INVESTIGATION AND SUSPENSION DOCKET NO. 4524

DRIED BEANS, INTERMOUNTAIN TO WESTERN TRUNK LINE AND SOUTHWESTERN POINTS

Submitted October 21, 1939. Decided November 18, 1939

Proposed increased rates on dried beans, peas, and lentils, in carloads, from intermountain territory and Nebraska to western trunk-line and southwestern points, found not justified. Suspended schedules ordered canceled and proceeding discontinued.

Dana T. Smith and Stanfield Johnson for respondents.

J. G. Bruce for Public Utilities Commission, State of Idaho, protestant.

Carl L. Delong for Department of Agriculture, State of Idaho.
G. J. Willson for certain protestants.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MAHAFFIE, MILLER, AND PATTERSON BY DIVISION 3:

Exceptions to the report proposed by the examiner were filed by respondents, and protestants replied. The issues were orally argued.

By schedules filed to become effective August 31, 1938, and later, respondents proposed to increase their rates on dried beans, peas, and lentils, in carloads, from points in Utah, Colorado, Idaho, Wyoming, and New Mexico, commonly called intermountain territory, and from Nebraska to destinations in western trunk-line and southwestern territories. Upon protest of the Public Utilities Commission of the State of Idaho, the operation of the proposed schedules was suspended until March 31, 1939, and has been voluntarily postponed until November 30, 1939. The Rocky Mountain Bean Growers' Association appeared in protest of the proposed increased rates. Rates will be stated in cents per 100 pounds.

For an undisclosed number of years the carriers have maintained so-called temporary rates on dried peas, beans, and lentils in the territory embraced by this proceeding. These rates are on a substantially lower basis than the normal rates which the temporary rates displace. The normal and temporary rates were increased 5 percent as authorized on March 8, 1938. The proposed increases are approximately an additional 5 percent over the normal rates. The temporary rates were published to expire August 31, 1938, but the expiration

date has been extended to August 31, 1939, and again to August 31, 1940. The suspended schedules as published are not to become effective until the expiration date of the temporary rates.

As justification for the increased rates, respondents cite the decision of division 2 in Idaho Public Utilities Comm. v. Oregon Short Line R. Co., 181 I. C. C. 731 and 183 I. C. C. 755. In that proceeding division 2 had under consideration rates on dried peas and beans, in carloads, from points in southern Idaho on the Oregon Short Line Railroad to destinations in territory embracing northern Michigan, Indiana, Kentucky, western Tennessee, Mississippi, and intermediate States west thereof but not including New Mexico and Arizona. Division 2 prescribed a reasonable basis for Mountain-Pacific territory, a basis for the removal of undue prejudice and preference as between producers in Idaho and producers in Colorado to destinations in Illinois, Oklahoma, and western trunk-line territory; and in other respects the assailed rates were found not unreasonable or unduly prejudicial. Division 2 said at page 739 of the first report:

We have prescribed 27.5 percent of first class on potatoes in and from and to the Southwest and from certain sections of western trunk-line territory to destinations in official and southern territories. Leonard, Crosset & Riley v. Akron, C. & Y. Ry. Co., 176 I. C. C. 309. In, or from or to, most of the same territories we have found justified a basis of 32.5 percent of first class on dried beans and peas. Accordingly, we cannot find that the assailed rates should be no higher than those currently applicable on potatoes. On the contrary, we find upon this record no adequate support for reasonable rates on dried beans and peas from Idaho to destinations east of Mountain-Pacific territory which are lower than 32.5 percent of reasonable maximum first-class rates from and to the same points.

The decision in that proceeding was made on February 5, 1932. Values of Idaho peas and beans, stated in the report, are 3.25 to 4.5 cents per pound for peas and 4 to 5 cents per pound for beans, f. o. b. country station; the peas weigh 112 to 120 pounds per 2-bushel bag. and the beans weigh 100 pounds per 2-bushel bag. For beans, the principal commodity under consideration, the average values, per bag, in Idaho, Colorado, and Michigan, given in the instant proceeding, in the years shown were:

Using prescribed first-class rates in effect March 27, 1938, prior to the general increases, or constructive first-class rates made in the same manner as prescribed rates, respondents show that the suspended rates are lower than 32.5 percent of such first-class rates and sub

stantially lower than rates upon that basis increased 5 percent as authorized March 8, 1938, for agricultural products. The following table contains representative proposed increased rates, 32.5 percent of the first-class rates in effect March 27, 1938, or constructive firstclass rates increased 5 percent, and the present normal and temporary rates:

On behalf of growers of beans in Utah it is testified that the cost of production has been greater than the selling price. Protestants indicate that the average production cost in Idaho, excluding any return on investment, has been $2.17 per 100 pounds, f. o. b. cars. The decrease in prices was the result of increased production and an increase in surplus. Stocks of edible beans in Idaho warehouses totaled 1,283,994 bags on December 1, 1937, and 1,417,947 bags on December 1, 1938, an increase in surplus of 123,843 bags. On September 1, 1938, the amount was 481,183 bags, and on June 1, 1938, it was 643,233 bags. In the crop year of 1938 the production was 1,566,000 bags.

Potatoes and Onions to W. T. L. and S. W. Territories, 231 I. C. C. 606, is cited, wherein division 3 dealt with proposed increases in rates, which had been subject to expiration dates, on potatoes from western producing sections, under authority granted March 8, 1938, for general increases, and found that the "authority did not include permission to advance the existing rates up to a basis previously in effect, plus an additional increase of 5 percent," and that the proceeding "simmered down to this point as justification of the proposal." Division 3 said at page 611:

In determining the reasonableness of these rates we must also consider the ability of the industry to bear the increased costs and the effect of such increases upon the movement of the traffic.

In a discussion of prices of potatoes the division said that prices prevailing in Idaho and Utah averaged 85 cents per 100 pounds ?

those for Colorado averaged $1 and that even at those prices, which were higher than prior prices, it was doubtful whether the growers were able to make a profit. Division 3 further said at page 612:

It is fair to say that, just as we had the needs of the carriers in view when we authorized increases in rates generally in 1938, we also had in mind the ability of these growers to pay increased costs and the effect of increases upon the volume of traffic when we limited our authorization to 5 percent of the then existing rates, as applied to the major products of agriculture, including the commodities now before us.

Producers of beans in Idaho compete principally with producers in Colorado and Michigan and also with producers in Nebraska. The movement of beans from Idaho is principally to destinations east of the Missouri River. It is indicated that producers in Colorado and Nebraska use motortrucks to a great extent, and apparently for that reason they are not much concerned with increases in rates by rail. In 1938 the production of dried beans was 4,567,000 bags in Michigan, 1,498,000 bags in Colorado, and 190,000 bags in Nebraska. For the United States the production was over 15,000,000 bags in each of the years 1937 and 1938 and 11,405,000 bags in 1936. Protestants argue that the voluntary reduction of rates made possible the movement of tonnage that would not have moved had the normal rates remained in effect, and that the ability to pay transportation charges must be considered. If increased rates from the points having the higher rates should curtail the movement of this traffic, the carriers serving those points might also be adversely affected.

Respondents argue that prices over a period of years rather than low prices in any year should be considered and that any effort to burden the respondents with the distress caused by low prices resulting from increased production lacks legal support. They maintain that the economic wisdom of an increase in rates cannot properly be an issue. They state that they have not been insensitive to the interests of Idaho and have endeavored to establish rates in accordance with this policy so far as was compatible with requirements of law and with their obligations to all concerned. The postponement of the expiration date of the present rates to August 31, 1940, occurred after the filing of exceptions to the examiner's proposed report. Apparently further due consideration of the interests of all concerned impelled respondents to postpone the expiration date for 1 year. There is no justification for a conclusion by us as to the lawfulness of rates at some uncertain time in the future when defendants may conclude that it is proper to establish increased rates.

We find that the suspended schedules have not been justified. An order requiring their cancelation and discontinuing this proceeding will be entered.

No. 3666

OTHER DANGEROUS

IN THE MATTER OF REGULATIONS FOR TRANSPORTA-
TION OF EXPLOSIVES AND OTHER
ARTICLES

Decided November 20, 1939

Application for authority to construct, for experimental service in the transportation of petroleum products, 50 tank-car tanks fabricated by fusion welding granted.

R. W. Thompson for applicant.

SUPPLEMENTAL REPORT OF THE COMMISSION 1

ALLDREDGE, Commissioner:

In our several prior reports we granted upon applications therein considered authority to build and use, for experimental service in the transportation of dangerous articles other than explosives, a total of 872 tank cars to be equipped with tanks fabricated by fusion welding but otherwise conforming to I. C. C. shipping-container specifications. By application of the General American Transportation Corporation dated October 11, 1939, recommended November 6, 1939, by the Bureau of Explosives and the mechanical division, Association of American Railroads, for our approval, we are asked to authorize the construction and use of 50 additional cars of I. C. C. shippingcontainer specification 105A300 type, meeting current requirements, except that tanks will be fabricated by fusion welding instead of forge welding. Tank anchors to underframes will be of riveted construction.

In support of previous application for authority for test cars for petroleum products, granted November 3, 1939, the following appears (235 I. C. C. 41):

Applicant states that

of a total of 767 fusion-welded cars previously authorized, 321 are in service. Applicant further states that service trials and periodical inspections show all cars in use to be in good condition after 7,673 trips over a total of 5,953,698 miles, an increase of over a thousand trips and a million miles of safe transportation since our next previous authorization dated March 13, 1939.

1 Under the authority of section 17 (6) of the Interstate Commerce Act, the aboveentitled matter was referred by the Commission to Commissioner Alldredge for consideration and disposition.