencies investigate and give weight to any significant environment effects caused by action which they take, to require the development of less damaging alternatives, and to assure that those effects are made known to the public before the action is undertaken. The guidelines of the Council on Environmental Quality, reproduced in appendix A to our report in Implementation—Natl. Environmental Policy A ct, }969-supra, seek to coordinate the efforts of Government agencies and to allow Federal agencies to assess in detail the potential environmental impact of a considered course of action in order that adverse effects may be avoided, ‘and the environmental quality restored or enhanced, to the fullest extent practicable. In this spirit, we shall proceed next to an analysis of the five separate criteria eae in section 102(C) of the NEPA as quoted above. The Council on Environmental Quality in its guidelines and subsequent memoranda states that Federal agencies must consider _ the probable impact of the proposed action on the environment, including the impact on ecological systems such as wildlife, fish, and marine life. Both primary and secondary significant consequences for the environment should be included in the analysis. We are also ; . 346 LC.C. INCREASED FREIGHT RATES AND CHARGES, 1972 99 directed to consider any probable adverse environmental effects which cannot be avoided, such as water or air pollution, undesirable land use patterns, damage to life systems, urban congestion, threats to health, or other consequences adverse to the environmental goals set forth in section 101(b) of the NEPA. In addition, all alternatives to major proposed actions must be evaluated even though this may lead to a consideration of effects and options outside this agency's actual control. Cf. NRDC v. Morton, 458 F. 2d 827 (C.A.D.C. 1972). That court concluded that a full discussion of such alternatives is required in order to reach the decision at hand as well as to inform the public of the issues and to guide the decisions of the President and Congress, but that a detailed discussion is not required of alternatives that are deemed only remote and speculative possibilities. The agency, according to the Morton court, need not indulge in “crystal ball inquiry” in assessing the effects of alternatives, but will have taken the “hard look” required by NEPA if it has discussed the reasonably foreseeable effects with a _ thoroughness commensurate with their severity and the significance of the action. In accordance with the NEPA we must fully consider the relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity. This in essence requires this Commission to assess the proposed action for its cumulative and long-term effects from the perspective that each generation is trustee of the environment for succeeding generations. We are also directed by the NEPA to consider any irreversible and irretrievable commitments of resources that would be involved in the proposed action should it be implemented. This requires us to identify the extent to which the considered action curtails the range of beneficial uses of the environment. It probably would not be possible for us to issue separate environment impact statements for each specific commodity which has been classified as recyclable in this proceeding. Therefore, we have analyzed the overall environmental effects of the proposed rates increases on all recyclables as a class, separately on cight commodity groups of recyclables, and on certain selected and representative commodities individually. We believe that this approach is administratively efficient and practical, and that this Commission has met its expansive obligations pursuant to the NEPA. 346 LC.C. 100 INTERSTATE COMMERCE COMMISSION REPORTS POSTSTATEMENT COMMENTS RELATING TO PROCEDURAL AND RELATED MATTERS It appears that a substantial difference of opinion has developed among the parties as to the procedures that have been followed in this proceeding even though most such parties challenge the completeness, accuracy, and objectivity of the matters set forth in the draft environmental impact statement. Thus, S.C.R.A.P. complains that the burden of proof in this proceeding has been improperly placed upon those parties (other than the railroads) advocating holddowns or other similar action as to rail freight rates or commodities being transported for the purposes of recycling. Other parties, best exemplified by EDF et al., contend that this Commission must develop more adequate, objective, and systematic data in order to justify the proposed freight rate increases as to recyclable materials, and the draft impact statement wrongfully attempts merely to weigh the arguments and evidence advanced by the parties to this proceeding, rather than comprising the independent and searching inquiry and analysis mandated by the NEPA. On the other hand, the Institute avers that this Commission apparently has assumed the position of a proponent in this proceeding in contrast to its proper role as regulator. The Institute objects to the reliance placed in the drafe’statement upon what it characterizes as extra-record material which has not been tested by cross-examination. $.C.R.A.P. and the Department of Commerce state that they believe the draft impact statement was written to support the prior conclusions of this Commission and not to inform © the public. We strongly reject the validity of all of these assertions. This Commissicn is required by the NEPA to _ investigate, evaluate, and report the probable environmental impact of our major proposed action. In S.C.R.A.P., supra, this Commission was informed that it may not sit as an arbitrator of the facts, but must develop a sufficient record on which to base its environmental determinations. We have done so in this proceeding. Contrary to S.C.R.A.P.’s contention, *the burden of proof in this proceeding has never been placed upon the environmentalists. Certainly, S.C.R.A.P. presented no relevant or probative data upon which an intelligent decision in this matter could possibly be based. Instead, we have attempted to research all available literature and have contacted .governmental and private industry environmental ex- perts in order to develop the complete record found herein. We 346 L.C.C. 22 INCREASED FREIGHT RATES AND CHARGES, 1972 101 are not content to sit back and simply weigh the evidence of record because the parties to this proceeding have failed properly to develop the environmental data) Our present conclusion that the proposed action is not likely to significantly affect the quality of the human environment is predicated upon the extensive record developed in this rulemaking proceeding preceding our prior report (341 I.C.C. 288), the expenditure of many man-hours of research and study, and the application of our historical expertise in trans- portation generally and ratemaking in particular. The parties to this proceeding, which lack both expertise in transportation and Supporting research data relating to recycling, aver that the evidence has not been objectively weighed. As can be seen by the discussions later in this statement, the data we have developed were properly considered and logically lead to the conclusions reached herein. EDF et al., propose what they consider to be a more systematic and objective approach to resolving these issues. They do not, however, explain or even intimate the length of time that such a four-step procedure would consume, nor whether that procedure could have been completed during the Statutory time period within which we must act in suspension proceedings. We have examined the railroad rate structure and the effect of the increased rates and charges upon recyclable commodities and that we have done so differently than some of the parties (such as EDF or the academicians they have employed) would have, does not render our effort suspect. In an area as imprecise, ephemeral, and subjective as the effect of rate increases on the use of secondary materials, there are bound to be disagreements about how best to make the requisite environmental assessments. Each method has advantages and disadvantages, and the selection of one in no way denies the appropriateness of another. Thus, no matter how we might have approached our task, a dissatisfied party might have said our evaluation was inadequate, and that another method would have permitted a more meaningful determination. EDF et al., acknowledge that their four-step procedure is “formidable” and in any event would not be productive of “absolute accuracy.” That we elected a different course does not render our analysis any the less objective or systematic. EDF et al., NASMI, and the Institute assert that this statement Should be issued as a second draft impact statement, that additional hearings should be scheduled on the environmental issues, and that 346 LCC. 23 ; a 102 INTERSTATE COMMERCE COMMISSION REPORTS our staff members who participated in the preparation of this report should be made available for cross-examination. Oral hearings have been held in this proceeding, and the parties have had an opportunity to present environmental data at oral argument, in petitions for reconsideration, in responses to the bibliography herein, and in commenting upon our draft statement. We see no benefit to be derived by allowing further hearings in this proceeding even if (as we doubt) those hearings could be completed within the statutory suspension period. The procedure is in keeping with the requirements of both the Administrative Procedure Act (5 U.S.C. 553) and the Interstate Commerce Act. The present environmental record has been developed in substantial part by our own independent efforts and there appears no reasonable basis for now concluding that the parties can make any further rational contribution to that record. This report will be a final report. The suspension period for the involved rates terminates June 7, 1973, and we have no statutory authority unilaterally to extend that deadline. For this reason, we cannot continuously issue draft statements and prolong a final result in this matter. A proceeding must have a termination. It certainly was not the purpose or function of the NEPA to extend proceedings endlessly to the economic benefit of certain of the complaining parties. The record in this proceeding is complete and further public procedures herein would be impracticable, unnecessary, and contrary to the public interest. In regard to the requests for cross-examination of our staff, the draft impact statement was a part of a report of this Commission and is the subject of administrative and judicial appeals in the same manner as any other report of this Commission. ASSERTED DISCRIMINATION IN THE RATE STRUCTURE It is contended that our approval of increased rail rates and charges on commodities moving for recycling purposes will serve to aggrevate discrimin already allegedly in the railroad freight rate structure, to he dete recyclable commodities and the national recycling effort. Chairman Russell B. Train of CEQ, for example, has conveyed to us his belief that “several rail haul cost biases currently exist,” and certain of the parties herein aver that discriminatory railroad rates and charges impede the movement of waste materials and favor the transportation of primary materials with “obvious” adverse consequences to the environment. 346 1.C.C. 24 as INCREASED FREIGHT RATES AND CHARGES, 1972 103 As recently as the last railroad general rate proceeding, we pointed out that such a case does not provide an appropriate vehicle for examining these issues. Increased Freight Rates, 1970 and 1971, 339 L.C.C. 125, 189 (1971). Thus, we do not attempt to determine whether the particular rates which result from the increases are maximum reasonable rates, nor does the order constitute a prescription of rates within the meaning of the decision in Arizona Grocery Co. v. Atchison, T. & S. F. Ry. Co., 284 U.S. 370. If individual rates or groups of rates are believed to be unjust and unreasonable, a shipper or other interested persons has an administrative remedy available in sections 13 and 15 of the Interstate Commerce Act, 49 U.S.C. §§13 and IS. General revenue proceedings are inappropriate forums for litigating such issues. “Electronic Industries Assn. v. United States, 310 F. Supp. 1286, 1289 (D. D.C. 1970), affirmed mem., 401 U.S. 967 (1971 ); Alabama Power Co. v. United States, 11 F. Supp. 337, 338 (D. D.C. 1069), affirmed by a divided court, 400 U.S. 73 (1970); Algoma Coke & Coal Co. v. United States, 11 F. Supp. 487 (E.D. Va. 1935). Moreover, we currently have under way a comprehensive investigation of the railroads’ freight rate structure, Ex Parte No. 270, Investigation of Railroad Freight Rate Structure. That proceeding was instituted by us in recognition of the growing concern regarding the pricing of railroad services. More particularly, we felt the need for exploring whether, as has been contended, the application by the railroads of increases in rates and charges as approved by us (especially when measured as percentages of existing rates) have over the years caused a misalignment of rate relationships and a distortion of proper rate levels. A specific area we have assigned for development in that case is the way in which our prior rate decisions may have an effect on the Government's program of protecting the environment. The Institute of Scrap Iron and Steel, Inc., the National Association of Secondary Material Industries, Inc., and other parties to this proceeding are parties as well to Ex Parte No. 270. This Commission has recently named a Special Counsel to further develop the record in Ex Parte No. 270. We also have proposed new rules governing the presentation of evidence in Ex Parte No. 290 which, if later determined appropriate, would provide for data relative to the revenue contribution of 143 major commodities or groups thereof. Notwithstanding these on-going efforts to eliminate any distortions that may inhere in the rate base and to improve our evidentiary 346 L.C.C. 104 INTERSTATE COMMERCE COMMISSION REPORTS procedures applicable to proceedings such as this one, we think that the following comments are appropriate at this point in our deliberations. We have made an examination of the presently effective railroad rate structure, and we have done so without ascribing to any of the parties the burden of establishing that it impedes the transportation of recyclable commodities. We recognize full well that the obligation of assessing the ecological implications of our actions, singly taken or in their cumulative effect, is ours. The contention that the existing railroad rate structure contains a bias in favor of primary materials to the prejudice of setondary materials rests, essentially, upon a surface comparision of their rates. Thus, for example, the Institute of Scrap Iron and Steel, Inc., notes that in 1966 the average rail revenue per 100 pounds was 20.6 cents for iron and steel scrap, whereas, the comparable earnings on iron ore were but 8.2 cents. The Institute acknowledges that by 1969 this disparity was considerably less—$5.11 per gross ton for scrap iron compared to $2.67 for iron ore in the United States and $4.70 against $2.58 in official territory. The charge that the rates on iron and steel scrap are more than twice those of iron ore has been repeated by others as well, and underlies the frequently repeated charge that the rail rate structure maintained by the railroads prefers primary materials to the undue prejudice of secondary materials. .The allegation that the disparity in rates between iron and steel scrap and iron ore demonstrates &n unwarranted bias, reflects an unfamiliarity with American transportation and a naivety as to ratemaking in domestic commerce that the Institute’s long and sophisticated participation in our proceedings belies. If rates were established on nothing more than a consideration of the weight of the shipment, the Institute’s position would have some plausibility. As it well knows, however, that is not and never has been the method followed in this: country for establishing transportation charges. é It is true that domestic transportation rates are generally stated in terms of cents per hundredweight. In this respect, their method of publication differs from the practice in the ocean trade, in which rates normally are stated on the basis of displacement or cents per cubic foot. Nevertheless, a comparison of the rates, expressed as cents per hundredweight, does not permit a meaningful determination as to whether a discriminatory or prejudicial situation obtains. . cv 346 LC.C. 26 INCREASED FREIGHT RATES AND CHARGES, 1972 . 105 We have said on numerous occasions that the mere existence of a difference in rates does not establish undue prejudice or preference. Black Hills Glass & Mirror Co. v. C., M., & St. P. & P. R. Co., 313 1.C.C. 333, 339 (1961); Malt Liquors, Missouri, Illinois, and Nebraska to Okla., 310 1.C.C. 93, 101 (1960); United States Lime Products Corp. v. A., T. & S. F. Ry. Co., 288 1.C.C. 293, 300 (1953); Cinder Concrete Products, Inc.,v. Colorado & S. Ry. Co., 279 1.C.C. 191, 194 (1950); A. C. Jensen Block & Supply Co. v. C., M., & St. P. & P. R. Co., 273 1.C.C. 399, 401 (1948); Wayggener Paint Co. v. Chicago G.W. Ry. Co., 308 I1.C.C. “T48,.150 (1959); Commodity Credit Corp. v. Texas & P. Ry. Co., 306 1.C.C. 525, 533 (1959): and State Board of Equalization of Wyo. v. Abilene & S. Ry. Co., 305 1.C.C. 497, 513 (1959). Our view long has had the approbation of the courts. Nearly 50 years ago the Supreme Court of the United States in United States v. Illinois Central R.R., 263 U.S. 510 (1923), expressed its agreement that differences in rates in and of themselves do not establish their illegality under the antidiscrimination provisions of the Interstate Commerce Act. The Court said, supra, 263 U.S. at 524: *** to bring a difference in rates within the prohibition of $3, it must be shown that the discrimination practiced is unjust when measured by the transportation standard. In other words, the difference in rates cannot be held illegal, unless it is shown that it is not justified by the cost of the respective services, by their values, or by other trans- portation conditions. Accord: Southern States Cooperative, Inc., v. Baltimore & O. R. Co., 323 1.C.C. 400, 408 (1964); Southeastern Assn. of R. & Util. Commrs. v. A., T. & S.F. Ry., 321 L.C.C. 519, 553 (1964): United States v. Oklahoma City-Ada-Atoka Ry. Co., 319 1.C.C. 182, 186 (1963); and Seattle Traffic Assn. v. Consolidated Freightways, Inc., 306 I.C.C. 87, 92 (1959). We begin by“noting that there are literally hundreds of thousands of commodities that comprise the commerce of this Nation, and that the railroads through their network of connecting lines hold themselves out as common carriers of all of such commodities be- tween each of the tens of thousands of points that they serve. To enable them to render their task of rate publication manageable, our Nation's railroads long have classified the freight that they transport. We think it appropriate to include in this discussion of the alleged discrimination in the rate structure a brief summary of the principles of classification and ratemaking. Our review of these fundamentals is offered at this point not to draw comparisons between any specific 346 L.C.C. 27 106 INTERSTATE COMMERCE COMMISSION REPORTS commodities, whether they be primary or secondary, but simply to suggest the complexity and diversity of the factors that go into classification and ratemaking, A classification has a twofold meaning in transportation parlance.* In the one sense, the term denotes the process by which the myriad commodities tendered a carrier are grouped for the pricing of its services. As succinctly stated in Van Metre, Industrial Traffic Management, 27 (1953): It must be immediately apparent that the publication of rates for a railroad system as large as that of the United States is a monumental task. Our railroads handle thousands of commodities each day, between thousands of stations. On each commodity handled there is a published freight rate applying to its transportation be- tween each freight station and all other freight stations in the country. If all articles carried were charged an identical rate per hundred pounds, the tariff for a single station would have to be as large as a good-sized mail-order catalouge. But instead of one article, there are probably as many as 30,000 for which freight rates must be made.® The process by which the publication of transportation charges of the thousands of articles in commerce is made manageable is classification. Classification as so uséd has been defined by the Supreme Court in Director General v. Viscose Co., 254 U.S. 498, 503 (1921), as follows: Classification in carrier rate-making practice is grouping,—the associating in a designated list, commodities, which, because of their inherent quality or value, or of the risks involved in shipment, or because of the manner or volume in which they are shipped or loaded, and the like, may justly and conveniently be given similar rates.°°* The Commission has variously defined the classification of freight as “a ratemaking scheme devised for the purpose of according the same rate to all commodities of a like character from a trans- portation standpoint,” McCrory Stores Corp. v. Director General, "For comprehensive discussion of this subject. see Colquitt, The Art and Development of Freight Classification (1956), and Way, Elements of Freight Traffic (1956). “Drinker in Interstate Commerce Act 193 (1909). observed: “O lassification.” said the Commission in its first Annual Report, “is the foundation of all rate making.” For the railroads to attempt to fix a separate rate for each commodity shipped, would not only be unduly burdensome to them and entirely impractical, but it would lead to an endless complication of tariffs, which would undoubtedly be more objectionable to shippers in general than a simpler system of rates adjusted with less theoretical nicety. On all sides it has been found advisable to sacrifice, to a certain extent. mathematical accuracy. for the sake of securing practical simplicity. 346 L.C.C. INCREASED FREIGHT RATES AND CHARGES, 1972 107 55 1.C.C. 423, 424 (1919); and Hires Condensed Milk Co. v. P. R. R. Co., 38 1.C.C. 441, 447 (1916); “a matter of comparison of all the commodities that move as freight and the assignment of ratings such that each shall bear its fair share of the transportation burden,” Classification of Canned Goods, 98 1.C.C. 166, 176 (1925); and “a determination of reasonable relations between commodities, with groupings of kindred articles.” National Electrical Mfrs. Assn. v. Atchison, T. & S. F. Ry. Co., 289 1.C.C. 125, 132 (1953). The factors that influence the freight’s classification, the so-called transportation characteristics, are many and varied. In Motor Carrier Rates in New England, 47 M.C.C. 657, 660-61 (1948), these characteristics were listed in the following terms: The characteristics of the commodities which must be considered in fixing classification ratings are generally as ‘follows: |. Shipping weight per cubic foot. 2. Liability to damage. 3. Liability to damage other commodities with which it is transported. 4. Perishability. 5. Liability to spontaneous combustion or explosion. 6. Susceptibility to theft. 7. Value per pound in comparison with other articies. 8. Ease or difficulty in loading or unloading. 9. Stowability. 10. Excessive weight. 11. Excessive length. 12. Care or attention necessary in loading and transporting. 13. Trade conditions. 14. Value of service. 15. Competition with other commodities transported. Accord: All States Frgt. v. New York, N. H. & H. R. Co., 379 U.S. 343 (1964); Class Rate Investigation, 1939, 262 1.C.C. 447, 508 (1945); Investigation and Suspension Docket 76, 25 1.C.C. 442, 463, 472-73 (1912); and Proctor & Gamble Co. v. C., H. & D. Ry. Co., 9 1.C.C. 440, 482 (1903). It is because of these many and varied characteristics that bare reliance by a number of parties herein upon certain Burden Study statistics (which represent estimates only) to indicate the contribution a particular commodity may be making to the carriers’ costs is not well taken. This matter will be amplified at a later point in this statement. The first of the listed transportatin characteristics is the shipping weight per cubic foot, or density. As we have noted, domestic trans- portation charges in America generally are assessed on the basis of 346 L.C.C. 29 aiaiteeentiant 108 INTERSTATE COMMERCE COMMISSION REPORTS the weight of the shipment that is, the rates are stated in terms of so many cents per 100 pounds. Obviously, under such a scheme of pricing, the shipper tendering a large shipment in terms of weight will pay more than the shipper tendering a light shipment. In other words, a shipper of a 1,000-pound box would be expected to pay more than the shipper of a 100-pound box. However, a carrier is limited in how much freight it can carry by the capacity of its equip- ment, and in any one piece of equipment it can carry a heavier load of freight having a low cubic displacement than it can shipments of high cubic displacement. Therefore, in determining the rate relationships of various commodities, that is, in grouping com- modities for the assessment of transportation charges, it is natural that the carrier would rate freight of low density higher than freight of high density, all other things being equal. Feathers should be rated higher than lead, as, indeed, they are. Van Metre in /ndustrial Traffic Management 51-52 (1953), says of this transportation characteristic: Since rates are almost all quoted in cents or dollars and cents per hundred pounds or per ton, it is plain that a car loaded to its capacity in pounds earns more than one which is loaded only to a fraction of that capacity. But there are many articles so light in proportion to their bulk that under no circumstances could enough of them be packed into a car to bring its load up to its weight capacity. Therefore it costs the rail- road much more per hundred pounds to transport such articles than to transport articles so heavy in proportion to the space they occupy that they can fill a car to the limit of its weight capacity. The light, bulky articles take up the earning space of the carrier's equipment, and the only way in which a carrier can secure revenue which ad. quately reflects the cost of transporting such articles is to make a high charge per hundred pounds for their transportation. The significance of density as a transportation characteristic is illustrated by the shipments of bulk cottonseed from Blytheville, Ark., to Memphis, Tenn., and of loose cotton in bags from Arbyrd, Mo. (Paragould, Ark.), to Memphis. Although these shipping points are approximately comparable, the cottonseed takes a rate of 17 cents per hundred pounds for a minimum shipment of 50,000 pounds (St. L. S. W. Ry. tariff 321-C, ICC No. 4853) while the loose cotton in bags takes a rate of $1.83 per hundred pounds (tariff SWL 237-L, ICC No. 4907). This elevenfold difference in rates is -explained upon an examination of sample waybills. The cottonseed loads heavily, at over 70,000 pounds per car, resulting in freight revenue of over $120 per car to the carrier. The loose cotton in bags of course loads lightly and, at about 6,000 pounds per car, earns less than $120 per car for the carrier. Since the carrier's costs for moving 346 L.C.C. 30 INCREASED FREIGHT RATES AND CHARGES, 1972 109 the two cars are similar in this specific situation, except for such items as added fuel costs for pulling a heavier car, the difference in rates enables the carrier to realize comparable revenues on the movements. Another roughly comparable movement of primary and refuse materials is the transportation of cotton linters from Greenville, Miss., to Memphis, Tenn., and the movement of cotton motes from Greenwood, Miss., to Memphis. The linters move at a rate of 32 cents per hundred pounds with a minimum shipment of 60,000 pounds (SFTB 2011-M)- while the motes bear a scale of rates: Minimum we ighi—pounds Rate—cents per hundred pounds 20,000 60 30,000 42 40,000 39 Excess over 40,000 in same car ---- 32 An examination of sample waybills again revealed that while the motes load at just over 40,000 pounds per car, thus bearing the 39- cent rate, the linters load at over 60,000 pounds per car. The revenue realized by the carrier is higher for the lower rated com- modity: the 20-percent difference in rates is more than offset by the 50-percent difference in loading characteristics, as far as the carrier is concerned. 4 The next group of transportation characteristics—liability to damage, liability to damage to the commodities with which it is transported, perishability, liability to spontaneous combustion and explosion, and susceptibility to theft—relate to the obligation of the railroads as bailees of the goods that they transport. Whatever may have been the obligation of the railroads under the common law, under the prowgions of the Interstate Commerce Act, rail carriers are tantamount to insurers of the safe delivery of cargoes entrusted to their care for transportation. Loss and Damage Claims, 340 1.C.C. 515 (1972). Section 20(11) of the Interstate Commerce Act, 49 U.S.C. §20(11), states “That any common carrier, railroad, or transportation company *** shall be liable *** for any loss, damage, or injury *** caused by it | or by its connecting carriers]” to the property transported by it. That being the case, it Stands to reason that in establishing the rate relationship between the many commodities they transport, the railroads should assess a higher charge on freight more likely to be lost or damaged in transit than on freight not having such a tendency. Thus, electric light bulbs 346 1.C.C. 31 110 INTERSTATE COMMERCE COMMISSION REPORTS should be rated higher than electric switches, as, of course, they are. The Institute in its comments on our draft statement asserts that the railroads refuse to pay freight claims on scrap. It offers no .sub- stantiation of this allegation and, subject to the caveats expressed in the Loss and Damage Claims case, it has available the same legal remedies as any other shipper to collect for its legitimate claims. The next transportation characteristic—value is related. If two packages of equal weight are lost in transit, the carrier incurs a greater monetary loss in paying the claim of the shipper of the more valuable freight than it does in paying any that may be submitted on the less valuable freight. Accordingly, in establishing the relation- ship of rates it would be appropriate for the carriers to assess the former a higher rate than the latter. In other words, as a measure of the risks assumed, value clearly is a transportation characteristic to be taken into account. Moreover, value is a factor in classification for the further reason that it generally is indicative of the ability of a commodity to pay the transportation charges. Rates on Lumber and Lumber Products, 52 1.C.C. 598, 615 (1919). In the latter respect, according the value of the commodity consideration in establishing the relationship of transportation charges is not dissimilar from oridinary commercial practices. It is almost universally true that merchants and manufacturers have a greater markup or assign a greater portion of their overhead and anticipated profit to their expensive items than to those bearing a smaller price. The railroads and other domestic transportation . companies long have done no less. As Professor Locklin has noted in his Economics in Transportation (6th Edition 1966) p. 418: It has been customary from the earliest days of railway development to charge comparatively high rates on valuable articles and lower rates on cheaper articles *** sometimes the valuable commodities will not stand high rates, but the usual relation- ship clearly warrants the prominence generally given to value comparisons in rate cases. There is no need of giving citations to cases in which the Commission has acknowledged value of the article as a factor to be considered in determining the reasonableness of rates. Their number is legion In fact, there is scarcely a case involving rates on particular articles which does not make use of value, comparisons. In many cases value becomes the controlling consideration. The next characteristics—case or difficulty in loading or unloading, stowability, excessive weight, excessive length, and care or attention necessary in loading and transporting—can be treated as a group. That they affect the costs incurred in performing the trans- portation and, accordingly, warrant consideration by the carrier in 346 LCC. 32 INCREASED FREIGHT RATES AND CHARGES, 1972 111 , ' establishing the relationship of its transportation charges is so _ obvious as to require little or no amplification. As we previously have noted, domestic transportation charges in America are generally stated in terms of so many cents a hundred- | weight. That being the case, the carrier needs to receive greater ' compensation for a shipment of freight requiring extraordinary handling than one of equal weight that can be moved in the usual fashion. Thus, for example, a 10,000-pound transformer of a type used at a’ power company substation, requiring skids, winches, or similar devices for loading or unloading, should take a higher charge per 100 pounds than a shipment of equal total weight of boxed trans- formers of the type used in installing door chimes in private dwellings. Similarly, it stands to reason that, all things being equal, the carrier should receive more money for handling a 100-pound bar of steel stretched to a 50-foot length than it can collect for a barrel of nails of equal weight. In fact, the railroads and other domestic carriers assess their rates just that way. Referring to these factors, among others, Flood in Traffic Management (2d Edition 1963) p. 97, concluded, “Additional services required to transport a specific commodity add to the transportation costs and therefore become _ important elements in classifying the commodity.” As for the next transportation characteristic—trade condi- tions—we heretofore have noted that a depressed condition existing in an industry may be a proper factor to be considered in deter- mining the reqronableness of the rates that apply on its products. Thus, in ac involving rates on wool, In Re Transportation of Wool, Hides, and Pelts, 23 1.C.C. 151, 156 (1912), it was said, “If the condition of one industry is such that it can not flourish, that the traffic will not move for the reason that the wool itself will not be produced, that, certainly, is a circumstance which may be con- sidered in comparing this rate with those upon other commodities.” Again, in Utah-Idaho Millers and Grain Dealers Asso. v. R. R. Co., 44 LC.C. 714, 726 (1917), it was concluded, “*** the condition of an industry has an influence upon the ability of a commodity produced by that industry to beara rate, which in turn may have a © bearing upon the reasonableness of the rate charged.” Accord: Wool and Mohair Rates, 276 1.C.C. 259, 269 (1949); Livestock—Western District Rates, 190 1.C.C. 611, 633 (1933); and Rates and Charges on Grain and Grain Products, 91 1.C.C. 105, 143 (1924). Professor Locklin in Economics of Transportation (6th Edition 1966), p. 427 said: 346 LC.C. 33 112 INTERSTATE COMMERCE COMMISSION REPORTS The ability of a particular commodity to stand a rate is sometimes affected by the conditions of prosperity or depression within the industry which produces the com- modity. If an industry is in a depressed condition, high rates may result in curtailed production. Conversely, if the industry is prosperous, rates may be increased without affecting production. For this reason the Commission has long recognized that the conditions existing in an industry may be taken into consideration in determining the reasonableness of rates. This position has the approval of the United States Supreme Court, for in Ann Arbor Railroad Co. v. United States the Court said: “In rate making under existing laws it has been recogn that conditions in a particular industry may and should be considered along with other factors in fixing rates for that industry and in determining their reasonableness.” The principle received special emphasis in the Hoch-Smith Resolution, passed by Congress in 1925, which declared that the “true policy” to be observed by the Interstate Commerce Commission in adjusting rates was “that the conditions which at any given time prevail in our several industries should be considered in so far as it is legally possible to do 80, to the end that commodities may freely move.” The principle that rates should be adjusted in accordance with the economic condi- tions existing in an industry may easily be abused. It is valid only in so far as it throws light on ability to pay transportation, charges. It is not valid when used to help one class of individuals at the expense of another. The Interstate Commerce Commission has emphatically declared that it is not justified in reducing rates on a commodity merely to relieve a distressed industry. This position was taken in a number of cases which came up after World War I, when the agricultural interests argued for lower rates on the products of agriculture on the ground that the industry was in a depressed condition. These ‘pleas were, as a rule, unsuccessful. The soundness of the Commis- sion’s reasoning on the question of reducing rates to help a distressed industry cannot be questioned. If the rates are reduced to help out one industry, the burden of the reduction must be borné by the railroads or shifted to other shippers and consumers by increasing the rates on other products. The railroad is not an eleemosynary institu- tion and ought not to be required to forego reasonable compensation for the services ‘ it renders. *** (Footnotes omitted.) The next transportation characteristic—value of service—is perhaps the least understood and most frequently maligned of the factors influencing the establishment of the relationship of trans- portation charges. Here again, however, what the railroads and other domestic transportation companies long have done is wholly analogous 'to the practice that universally obtains in commerce and industry. Manufacturers and merchants routinely assess the market demand for their products and price them accordingly. An item that may be very much in demand one day, commanding a correspond- ingly high price, the next day may become a glut on the market, not to be sold at any price as the fashion may have changed. Thus, for example, today there might be few takers for Daniel Boone coonskin caps even if they were virtually given away. On the other hand, as the demand for a product surges, so does its price, as anyone who was lucky enough hot to have thrown out his grandmother's coffee 346 LCC. 34 INCREASED FREIGHT RATES AND CHARGES, 1972 113 mill, mason jars, or other items now prized as antiques will testify. If such pricing in accordance with the elasticity of demand constitutes charging what the traffic will bear, then that is nothing more than an economic fact of life. The traditional railroad rate structure of this country was characterized by value of service pricing. The railroads were known freely to charge their shippers what the traffic would bear. With the advent of the motor carriers, pipelines, and other competitors for freight-and with the competition for traffic having become intense and pervasive, as we find it to be today, it has been urged that value of service no longer is an appropriate factor to be considered in the setting of transportation rates and charges. This misapprehends completely the role of value of service, for the intensity and pervasiveness of today’s competition have not diminished in any way the relevance of elasticity of demand as a matter to be taken into account in setting railroad rates and charges; the elasticity of demand for railroad service has increased greatly and shippers of freight will divert their traffic to alternative modes when confronted by increased railroad charges more so than they ever have been able to do before. Shure Professor Way in Elements of Freight Traffic (1956), pp. 124-25, explained the role of value of sefvice under contemporary condi- tions as follows: Value of service should not be confused with value of the shipment. Although in traffic matters there is a definite relationship between the two, each is different. The former refers to the transportation service performed by carriers; the latter, to some particular commodity itself. A relatively high rating of a high-valued article results in a freight rate whieh is higher than one obtained from a low rating, but the resultant high rate is a small proportion of the selling price of the high-valued article, in contrast to a low rating of a cheap commodity resulting in a rate which is a substantial part of its price. Therefore, even the resujting low rate on a low-valued commodity has much greater influence both upon its selling price and the consequent demand of the public for it, than a high rate on high-valued articles. Consequently, relatively high ratings do not restrict shipments of high-valued goods nearly as much as they influence the geographical extent of markets for low-valued goods, which means value of service is much greater and more sensitive for shippers of low-valued commodities than for shippers of high-valued commodities. The former are able and willing to pay less than the latter for transportation service, because the freight rate is a greater direct part of the former's cost of production and distribution than to latter's. This situation is recognized by the carriers in rating determination, for they realize any action on their part which restricts the demand for an article itself, by an appreciable proportionate increase in its price, will reduce the demand of shippers of that article for transportation service. It is Tor this reason that there is such wide divergence among ratings and that “Exceptions,” which will be explained later, have 346 LC.C. ' 114 INTERSTATE COMMERCE COMMISSION REPORTS been adopted. Of course, no rating can be so low, regardless of the value of service and ultimate loss of traffic, that the applicable rate will produce revenue at least no less than the carrier's out-of-pocket costs of providing the service. While value of service to the shipper constitutes the highest level of rates, costs to the carrier of furnishing the service represent the lowest level. In practically all instances, the rating of a particular article falls somewhere between the two extremes, depending entirely upon the influence of the other classification factors as they are applied to individual situations. [Footnote omitted.] Finally, the last of the transportation characteristics which have been listed as influencing the classification of freight—competition with other commodities transported—is perhaps the most important one in evaluating properly the contention advanced herein that the railroad rate structure discriminates against secondary materials. Only recently, we received the decision of the United States District Court for the Western District of New York in Civil Action No. 1971-542, National Gypsum Company, et al. v. United States, et al., 353 F. Supp. 941 (decided February 5, 1973), which clearly and con- cisely reiterates the principles which obtain in assessing the importance of competition as a factor in explaining disparate rates. Involved in that case were disparate railroad rates from nine origins in West Virginia, Ohio, Pennsylvania, and Kentucky to the port of Toledo, Ohio. The plaintiffs were receivers of metallurgical coal, and alleged that the lower rates that the railroads assessed on steam coal were discriminatory, in violation of section 2 of the Interstate Commerce Act. The Court said: For many years the Supreme Court has recognized that the carrier's necessity of meeting competitive conditions in order to retain business is an important considera- tion, which may provide a sufficient dissimilarity of conditions to warrant a reasonable difference in rates that will not be classified as unjustly discriminatory. In Texas & Pac. Railway v. Interstate Commerce Commission, 162 U.S. 197 (1896), the Texas & Pacific published a lower rate for transportation from New Orleans to California of traffic imported from Europe than for carriage of identical domestic traffic between — the same points. The lower rate was justified as necessary to avoid the loss of the European traffic altogether to competition which would transport it to the California coast by water. Upholding the discrimination as justified, the Court stated: We think that Congress has here pointed out that, in considering questions of this sort, the Commission is not only to consider the wishes and interests of the shippers and merchants of large cities, but to consider also the desire and advantage of the carriers in securing special forms of traffic, and the interest of the public that the carriers should secure that traffic, rather than abandon it, or not attempt to secure it. It is self- evident that many cases may and do arise where, although the object of the carriers is to secure the traffic for their own purposes and upon their own lines, yet, never- theless, the very fact that they seek, by the charges they make, to secure it, operates in the interest of the public. eg Se INCREASED FREIGHT RATES AND CHARGES, 1972 115 The principal purpose of the second section is to prevent unjust discrimination between shippers. It implies that, in deciding whether differences in charges, in given cases, were or were not unjust, there must be a consideration of the several questions whether the services rendered were “like and contemporaneous,” whether the kinds of traffic were “like,” whether the transportation was effected under “substantially similar circumstances and conditions.” To answer such questions, in any case coming before the Commission, requires an investigation into the facts; and we think that Congress must have intended that whatever would be regarded by common carriers, apart from the operation of the statute, as matters which warranted differences in charges, ought to be considered in forming a judgment whether such differences were or were not “unjust.” Some charges might be unjust to shippers—others might be unjust to the carriers. The rights and interests of both must under the terms of the act, be regarded by the Commission. 162 U.S. 197, 218-19. We are not persuaded by plaintiffs’ contention that the teaching of Texas & Pac. Railway is limited to a difference between import and domestic traffic. The basis of the decision is much broader than that. It is grounded upon the principle that the necessity of meeting competition in order to retain traffic is a circumstance that will be given heavy weight in deciding whether a difference in rates is unjust or unreason- able. Just as the railroads were entitled in Texas & Pac. Railway to publish lower rates on import traffic in order to induce it to move through the affected ports rather than use cheaper water transportation, the railroads were here entitled to do likewise in order to avoid a very substantial loss of business and resulting revenue that might well have required them to charge even higher rates to plaintiffs than at present in order to meet the higher operating costs per ton that would result from the decline in volume of traffic. The viability of the principle established by Texas & Pac. Railway has repeatedly been confirmed. Barringer & Co. v. United States, 319 US. 1 (1943) (railroad permitted to eliminate a loading charge for cotton destined for Gulf ports in order to meet truck competition but to retain charge on cotton destined for other southeastern ports); Koppers Company v. United States, 166 F. Supp. 96, 101 (W.D. Pa. 1958); Coal to New York Harbor, 311 1.C.C. 355 (1960); Consolidated Edison Co. of New York, Inc, v. Virginian Ry. Co., 292 1.C.C. 23, 35-38 (1954); Reduced Rates on Coal from the East to the Northwest, 292 1.C.C. 199, 137-38 (1954); Coal from Ky., Va., and West Va. to Virginia, 308 1.C.C. 99 (1959); Wyandotte Chemicals Corporation v. The Baltimore and Ohio Railroad Company, et al. (not published) 1.C.C. Dkt. No. 34460 (Sub-No. 1), decided June, 1965. The Commission's settled construction of $2 is entitled to the “highest respect.” United States v. Missouri Pacific R. Co., 278 US. 269, 280 (1929). The foregoing presents a summary of the foremost transportation characteristics which, as we noted at the outset, are considered in the classification of freight. While any one of the transportation characteristics, considered alone, might appear to warrant a higher or lower classification rating of particular freight, all of them are taken into consiveration, and no one of them is controlling. Vacuum 346 LC.C. “ 37 | ian 116 INTERSTATE COMMERCE COMMISSION REPORTS Cleaner Mfrs. Assn. v. Atchison, T. & S. F. Ry. Co., 276 1.C.C. 783, 792 (1950); Class Rate Investigation, 1939, 262 1.C.C. 447, 508 (1945); Nashville Traffic Bureau v. L. & N.R. R. Co., 68 1.C.C. 623, 626 (1922); and McCory Stores Corp. v. Director General, 55 I.C.C. 423, 424 (1919). It is well known, however, that relatively little freight transported by the Nation’s railroads moves solely in accordance with these principles, or upon class rates. Rather, approximately 90 percent of the railroads’ traffic moves on so-called commodity rates. Commodity rates long have been recognized as a concession to a particular situation that requires departure from the basic rate structure embodied in the schedules of class rates. “[C Jommodity rates are special rates which ought to be made with reference to all the conditions surrounding the transportation of the particular articles between the particular points.” The Mississippi River Case, 28 I.C.C. 47, 63 (1913); and Railroad Commission of Louisiana v. A. H. T. Ry. Co., 48 1.C.C. 312, 369 (1918). An observer, Landon, in Transportation, 315 (1951), noted: Commodity rates are special rates for products that move in large ene, such as lumber, wheat, coal, iron ore, cotton, and many others. They are lower than the applicable class rates and are usually carload rates. Commodity rates as low as 8 percent of the first-class rates applying in particular areas are numerous for articles unable to bear higher charges. The nature of the commodites that are apt to be accorded commodity rates permits the generalization, as made by Van Metre in Industrial Traffic Management, 28 (1953), that “While the number of shipments charged class rates is much greater than the number of shipments that are charged commodity rates for their transportation, the volume of traffic moving under commodity rates is far greater than the volume of traffic moving under class rates.” In establishing commodity rates railroads take into account — additional factors, among which the most prominent are the volume of the movement in qugstion, its regularity, duration, direction, and length. We next shall consider these. "Wyman in Railroad Rate Regulation 423 ( Ed. 1915) stated: The principle on which such |commodity] rates are ex tab! ished is doubtless a sound one. The articles which are granted commodity rates are staples of comparatively low value, like grain, lumber, and salt, moving in great quantities over roads of which they form a large part of their traffic. A granger road, carrying great quantities of grain in bulk, is in an entirely different position as to traffic in grain from a road in another part of the country carrying small quantities from time to time to the small consumer, and while the traffic of the latter road can be classified, that of the former requires special treatment. 346 LC.C. 38 INCREASED FREIGHT RATES AND CHARGES, 1972 An obvious determinent of the level of rates to be assessed is the size of the shipment. Certain costs are incurred by a railroad regardless of how large or how small a shipment may be, and these include the costs attending the preparation of the bill of lading, the rendition of a statement of charges owing, the tracing of the shipment if astray, or the processing of a claim if damaged or lost in transit. Such costs are substantially the same whether the carrier handles a 40-pound shipment or a 40,000-pound shipment; and, therefore, all things .being equal, the rate per 100 pounds for handling the former should be substantially higher than that which applies on the latter. In transportation parlance, it is axiomatic that LTL rates should be higher than truckload; LCL rates, higher than carload. This relationship is no less valid when only volume shipments are considered, particularly in the case of the railroads. In other words, certain Costs are incurred by a railroad regardless of how many carloads of freight comprise a shipment. Apart from the housekeeping or overhead costs previously enumerated, there are those related to picking up and spotting the cars that are the same or substantially so regardless of the number of cars involved. Dispatching the locomotive, switching it to the siding, pulling the cars to the assembly or classification yards at origin, and the reverse procedure at destination are similar whether the shipments consist of 1 car or 10. Therefore, once again, all things being equal, the rate per 100 pounds for handling the former should be substantially higher than that which applies on the latter. In transportation parlance, it has become commonplace that carload rates shoid be higher than multiple carload or trainload rates. This, then, is a function of the volume of the movement in question. In considering the rate relationships between iron ore and scrap iron and steel, we have examined waybills in our files attending the movement of scrap from Curtis Bay, Md. (Baltimore), to Steelton, Pa. (Harrisburg). Without in any way suggesting that these are representative, but noting that actual traffic was moving between those points, the scrap rates for this movement are (B&O Tariff 488- A, suppl. 123, ICC No. 24822): Ao Weight of shipment Rate Per gross ton 44,800 pounds 80,000 pounds 600 gross tons in not more than 12 cars 900 gross tons in not more than 18 cars 1,200 gross tons in not more than 24 cars 346 LCC. 39 118 INTERSTATE COMMERCE COMMISSION REPORTS This table of rates shows that volume shipments are in fact accorded lower rates. As can be seen, a 1,200-gross ton shipment, suite is substantially below a unit-train lot, bears a rate roughly one-half that of the single-car rates. We have examined several random waybills covering actual movements under this tariff and found three single- car shipments of about 115,000 pounds each at a rate of $7.19 per gross ton, and an 18-car shipment of 68 gross tons (76.2 net tons) per car at a rate of $3.87 per gross ton. Another example of the relationship between rates and weight of a shipment is shown by the following rates on cotton refuse (Tariff SFA S-2011-M, ICC No. S-1019): From East Point, Ga (Atlanta), From Stonewall, Miss., to to Memphis, Tenn. Memphis, Tenn. Minimum weight— Rate—cents Minimum weight Rate r 100 pounds 20,000 105 20,000 83 30,000--- 71. + +=30,000 57 40,000--- 63 40,000 52 Excess over 40,000 ------------------- $2 Excess over 40,000---------------- 41 Thus, by heavy loading, shippers can take advantage of rates which are almost one-half of the maximum rates. As for its regularity, it requires little elaboration that a railroad which can anticipate pulling three cars of freight daily from a particular industry can plan more efficiently and, hence, can operate more economically than it can to an industry that has no requirements | week and then tenders a shipment of 18 cars the first day of the following week. Although the two shippers may be the source of an equal amount of traffic for the railroad, it would not be unreasonable for the former to be accorded a more favorable rate than the latter. Similarly, it requires little or no elaboration to justify lower rates when the thovements reasonably can be expected to continue for several years than when their duration is anticipated to be short lived. , : Direction is a factor whenever a railroad experiences an imbalance in the flow of freight. One of the most interesting examples of the influence of this factor which we encountered in recent years involved a railroad engaged in the transportation of 346'1.C.C. a = — INCREASED FREIGHT RATES AND CHARGES, 1972 phosphate in hopper cars from Florida. In order to avoid the empty return of its equipment, the railroad published drastically reduced barge-competitive rates on coal, thereby achieving a balanced movement. Finally, the length of the movement is a factor to be considered in establishing the relationship’of rates for many of the same reasons that volume is. Essentially, terminal costs, the costs incurred in originating and terminating the movements, remain identical whether the intervening line-haul transportation is 50 miles or 500 miles. Therefore, all things being equal, the rate per 100 pounds for handling the former should be substantially higher than that which applies on the latter. It is against a background of these many, varied, and yet significant factors that enter into the establishment of the relationships that obtain in the railroad rate structure that the axiom that a mere disparity in rates does not establish discrimination or undue preference, assumes real meaning. It is against the background of these that we conclude that no case for discrimination or undue preference has been made by arguing that the railroads as a group in 1965, may have received an average of 2.5 times as much per hundredweight for transporting iron and steel scrap than they did for handling iron ote. The comparison between the average revenue per 100 pounds on iron and steel scrap and iron ore reveals very little; it certainly does not establish that the former was disadvantaged in relation to the latter. It tells us nothing about the transportation characteristics we just have discussed. It provides no information as to the lengths of the movements making up the average, and whether the hauls of iron and steel scrap may not have been considerably shorter than those of the iron ore. It tells us nothing of the duration of the movements and their regulatity, and whether the movements of iron and steel scrap may not have been far more sporadic and cyclical than those of the iron ore. It fails to inform us as to the volume of the movements going into the average, and whether the tonnages tendered of iron and steel scrap may have been far less than those of iron ore. Our experience, our prior cases, and, indeed, the record herein suggest that each one of these transportation characteristics, relevant to a comparison of the rates, may not be nearly as favorable for iron and steel scrap as for iron ore. The Institute’s simplistic argument tells us nothing of the density of the commodities, and whether iron and steel scrap, particularly before shredding or 346 L.C.C. 6 41 120 INTERSTATE COMMERCE COMMISSION REPORTS compacting, may not be lighter than iron ore. It provides no data as to the ease of loading and unloading of the commodities and of their tendency to damage the carriers’ equipment, and whether iron and steel scrap may not be dumped into gondolas from magnetic or clamshell cranes, whereas, iron ore flows into hoppers from overhead’ bins or conveyors. li tells us nothing of the intensity of ~competition in the trade, and whetier iron and steel scrap is the bject of the kind of competition that is characteristic of the iron ore area. Again, our experience, our prior cases, and, indeed, the record herein suggest that each of these factors may not be nearly as favorable for iron and steel scrap in comparison to iron ore. As we have indicated, the cost of transporting a commodity by + rail is affected by the volume in which it moves. All things being equal, if the volume of movement is large, a carrier is in a position to organize better its operations and methods of handling the commodity and so reduce the cost of carrying the freight (i.e., the costs directly 48Signable to the commodity). However, in order for a large volume of movement to justify a lower rate on one article than on another, the larger volume should actually lower direct costs. The most striking example of this principle occurs where the volume of traffic in a single commodity permits its movement in continuous, solid trainloads. Iron ore with a number of economical attributes is an excellent illustration of such a distinctive transport pattern. Iron ore is a dense, homogenous material, which moves in huge volumes from the mines or transshipping ports (i.e., iron ore frequently moves in trainload quantities of 100 or more cars), and requires little or no special, individual handling. Moreover, high density permits heavy loading per car, and homogenity eliminates the need for detailed identification and the concomitant costs thereof. Additionally, the absence of individualized handling requirements also lowers the cost per movement. Over a period of time, however, . specific types of vessels and rolling stock adapted to the iron ore movement have been Sea ge docks equipped with special bulk mechanical handling devices for loading and unloading the freight at both ends of the haul have been brought into use; and railroad yards have been designed with particular reference to the traffic. The actual effect of such volume movements can readily be observed in the operations of the Duluth, Missabe and Iron Range Ry. Company and the Bessemer and Lake Erie Railroad Company. For instance, the D.M.&I.R., which originates roughly 35 percent of the total iron ore tonnage and derives approximately 88 percent of its total freight revenue from these movements has specialized its 346 LC.C. 42 ES . INCREASED FREIGHT RATES AND CHARGES, 1972 121 handling to a point where its entire systemwide operating ratio has been lowered to 65.1 percent. The B&LE, although not handling as much iron ore traffic as the D.M.&I.R., nevertheless has a comparable systemwide operating ratio of some 62.5 percent. Iron ore movements account for almost 54 percent of Bessemer'’s total freight revenue. In those instances where iron ore traffic is not as significant to, or the movements are not as continuous for, an originating railroad, the operating ratios are higher. In direct contrast to concentration of iron ore movements the iron and steel scrap flow pattern is diffused and, except for Penn Central, the tonnage is rather thinly spread out among almost all of the Nation’s 68 class I railroads. In essence, iron ore moves largely over a few single-line direct routes, whereas scrap moves via many railroads mainly in single carloads over a multiplicity of routes, some of which are extremely circuitous. Furthermore, the tendency of scrap to originate over broad areas for concentration, and to some extent fabrication, and then to disperse over other destination areas necessitates a transport system replete with feeder and secondary routes supporting the main intercity arteries. Such a scattered type of flow pattern can be expected to cause a few cost and service deficiency problems as noted by the shippers of scrap iron and steel in Ex Parte Nos. 265 and 267 (i.e., excessive transit time, terminal and interchange delays, car shortages, bunching of cars, et cetera." Regularity of movement is also a most important factor entering into the measurement of relative cost of railroad service. If traffic moves regularly, it can be transported with greater economy (i.e., more economical train schedules can be worked out, and empty cars can be supplied with a minimum of expense, et cetera. On the other hand, irregularity of movements has the opposite effect. This is particularly true when there is a distinctly seasonal movement, such as certain types of scrap, which taxes the carrier's facilities at certain times and results in idle equipment and facilities at others. The economic advantages inherent in the movement of iron ore in the highly specialized open-top hopper car with its drop frame that allows for an unloading in one swift motion, as compared to its movement in the gondola car are significant irrespective of the territory in which they operate. With respect to the terminal investment required by the various carriers, that also differs materially depending upon the predominant type of traffic in which the carrier is engaged. Thus, “Ex Parte Nos. 265 and 267, Increased Freight Rates, 1970 and 1971, 339 L.C.C. 125. 346 LC.C. 43 WERE ate tah Mees, TT n genta Gyan eke reer ey RT eT te ee ee 122 INTERSTATE COMMERCE COMMISSION REPORTS railroads which specialize in iron ore traffic moving directly from the mines require facilities entirely different from those carriers serving a highly industrialized territory. In contrast to the simplicity of the iron ore operation the latter situation requires an intensive system of switching lines and siding. connection to accommodate a great number of industries. In a large industrial area, such as that of the official territory, this results in great dispersion in the origination and termination of freight, commonly requiring a number of switching yards serving each section in the industrial district. The operation is often conducted under extremely congested conditions. High land values and the built-up nature of adjacent lands makes expansion or improvements possible only at prohibitive costs. In consequence, expanded freight business must be handled by existing facilities under a system of most intensive operation, and unit costs accordingly are obviously high. Data drawn from the railroads’ experience in official territory, the industrial heartland of America, will permit a meaningful comparison to be made between the two categories of commodities. Within official territory are the Great Lakes ports of Cleveland and Toledo, important in the movement of domestic iron ore, and the Atlantic Ocean ports of Philadelphia and Baltimore, gateways in the movement of import iron ore. Here are the iron and steel centers of Gary, Youngstown, Pittsburgh, Fairless, and Sparrows Point, and finally, within the territory the greatest amounts of iron and steel scrap, both home and waste, are generated. Indeed Penn Central Transportation Company, which blankets the area like no other railroad, alone originates about one-third of all of the iron and steel gerap transported within the United States. We find that, within official territory, carloads of iron ore load far more heavily than carloads of iron and steel scrap; as a matter of — fact, carloads of iron ore consistently average nearly half again the weight of carloads of iron and steel scrap. Similarly, we find that iron ore travels further than iron and steel scrap; the average haul per car of iron ore has been nearly twice that of iron and steel scrap." . “ "In Price-Watson v. Elgin, J. & E. Ry. Co., 329.1.C.C. 736, 740 (1967), sustained, Price-Watson ’ Co. v. United States, 287 F. Supp. 872 (N.D. IIL 1968), we noted that the average haul of scrap iron in official territory was only 84 miles. This compares with our findings in Increased Rates on Iron Ore, 313 LC.C. $49, 566 (1961), that about the same time the average haul of iron ore was 142 miles on ex-lake traffic and 357 miles on import traffic. The railroads serving the eastern district transported a total of 55.5 million net tons of iron ore, that traffic comprising 5.18 percent of their togpage and 2.8 percent of their revenue. Id. 313 LC.C. at 551. 346 L.C.C. _- INCREASED FREIGHT RATES AND CHARGES, 1972 123 Iron ore Iron and steel scrap Average Average Average Average ton haul ton haul per car per car per car per car 1964 76.0 184 53.4 9% 1965 77.7 186 53.4 95 1966 78.7 178 54.1 107 1969 776 194 55.5 103 Source: Carload Waybill Statistics. At the same time, the rate disparity between iron ore and iron and steel scrap moving in official territory is not as great as it is generally represented to be. In 1966, the average revenue per hundredweight earned by the railroads in handling iron ore was 60 percent of that of the average revenue earned on iron and steel scrap. In 1969, it was 55 percent. However, the more significant earnings figure, average revenue-per car, was not nearly as disparate. In 1966, the average revenue per car of iron ore was 85 percent that of iron and steel scrap, and in 1969, 80 percent. Iron ore Iron and steel scrap Average revenue Average révenue Per Per Per Per hundredweight car hundredweight car 1966 1.1 174 18.9 205 1969 11.5 179 20.8 231 Source: Carload Waybill Statistics. Indeed, we find that some of the rates maintained by the railroads on comparable movements of iron ore and iron and steel scrap are not dissimilar. For example, the multiple-car rate on iron and steel scrap from Curtis Bay (Baltimore), Md., to Steelton (Harrisburg), Pa., is $3.87 per gross ton, whereas, the rate on iron ore is $3.57. Baltimore & Ohio Railroad, Tariff No. 4988, ICC No. 24822, Supplement 123, item 630B, and Tariff No. 1014, ICC No. 24789, Supplement 141, item 3115E. Even at the slightly lower rates at which the official territory railroads handle iron ore than they transport iron and steel scrap, they find they are making more money on the former than they are on the latter. Using an average shipment of about 72 carloads of over 346 1.C.C. 45 124 INTERSTATE COMMERCE COMMISSION REPORTS 76 tons each as an example, we have calculated that railroads’ variable cost per ton for the above movement of iron ore and iron and steel scrap. The results were developed through procedures : from Statement No. ICI-69, Rail Carload Cost Scales by Territories for the Year 1969, issued as information by our Bureau of Accounts, but not adopted by us. The calculation establishes that the carriers’ variable cost per gross ton of iron ore is about $1.70 while that for scrap is about $2.28. Thi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0458%3A01. Public record. Not legal advice.