rates on volume shipments of these ingredients from the surplus. producing areas of the Midwest. But there are offsetting factors. Transit operators such as the protestants are manufacturers of substantial quantities of feed either at large centrally located plants or at a number of different facilities. They are able, through economies of production and by use of established brandname products, to market their mixed feed in extensive areas in competition with various local feed manufacturers. Under the proposed tariff rule the protestants will lose some of the benefit or advantage they presently have under the transit provisions currently in effect. The through rates on soybean meal, as described earlier, are published in connection with varying minimum weights ranging from 40,000 to 100,000 pounds—the higher the minimum weight, the lower the applicable through rate. Since the through rate (from origin to final destination) will be determined under the proposed modification by the generally lower weight of the outbound shipment of feed (80,000 pounds or less in southern territory) in lieu of the higher weight (100,000 pounds or more) of the inbound shipment of the soybean meal, the protesting transit operators will be required to pay higher through rates on the meal shipped under transit. Respondents correctly note that where the outbound shipments of the feed have a weight of 100,000 pounds or more, the proposed tariff change will not result in any change in the rates. However, the record shows that few, if any, of the feed shipments from the transit points equal that weight. The vast majority of these shipments range in weight from 60,000 to 80,000 pounds. The current transit rule has been in effect within southern territory for some 14 years. During this period, substantial quantities of the soybean meal moved by railroad under transit through protestants' facilities. Although most of the feed facilities were located in the South prior to the establishment of the present transit rule, there have been some plant additions and expansions by protestants under the expectation that existing provisions would be continued. Respondents take the view that the proposed rule change will have a minimal effect on the revenues of the intermediate transit operators. Using examples submitted by protestants, the railroad respondents estimate the increases in rates and charges under the proposed modification of the transit rule to be 10 percent or less depending on the weight of the outbound feed. The 10-percent figure is predicated on a weight of some 61,000 pounds of the feed, a figure less than the average loadings of the feed terminated in southern territory in 1970 of 78,000 pounds. This comparatively small increase in protestants' freight charges is contrasted by respondents with the continuance of a tariff rule which departs from their basic idea of transit and assertedly results in a loss of needed railroad revenue. This is the main thrust of respondents' arguments in support of their position that the proposed tariff rule is lawful and will result in the assessment of rates and charges that are just and reasonable. The fact remains, however, that the proposed tariff change will require protestants to pay increased rates and charges on the combined shipments of soybean meal and mixed feed to and within southern territory. The present transit rule does represent a departure from the established or normal transit arrangement; but the departure is not particularly significant, since "normal" transit provisions would provide for the assessment of the rates on the finished product (feed) from the origin of the raw material (soybean meal) to the destination point of the finished product (feed). The proposed modification would also represent a departure from the "normal" transit arrangement, since the rate on the ingredient would continue to be the applicable through rate (though at a higher level) on the soybean meal from its point of origin to the destination of the feed. What is significant in the instant proceeding is that the proposed rule modification results generally in increased rates and charges. and the respondents have not presented probative evidence in justification. The variance in the transit provisions, such as it is, was originally established by the respondents along with reduced levels of rates to attract this particular traffic. At the time, this particular tonnage was being transported by trucks. That the railroads were successful in their efforts is evident from the fact that, in the period extending from October of 1972 through March of 1973, Ralston shipped slightly more than 1 million tons of feed (or 55 percent of total production) by railroad from its facilities in southern territory where transit accounts are maintained. The remainder was transported by trucks. All of the protestants have substantial rail movements of the outbound mixed feed shipments under present transit provisions. Some 45 percent of Security's at Knoxville is shipped by rail, and 90 percent of that tonnage is moved under currently effective transit provisions. The protestants make extensive use of trucks in the distribution of their mixed feeds in southern territory and indicate that the proposed transit rule, if it becomes effective, will cause a greater utilization of this mode of transport. There is strong support on this record for concluding that these shippers will divert a considerable portion of their feed traffic, from railroad to trucks, with the establishment of the proposed rule. The record also indicates that, since the proposal would diminish the value of inbound movements, the proposed change would divert to a significant extent the meal traffic to motor or water carriage. The result will be a net loss of revenue to the respondents despite the assessment of the higher rates and charges and thus will be self-defeating. Nor is there any sound basis in this record for concluding that the proposed tariff change will increase car utilization. The incentive for the greater loadings of the soybean meal (100,000 pounds) to the transit location will be lost because the intermediate feed processor is required to pay the higher through rates applicable on the lighter loadings of the mixed feed (80,000 pounds or less). We are persuaded from the evidence submitted that the feed shipments outbound from the transit location, except in comparatively rare cases of bulk movements in large hopper cars, must be transported in shipments ranging from 60,000 to 80,000 pounds. Under section 15a(2) of the Interstate Commerce Act, the Commission is required to give consideration to the effect of the rates on the movement of traffic. The effect of the proposed tariff rule is to increase rates, even though no increase is proposed in the line-haul rates themselves. Compare Transit Charges, Southern Territory, 332 I.C.C. 664. These intermediate transit operators are, as indicated, presently using trucks to transport substantial quantities of their mixed feed shipments. Since the proposed transit modification will increase the cost of using the railroad service in the movement of the considered traffic, there will be, as we have earlier concluded, a diversion of part of the mixed feed traffic from the respondent railroads. The higher cost of transit on the soybean meal under the proposed rule would also have an effect on the inbound shipments of the meal, particularly at those transit locations having access to movements of this commodity by water carrier. We conclude that the proposed transit rule change has not been shown to be just and reasonable. In view of the above conclusion it is unnecessary to consider whether the proposed modification will result in undue preference or prejudice. We find that the proposed modification of transit arrangements on vegetable oil, cake or meal, and related articles, when used as an ingredient in animal, fish, or poultry feed, on shipments to and within southern territory is not shown to be just and reasonable. We further find that this decision is not a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969. IT IS ORDERED, That the respondents herein be, and they are hereby, notified and required to cancel the schedules described in the order entered on March 29, 1973, by Division 2, Acting as an Appellate Division, on or before 30 days from the date of service of this order, upon not less than 1 day's notice to this Commission and to the general public by filing and posting in the manner prescribed under section 6 of the Interstate Commerce Act, and that this proceeding be, and it is hereby, discontinued. By the Commission, Review Board Number 4. (SEAL) 346 I.C.C. ROBERT L. OSWALD, |