Source: https://supreme.justia.com/cases/federal/us/234/548/
Timestamp: 2019-04-26 05:45:23+00:00

Document:
The provision in the Hepburn Act, amending the Act to Regulate Commerce by making persons or corporations engaged in transporting oil from one state to another by pipelines carriers within the provisions of the act, applies to the combination of pipelines owned and controlled by the Standard Oil Company and to the constituent corporations united in a single line, although the only oil transported is that which has been purchased by the Standard Oil Company or by such constituent corporations prior to the transportation thereof.
As applied to existing corporations, the pipeline provision of the Hepburn Act does not compel persons engaged in interstate transportation of oil to continue in operation, but it does require them not to continue to transport oil for others or purchased by themselves except as common carriers.
The fact that the article transported between interstate points has been purchased by the carrier, is not conclusive against the transportation's being interstate commerce, and in this case held that interstate transportation of oil purchased from the producers by the owner of the pipe is interstate commerce and under the control of Congress.
While the control of Congress over commerce among the states cannot be made a means of exercising powers not committed to it by the Constitution, it may require those who are common carriers in substance to become so in form.
The provision in the Hepburn Act requiring persons or corporations engaged in interstate transportation of oil by pipelines to become common carriers and subject to the provisions of the Act to Regulate Commerce is not unconstitutional, either as to future pipelines or as to the owners of existing pipelines, as depriving them of their property without due process of law.
Requiring a person engaged in interstate transportation of oil by pipelines to become a common carrier does not involve a taking of private property, and the provision in the Hepburn Act to that effect is not unconstitutional under the Fifth Amendment.
A corporation engaged in refining oil may draw oil from its own wells through a pipeline across a state line to its own refinery for it own use without being a common carrier under the pipeline provisions of the Hepburn Act, the transportation being merely incidental to the use of the oil at the end.
204 F. 798 reversed in part and affirmed in part.
The facts, which involve the constitutionality, construction, and application of the provisions in the Hepburn Act relating to interstate transportation of oil by pipelines, are stated in the opinion.
oil or other commodity, except water and except natural or artificial gas, by means of pipelines, or partly by pipelines and partly by railroad, or partly by pipelines and partly by water, who shall be considered and held to be common carriers within the meaning and purpose of this Act."
Thereafter the Interstate Commerce Commission issued an order requiring the appellees, among others, being parties in control of pipelines, to file with the Commission schedules of their rates and charges for the transportation of oil. 24 I.C.C. 1. The appellees thereupon brought suit in the Commerce Court to set aside and annul the order, and a preliminary injunction was issued by that court on the broad ground that the statute applies to every pipeline that crosses a state boundary, and that, thus construed, it is unconstitutional, 204 F. 798. The United States, the Interstate Commerce Commission, and other intervening respondents appealed.
lines, the Standard Oil Company had made itself master of the only practicable oil transportation between the oil fields east of California and the Atlantic Ocean, and carried much the greater part of the oil between those points. Before the recent dissolution, the New York and Pennsylvania companies had extended their lines into New Jersey and Maryland to the refineries, and the laws of those states did not require them to be common carriers. To meet the present amendment, the Standard Oil Company took a conveyance of the New Jersey and Maryland lines, and the common carrier lines now end at insignificant places where there are neither market nor appliances except those of the Standard Oil, by which it would seem that the whole transport of the carriers' lines is received. There is what seems to be merely a formal breach of continuity when the carriers' pipes stop The change is not material to our view of the case.
Availing itself of its monopoly of the means of transportation, the Standard Oil Company refused, through its subordinates, to carry any oil unless the same was sold to it or to them, and through them to it, on terms more or less dictated by itself. In this way, it made itself master of the fields without the necessity of owning them, and carried across half the continent a great subject of international commerce coming from many owners, but, by the duress of which the Standard Oil Company was master, carrying it all as its own. The main question is whether the act does and constitutionally can apply to the several constituents that then had been united into a single line.
to cut down the generality of the previous declaration to the meaning that only those shall be held common carriers within the act who were common carriers in a technical sense, but an injunction that those in control of pipelines and engaged in the transportation of oil shall be dealt with as such. If the Standard Oil Company and its cooperating companies were not so engaged, no one was. It not only would be a sacrifice of fact to form, but would empty the act if the carriage to the seaboard of nearly all the oil east of California were held not to be transportation within its meaning, because by the exercise of their power the carriers imposed as a condition to the carriage a sale to themselves. As applied to them, while the amendment does not compel them to continue in operation, it does require them not to continue except as common carriers. That is the plain meaning, as has been held with regard to other statutes similarly framed. Atlantic Coast Line R. Co. v. Riverside Mills, 219 U. S. 186, 219 U. S. 195, 219 U. S. 203. Its evident purpose was to bring within its scope pipelines that, although not technically common carriers, yet were carrying all oil offered, if only the offerers would sell at their price.
The only matter requiring much consideration is the constitutionality of the act. That the transportation is commerce among the states we think clear. That conception cannot be made wholly dependent upon technical questions of title, and the fact that the oils transported belonged to the owner of the pipeline is not conclusive against the transportation's being such commerce. Rearick v. Pennsylvania, 203 U. S. 507, 203 U. S. 512. See Texas & New Orleans R. Co. v. Sabine Tram Co., 227 U. S. 111. The situation that we have described would make it illusory to deny the title of commerce to such transportation, beginning in purchase and ending in sale, for the same reasons that make it transportation within the act.
states cannot be made a means of exercising powers not entrusted to it by the Constitution, but it may require those who are common carriers in substance to become so in form. So far as the statute contemplates future pipelines and prescribes the conditions upon which they may be established, there can be no doubt that it is valid. So the objection is narrowed to the fact that it applies to lines already engaged in transportation. But, as we already have intimated, those lines that we are considering are common carriers now in everything but form. They carry everybody's oil to a market, although they compel outsiders to sell it before taking it into their pipes. The answer to their objection is not that they may give up the business, but that, as applied to them, the statute practically means no more than they must give up requiring a sale to themselves before carrying the oil that they now receive. The whole case is that the appellees, if they carry, must do it in a way that they do not like. There is no taking, and it does not become necessary to consider how far Congress could subject them to pecuniary loss without compensation in order to accomplish the end in view. Hoke v. United States, 227 U. S. 308, 227 U. S. 323; Lottery Case, 188 U. S. 321, 188 U. S. 357.
These considerations seem to us sufficient to dispose of the cases of the Standard Oil Company, the Ohio Oil Company, the Prairie Oil & Gas Company, and the Tide Water Pipe Company, Limited. The Standard Oil Company of Louisiana was incorporated since the passage of the amendment, and before the beginning of this suit, to break up the monopoly of the New Jersey Standard Oil Company. It buys a large part of its oil from the Prairie Oil & Gas Company, which buys it at the wells in the Mid-Continent field and transfers the title to the Louisiana Company in that state. Its case also is covered by what we have said.
Company. This company has a refinery in Kansas and oil wells in Oklahoma, with a pipeline connecting the two which it has used for the sole purpose of conducting oil from its own wells to its own refinery. It would be a perversion of language, considering the sense in which it is used in the statute, to say that a man was engaged in the transportation of water whenever he pumped a pail of water from his well to his house. So as to oil. When, as in this case, a company is simply drawing oil from its own wells across a state line to its own refinery, for its own use, and that is all, we do not regard it as falling within the description of the act, the transportation being merely an incident to use at the end. In that case, the decree will be affirmed. In the others, the decree will be reversed.
Nos. 481, 482, 483, 506, and 508, decrees reversed.
* Docket title of these cases: No. 481. United States v. Ohio Oil Company. No. 482. United States v. Standard Oil Company. No. 483. United States v. Standard Oil Company of Louisiana. No. 506. United States v. Prairie Oil & Gas Company. No. 507. United States v. Uncle Sam Oil Company. No. 508. United States v. Benson, doing business under the Partnership Name of Tide Water Pipe Company, Limited.
embraced by the statute, because it would be impossible to make the statute applicable to it without violating the due process clause of the Fifth Amendment, since to apply it would necessarily amount to a taking of the property of the company without compensation. It is shown beyond question that the company buys no oil, and, by the methods which have been mentioned, simply carries its own product to its own refinery -- in other words, it is engaged in a purely private business. Under these conditions, in my opinion, there is no power under the Constitution without the exercise of the right of eminent domain to convert without its consent the private business of the company into a public one.
Of course, this view has no application to the other companies which the Court holds are subject to the act, because, as pointed out, the principal ones were chartered as common carriers, and they all, either directly or as a necessary result of their association, were engaged in buying oil and shipping it through their pipes -- in other words, were doing in reality a common carrier business, disguised, it may be, in form, but not changed in substance. Under these conditions, I do not see how it would be possible to avoid the conclusion which the court has reached without declaring that the shadow, and not the substance, was the criterion to be resorted to for the purpose of determining the validity of the exercise of legislative power.
of them is not now possible. Indeed, any discussion may not be worthwhile, as I express only my individual views. In order to be brief, I have to refer to the principles of the decision of the Court, and indeed I am impelled more to dissent from them than from the judgment. It is of little consequence, aside from the rights of the appellee companies, whether they are subject to be regulated as common carriers, but it is of great consequence whether the sanctions of property be impaired.
"becomes clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. . . . When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created."
have been legally compelled, and in the other cases, as we have seen, it was the Act of the parties, not the power of the law, which devoted the property to the public interest. In the Munn case, it was said of the owners of the elevators that there was no attempt to compel them "to grant the public an interest in their property, but to declare their obligations if they used it in this particular manner." And further, "[h]e may withdraw his grant by discontinuing the use; but so long as he maintains the use, he must submit to the control."
In the cases cited, therefore, there was a regulation of uses which were extended voluntarily to others. I recall no case where the use was compelled, and by the use so compelled regulation was justified. The case at bar has no fellow in our jurisprudence.
"through its subordinates any oil unless the same was sold to them, and through them to it on terms more or less dictated by itself, and thereby became master of the fields without owning them."
It is not very clear whether this is intended as a statement merely of the motive of the amendment or of its legal justification. If stated as the motive of the amendment, I have no concern with it; as a justification of the amendment, its foundation must be considered.
"The Prairie Oil & Gas Company is a corporation organized in 1900 under the laws of the State of Kansas. It owns and operates a system of pipelines consisting of gathering lines in the Mid-Continent field, in the States of Kansas and Oklahoma, a trunk line from that field to Griffith in the State of Indiana, where it connects with the Indiana pipeline, and a trunk line in the State of Arkansas, connecting the Oklahoma pipeline with the pipeline of the Standard Oil Company of Louisiana. This company has no refinery, and its business is confined to producing, purchasing, and selling crude oil, which it delivers to its customers by means of the pipelines described. Its own wells yield only about 12,000 barrels per day, and it purchases approximately 70,000 barrels per day on the average. Its trunk lines are about 860 miles in length, of which some 300 miles are located on the right of way of the Atchison, Topeka, & Santa Fe Railway Company under contract arrangement with that company."
"The Uncle Sam Oil Company is a corporation organized in 1905 under the laws of the State (then Territory) of Arizona. It owns and operates a pipeline from its wells in the State of Oklahoma to its refinery at Cherryvale, Kansas. The extent to which this company purchases oil from other producers, if it engages in that business at all, does not appear from the record."
from Stoy, Illinois, through the States of Illinois, Indiana, Ohio, and Pennsylvania. The greater part of the crude oil transported by this company is purchased from other producers. The lines which it owns and the Bayonne refinery which it serves are under common or unified control."
"The Ohio Oil Company is a corporation organized in 1887 under the laws of the State of Ohio. It owns and operates pipelines in the States of Ohio, Indiana, and Illinois, and also leases and operates a line from Negley, Ohio, to Centerbridge, in the State of Pennsylvania. It is an extensive purchaser of crude oil from other producers."
"The Standard Oil Company, designated, for convenience, 'Standard Oil Company of New Jersey,' is a corporation organized in 1882 under the laws of the State of New Jersey, and its principal pipelines are the following: (a) a line extending from Unionville, in the State of New York, near the boundary line of New Jersey, through the latter state to its refineries at Bayonne; (b) a line from Centerbridge, in the State of Pennsylvania, near the boundary of New Jersey, through the latter state to its refineries at Bayonne and Bayway, and (c) a line from Fawn Grove, in the State of Pennsylvania, near the boundary of Maryland, through the latter state to its refinery at Baltimore. The record indicates that much the greater part of the oil transported through these lines, and perhaps all of it, is oil which this company has purchased."
"The Standard Oil Company of Louisiana is a corporation organized in 1909 under the laws of that state. It owns and operates a refinery at Baton Rouge and a trunk line extending thereto from the town of Ida, near the northern line of Louisiana, and also gathering lines in the Caddo field, in the states of Louisiana and Texas. It purchases a considerable part of the crude oil which its lines transport."
derives any of its corporate powers from laws of the State of its creation under which common carrier or other public service corporations are organized, but each of them was formed and has always conducted its operations under and in compliance with state laws which relate to private as distinguished from public business."
The companies do not possess the right of eminent domain, and their lines are laid over private rights of way, except some of them for short distances have laid their lines along the rights of way of certain railroads under some contract arrangement with the railroads, one of them for a distance of about 300 miles. They, however, have in many instances also laid their lines across or along public streets and highways by permission or consent of the local authorities. None of them has ever held itself out as a common carrier, or in fact ever carried oil for others, but they have carried only such oil as they produced from their own wells or purchased from other producers, and which they owned when the transportation took place.
"In short, so far as their legal status is fixed by the laws of the states of their creation, and so far as their acts and attitude could make them such, all the petitioners [appellee companies] carry on a private business, at least in the sense that they transport only their own oil and have always refused to transport for others, and all of them have evidently sought and claimed to so conduct their operations as to avoid any public activity which might subject them to public regulation."
legal consequences -- the subjecting of property to other uses than those of its owner. A manifest taking, therefore.
advantages, and, it may be, power; so does all property and in proportion to its extent. It may well, then, be asked -- what extent of trade advantages, what degree of power in purchasing, what superiority in facilities of transportation or disposition of articles may be grounds of the exercise of congressional control? If the owner of a small oil well may be given rights in the facilities of the appellee companies, why may not the owner of a small business be given rights in the facilities of a larger business, if Congress sees fit to say that the public welfare requires the gift? Can any privilege be claimed for oil that cannot be claimed for other commodities? May a jobber of merchandise in Washington who conducts a trade in Baltimore and other places, and owns special facilities for the transportation of his merchandise be compelled to share them with competitors who may not be able to afford as ample ones, and in consequence be forced to sell their property to him at a disadvantage? Or, recurring to the illustration of W. W. Cargill Co. v. Minnesota, can one who erects elevators for the storage of grain of his own raising (such instances exist), and uses it as well for grain of his purchase (there are more of such instances), be compelled to share their advantage with other growers or purchasers of grain? The advantages of his situation are quite as manifest as the advantages the appellees enjoy, and the effect on interstate commerce transportation as marked. Upon the same principle, one who builds a railroad to a coal field or to a forest must share it with other owners in the field or forest if the ventures to purchase their productions. Such is the principle of the present decision. Under it, what attribute of private property is left?
and more accurately, what duress is used except the exclusion of others from the use of property which they do not own? There were no prior or present rights in other owners of oil wells to the use of the lines of the appellee companies. They contributed nothing to the construction of the lines, and their exclusion from their use is the exclusion resulting from the separate ownership of property, as distinguished from rights of community ownership.
There is quite a body of opinion which considers the individual ownership of property economically and politically wrong, and insists upon a community of all that is profit-bearing. This opinion has its cause, among other causes, in the power -- may I say the duress? -- of wealth. If it accumulates 51% of political power, may it put its conviction into law and justify the law by the advancement of the public welfare by destroying the monopoly and mastery of individual ownership?
from the law, thereby being able to break away from the supposed subjection to, and "duress" of, the superior advantages of the appellee companies? The result which the amendment under review was intended to effect as beneficial to the public welfare. The query then occurs, may all of the other oil companies give up their purchases, and, if they should, will they thereby get the freedom of the Uncle Sam Company? What, then, of the owners of oil? It may be they cannot sell their oil at all -- the local market is taken from them, a distant market is not possible for them. Is not the public welfare concerned for them in such situation? Must they remain in it dependent upon the richer owner balancing the advantages of remaining under the law or becoming free from it? Or may the power which has brought them to such situation extricate them from it by one more act of legislation in the public interest, and to take from the companies their mastery of the fields of production?
United States v. Delaware & Hudson Co., 213 U. S. 366, opens a curious speculation and illustrates the effect of the power exercised in the legislation under review. The appellee companies, the decision is, engaging in interstate commerce, may be declared common carriers and made to carry the products of others as well as their own products. Then, having been made common carriers, under the authority of the cited case, they can be forbidden to carry their own products, and so by legal circumlocution property legally devoted to the use of its owners is forbidden such use and devoted wholly to the use of others. A queer outcome.
will plead a justification by the decision in these cases. It is to be remembered that there are many jurisdictions of legislation. It is to be remembered that there cannot be one measure of control for Congress over private property and its uses and another measure of control for the states. In other words, the power which Congress has in its domain the states have in their domain. Alarms, however, are not arguments, and I grant that legislation must be practical. But, while making this concession, and giving to the legislation in question the presumption of constitutionality to which all legislation is entitled, I am yet constrained to say that it transcends the limits of the power of regulation, and takes property without due process of law.
As I have not the power of decision, I do not enter into a discussion of the facts which distinguish the cases. It may be that the judgment of the Commerce Court as to the Standard Oil Company should be reversed because the lines of the company were common carriers before their acquisition, and it may be that the Prairie Oil & Gas Company was made a common carrier by the law which created it. This, however, is in controversy.
I concur in the judgment as to the Uncle Sam Oil Company. From the judgments as to the other companies I dissent.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.