FINANCE DOCKET No. 11584 CHESAPEAKE & OHIO RAILWAY COMPANY Submitted May 29, 1937. Decided July 23, 1937 1. Certificate issued authorizing operation under trackage rights by the Chesapeake & Ohio Railway Company over certain lines of railroad of the New York, Chicago & St. Louis Railroad Company, the Illinois Central Railroad Company, and the Chicago & Western Indiana Railroad Company. 2. Application for permission to abandon operation under trackage rights over certain lines of railroad dismissed. Robt. B. Tunstall and Geo. H. Gardner for applicant. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS MEYER, PORTER, AND MAHAFFIE BY DIVISION 4: The Chesapeake and Ohio Railway Company, on March 11, 1937, applied for authority under section 1 (18) of the Interstate Commerce Act, (1) to operate under trackage rights (a) over the line of railroad of the New York, Chicago and St. Louis Railroad Company, hereinafter sometimes called the Nickel Plate, between Erie Junction, Lake County, Ind., and the point of connection with the railroad of The New York Central Railroad Company, hereinafter sometimes called the New York Central, at or near Seventythird Street, approximately 10.89 miles, in Chicago, Cook County, Ill., and also over a track of the Nickel Plate extending from the line above described to a connection with the line of the Illinois Central Railroad Company, at or near Eighty-third Street, approximately 0.09 mile, in Chicago, (b) over the line of railroad of the Illinois Central between Illinois Central Junction and South Water Street freight house, north of Randolph Street, approximately 9.93 miles, in Chicago, and (c) over the line of railroad of the Chicago and Western Indiana Railroad Company, hereinafter sometimes called the Western Indiana, between its point of connection with the line of the Nickel Plate and its point of connection with the line of The Belt Railway Company of Chicago, hereinafter sometimes 221 I. C. C. called the Belt Railway, at Pullman Junction, approximately 0.35 mile, in Chicago; and (2) for permission to abandon operation under trackage rights (a) over the line of railroad of the Chicago and Erie Railroad Company, hereinafter sometimes called the Erie, between Erie Junction and Indiana-Illinois State line, approximately 0.43 mile, in Lake County, Ind., and (b) over the line of railroad of the Western Indiana between Indiana-Illinois State line and Dearborn Station, at Polk Street, in Chicago, approximately 19.99 miles. No representations have been made by any State authority and no objection to the application has been offered. In 1910 the applicant acquired control through its subsidiary the Chesapeake and Ohio Railway Company of Indiana of its present Chicago division, extending from Cincinnati, Ohio, to H. Y. Tower, Ind., a point in the city of Hammond, and subsequently operated trains into the Chicago terminal district under various trackage agreements with other railroads. The property of the carrier last named was leased to the applicant in 1921, Chesapeake & O. Ry. of Indiana Lease, 70 I. C. C. 694, and subsequently acquired by it. See Chesapeake & O. Ry. Co. Acquisition, 202 I. C. C. 235. Reference herein to operation by the applicant between 1910 and 1921 means operation by the subsidiary. From 1910 until March 13, 1925, the applicant secured access to the terminal district by using the Erie between H. Y. Tower and the State line, and the Western Indiana between the State line and Dearborn Station, at Polk Street, in Chicago, including the connection between the Western Indiana and the Chicago Junction Railway at Fortieth Street for entrance to the stockyards. By an agreement dated March 23, 1920, effective April 1, 1920, it arranged for use of the South Water Street freight house of the Illinois Central, and the main line of that carrier between its point of connection with the Western Indiana near Fordham yard and the freight house mentioned, but continued operation over the Erie and the Western Indiana. On March 13, 1925, pursuant to tentative arrangements with the Nickel Plate for the use of its line between Erie Junction and Illinois Central Junction and the Stony Island and Calumet yards, located near the latter point, the applicant abandoned its yards at H. Y. Tower and began operation over the Nickel Plate. The changes made at this time included (1) the operation of passenger trains over the Illinois Central to that carrier's station at Roosevelt Road, in lieu of the Western Indiana to Dearborn Station; (2) the operation of freight trains for the Chicago district to and from the Nickel Plate's Stony Island yard and subsequently its Calumet yard, instead of to and from H. Y. Tower; (3) the operation of freight transfer trains between Stony Island yard and the stockyards through Illinois Central Junction and over the Illinois Central between the last-named point and a point of connection with the Chicago Junction Railway at Forty-first Street, in lieu of the Western Indiana and the connection at Fortieth Street; and (4) it began operation of freight-transfer trains between Stony Island yard and the clearing yard of the Belt Railway and other connecting lines. Contemporaneously with the changes mentioned the applicant completely abandoned operation over the Erie between Erie Junction and the State line, and over the Western Indiana between the State line and Dearborn Station. However, in order to make connection with the Belt Railway the applicant secured the right to use a track of the Western Indiana between the point of its connection with the Nickel Plate and the point of its connection with the Belt Railway at Pullman Junction. No authority was then sought from us to abandon operation over the Erie and Western Indiana, or to begin operation over the Nickel Plate and Illinois Central, or the track of the Western Indiana mentioned. The applicant indicates that the failure to apply for such authority was because it considered that such changes in operations neither extended its line nor permitted it to reach and serve connecting lines and traffic sources not previously served, but merely afforded it a more convenient yard and terminal location about 10 miles nearer to downtown Chicago than the old facilities at H. Y. Tower, and enabled it to more efficiently, adequately, and expeditiously operate its trains and handle its traffic into and out of Chicago. We are of the opinion that we have jurisdiction over the main-line trackage operations. The arrangements for the above-described operations were effected by various agreements between the parties involved. The original agreement between the applicant and the Western Indiana for use of the line of the latter between the State line and Dearborn Station expired on February 28, 1925, and the applicant began operation over the Nickel Plate on March 13, 1925, without a final agreement for use of that line having been executed, but with the understanding that such an agreement would be negotiated as promptly as practicable. A tentative agreement submitted to the applicant by the Nickel Plate in 1926 was never executed, but served as a basis for settlements until a final agreement was reached. The final agreement, executed on January 19, 1937, effective September 1, 1935, is to continue in effect until canceled upon six months' written notice given by either party. It provides that the applicant will pay the Nickel Plate for use of its tracks and facilities as follows: (1) For main-line use by the applicant's road trains the sum of $1.75 per road train-mile, and $0.40 for each locomotive or locomotive and caboose operated in either direction between Calumet yard and the enginehouse at Stony Island yard, when such equipment is operated into or out of Calumet yard with cars in road-haul service to or from the east; and (2) for use of certain other facilities and tracks specifically identified by zones as to value and location, an interest rental, based on 5 percent of the valuation, less certain deductions for depreciation, taxes, assessments, and insurance. Expenditures for additions and betterments made on such property for the exclusive use of either party will be borne entirely by the party for whose use the improvement is made, and if made for improvements for the joint use of both parties, the applicant will bear its user proportion of the interest thereon. Operating expenses are to be computed by zones and divided between the parties on the basis of use. The agreement also contains certain provisions with respect to liability, arbitration, and other provisions ordinarily included in trackage agreements. An agreement was negotiated between the applicant and the Illinois Central on February 13, 1925, to become effective February 1, 1925, and will continue in effect until the expiration of one year after written notice to the contrary given by either party. This agreement amended one of March 23, 1920, and granted the applicant the right to use the connection of the Illinois Central with the Chicago Junction Railway at Forty-first Street in addition to rights previously granted with respect to use of the Illinois Central to the South Water Street freight house. It provides for payments to the Illinois Central by the applicant as follows: (1) For use of the main line to and from the freight-house facilities, the sum of $3.50 for each loaded car and $3 for each empty car, in each direction; (2) for use of the main line to the connection with the Chicago Junction Railway at Forty-first Street, the sum of $2 for each car loaded or empty, in each direction; and (3) for handling cars of less-thancarload freight between the South Water Street station and certain freight stations of other lines, the sum of $7.50 for each car, and for special runs of such cars the sum of $10 for each car, with a minimum payment of $50 for any one special run. The agreement also contains provisions with respect to liability, arbitration, and other provisions ordinarily found in trackage agreements. Under an agreement dated January 1, 1934, superseding previous agreements dated March 17, 1925, and December 1, 1928, the Western Indiana grants the applicant the right to use its connecting tracks between the line of the Nickel Plate and the line of the Belt Railway at Pullman Junction, conditioned upon payment of a rental charge of 15 cents for each car handled thereover, each locomotive to be counted as two cars. The applicant handled approximately 90,000 cars to and from the Chicago district in 1936. Prior to 1925 it was handling approximately 12,000 cars a month, or 144,000 cars annually. It then operated road trains between Peru, Ind., and H. Y. Tower yard, approximately 100 miles, and transfer switch engine service from the latter point to rail connections and freight houses in the Chicago district as already indicated. The yard at H. Y. Tower consisted of 3.5 miles of track, and available space for only 370 cars. The physical layout of the yard required back-up movements on westbound trains, causing serious delays and interfering with street traffic on Calumet Avenue, an important street in Hammond. The engine terminal in connection with the yard was too small to accommodate the new motive power acquired by the applicant in 1924 for use on its Chicago division. Being confronted with this situation, the applicant developed plans for the construction of a new yard and engine terminal near Griffith, Ind., about 8 miles east of H. Y. Tower, at estimated costs ranging from $694,000 to $1,420,000, but use of a yard at this point would have required operation of transfer engines into the Chicago district for a distance of 28 miles. The contract under which the applicant operated over the Western Indiana expired on February 28, 1925, and it was apparent that continued operation over that line meant that the applicant would also have to continue use of its H. Y. Tower yard, or build a new yard at a disadvantageous location. Accordingly it made arrangements for use of the line of carriers over which it now seeks authority to operate as hereinbefore described, having determined that the Stony Island-Calumet yards and engine-terminal facilities, together with the Nickel Plate's main line, afforded a satisfactory solution to its problems. The applicant states that its expense for operating freight and passenger service over the Western Indiana during 1924, the last full year it was used, was $157,112, of which freight service expense was at least $78,000. Since June 1933 the applicant has not operated its passenger trains west of Hammond. The trackage rights now used are for freight service only. Trackage charges paid the Illinois Central by the applicant in 1934, a representative year, for its stockyards operation amounted to $45,882, and main-line trackage charges paid the Nickel Plate in that year amounted to $49,907, total $95,789. The amount paid the Illinois Central for the South Water Street operation is not shown, since that expense also was incurred concurrently with the operation over the Western Indiana. However, by an agreement dated April 15, 1934, permitting the Nickel Plate joint use with the applicant of certain Illinois Central freight houses, the applicant saved approximately $25,000 annually. Expenses inci |