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The specific violations of the act alleged by complainant are the unreasonableness of the present rates, the unreasonableness in the method and manner of their establishment and preference and prejudice between complainant and its competitors. As noted above, this record will not sustain a finding that defendants' exclusion of Schilling from the Wallula-Lewiston group or failure to institute a mileage scale of rates constitutes an unreasonable practice.

An important test of reasonableness is the comparison of an assailed rate with others which represent a proper standard of comparison. Chicago Board of Trade v. Illinois Central R. Co., 329 I.C.C. 529, 532. The Commission may not arbitrarily fashion a standard out of whole cloth. The party assailing a rate has the obligation to establish that the standard desired is rational and that it has in fact met the standard proposed. Inspection in Transit, Grain and Grain Products, 349 I.C.C. 89, 93. Often, in determining the reasonableness of rates on a particular kind of traffic, the most important facts of record are those pertaining to rates on like traffic in the same general territory. Albany Port District Comm. v. Ahnapee & W. Ry. Co., 219 1.C.C. 151, 164.

The rates submitted for comparison are not probative of the issue of reasonableness for the following reasons. It has been noted that Schilling is located in different territory than the origin group in which it seeks inclusion and is subject to different transportation conditions. It is well settled that rates depressed by water competitive conditions cannot serve as bases for determination of a reasonable maximum. See Timber Engineering Co. Southwest v. A., T. & S. F. Ry. Co., 262 1.C.C. 118, 123. Furthermore, point-to-point rates do not afford a proper basis for comparison with rates constructed on the group principle. S.H. Kress & Co. v. Central of Georgia R. Co., 274 I.C.C. 272, 273. In regard to the rate from Missoula on particleboard, comparisons with “paper rates," which move little or no traffic, are of little probative value. State Board of Equalization of Wyo. v. Abilene & S. Ry. Co., 305 1.C.C. 497, 512. In view of the foregoing, we conclude that the rate comparisons relied upon by complainant lack probative value.

358 I.C.C.

The short tariff miles computed by complainant and offered to show that movements from Schilling to California destinations are shorter than from points in the Wallula-Lewiston origin group, are also unpersuasive. The reason for this that the Silver Bow gateway was not used before February 1976, and no movements had occurred over this route for several years. The defendants proposed cancellation of this gateway effective December 31, 1976, is the subject of another proceeding. The traffic has moved for many years over the Portland gateway, Southern Pacific being the basic rate making carrier and short-line distances have been largely disregarded in constructing the rates. Southern Pacific does not participate in shipments over the Silver Bow route and the only connection which the Burlington Northern has is to isolated mountain points. Furthermore, the movements upon which the short tariff miles were constructed are confined to limited southern California destinations.

As to the cost data presented, complainant has made no study or showing of actual operating characteristics at any of the shipping points. Only territorial average data based on mileages over hypothetical routings were used to develop the costs. Specifically, no traffic studies or studies of switching operations at the various terminals were conducted. Minimum tariff weights were used in constructing the costs, whereas costs are related to actual lading weights. These, in addition to other factors, such as turnaround times, special services, et cetera, all have an affect on costs. In order to determine, from a cost standpoint, where the rates from one point should be comparable to those from other points, each of these factors which affect costs should be studied and computed. Only after these matters have been considered would it be possible to determine if the cost were similar or different for the handling of the subject traffic from the various origin points in question.

Both the defendants and the complainant have updated 1974 costs to the October 1975 level by different index factors. However, neither method was shown to accurately depict the costs at this level.

Differences were noted in the costs computed by defendants and complainant with respect to mileages and numbers of interchanges used. Since the costs were intended to depict hypothetical rather than actual movements it is not possible to resolve these differences. In any event, a mere showing of differences in the ratios of revenue to variable costs produced by rates from different points does not establish that particular rates aree unreasonable.

There remains the issue of the alleged section 3 violation. In order to warrant a finding of undue preference and prejudice the evidence should disclose (1) that a difference in the level of rates exists in favor of the preferred points; (2) that the difference in rates is not justified by transportation conditions; (3) that there is a carrier or group of carriers which is the common source of the rate prejudice and which effectively participates in both the prejudiced traffic and the preferred traffic;

358 I.C.C.

and (4) that the prejudiced party or parties suffer actual or porential injury. The burden of proof is on the complainant to establish that the carrier's rates are subjecting them to undue preference or prejudice. The mere fact that there is, in a given instance, a preference or advantage does not of itself establish that such preference or advantage is undue or unreasonable within the meaning of the act. The law does not attempt to equalize opportunities among localities. A difference in rates cannot be held illegal, unless it is shown that it is not justified by the cost of the respective services, by their values, or by other transportation conditions. United States v. Illinois Cent. R.R., 263 U.S. 515, 524. The evidence of record shows there is a difference in rates between Schilling and California points and the Wallula-Lewiston group and those points. Defendants also appear, as a group, to control these rates. However, complainant has not shown that it suffers any injury from these rate differences. Therefore, we conclude that the assailed rates are not shown to be unduly preferential or prejudicial.

ULTIMATE FINDINGS

Upon consideration of the evidence of record, we find that the assailed rates on pulpboard from Schilling, Mont., to points in California are not shown to be unjust and unreasonable, or to constitute an unreasonable practice in the method and manner of their establishment, and are not shown to be unduly prejudicial to complainant and preferential of Pacific Northcoast pulpboard producers.

And 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.

BOARD MEMBER Shaw did not participate in this proceeding. 358 I.C.C.

IT IS ORDERED, That the complaint filed in this proceeding be, and it is hereby, dismissed.

358 1.C.C.

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