REPORTS No. 36418 HOERNER WALDORF CORPORATION v. UNION DECISION AND ORDER An appeal from an initial decision by Review Board Number 4 was filed by complainant Hoerner Waldorf Corporation on August 2, 1977, to which defendants replied.' In addition to the appeal, complainant also (1) moves to strike material from defendants' reply, (2) again petitions to reopen the record to submit additional evidence, and (3) requests oral hearing. The appeal does not warrant a different result than that in the prior report. While the petition to reopen is granted, the motion to strike and the request for oral argument are denied. Arguments and requested findings not specifically discussed have been considered and found not justified or their resolution not necessary for the proper disposition of this proceeding. By complaint filed August 13, 1976, Hoerner Waldorf Corporation, a pulpboard producer located in Schilling, Mont., assailed certain rail rates from its producing point to destinations in Southern California as unjust and unreasonable in violation of section 1 and unduly preferential and prejudicial in violation of section 3. In the initial decision, Review Board No. 4 found that the rates were not shown to be unjust and unreasonable, unduly prejudicial to complainant and preferential to its competitors and dismissed the complaint June 29, 1977. Complainant alleges that Review Board No. 4 committed four material errors in not finding that (1) Schilling, Mont., and the pulpboard mills in Washington, Oregon, and Idaho are not in different territories, (2) complainant has suffered injury from the assailed rate disparity, (3) transportation conditions affecting Schilling and the compared points are not different, and (4) complainant's evidence establishing unreasonable rates and rate making procedure is probative. 'Sixty-two railroads, either participating directly in the involved movements or by through routes and joint rates, were joined as defendants in this proceeding. As a practical matter, complainant designates six class I railroads in region VI as actually controlling the rates in question. These railroads are: Chicago, Milwaukee. St. Paul and Pacific Railroad Company: Burlington Northern, Inc.; Union Pacific Railroad Company; Southern Pacific Transportation Company; The Western Pacific Railroad Company; and, The Atchison, Topeka and Santa Fe Railway Company. 1 Complainant's various motions and requests will be addressed first. Complainant moves to strike the following material from page 8 of defendants' reply: In the space of three years Hoerner Waldorf moved from approximately 7/10ths of 1% of the California market to almost 5% of the California market at the expense of its allegedly perferred competitors. It contends that this material should be stricken because there is no reference to the record and no evidence of record to support the statement. Complainant also contests the stated percentages. Defendants reply that in context the statement is clear that the percentages refer to the California rail market. They contend that the figures are correct and of probative value. It is clear to us upon reading defendants' pleading that they are referring to the California rail market. Pursuant to rule 2 of the General Rules of Practice, the Commission has traditionally adopted a liberal stance on the admission of evidence. The sentence in question is not overly vague, and in the absence of supporting data may be treated as mere argument. The motion to strike is denied. Complainant also petitions to reopen the proceeding to receive newly discovered evidence. The proffered evidence was discovered after the hearing and complainant exercised reasonable diligence in bringing it to our attention. The evidence is alleged to prove that the Union Pacific Railway Company is the ratemaking route. Sufficient cause being shown, the petition is granted. Nevertheless, this evidence does not warrant a different result. The evidence is directed at a general roll-back in rates on the subject commodity within mountain Pacific territory. Complainant seeks to characterize this action as an acquisence in the Union Pacific Railroad Company's power to set the general level of rates in the territory. However, the roll-back was a response to similar actions by railroads throughout the continent. The carriers east of the Rocky Mountains initially rolled back the increases including those applicable on movements to the west coast. The Union Pacific then took independent action as a defensive measure. At that time, however, the other carriers did not feel this roll-back was necessary on movements from the Northwest to California. They later discovered after complaints from Northwest shippers that defensive action on their part would also be necessary and they too rolled back the increase. Complainant also requests an oral hearing. Pursuant to rule 93 of the General Rules of Practice, oral argument is granted at the discretion of the Commission or its division. As all relevant facts and arguments are adequately set forth in submitted pleadings, it is unnecessary to hear the same reiterated orally. Such a hearing, moreover, would only delay the proceeding. The request is denied. After a thorough review of the entire record, the complaint, petitions, appeals, and replies filed in this proceeding, we find that the appeal does not warrant a different result than that in the prior report. The record clearly establishes that the assailed rates are primarily due to Hoerner Waldorf's location, it being at an advantage compared to some of its competitiors when shipping to some points and at a disadvantage when shipping to others. We also find that it is unnecessary to make a determination as to whether or not Hoerner Woldorf suffers an injury as defendants have demonstrated more than adequately that the difference in rates is justified by different transportation conditions. Moreover, complainant's insistence that water competition does not exist in the Pacific Northcoast territory is unfounded. There is substantial evidence of water competition not only in this proceeding but in Ex Parte No. 270 (Sub. No. 8), Investigation of the Railroad Freight Rate Structure, 345 I.C.C. 2092 (1977), wherein complainant's own witnesses supplied evidence of water competition in that territory. Complainant's suggestion that the entire rate structure in the Pacific Northcoast territory be revised is not supported by the evidence. Additionally, our investigation in Ex Parte No. 270 (Sub-No. 8), supra, indicated that revision of that rate structure is both undesirable and unnecessary. We find that the evidence considered in the light of the specification of errors in complainant's appeal and reply thereto does not warrant a result different from that reached by Review Board No. 4; and that, except as modified, its statement of facts, conclusions, and findings, being correct and proper in all material respects are affirmed and adopted as our own. It is ordered: In adopting the review board's initial decision as our own the following changes are made: 1. On page 6, line 38 replace "the" with "another," and after "tariff" insert "Schilling is located approximately 200 miles east of this group near Missoula, Mont." 2. On page 14, line 21 after "traffic." insert "These groupings are deemed especially necessary in that territory." 3. On page 14, line 27 after "311." insert "Further even if there is an injury, the differing rates may be justified by differing transportation conditions." 4. On page 15, line 25 after “273” insert “In the Kress case the Commisson said: "Comparisons of revenue produced by individual rates for specific distances are of little, if any probative value in considering a rate structure comprising extensive origin and destination groups." 5. On page 15, line 25 after “particleboard," insert "instituted for the purpose of generating traffic rather than demonstrating that it is in the same group as the other points in question," 6. On page 16, line 12 delete the period and insert "on the Union Pacific over the Ogden gateway. To destinations in central and northern California and to destinations in southern California not served by the Union Pacific, short-tariff miles from Schilling and the Wallula-Lewiston group would be constructed over the Portland gateway. Thus, the short-tariff miles to these points would be greater from Schilling than from Northcoast groups.” 7. On page 16, line 33 after "unreasonable." insert "Moreover an examination of the various rates reveals that the rate differential between Schilling and other points appear to be within the zone of reasonableness when compared to complainant's competitors." 8. On page 17, line 12 and 13 delete "However, complainant has not shown that it suffers any injury from these rate differences." and insert "We need not reach a conclusion as to whether injury has been shown because defendants have demonstrated that the differences in rates are justified by differing transportation considerations." Decided November 23, 1977. The statement of facts, conclusions, and finding of Review Board Number 4 Fitzpatrick, Shaw, and Fisher follows: Point-to-point commodity rates on pulpboard from Schilling, Mont., to California destinations found not shown to be unjust and unreasonable, unduly prejudicial to 358 I.C.C. |