The following table shows the number of cars with an Oklahoma origin but which moved from a transit station in Texas, and the percentage they comprise of the whole study, to the named ports for the period 1973-1975:

A sales representative in respondent's office attributed the 1974 decline over 1973 at Corpus Christi to a drop in export demand. Respondent concedes that the same circumstances would appear to apply at all ports. The aforesaid tables establish that in 1975 Corpus Christi was the third busiest port in terms of exporting shipments originated by Santa Fe.

No study has been made of the extent to which wheat is trucked to Galveston, Beaumont, or Port Arthur. Respondent believes there has been some motor movements to Galveston and Beaumont, but not to the extent to which this mode of service is used to Houston. There has been no trucking to Corpus Christi. From Woodward, Buffalo, Enid, Freedom, Medford, Blackwell, Waynoka, and Kiowa the short highway distance to Corpus Christi ranges from 107 to 130 miles greater than the distance to Houston. By the same standard the distance to Galveston ranges from 23 to 41 miles more than the distance to Houston, and from 59 to 107 miles less than the distance to Corpus Christi.

For all the above reasons and perhaps others, respondent decided to proceed with a realignment of rates in the territory. On direct examination the witness testified that he began with the existing Enid to Houston rail export rate of 60.5 (Ex Parte No. 313 level). For fixing the rates at stations beyond Enid he applied increments of 0.5 cent for each 5 miles the sation lay beyond Enid. In computing mileages for stations located in what may be called the western portion of the adjustment the witness worked north from Enid to Kiowa thence south to Waynoka thence northwest to Buffalo and southwest to Shattuck.

The first station north of Enid is Hillsdale about 13 miles away and the rate proposed for this point is 61 cents. The next station to the north is Nash about 8 miles and this is accorded a rate of 62 cents. The next station is Jet, about 8 miles from Nash, which is given a rate of 63 cents. Cherokee is about 10 miles from Jet and is assigned a rate of 64.5 cents. Burlington 11 miles from Cherokee has a rate of 66 cents and Kiowa 9 miles from Burlington a rate of 68 cents. As can be seen from the above pattern respondent did not abide by the 0.5 cent increase for each 5 mile increment beyond Enid.

In what may be called the middle segment of the area under consideration, that is the territory served by lines extending south from Anthony, South Haven, and Arkansas City and converging at Ponca City and thence extending south to Red Rock, respondent began with the rate from Otoe to Houston. This rate at the Ex Parte No. 313 level was 60.5 cents, the same as the rate from Enid. Moving north from Otoe, the first station is Red Rock, 5 miles distant. It was given a rate of 61.5 cents. Further north in this same area Ponca City is given a 64 cent rate. Blackwell a station about 17 miles to the west northwest, and five even more distant points take the same 64 cent rate. In the easternmost portion of the territory at stations such as Ralston, Osage Junction, and Fairfax respondent started with the rate of 60.5 cents from Skeedee to Houston.

In both areas respondent ostensibly increased the rates by increments of 0.5 cents for each 5 miles north of Otoe and Skeedee, but as was true of the situation in the west the standard was observed more in the breach than in conformity. In any event it is clear that in the making of rates for stations in the middle and eastern sections of the adjusted territory respondent did not rely on Santa Fe miles from Enid because the layout of its tracks would make such rates prohibitively high in relation to the rates maintained by Rock Island which serves a portion of this territory. As noted respondent does not operate over the short route between Enid and the Ponca City area, but in a certain sense it assumed that points east and northeast of Enid should be treated as if Santa Fe has the short-line route to this territory.

With few exceptions the proposed rates were constructed by placing several stations in the same rate group. The most extensive is the 10 stations stretching from Clyde to White Eagle which collectively take a 64 cent rate. Respondent does not believe that elevators located at each of the 10 stations are in competition with stations in adjacent rate groups to the north or south. It does not believe points as distant as Avard and Kiowa (29 miles) are in competition for wheat from the same growers, but at some point between Alva and Kiowa (18 miles) growers have the option of selling to either elevator. Nevertheless, respondent concedes that the effect of the recent adjustment is to continue Avard in the same relationship to Kiowa as Alva. Yet, at the same time the stations west of Waynoka which up to Ex Parte No. 313 had enjoyed parity were chopped into numerous groups with the rates progressing upward as distance increased.

In working up the rates under investigation respondent concluded that because of competition from trucks it would be impractical to remove the

spreads or disparities by increasing the rates from Alva-Avard and Enid. It concedes that the past more favored position of Alva-Avard does not necessarily mean that these stations have been more successful in retaining rail traffic than communities less favored. Thus, wheat was trucked from Alva-Avard even though the rail rate was lower than that of surrounding stations. As the reduced rates from Waynoka and Kiowa do not go as low as the Alva-Avard level, respondent admits there will be truck competition from the surrounding communities despite the adjustment.

The following table shows the volume of rail traffic from Alva-Avard for the 3 years 1973-1975.

In the category of "All other points" was traffic that moved to transit points such as Enid rather than directly to the gulf. Most of the shipments in this group moved to Enid, but there were some to Fort Worth, Tex., and Shawnee, Arkansas City, and Wichita, Kans. All the points named are transit stations on movements to the Texas gulf. To Enid in 1975 there were 24 cars carrying 2,385 tons from Alva, and 66 cars carrying 6,436 tons from Avard. There was no substituted tonnage from either point to Enid. The declines from Alva-Avard shown in the above table between 1973 and 1975 could be due to a lesser harvest, railroad or motor competition, or a decline in export demand.

In an attempt to compete with the motor carriage of wheat to transit points such as Enid during period when cars are in short supply respondent published what it terms a "Truck Substitution Allowance Tariff." Under this arrangement the shipper provided he satisfies certain conditions designed to protect the integrity of the plan, may move wheat by truck, but under rail billing from

origin to Enid and be paid an allowance based on the distance of the move. The allowance ranges from 5.5 cents a 100 pounds for distances of 0 to 20 miles up to 11 cents for distances of over 70 and up to 80 miles. Most of the origins here under consideration are named in the allowance tariff including no points more than 80 miles from Enid, but in all such cases the allowance does not exceed the maximum of 11 cents.

The plan works in somewhat the following manner. Respondent's agent at the country origin prepares a freight bill which shows the local rail rate from the country origin, Clyde for example, of 30 cents to Enid from which he subtracts the allowance of 7 cents. Usually the terminal elevator pays the inbound charges of 23 cents. Wheat handled under the arrangement is entitled to transit. On the outbound move from Enid the shipper may avail itself of the local Enid to Houston rate of 60.5 cents or he could apply the inbound substituted truck transit tonnage to the outbound movement which would mean payment of a rate of 64 cents (Clyde to Houston rate) minus the 30 cent local rate. If the trucking cost from Clyde to Enid is greater than 3.5 cents the country elevator would be better off using the truck substitution plan rather than shipping rail. Respondent terms the allowance a success. It is not used to an even greater extent because it does not cover the full cost of trucking to Enid.

The rates so worked up were docketed with the Western Trunk Line Committee and the Southwestern Freight Bureau on April 19, 1976, but the proposal was rejected on May 13, 1976. As presented to the above bodies respondent sought to establish single-line reduced rates to Houston, Galveston, Beaumont, and Texas City. On this basis the rates would not have applied to Corpus Christi because Santa Fe does not serve this point. Subsequently respondent decided to proceed with the adjustment through independent action, and on June 3, 1976, it amended its filings with the rate bureaus by eliminating most Kansas origins and included Corpus Christi as a destination. The refiling indicated that the adding of Corpus Christi was taken "regretably" as respondent could not afford to become involved in litigation relating to burdensome restraints placed on carriers in outstanding port equalization orders. The refiling indicated with with respect to ports not served direct such as Corpus Christi respondent was seeking the concurrence of its connecting lines. Copies of the June 3 notice were mailed to Missouri Pacific, Southern Pacific, and Kansas City Southern with an accompanying letter on June 7, 1976. The first two carriers serve Corpus Christi and one or perhaps both participated in the rates in effect prior to August 28, 1976. Respondent followed up by telegrams of June 10 to the same carriers indicating there was no fourth section disability and encouraging them to disclose their position on concurring in the reductions. By telegram of the following day the same carriers were told that the reductions applied only to wheat and it was not contemplated that there would be a broadening to include other grains. On June 16, 1976, Kansas City Southern was told that respondent did not intend to broaden the proposal to cover Louisiana ports as the existing Oklahoma rates did not apply to Louisiana ports. As no replies were received Santa Fe proceeded with publication and filing with the Commission. Up to late September neither of

the connecting lines serving Corpus Christi agreed or declined to participate in the reduced rates. Respondent submits it is ready and willing to apply the reduced rates to Corpus Christi when concurrences are received.

By a letter dated September 24, 1976, received by Santa Fe September 27, a representative of Missouri Pacific advised that the revenue it would realize from the reduced rates at either the tariff minimum of 150,000 pounds, or even 190,000 pounds, and on the basis of a 32-percent division factor is below variable cost. It asked whether an arrangement could be worked out whereby it would receive a greater division of the through revenue. Santa Fe as of the October 15, 1976, hearing date had not responded to the inqiury but has the matter under study.

There is an established basis for dividing revenue on export shipments of grain from all origins served by Santa Fe to Corpus Christi and other Texas ports which it does not serve. Accordingly respondent submits there was no need to obtain a division agreement, but it was necessary to receive concurrences from the connecting lines before showing them as participating in the movement to Corpus Christi.

Protestants on cross examination refer to Missouri Pacific Railroad Company concurrence FCI No. 2 dated November 11, 1957, and Southern Pacific Transportation Company concurrence FCI No. 1 dated January 5, 1970, wherein the railroads in communications to the Commission state that they concur in all freight tariffs filed by Santa Fe in which they are shown as participants, and suggest that these documents constitute all the authority Santa Fe needs to apply the supplement 76 rates to ports served by Missouri Pacific and Southern Pacific. Respondent concedes that there is nothing in the concurrences indicating that something more is required of the signatories. before Santa Fe may show them as participating in a joint rate. Both Missouri Pacific and Southern Pacific are shown as participating carriers in tariff 5655-J. Respondent rejects protestants' position and contends that pursuant to long standing business practices between railroads, unlimited concurrences of the type described are understood as merely showing that the assenting carrier participate in tariffs issued by the carrier to whom the concurrence is directed. It submits that unlimited concurrences do not constitute approval of the signatory to a particular rate and before a carrier may be shown as participating in a specific rate published by another carrier it must assent specifically to participation. According to respondent, the assent may be evidenced by the record or minutes of a rate bureau meeting or by a letter communication.

Respondent's witness was questioned concerning his awareness of Commission order in docket No. 31098 dated January 19, 1954, which arose out of the report in Nueces County Nav. District No. 1 v. Abilene and S. Ry. Co., 291 I.C.C. 459, and the order in docket No. 33447 dated November 14, 1961, issued following the decision in Nueces County Nav. Dist. No. 1 v. Atchison, T. & S.F. Ry. Co., 315 I.C.C. 155, requiring numerous defendant carriers including Santa Fe and Missouri Pacific to publish rates to Corpus Christi no higher than those published to Galveston and Houston. The responses of the witness were contradictory, but the weight of the evidence suggests he was familiar with the aforesaid orders.