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D&RGW and the Ogden Gateway

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This page was last updated on September 8, 2015.

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Overview

The Ogden Gateway case involved Union Pacific, Southern Pacific, and Denver & Rio Grande Western, and their connections at Ogden. It dealt with the relationship between Union Pacific and Southern Pacific at Ogden, Utah, how they treated each other, and how they in turn treated Rio Grande. Under Harriman's influence, there was no return to the early years, when D&RGW (and later the RGW), was regularly being either favored or ignored, depending on relations between Union Pacific and Central Pacific/Southern Pacific at the time, although most traffic to and from the east still went over UP. If the bickering became serious, Union Pacific had the advantage of diverting West Coast traffic to the Northwest, and SP had its connection with Rio Grande.

By the turn of the century, D&RG in Colorado and RGW in Utah were both controlled by George Gould, who was building his own railroad empire that included the two Rio Grandes in Utah and Colorado, and their Missouri Pacific connection at Pueblo. Harriman's rival control of the SP, and the need for a dependable connection for the Rio Grande to the West Coast were the major reasons Gould built the Western Pacific Railway west from Salt Lake City, started in 1906 (with D&RG backing) and completed in 1909.

In 1906, the Harriman-controlled Union Pacific and its Oregon Short Line subsidiary canceled existing joint rates from and to Colorado common points and east, and from and to Montana, Idaho and Oregon. In 1912, Union Pacific and its Oregon-Washington Railroad & Navigation Company subsidiary canceled transcontinental rates between points on its routes, and D&RGW and its points in Utah. (287 ICC 621)

More problems for D&RGW came in 1923 when the ICC was deciding whether SP had the right to control the Central Pacific. In its decision, ICC stated that the Ogden Gateway was exclusively for interchange between UP and SP, and with this support from the federal government, traffic agreements were made between the two companies that continued to shut D&RGW out of sharing in cross-country rail traffic.

D&RGW was not in good financial condition when these rates were canceled, and when the 1923 ICC order was handed down, and was unable to contest the changes. This changed after the Moffat tunnel was completed in 1927, giving D&RGW a better route for through traffic, and as D&RGW emerged from bankruptcy and reorganization in 1947.

In the first round of the Ogden Gateway case, D&RGW in August 1949 filed a complaint with the ICC for full joint rates for traffic bound to and from the Pacific Northwest through the Denver gateway, by way of Ogden. Hearings by ICC investigators were held in Salt Lake City in mid December 1949, and in other locations in mid February 1950. (Ogden Standard Examiner, December 16, 1949)

In a series of ICC orders and court decisions from the mid-1950s through to the late-1960s, Union Pacific attempted to avoid being forced to share its Ogden traffic with upstart D&RGW. When SP trains began running directly into Rio Grande's Roper Yard in Salt Lake City in 1970, it was a direct result of a final settlement of what has been called the Ogden Gateway case.

Santa Margarita

The death of Collis P. Huntington in August 1900 changed railroading in Ogden for the next 70 years. Huntington's death put his controlling shares of Southern Pacific, and its leased Central Pacific line, onto the market, where E. H. Harriman almost immediately snapped them up, thereby controlling both UP and SP, effectively shutting out the Rio Grande in Ogden. In 1908 RGW was absorbed by D&RG, along with several other companies, and in 1921, D&RG was reorganized as the Denver & Rio Grande Western Railroad. UP and SP met and exchanged trains at Ogden, making it difficult for Rio Grande to solicit traffic to and from the West. (Wilson, The Denver and Rio Grande Project, 1870-1901, p. 110)

The case of the United States vs. Union Pacific (226 US 61), decided in 1912, was the government's successful action to force UP to divest itself of SP. That decision by the Supreme Court in 1912 also dealt with SP's lease and control of Central Pacific. In February 1914, the government sued to break that control, in United States vs. Southern Pacific (259 US 214), with the case being decided, again by the Supreme Court, against SP in 1922, forcing the road to terminate control of Central Pacific and separate the properties.

May 29, 1922
The United States Supreme Court ordered Southern Pacific to divest itself of the Central Pacific. "We direct that a decree be entered severing the control by the Southern Pacific of the Central Pacific by stock ownership or by lease." (United States v. Southern Pacific Company; Restored to docket for re-argument January 9, 1922; Reargued April 11, 12, 13, 1922; Decided May 29, 1922; 259 U.S. 214)

In the meantime, the Transportation Act of 1920 changed the Interstate Commerce Act of 1887 to allow the Interstate Commerce Commission jurisdiction over the issue of one railroad controlling another, as long as the public interest was maintained. The ICC found that the 1920 act constituted a "radical change in the legislative policy of Congress, in respect of the application of the Sherman [anti-trust] law to the railroads of the country." The timing of the 1922 Supreme court decision, coming after the 1920 Transportation Act, gave SP the opportunity to re-present its case for control of Central Pacific, this time to the ICC.

SP's major argument before the ICC was that it and Central Pacific were dependent on each other, and that an independent CP would have difficulty meeting its financial obligations. Union Pacific filed a brief with the ICC supporting SP's continued control of the Central Pacific, saying that if CP failed after being broken away from SP control, UP would lose its connection for westbound traffic at Ogden.

Next came the question of the percentage of traffic that SP was diverting to its Sunset Route through southern California, and across Arizona, New Mexico, and Texas, and away from the short haul along the Overland Route across Nevada to UP at Ogden. Evidence showed that due to the competitive position of its southern route, SP was giving itself the long-haul, and attendant higher profits.

Union Pacific needed its Southern Pacific connection at Ogden. In return for supporting Southern Pacific's control of Central Pacific, and after the 1923 ICC order, on May 24, 1924, UP and SP signed an agreement to route traffic via the Overland Route through Ogden. Many observers have called this the "Santa Margarita Agreement."

The agreement stated that traffic that originated on SP north of Santa Margarita and Caliente, California, and south of Kirk, Oregon, would move via the Ogden gateway and Union Pacific. This was essentially the same lines of separation line as an earlier internal agreement between UP and SP under Harriman control that decided which gateway would be used, Ogden for UP traffic or El Paso for SP traffic.

With the agreement in place, SP was forced to furnish a dependable amount of rail traffic to Union Pacific at the Ogden Gateway. The ICC decided in Southern Pacific's favor in 1923, giving it control of CP but insisting that Southern Pacific solicit traffic for the Overland Route, via Ogden, for interchange with Union Pacific there. This was to prevent Southern Pacific from routing large amounts of traffic via its Sunset Route, giving it a higher percentage of the profits.

February 6, 1923
SP control of CP, approved February 6, 1923. (76 ICC 508)

(Read the Central Pacific control case, 76 ICC 508, at HathiTust.org)

Conditions of SP control of CP included five conditions, including the following, later referred to as "Condition (e)" which continued to be a sticking point with D&RGW:

"Fifth. The Southern Pacific shall cooperate with the Union Pacific to secure by active solicitation the routing of the maximum of freight traffic via Union Pacific and Central Pacific lines through the Missouri River and Ogden as parts of one connected continuous line between all points in California, north of and including Caliente, and Santa Margarita (including points in Oregon on the Klamath Falls Branch, Kirk and south) on the one hand, and points north and west of a line along the northern boundaries of Oklahoma and Arkansas to the Mississippi River, thence via the Mississippi and Ohio Rivers (but not including intermediate cities on the Ohio River) to Wheeling, W. Va., thence north on a line drawn Just east of Pittsburgh and Buffalo to Niagara Falls."

Agreeing to such specific language in its 1923 decision, the ICC unwittingly shut Rio Grande out of sharing any meaningful amount of SP traffic at Ogden. This decision effectively forced D&RGW to depend even more on its connection with Western Pacific at Salt Lake City.

D&RGW Fights Back

D&RGW endured the imbalance until the post-World War II boom, pleading its case before the ICC in a bid for a share of the postwar prosperity. In 1953, D&RGW was granted limited joint rates with Union Pacific through Ogden. UP contested the decision, claiming that it was entitled to all of SP's traffic at Ogden as a provision of both the Pacific Railway Act of 1864 and the 1923 ICC decision. This round of the Ogden Gateway case ended in 1956 when the U. S. Supreme Court upheld the minimal changes made by the ICC in 1953. The contest for Northwest traffic had started in mid 1949, and ended up with a decision by the U. S. Supreme Court in June 1956 that sided with D&RGW for some of the Northwest traffic moving via Colorado and Utah, rather than by way of Union Pacific across Wyoming. UP conceded the fight in July 1956, when it said it would not appeal. (see Northwest Traffic, below)

In February 1953, D&RGW announced that as part of a $20 million improvement program, it would spend $88,000 to improve the interchange facilities with Southern Pacific. (Ogden Standard Examiner, February 22, 1953)

After its small win in 1956 in its fight for what it saw as its share of the traffic between Colorado and the Pacific Northwest, Rio Grande was ready to take on the larger Ogden Gateway issue with UP and SP. Now, Rio Grande had the highest court in the land on its side.

June 17, 1957
D&RGW petitioned the ICC to have the provisions of Condition (e) of the 1923 ICC order changed to remove the preferential treatment Union Pacific received for traffic passing through the Ogden gateway for points on Southern Pacific. (Traffic World, September 24, 1960, pages 121, 122)

This petition in 1957 was to reopen the 1923 case of Southern Pacific control of Central Pacific, and do away with the condition that gave Union Pacific its preferred status with Southern Pacific. (ICC Finance Docket 2613; 76 ICC 508)

Trains magazine wrote the following in its September 1957 issue:

Rio Grande objects -- The biggest thorn in the side of big 9811-mile Union Pacific is little 2164-mile Denver & Rio Grande Western. In times past Rio Grande has fought to open up UP's prized Pacific Northwest empire through the Ogden (Utah) gateway by seeking joint and equal rates -- a case which has yet to be fully settled, although the smaller road has won a moral victory of sorts.

Today Rio Grande is after a bigger plum. It has asked the I.C.C. to modify its famous Central Pacific order of 1923 under which Southern Pacific is required to solicit traffic for UP in central California and Oregon. The order was an aftermath of a Supreme Court decision of 1912. The Court decided that E. H. Harriman's Union Pacific-Southern Pacific combine (in which UP had a 46 per cent control of Espee) violated the Sherman Anti-Trust Act, told the roads to break it up, and attempted to force Espee sale of its stock in Central Pacific the western end of the nation's first transcontinental.

The Transportation Act of 1920, however, permitted the I.C.C. to endorse rail mergers, and the Court blessed the Commission decision of 1923 which put the CP in Espee hands -- provided it was operated as an extension of Union Pacific beyond Ogden with preferential routing of traffic. This provision was inserted to prevent Espee from routing all traffic via El Paso, Texas, taking advantage of the longer haul, and leaving UP high and dry.

Rio Grande now declares that such preference in favor of UP is "unlawful discrimination, is contrary to the stated National Transportation Policy, and results in undue prejudice against the Rio Grande." The little road says it didn't object in 1923 because then it was in no shape to provide comparable service; today, says Rio Grande, its "competitive position has improved immeasurably."

In the years between the original 1923 order, and the late 1950s, D&RGW's share of the traffic interchanged with SP at Ogden had risen from less than 6 percent, to 30 percent in 1958. Starting in February 1959, D&RGW and SP were cooperating on the movement of California perishables for fifth-morning arrival in Chicago. The events of the a growing economy were slowly overtaking the gross imbalance of traffic routing, but UP still had the lion's share. (317 ICC 476, 481)

During this time in the late 1950s, Southern Pacific was making its control of Central Pacific permanent. On June 30, 1959, it formally merged with CP, after the ICC had given its blessing on April 20th. In short order, SP began running across its new causeway across Great Salt Lake that would improve its operations into Ogden.

While the petition from 1957 awaited a decision by the ICC, and in anticipation of more traffic from its connection with SP at Ogden, during late 1960 D&RGW began a $2 million expansion and upgrading of its line between Salt Lake City and Ogden. Most of the improvements were along the line itself, including heavier rail and better ballast, along with extension of the Woods Cross and Clearfield passing tracks. The improvement project also included a new 109-foot bridge across the Weber River at the west end of the Ogden yards, and 21,000 feet of additional tracks in the Ogden yard. (Ogden Standard Examiner, November 27, 1960)

October 1, 1962
The ICC denied D&RGW's request to modify Condition (e) of the 1923 order, and its direct benefit for UP. "We find that the evidence does not establish that condition (e) in its present form is unjust, unreasonable, or contrary to the public interest, and accordingly, that the petition of the Denver & Rio Grande Western Railroad Company for modification as such condition be denied." (317 ICC 469)

1963-1964
In anticipation of the changing of interchange rules at Ogden, allowing direct interchange between SP and D&RGW, the two roads proposed a connection between their two lines by way of a new bridge over the Weber River, and new connecting track northwest of the two lines' 90-degree crossing, where the east-west D&RGW line crossed the north-south SP line. (Southern Pacific Company. C. E. Drawing 33502, November 3, 1963, revised April 1, 1964.)

April 20, 1964
The U. S. District Court for the District of Colorado returned the ICC decision of 1962 back to the commission for reconsideration. (Denver and Rio Grande Western Railroad Co. v. I. C. C.; Case No. 8046.; 229 F.Supp. 249 (1964))

1965
D&RGW asked, as part of the proposed merger of Union Pacific and Rock Island (CRI&P), that it be allowed to purchase the Rock Island line across Colorado and Kansas, between Denver-Colorado Springs and Kansas City-St. Joseph. The D&RGW also asked for equal interchange with SP at Ogden, along with trackage rights over Union Pacific from Ogden to Butte, Montana. (Trains, May 1965, page 6)

In January 1966, the original provision of the 1923 ICC order was changed to remove the wording about mandated cooperation between Union Pacific and Southern Pacific, and the maximum routing of freight between the two railroads. (328 ICC 345)

January 1, 1966
Interstate Commerce Commission partially agreed with D&RGW's petition to set aside all provisions of the 1923 Central Pacific control decision of 1923. The Commission modified Condition (e) that specifically showed Union Pacific as SP's connection at Ogden, and canceled the 1924 agreement between Union Pacific and Southern Pacific that mandated cooperation between the two roads at Ogden, Utah. But the Commission retained the specific points of origin and destination stated in the so-called Santa Margarita agreement.

"(e) That the Southern Pacific Company shall continue to secure by active solicitation the routing of the maximum of freight traffic through the Missouri River and Ogden, Utah, between all points in California and Oregon, north of and including Caliente and Santa Margarita, California, and south of and including the Klamath Falls branch and Kirk, Oreg., on the one hand, and points north and west of a line along the northern boundaries of Oklahoma and Arkansas, to the Mississippi River, thence along the Mississippi and Ohio Rivers (but not including intermediate cities on the Ohio River) to Wheeling, W. Va., and thence on a line drawn just east of Pittsburgh, Pa., and Buffalo, N. Y., to Niagara Falls, N. Y."

The ICC order took effect 60 days after the approval date, on or about March 1, 1966. All provisions of the original February 6, 1923 order remained in place, except for the changes to Condition (e) noted above, thus giving Southern Pacific the freedom to solicit traffic that could travel via D&RGW.

(Read the ICC report, 328 ICC 345, at HathiTrust.org)

December 31, 1966
The ICC approval for the curtailment of Ogden Union Railway & Depot Company freight operations became effective, allowing UP and SP to divide the freight operations of the joint company. At the same time, SP was allowed to build a direct connection with D&RGW at Ogden, opening the Ogde gateway. (Ogden Standard Examnier, December 6, 1966)

December 6, 1967
The U. S. District Court for the District of Nebraska, in Case 02577, sustained the modification of Condition (e) of the 1966 ICC order, removing Union Pacific as the designated routing for Southern Pacific through the Ogden gateway. Union Pacific appealed the decision to the U. S. Supreme Court. (Southern Pacific Company v. United States; 277 F.Supp. 671 (1967) (Traffic World, December 16, 1967)

(Read the District Court case, no. 02577, at eCases.us)

December 1967
The Ogden Gateway case, D&RGW's bid to end the SP-UP preferential solicitation at the Ogden Gateway for each other, imposed by ICC order in 1923 when Central Pacific and Southern Pacific were merged, had been won by D&RGW before the ICC in January 1966, and by a 2-to-1 decision by a three-judge District Court in December 1967, and was on its way to the Supreme Court to defend against an SP-UP appeal. (Jerry A. Pinkepank, in Extra 2200 South, Volume 6, Number 11, April 1968, page 11, "General News")

April 29, 1968
The U. S. Supreme Court sustained "affirmed" the decision of the District Court of Nebraska. (Southern Pacific Co. v. United States, 390 U.S. 744 (1968))

(Read the very short U. S. Supreme Court decision at Justia.com)

OUR&D Curtailment

March 1965
UP and SP petitioned the federal ICC to allow "curtailment" of their jointly owned Ogden Union Railway Company. Hearings were held in Ogden in 1965 and 1966, and in October 1967, the petition was approved. Included in the OUR&D decision was permission for SP and D&RGW to have direct interchange at Ogden.

January 8, 1968
D&RGW and SP began direct interchange over their new connection, without switching by Ogden Union Railway & Depot Co., the joint UP-SP terminal company, and the Ogden Gateway case was closed. (D&RGW Green Light, January 1968; courtesy of Keith Hahn)

March 13, 1968
OUR&D was reorganized on March 13, 1968, with the freight operations being split between UP ansd SP. Most of OUR&D's employees were shifted over to either of the two parent companies.

(Read more about the end of OUR&D in Ogden)

Northwest Traffic

As mentioned above, in 1906 Union Pacific canceled existing joint rates from and to Colorado common points and east, and from and to Montana, Idaho and Oregon. In 1912, Union Pacific canceled rates between points on its routes in Washington and Oregon, and D&RGW and its points in Utah and Colorado. D&RGW's financial condition did not allow a response until 1949, after its reorganization in 1947.

In August 1949 D&RGW filed a complaint with the ICC for full joint rates for traffic bound to and from the Pacific Northwest through the Denver gateway, by way of Ogden. Hearings by ICC investigators were held, and by late 1952, the ICC was ready to make its decision.

January 12, 1953
Interstate Commerce Commission ordered Union Pacific and connecting lines to establish joint rates for only 10 commodities through the Ogden gateway, continuing to shut D&RGW out of the lucrative Pacific Northwest lumber traffic. (ICC Finance Docket 30297, submitted October 16, 1952, decided January 12, 1953; 287 ICC 611; Ogden Standard Examiner, January 26, 1953)

(Read the D&RGW complaint to ICC concerning rail traffic to and from the Pacific Northwest, decided in 1953, 287 ICC 611, at HathiTrust.org)

The ICC order covered 10 commodities, including livestock and farm produce (but not lumber) from the Pacific Northwest to midwestern and eastern markets.

(This order does not mention Southern Pacific's control of Central Pacific, and also does not mention preferential treatment of UP by SP.)

In response to the January 1953 ICC order, D&RGW in October 1953 filed a suit in U. S. District Court in Denver calling the ICC order for joint rates on only a small number of commodities "unlawful, arbitrary, and capricious." The suit was expected to reach the Supreme Court for a final decision. (Deseret News, October 22, 1953)

October 22, 1954
A special Court of Appeals in Nebraska, in a 2-1 decision, narrowed the terms of the ICC order for limited joint rates. The decision was a victory for Union Pacific. The case had been argued before the Nebraska court in November 1953. (Ogden Standard Examiner, October 23, 1954; Greeley Tribune, October 23, 1954; Ogden Standard Examiner, March 29, 1954)

January 15, 1955
A special three-member Court of Appeals in Colorado annulled the entire ICC order of limited joint rates, putting the question back into the hands of the ICC, where it had begun six years before. The decision was a victory for D&RGW. (Salt Lake Tribune, January 14, 1955; Ogden Standard Examiner, January 16, 1955)

June 21, 1955
The Ogden Gateway case was headed to the U. S. Supreme Court. (Ogden Standard Examiner, June 22, 1955)

October 24, 1955
The U. S. Supreme Court agreed to hear the Ogden Gateway case. (Ogden Standard Examiner, October 25, 1955)

June 11, 1956
United States Supreme Court upheld the original decision of the Interstate Commerce Commission concerning establishing joint rates on certain types of railroad traffic on the D&RGW between points on Union Pacific in the Pacific Northwest and points in Colorado, by way of Ogden, setting aside decisions of first, the Colorado District Court to broaden the ICC order to all commodities, and second, the Nebraska District Court, to strike down the entire ICC order. The Supreme Court ruling upheld the ICC order, and meant that for certain commodities, shippers could request routing via D&RGW at the same rate Union Pacific charged between the same two points. (Denver & Rio Grande Western Railroad Co. v. Union Pacific Railroad Co.; Argued April 23-24, 1956; Decided June 11, 1956; 351 U.S. 321) (Read the Justia.com syllabus) (See also Ogden Standard Examiner, April 24 and 25, 1956, and June 11, 1956)

July 3, 1956
Union Pacific announced that it would not appeal the decision of the U. S. Supreme Court, upholding the ICC decision opening the Ogden Gateway to D&RGW joint rates. (Council Bluffs Nonpareil, July 4, 1956)

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