No. 34348 BOARD OF TRADE OF THE CITY OF CHICAGO v. Decided December 4, 1973 Upon further hearing, assailed carload rates on soybeans from central and southern Illinois origins to Chicago, Ill., for export, found not shown to be unjust and unreasonable, but to be unduly prejudicial to Chicago and unduly preferential of the gulf ports. Findings in prior report, 329 I.C.C. 529, reversed in part. Unlawfulness ordered removed. Appearances as shown in prior reports, and, in addition: William E. Eich, John P. Hynes, Charles E. Keeley, F. Clinton Lind, and John A. McWilliam for intervenors in support of complainant. Franklin C. Gagen for an intervenor in support of defendants. REPORT OF THE COMMISSION ON FURTHER HEARING BY THE COMMISSION: Exceptions to the report and recommended order of the hearing examiner' on further hearing were filed by both the complainant and the defendants' and an intervenor' in support of the latter, to which the complainant and defendants replied. Exceptions and requested findings not discussed in this report nor reflected in our findings or conclusions have been considered and found not justified. 'Effective August 19, 1972, this position title was changed to Administrative Law Judge. Illinois Central Railroad Company (IC), Gulf, Mobile and Ohio Railroad Company (GM&O), the Chicago & Eastern Illinois Railroad Company (C&EI), and Wabash Railroad Company (Wabash). Norfolk and Western Railway Company (N&W) acquired operating control of the Wabash in October 1964, and by prehearing conference order of August 25, 1969, the Wabash was dismissed as a party defendant and the N&W was substituted. Reference hereinafter to N&W also includes, where applicable, the Wabash prior to that date. New Orleans Traffic and Transportation Bureau concurred in and adopted the exceptions submitted by the defendants. 344 I.C.C. 4 This proceeding was originated by a complaint filed by the Board of Trade of the City of Chicago, Ill., alleging that the local and joint rates' maintained by the defendants on soybeans, in carloads, from Illinois origins to Chicago, Ill., for export, to the extent that they exceed the rates on soybean meal to Chicago from the same origins, are unjust and unreasonable in violation of section 1 and the policy of Congress stated in section 3(1a) of the Interstate Commerce Act, and, in relation to the corresponding rates on export soybeans to the gulf ports,' are unduly prejudicial to the port of Chicago and unduly preferential of the gulf ports in violation of section 3(1) of the act. The complainant requested the Commission to order the defendants to cease and desist from the alleged violations, and to prescribe export soybean rates to Chicago on the same level as rates maintained by defendants from the same origins to competitive gulf ports, which reflected 9 percent of the then current first-class rates prescribed in docket No. 28300, Class Rate Investigation, 1939, 262 I.C.C. 447, and later reports, as modified by subsequent general increases. Various interested parties intervened in support of defendants.8 In the initial report and recommended order, to the extent now pertinent, the Administrative Law Judge found the assailed rates on soybeans from points in central Illinois to Chicago, when for export, not shown to be unjust and unreasonable in violation of section 1 of the act, but that to the extent such assailed rates reflected a higher percentage of docket No. 28300 first-class rates than did the corresponding export rates to the gulf ports, they are unduly prejudicial to the port of Chicago and unduly preferential of the gulf ports, in violation of section 3(1) of the act. Upon exceptions, the initial report of the Commission, 325 I.C.C. 412, decided May 10, 1965, division 2 affirmed the finding of the Administrative Law Judge that the assailed export rates on soybeans 'Rice Grain Corporation, an exporter of soybeans and operator of a terminal grain elevator in the Chicago switching district, intervened in support of complainant, as did the Chicago Association of Commerce and Industry, and the Department of the Port of Chicago. "Rates are stated in cents per 100 pounds. For purposes of this proceeding, the Illinois points are divided into northern, central, and southern origins, as shown in appendix A hereto. On further hearing, the complainant abandoned its allegations with respect to the northern origins, and the lawfulness of the rates therefrom will not be further considered. 'Located on the coast of the Gulf of Mexico, or on waters connecting with said gulf, including New Orleans, Destrehan, and Baton Rouge, La., Gulfport, Miss., and Mobile, Ala., hereinafter collectively referred to as the gulf ports. "New Orleans Traffic and Transportation Bureau, and certain central Illinois soybean processors namely, Allied Mills, Inc., Archer Daniels Midland Co., Central Soya Co., Inc., Lauhoff Grain Co., Ralston Purina Co., A. E. Staley Manufacturing Co., and Swift & Co. to Chicago were not shown to be unjust and unreasonable under section 1 of the act nor to contravene the policy expressed in section 3(1a), but found such rates unduly prejudicial to the port of Chicago and unduly preferential of the gulf ports to the extent that the rates to Chicago were higher than the corresponding export rates on soybeans from the same origins to the gulf ports. Thus, the division modified the recommended finding regarding section 3, using the actual amounts of the rates to measure the violation, and not the level of the rates. The proceeding was subsequently reopened for reconsideration by the Commission, on its own motion, by order dated June 10, 1966.' In a report on reconsideration, 329 I.C.C. 529, decided March 13, 1967, the entire Commission affirmed the findings in the prior report of division 2. Thereafter, on July 25, 1968, the District Court entered its decision in the court suit referred to, 291 F. Supp 858, affirmed per curiam, 394 U.S. 717 (1969), vacating and setting aside the prior orders of the Commission of May 10, 1965, and March 13, 1967, and remanding the matter to the Commission for further proceedings. 10 By order of September 17, 1968, the Commission reopened the proceeding for further hearing. A prehearing conference was held to redefine and clarify the issues, following which an order was entered which dismissed the section 3(1a) allegation. Upon further hearing the record was updated by rate and statistical data to show the more current rate situation, including the general increases authorized to and including Ex Parte No. 259. reductions in the assailed rates to Chicago and the compared rates to the gulf ports, and additional comparisons of export rates on soybeans from Iowa, Michigan, Mississippi, Ohio, and Indiana to Chicago, New Orleans, Houston, Tex., Baltimore, Md., and Toledo, Ohio, with the assailed rates, as well as the current soybean meal rates from origins principally in central Illinois to Chicago and gulf ports. In the light of certain reductions in the export rates to the gulf ports, complainant, on further hearing, now seeks rates to Chicago based upon 7 percent of the docket No. 28300 first-class rates, in lieu of the 9 percent previously sought. Also, additional parties' were permitted to intervene in support of the complainant. In substance, the collective "A court action had previously been instituted in the United States District Court for the Northern District of Illinois, City of Chicago and Board of Trade of the City of Chicago v. U.S., Civil Action No. 66-D-524. 10 Increased Freight Rates, 1968, 332 I.C.C. 590 and 332 I.C.C. 714. "The Department of Business and Economic Development of the State of Illinois, The State of Wisconsin, and the Detroit-Wayne County Port Commission. position of these intervenors is that mere equalization in amounts of the assailed rates with the rates to the gulf ports as previously found by the Commission, will not remove the alleged unlawful prejudice to Chicago. They urge, as does complainant, that the port of Chicago is entitled to export rates which reflect the substantially shorter distances from points in central Illinois to Chicago than from the same origins to the gulf ports. The Administrative Law Judge's report on further hearing was served December 9, 1970. The evidence of record recited by him in his report is not in dispute. A summary of the facts follows for a clear understanding of the issues. Illinois is the largest soybean producing State in the Nation, with approximately 20 percent of total national production. About twothirds of Illinois' production is grown in central Illinois. Soybeans are harvested during the months of September, October, and November. September 1 is regarded as the beginning of a new crop year. Between 1963 and 1969, Illinois' production of soybeans increased from 164.5 million bushels in 1963 to an estimated 210 million bushels in 1969. Annual production in Illinois for 1966, 1967, and 1968, as representative years, was approximately 160.4, 186.3, and 204.4 million bushels, respectively, of which 105.4, 122.4, and 132.2 million bushels were produced in central Illinois. As of September 1 of each year, there is an inventory of prior receipts of soybeans, or carryovers, in Illinois in all so-called "positions" (which includes stocks on farms, at mills, elevators, warehouses, terminals, processors, and those owned and stored by the Commodity Credit Corporation). The crop carryover for the years 1966, 1967, and 1968 was 7, 10, and 28 million bushels, respectively. Most of the Illinois production is purchased by processors, and some by exporters. Soybeans are marketed through merchandisers. They buy soybeans from country elevators and sell them to the processors and exporters who compete in the bidding for the beans. The processors produce soybean oil and meal, and they have plants in central Illinois and Chicago which are served by the defendants. 12 Total capacity of the processors exceeds the soybean production in central Illinois. As a result, these processors also compete for soybeans grown in other areas, such as Indiana and Iowa. The "GM&O has three processors on its line, one at Bloomington and two at Chicago, Ill.; N&W has processors at eight points, including Chicago; C&EI serves a processor at Chicago and Danville, Ill., through reciprocal switching arrangements; and the IC has five processors at different points on its lines. |