No. 35301

WEST VIRGINIA INTRASTATE FREIGHT RATES, 1970

Decided January 8, 1973

West Virginia intrastate freight rates and charges found to cause unjust discrimination against, and undue burden on, interstate commerce. Basis for removal thereof determined, and approved increases found to comply with the regulations promulgated by the Commission in Ex Parte No. 280.

Rene J. Gunning, Edward R. Gustafson, Charles N. Marshall, and Richard W. Kienle for respondents.

Walter J. Myskowski, George J. Ketterer, and Robert M. Scott for protestants.

Cassius H. Toon, Robert L. Stewart, and John E. Lee for the Public Service Commission of West Virginia.

REPORT OF THE COMMISSION

REVIEW BOARD NUMBER 4, MEMBERS
BROWN, ROCK, AND FITZPATRICK

BY THE BOARD:

Exceptions to the examiner's report and recommended order were filed by the respondents,' the protestants, and the intervenor,' to which the parties replied. Our conclusions differ in part from those recommended. Exceptions and requested findings not discussed in this report nor reflected in our findings or conclusions have been

2

'The Baltimore and Ohio Railroad Company, Beech Mountain Railroad Company, The Chesapeake and Ohio Railway Company, The Kanawha Central Railway Company, Kelley's Railroad Company, Norfolk and Western Railway Company, Penn Central Transportation Company, Western Maryland Creek and Northwestern Railway, West Virginia Northern Railway Company, and Winifrede Railroad Company.

'Appalachian Power Company (Appalachian Power), Acme Limestone withdraw its opposition by letter received July 19, 1972.

'Public Service Commission of West Virginia (PSC).

considered and found not justified or their resolution not necessary for the proper disposition of the proceeding.

This is an investigation instituted September 14, 1970, under section 13(4) of the Interstate Commerce Act, upon petition of the railroads operating in West Virginia, to determine whether the railroad rates and charges for the intrastate transportation of property made or imposed by authority of the State of West Virginia, cause undue discrimination against or an undue burden upon interstate commerce by reason of the fact that such rates do not include increases corresponding to those made effective on interstate traffic as authorized in Ex Parte Nos. 262, 265, and 267 and, if so, what rates and charges shall be prescribed to remove any unlawfulness found to exist. All common carriers by railroad in West Virginia were made respondents, and copies of the order of investigation and notice of hearing were served on each of the respondents, the State of West Virginia, the Public Service Commission of West Virginia, and on other interested parties.

Respondents are seeking an increase in West Virginia intrastate rates to bring revenues up to the interstate level approved by this Commission in Ex Parte Nos. 262, 265, and 267. A 6-percent adjustment is sought based on Ex Parte No. 262, which has been denied twice, on June 23, 1970, and February 10, 1971. A second 6-percent increase is sought based on Ex Parte No. 265 which was also denied by the PSC on February 1, 1971. The PSC denied the increases because the respondents failed to separate intrastate costs. Respondents did not attempt to secure a 14-percent intrastate increase based on Ex Parte No. 267 from the PSC, but instead sought relief under section 13(4) of the Interstate Commerce Act. The cumulative effect of the proposed increases, compounded, is approximately 28.1 percent.

EVIDENCE OF RESPONDENTS

All West Virginia intrastate freight rates on file with the PSC which bear a notation that they are not subject to any of the three increases here involved, would be affected by the sought increases, if granted. Also, certain interstate rates which are maintained at the level of

'Ex Parte No. 262, Increased Freight Rates, 1969, 337 LC.C. 436, effective November 18, 1969, approved general increase of 6 percent. Ex Parte No. 265, Increased Freight Rates, 1970, 339 I.C.C. 125, effective June 9, 1970, approved general increase of 6 percent. Ex Parte No. 267, Increased Freight Rates, 1971, 339 I.C.C. 125, effective April 12, 1971, approved a 14-percent increase generally, except 8 percent on traffic from, to, or within the South.

the existing intrastate rates would be increased. Application of the
increases granted in the Ex Parte Nos. 262, 265, and 267 would
produce annually approximately $1.3 million in additional revenues
to the respondents for the intrastate transportation of coal and coke.

The following table shows that the average revenue per ton-mile
for four class I railroads,' which operate 96.1 percent of the total
railroad miles operated in the State, exhibited a downward trend
during the last decade whereas wholesale and consumer prices
trended up:

In the 3 years following 1966, hourly straight time rates of pay for

all class I railroad employees increased from 309.9 cents to 370.4

cents (19.5 percent), and the index of wage rate and material prices,
combined (1957-59-100), increased from 121.7 cents to 143.1 cents.
Net operating income for the four class I railroads operating in West
Virginia" decrease from $246 million in 1966 to $227 million in
1969, a decrease of some 8 percent despite the general increase

'Class I railroads (those with revenues in excess of $5 million annually): Baltimore & Ohio
Railroad (B&O), Chesapeake & Ohio Railway (C&O), Norfolk & Western (N&W), Western
Maryland (WM), and Penn Central Transportation Company (PC). The PC will be understood to
be excluded in any reference to "the four railroads."

"Hereinafter the phrase "operating in West Virginia" will be understood but omitted from the

text of this report.