FINANCE DOCKET No. 2172

CONSTRUCTION OF LINE BY WENATCHEE SOUTHERN RY. CO.

Submitted May 2, 1924. Decided July 14, 1924

Certificate issued authorizing the Wenatchee Southern Railway Company to construct a new line of railroad in Chelan, Kittitas, and Benton Counties, Wash. Permission to retain excess earnings granted.

A. N. Corbin, Fayette B. Dow, and Corbin & Easton for applicant. Fayette B. Dow for Yakima Valley Transportation Association, intervener.

L. L. Thompson, attorney general, and Raymond W. Clifford for State of Washington, and Frank R. Spinning for Washington Department of Public Works.

S. J. Wettrick for Seattle Chamber of Commerce.

Col. R. E. Longan for United States War Department, transportation branch.

F. G. Dorety, M. L. Countryman, and Thomas Balmer for Great Northern Railway Company, protestant.

REPORT OF THE COMMISSION

BY THE COMMISSION:

This application was originally heard for us by the Washington Department of Public Works. The applicant, Wenatchee Southern Railway Company, excepted to the report proposed by our examiner and the case was orally argued. Thereafter the proceeding was reopened, a further hearing has been had, and the matter stands submitted upon briefs, without further oral argument. Except as otherwise indicated, places named in this report are situated in the State of Washington.

The applicant is a corporation of the State of Washington, organized September 15, 1920, to engage in interstate commerce by the ownership and operation of a common-carrier railroad. In its application, filed January 11, 1922, it asks for the issuance of a certificate of public convenience and necessity, pursuant to paragraph (18) of section 1 of the interstate commerce act, authorizing it to construct a standard-gauge steam railroad as follows: (a) From Wenatchee, Chelan County, southerly along the west side of the Columbia River to Beverly Junction, Kittitas County, 53 miles; (b)

from Hanford, Benton County, southerly along the west side of the Columbia River to a connection with the railroad of the OregonWashington Railroad & Navigation Company, hereinafter called the Oregon-Washington, about 5 miles west of Kennewick, Benton County, a distance of 29 miles; (c) from a point about 13 miles south of Wenatchee northerly to Orondo, Douglas County, about 30 miles. The latter request has been withdrawn. The applicant proposes to operate trains under trackage rights over the Hanford branch of the Chicago, Milwaukee & St. Paul Railway, hereinafter called the Milwaukee, between Beverly Junction and Hanford, approximately 46 miles, and over the tracks of the Oregon-Washington between Kennewick and the proposed junction 5 miles west thereof. This would afford it a continuous line along the west bank of the Columbia River from Wenatchee to Kennewick, about 132 miles. Applicant also requests permission under paragraph (18) of section 15a of the act to retain the excess earnings from the new construction.

The Great Northern Railway Company, herein called protestant or Great Northern, opposes the application. At the further hearing the Washington Department of Public Works appeared in support of the application.

The bases for the application are that the Wenatchee district, now served only by the Great Northern, needs a direct and open connection with other transcontinental lines, and additional routes to and from Pacific coast points; that the territory between Wenatchee and Kennewick is in need of transportation facilities; and that the northern and southern portions of central Washington need more adequate railroad connection. In opposition, protestant urges that its facilities are, and in the future will be adequate to the needs of the Wenatchee district; that the proposed connection with other transcontinental lines would not improve transportation facilities in the Wenatchee district; that no appreciable development would result from the construction; that the prospective traffic does not warrant the expenditure necessary, and would not support the road after construction; and that the proposed line would unnecessarily deprive protestant of traffic for which it has made adequate provision.

The primary purpose of the project is to provide additional facilities to move apples from the Wenatchee district. In the Wenatchee Valley, and along the Columbia from the mouth of the Okanogan River to a point a few miles below Wenatchee, including also some areas on the Okanogan River, there are about 28,000 acres of irrigated lands, of which approximately 16,000 acres lie within 20 miles of Wenatchee. This area we may call the Wenatchee district. Shipments of fruits and vegetables there from have shown

a remarkable increase, from 1,302 carloads in 1907 to 16,986 carloads in 1921. The bulk of this great increase is of apple shipments, which from 616 carloads in 1907 grew to 15,915 carloads in 1921. At the hearing estimates of the 1923 shipments of apples and of all fruits were placed at 16,600 and 17,800 carloads, respectively. Apples now constitute over 90 per cent of the production of the Wenatchee Valley. The community is virtually dependent upon the one product. The Great Northern's plans anticipate that the annual production of the district will be 20,000 to 25,000 carloads within the next few years. Most of the apple crop moves to destinations east of the Mississippi River. A small but increasing portion is shipped to Puget Sound ports, or Portland, Oreg., for export or coastwise ocean movement. The movement is highly seasonal. A large part of the production consists of the Jonathan and Delicious varieties, which mature early, and which the growers claim are therefore not adapted to storage and late consumption.

The shipping season begins about September 1. In the early part of the season shipments are refrigerated. After this there is a short period in which the temperature is controlled by ventilation. Beginning about October 15, heating of cars becomes necessary. It is difficult to avoid injury to the fruit when the outside temperature is much below zero for several consecutive days. During the carheating season the shipper has the option of securing carrier's protective service, under which the carriers assume the liability for losses from freezing, at a cost of 9 cents per 100 pounds to Chicago. The greater part of the fruit crop is moved during the period of refrigeration and ventilation. Growers and dealers claim with great earnestness that, for business reasons and to conserve the crop, at least two-thirds of the apples from this district should go into consumption during the months of October, November, and December, and that the greater part would not keep longer in storage.

The Great Northern serves the district by its main east-and-west line through the Wenatchee Valley; the Oroville branch, extending north along the Columbia and Okanogan Rivers to the Canadian boundary; and by the Mansfield branch, which extends northeasterly 60 miles from the main line a few miles south of Wenatchee. It has extensive terminal facilities at Wenatchee to assemble and handle traffic originating in the district, and reaches and serves all industries at Wenatchee.

Applicant's proposal apparently originated in the dissatisfaction of apple growers and dealers of the Wenatchee district with the service rendered by protestant. These growers and dealers testify that during almost every peak season protestant does not furnish sufficient cars, and frequently delays the movement of the crop to mar

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ket beyond the period of refrigeration and ventilation. As a result, it is said, great direct damage often ensues from deterioration, freezing, or overheating, and also large consequential damages from depressed market prices, caused by the offering of fruit, the quality of which has become so impaired, or due to the offering of early varieties which have passed their prime at a time when later varieties should be consumed.

During the crop years 1912 to 1921, inclusive, the Great Northern increased its ownership of refrigerator cars from 1,052 to 5,136 cars, and the Wenatchee apple shipments increased from 4,273 to 15,613 carloads. For 1922, on the basis of the number of carloads of fresh fruits and vegetables, including potatoes, originated per refrigerator car owned, the Great Northern's ownership compares favorably with that of each of the other three principal carriers serving the Pacific Northwest. The Milwaukee has little such traffic. Its equipment situation will be stated later herein. The Pacific Fruit Express is the private-car line which operates over the Union Pacific and various other systems. It obtains a more efficient use of its equipment than is possible under operation by a single railroad company. Protestant's scheduled service from Wenatchee to eastern termini is comparable with similar service of other carriers. Thus, the schedule time of fruit trains over the Union Pacific from Yakima to Council Bluffs, Iowa, is 137 hours. From Wenatchee to Minnesota Transfer, Minn., protestant's schedule for fruit trains is 146 hours, but in actual running time it has approximated the Union Pacific schedule. time. Minnesota Transfer is 48 miles nearer to Chicago than is Council Bluffs. The Milwaukee does not operate regular fruit trains to the east. Its regular time freight schedule is about 147 hours from Beverly to Minnesota Transfer, which does not include stops for icing perishable freight.

Winter temperatures on protestant's line are generally somewhat lower than on the Union Pacific, and the latter crosses the Rockies some 2,600 feet higher than does the Great Northern. Probably there would be some advantage as to temperature in shipping apples over the Union Pacific during the winter, but the evidence is not conclusive. Citrus fruits from California during midwinter are largely routed over the southern lines in preference to the Union Pacific. Damage claims arising from all causes paid on apples shipped over protestant's line for the years shown, were as follows: Crop of 1919, $941,000; crop of 1920, $207,000; crop of 1921, estimated at $225,000. These payments cover the damages on all lines to destination, and protestant's proportion thereof amounted to about 60 per cent.

Protestant contends that the embarrassment suffered by Wenatchee apple shippers in times of fluctuation of car supply is due not to inadequate transportation service, but largely to insufficient storage. With an estimated production of 16,600 carloads of apples in 1923, the Wenatchee district had cold-storage space for but 633 carloads, with additional space for 164 carloads under construction. Common or air-cooled track storage amounted to 5,748 carloads, and ranch storage to about 1,510 carloads. Including track-side common storage under construction at the time of the hearing, the total storage available for the 1923 crop was 8,359 carloads.

The Yakima Valley, a large apple-producing section, has a larger amount of cold-storage space than Wenatchee. This is partly due to a larger production of soft fruits, which require precooling before shipment, and also because the bulk of the apples are of intermediate or later varieties, which do not have to be marketed as soon as the earlier varieties raised so extensively in the Wenatchee district. Because of the large proportion of early varieties and the practical necessity of shipping over the northernmost transcontinental route in the United States, the Wenatchee growers deem it impracticable to store apples to an extent proportionately as great as in other sections.

Clearly the Wenatchee district has from time to time suffered considerable damage from delay in getting its apples to market. In this it has not been alone, although the degree of its damage at times may have been greater than in other sections. Often, although possibly not always, shortage conditions at Wenatchee have reflected a general situation which has affected other Northwest producing sections. The severe car shortage of 1922 and its effects upon the entire Pacific Northwest have been described in Transportation Facilities in Northwest Pacific States, 87 I. C. C. 472. In that case the record contained evidence on these subjects similar to that before us in this proceeding. In fact, much of the record in the case cited and this proceeding is common to both.

At the further hearing herein protestant announced important rearrangements in its refrigerator service, acquisitions of equipment, and betterments of facilities. On page 501 of the report in the case cited we referred to these improvements as follows:

Prior to 1923 the Great Northern operated its refrigerators under a pooling arrangement with other lines whose peak requirements were the same as its own. In that year it completed an arrangement whereby it leased its equipment to the Western Fruit Express, the stock of which company it owns, and whereunder such company affiliated with the Fruit Growers Express. The latter serves several eastern and southern roads. The principal traffic of the Fruit Growers Express is southeastern fruit, mainly from Florida, for which the heavy demand comes in the late winter and spring months. The two