Asphalt and molasses are shipped in the same general type of tank car, equipped with heater coils. Both are heavy, viscous products and, although cars must be cleaned before transfer between the products, the cleaning need not be as thorough as with other products.

Under tariff provisions now in effect, there is no requirement for equalization for private tank cars moving empty on the lines of major railroads, and accordingly, no charge is payable for tank cars moving empty between seasonal shippers. Under the proposed tariff all unequalized empty miles resulting from such seasonal transfer operations would be subject to the published classification charges. Protestant leasing companies contend that these charges would impose a much greater total cost upon providers of tank cars than would accrue on movements for the same distances as ordinary commercial freight. For illustration, a tank car moving as commercial freight from Chicago to Peoria on the Illinois Central Railroad would move a distance of 216 miles but would only be subject to freight charges based on 146 miles at 23.5 cents per mile ($34.31). (Paragraph (a) of item 81411 of the Uniform Freight Classification makes the shorter distance controlling for tariff assessment purposes on such a commercial shipment.) In contrast a net excess empty mile balance of 216 miles of a car owner on the Illinois Central at the end of an annual accounting period would result in a flat charge of 23.5 cents per mile for all 216 miles ($50.76). Similar comparisons are available from situations where a movement of a tank car as commercial freight may be made from and to points for which a specific commodity rate is available. An example is from Chicago to Cincinnati for which a B & O specific commodity rate of $57.56 is applicable. (Item 6124-A, Supplement 87 to Agent Maurer's Tariff 100-C, I.C.C. C-412.) That charge represents 15 cents a mile, compared with the applicable rate of 23.5 cents per mile for unequalized tank car miles. The various charges shown in these examples, of course, do not reflect the Ex Parte 259 rate increases that have become effective since the hearing.

The Corn Refiners Association, Inc., representing the nation's major corn wet millers or corn refiners, strongly opposes the suspended equalization rule. Its nine members operate refining plants at points throughout the midwestern States, distributing their products throughout a national market. Corn Products Company, of Chicago, a member of that association, utilizes a fleet of approximately 1,566 leased tank cars (as well as 315 covered hopper cars) in its operations. About two-thirds of its tank car fleet is leased from an affiliate, Crystal Car Line (CCLX), and the rest of that fleet is leased from other tank car owners. It maintains that the present mileage allowance structure, which provides for payment of allowances on loaded miles only, without consideration of empty mileage, operates to encourage a more efficient use of its fleet

than would be feasible under the proposed structure which imposes a strict equalization rule.

Corn Products Company analyzed the movements of its CCLX cars for the months of February and March 1968, during which its cars earned allowances on loaded miles only, and developed the following statistics for usage of CCLX tank cars in that period:

Total Miles Loaded Miles Empty Miles Excess Loaded Miles 1,791,684

1,043,766

747,918

295,848

It believes that the present method of allowance payments facilitates "triangular movements of tank cars to produce an aggregate excess of loaded over empty miles. It described several examples of the type of "triangular" movements it has been experiencing, two of which are summarized below:

Routed: RI-790 miles
DRGW-605 miles

SP-784 miles

(2) San Francisco, Calif. to 2/6/68 Empty

Corn Products argues that enforcement of the proposed equalization rules would inhibit such triangular movements, since that kind of movement would not achieve the required 100 percent balance of loaded and empty mileage over each of

the individual participating railroads. In the first example given above, the triangular operation would provide no loaded mileage in the equalization accounts to offset the empty mileage (626 miles) incurred over the MP between Pueblo and Kansas City. If that imbalance should be maintained on an annual accounting, an excess of empty mileage would result for Corn Products' operations over MP and that mileage would be subject to revenue billing at the published classification rates per mile.

Apple River Chemical Company_produces and ships anhydrous ammonia from its plant near East Dubuque, Ill., to numerous customers primarily in Illinois, Indiana, Iowa, Wisconsin, Minnesota, Missouri, Nebraska, and Michigan. Its annual production approximates 220,000 tons, about 50 to 60 percent of which is shipped in the peak fertilizer season, the months of April, May, and June. During the peak season it ships between about 35,000 and 50,000 tons of anhydrous ammonia by rail in tank cars. During the first 6 months of 1968, its leased tank car fleet ranged between about 250 and 600 cars, all but about 35 of which were "regular" size cars, of 11,000-gallon capacities.

Since its shipping requirements are so sharply seasonal, Apple River finds that it is not economically feasible to lease cars on a year-round basis in sufficient quantity to meet its peak needs. Therefore it attempts to obtain as many of its tank cars as possible for short terms, 1 month to 6 months duration. Apple River also participates in "split lease" arrangements with shippers of liquefied petroleum gasses, for coordinated use of jumbo size tank cars. This type of arrangement involves a relatively long term commitment providing that Apple River will use the car for 5 months of the year, and its companion lessee, a shipper of LPG, for 7 months. At the end of Apple River's 5-month portion of the year, it transfers the empty cars, via a cleaning facility, to the plant of its companion lessee. When the LPG shipper is located in Texas, a substantial amount of empty miles will accrue in this process of transfer. since Apple River, whose customers are located primarily in midwestern States, has little likelihood of giving these cars a last loaded movement in the general direction of the Southwest. Apple River regards the split leasing arrangement one which enables both itself and its companion LPG lessee to keep leasing costs at a minimum.

Another cost saving practice in the anhydrous ammonia business is that of exchanging or "swapping" product. Cooperating shippers often engage in this practice for the purpose of saving freight dollars. The arrangement is that under certain circumstances a shipper will supply product to its customers from the plants of competitor producers located closer to the customers. It involves moving an empty tank car addi

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tional empty miles to the competitor's plant for loading. The practice tends to complicate Apple River's shipping problems in that it makes it extremely difficult to establish effective control procedures for its tank cars. It also results in the accrual of some excess empty mileage, which Apple River makes a strong effort to minimize.

Apple River prefers to lease and use smaller tank cars (11,000-gallon capacity) than the larger (18,000 to 33,500 gallon capacity) cars. Since most of the full storage tanks being used by its customers are in the 12,000-gallon capacity range, the shipment of a larger tank car load to such a customer 10cation means that the car will be detained there for a longer period of time before it is unloaded. Gross weight limitations on some trackage further limit the practical utility of the larger tank cars. Some of Apple River's customers use rail tank car delivery service because it provides a chance for temporary storage of the product. At times in advance of its shipping season, Apple River will lease trackage at various locations in Illinois and Iowa for the purpose of holding loader tank cars for prompt forwarding to its customers at the "break" of the season.

In some instances failures by the railroads to follow specific routing instructions for tank cars made empty at destination will generate substantial accruals of empty car miles. One specific example described by Apple River resulted in a total of 2,716 empty miles accrued for one tank car when-had routing instructions been followed--actual empty mileage would have been 119 miles.

Cities Service Oil Company, whose domestic operations include refining, manufacturing, and marketing of petroleum and petroleum products in 29 States and the District of Columbia, operates a total tank car fleet ranging between 1,000 and 2,000 cars. At the time of the hearings its fleet consisted of 800 owned tank cars and 340 leased cars. The application of the proposed mileage allowances to its 1968 operations (as projected by Cities Service in early 1968 when respondents published the suspended tariff) would have reduced its projected mileage compensation by about 5 percent for the year, or approximately $50,000. Moreover, the application of the proposed equalization rules to the empty mileage incurred in its normal operations for the year would have reduced its mileage compensation by another 15 percent, or approximately $150,000.

Additionally, Cities Service prepared an estimate of the costs it would bear in establishing and maintaining a system of car control and mileage record keeping to meet the requirements of the new equalization rules. Beyond substantial initial expenditures--approximately $15,000 for clerical work