Source: https://www.law.cornell.edu/supremecourt/text/344/254
Timestamp: 2016-08-30 17:44:44
Document Index: 323248013

Matched Legal Cases: ['§ 13', '§ 13', '§ 1', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 13', '§ 15', '§ 15', '§ 1', '§ 1', '§ 15', '§ 15', '§ 1']

KING et al. v. UNITED STATES et al. | US Law | LII / Legal Information Institute
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344 U.S. 254 (73 S.Ct. 259, 97 L.Ed. 301)
[HTML] dissent, DOUGLAS, VINSON
[HTML] See 344 U.S. 936, 73 S.Ct. 503.
The questions here are: (1) whether the Interstate Commerce Commission, in prescribing intrastate freight rates for railroads under § 13(4) of the Interstate Commerce Act,
The underlying proceedings originated in 1940. The Interstate Commerce Commission then undertook a nationwide investigation of interstate railroad freight rates, under §§ 13(2) and 15a(2) of the Interstate Commerce Act, in conformity with the National Transportation Policy stated in § 1 of the Transportation Act of 1940.
The investigation dealt with past and future freight and passenger operations, intrastate as well as interstate. A Committee of Cooperating State Commissioners sat with the Commission and took part in its deliberations. Mounting railroad operating costs and declining passenger revenue led the Commission, in 1946, to authorize a nationwide increase of 20% in basic interstate freight rates. Ex Parte No. 162, Increased Railway Rates, Fares, and Charges, 1946, 264 I.C.C. 695, 266 I.C.C. 537.
In 1947, the Commission found such further increases in operating costs and decreases in passenger revenue that it authorized an additional nationwide interim increase of 10% in interstate freight rates. Soon it raised this to 20%. In a third report it varied the percentage in different areas, with the result that in the southern territory, including Florida, the increase was 25%. The 1948 final report confirmed this 25% increase. Ex Parte No. 166, Increased Freight Rates, 1947, 269 I.C.C. 33, 270 I.C.C. 81, 93, and 403. The Commission's estimates of revenue contemplated the application of the increased rates to intrastate, as well as to interstate, transportation.
The report concludes with the statement that the 'Committee of Cooperating State Commissioners * * * authorize us to state that they concur in the foregoing report.' 270 I.C.C. 403, 463.
On petition of the Florida railroads, the Interstate Commerce Commission undertook its own investigation of Florida intrastate railroad rates under § 13(3) and (4) of the Interstate Commerce Act, 41 Stat. 484, 49 U.S.C. 13(3) and (4), 49 U.S.C.A. § 13(3, 4). A full hearing was had before a Commissioner and an examiner, followed by a hearing upon exceptions to the examiner's report.
The Commission recommended that intrastate freight rates be established 'between points in Florida which will reflect the same increases as are, and for the future may be, maintained by respondents (railroads) on like interstate traffic to and from Florida, and within Florida under our authorizations in Ex Parte No. 162 and Ex Parte No. 166 * * *.' Finding No. 8, 278 I.C.C. 41, 73.
The Interstate Commerce Commission then gave the Florida Commission a final opportunity to permit the increased rates to be applied to intrastate transportation. Upon the latter's failure to act, the Interstate Commerce Commission ordered the railroads 'thereafter to maintain and apply for the intrastate transportation of freight from and to points in the State of Florida freight rates and charges which shall be no lower than the approved rates and charges, or on the approved rate bases, as provided in said report.'
In Ex Parte No. 168, Increased Freight Rates, 1948, 272 I.C.C. 695, 276 I.C.C. 9, the Commission reviewed the changing attitudes it has adopted concerning the role of passenger deficits and freight rates. In such cases as the Five Per Cent Case, 31 I.C.C. 351, the Commission in 1914 concluded that each class of service should completely and independently provide its own proportionate share of expenses and profits.
Citing with approval its similar views in Ex Parte No. 103, Fifteen Per Cent Case, 1931, 178 I.C.C. 539, and Ex Parte No. 123, Fifteen Per Cent Case, 19371938, 226 I.C.C. 41, the Commission summarizes its present position as follows:
In recent years, a nationwide passenger deficit has been obvious except during the peak of wartime passenger traffic. The ratio between passenger operating expense and revenue has varied in different areas but has been uniformly unfavorable to the railroads.
Section 15a(2) of the Interstate Commerce Act and the National Transportation Policy of 1940
reflect this broad concept of the unity of the Nation's transportation system. They direct the Commission to consider, among other things, the need, in the public interest, of adequate and efficient railway transportation service and the need of revenues sufficient to sustain such service. It permeates such general revenue proceedings as Ex Parte Nos. 162 and 166, supra. It leaves no ground for a claim that the Commission may not give weight to passenger revenue deficits in prescribing interstate freight rates to meet over-all revenue needs. See United States v. Louisiana, 290 U.S. 70, 54 S.Ct. 28, 78 L.Ed. 181.
In the instant case, however, there is no showing that the character of operating conditions in Florida intrastate passenger traffic differs substantially from that of interstate passenger operations in the southern territory generally. On the contrary, the Commission observes that
'The record affords no justification for a difference in treatment in this respect (passenger deficits) between Florida intrastate traffic, on the one hand, and interstate traffic to and from Florida, on the other hand. The question of passenger deficits is a serious one for both carriers and shippers, and would become even more serious for interstate shippers if this burden were imposed entirely upon them (rather than being shared on a like basis with intrastate shippers on the same lines).' 278 I.C.C. at 6768. See opinion below, 101 F.Supp. at page 944.
'This court has consistently held that this section (§ 13(4)) is to be construed in the light of section 15a(2) and as supplementing it, so that the forbidden discrimination against interstate commerce by intrastate rates includes those cases in which disparity of the latter rates operates to thwart the broad purpose of section 15a to maintain an efficient transportation system by enabling the carriers to earn a fair return. So construed, section 13(4) confers on the Commission the power to raise intrastate rates so that the intrastate traffic may produce its fair share of the earnings required to meet maintenance and operating costs and to yield a fair return on the value of property devoted to the transportation service, both interstate and intrastate.' 290 U.S. at pages 7475, 54 S.Ct. at page 31.
We conclude that there is no reason why the Commission may not give weight to passenger deficits in prescribing the intrastate freight rates in Florida, as it does in prescribing interstate freight rates for the southern territory.
Several of the Commission's findings which lend support to its order are printed in the margin.
Its authority to prescribe the rates now before us rests on the provision, in § 13(4), that when it finds that an intrastate rate causes 'any undue, unreasonable, or unjust discrimination against interstate or foreign commerce * * *' it shall prescribe such rate as, in its judgment, will remove the discrimination. Note 1, supra. The Commission's finding No. 7 meets this requirement. The Commission there finds that the maintenance of the existing intrastate rates within Florida 'on bases lower than those herein approved causes and in the future will cause, (1) in all instances, unjust discrimination against interstate commerce * * *.' 278 I.C.C. at 73. If supported by adequate subsidiary findings, the ultimate finding thus sustains the authority of the Commission and the validity of its order.
North Carolina v. United States, 325 U.S. 507, 514, 65 S.Ct. 1260, 1264, 89 L.Ed. 1760; Florida v. United States, 292 U.S. 1, 54 S.Ct. 603, 78 L.Ed. 1077; Id., 282 U.S. 194, 51 S.Ct. 119, 75 L.Ed. 291; United States v. Louisiana, 290 U.S. 70, 54 S.Ct. 28, 78 L.Ed. 181. The court below adds that it is 'clear from the evidence in the case that it (the existing intrastate rate) did result in undue, unreasonable and unjust discrimination against interstate commerce * * *.' 101 F.Supp. 941, 945.
In the North Carolina case there was no finding that the existing intrastate rate was inadequate. In fact, its ample adequacy was indicated by evidence of an extraordinarily large volume of available traffic and profits. In contrast, the Commission, in the instant case, has found that the existing 'Florida intrastate rates * * * which are below the (proposed) level herein authorized, are abnormally low and are not contributing their fair share to the revenues * * * and that the burden thus cast upon interstate commerce is undue to the extent that these intrastate rates * * * are less than they would be on the basis herein approved.' Finding No. 5, id., at 7273, and see 4559. The report adds that 'the revenue loss as estimated by the respondents (railroads) because of the failure to authorize the increases herein sought is $915,325 a year.' Id., at 65.
Whereas in the North Carolina case there was evidence to indicate that the conditions in that State were more favorable to profitable intrastate transportation of passengers than in the Nation at large, here the Commission's finding No. 2 expressly states that 'the transportation conditions incident to the intrastate transportation of freight in Florida are not more favorable and such conditions in the Florida peninsula are somewhat less favorable than those (1) within southern territory and (2) between Florida and interstate points.' Id., at 72, and see 6367.
'The decision in the first proceeding, that the increase in interstate rates was reasonable, was made in the hope that the state commissions would bring intrastate rates into harmony. When they failed to do so, the Commission reaffirmed its finding that the new interstate rates were reasonable and found that the intrastate rates must be raised in order that the intrastate traffic may bear its fair share of the revenue burden. It is plain from the nature of the inquiry that the rate level, to which both classes of traffic were raised, was found reasonable on the basis of the traffic as a whole. Where the conditions under which interstate and intrastate traffic move are found to be substantially the same with respect to all factors bearing on the reasonableness of the rate, and the two classes are shown to be intimately bound together, there is no occasion to deal with the reasonableness of the intrastate rates more specifically, or to separate intrastate and interstate costs and revenues. Compare American Express Co. v. State of South Dakota ex rel. Caldwell, 244 U.S. 617, 37 S.Ct. 656, 61 L.Ed. 1352; United States v. Louisiana, supra (290 U.S. 70, 54 S.Ct. 28, 78 L.Ed. 181); Florida v. United States, supra (292 U.S. at page 1, 54 S.Ct. 603, 78 L.Ed. 1077).' Illinois Commerce Commission v. United States, 292 U.S. 474, 483484, 54 S.Ct. 783, 786787, 78 L.Ed. 1371. See, also, Montana v. United States, D.C., 106 F.Supp. 778, 783.
The appellants point out that in the North Carolina case, this Court mentioned the absence of other findings. Those, however, are not needed to sustain an order already supported by such findings as have been made in this case.
For example, the North Carolina case mentions the absence in that case of a finding that the existing 1.65 cent per mile intrastate passenger rate was confiscatory. Such a finding, supported by competent evidence, would have provided a constitutional ground for enjoining the state rate. See Norfolk & Western R. Co. v. Attorney General Conley of West Virginia, 236 U.S. 605, 35 S.Ct. 437, 59 L.Ed. 745; Northern Pacific R. Co. v. North Dakota, 236 U.S. 585, 35 S.Ct. 429, 59 L.Ed. 735. The Interstate Commerce Commission's jurisdiction over intrastate rates, however, is not limited to cases where those rates are confiscatory. It is sufficient that the existing intrastate rates cause 'unjust discrimination against interstate or foreign commerce * * *.' In that event, § 13(4) directs the Commission to prescribe intrastate rates that will remove the discrimination without raising the rate beyond the zone of reasonableness. See United States v. Louisiana, supra, 290 U.S. at pages 7475, 54 S.Ct. at page 31, 78 L.Ed. 181; Florida v. United States, 282 U.S. 194, 211, 51 S.Ct. 119, 123, 75 L.Ed. 291; Wisconsin R. Commission v. Chicago, B. & Q.R. Co., 257 U.S. 563, 585586, 42 S.Ct. 232, 236, 66 L.Ed. 371.
'(T)he administrative arm of the Commission (would be) paralyzed, if instead of adjudicating upon the rates in a large territory on evidence deemed typical of the whole rate structure, it were obliged to consider the reasonableness of each individual rate before carrying into effect the necessary increased schedule.' United States v. Louisiana, 290 U.S. 70, 7576, and see pages 7879, 54 S.Ct. 28, 31, and see pages 3233, 78 L.Ed. 181. See also, Illinois Commerce Commission v. United States, 292 U.S. 474, 483, 54 S.Ct. 783, 786, 78 L.Ed. 1371; Florida v. United States, 292 U.S. 1, 9, 54 S.Ct. 603, 606, 78 L.Ed. 1077; Georgia P.S. Commission v. United States, 283 U.S. 765, 774, 51 S.Ct. 619, 622, 75 L.Ed. 1397; Wisconsin R. Commission v. Chicago, B. & Q.R. Co., 257 U.S. 563, 588, 42 S.Ct. 232, 237, 66 L.Ed. 371. Where the Commission seeks to deal generally with rates and revenues in a large area on evidence typical of the area as a whole, it may proceed by way of a general order supported by sufficient evidence applicable to the whole territory.
At the same time it is well for it to leave the way open, as it did here, for modifications of that general order in specific situations where the general order is not justly applicable. North Carolina v. United States, supra, 325 U.S. at pages 518, 535, 65 S.Ct. at pages 1266, 1274, 89 L.Ed. 1760.
The power of Congress to regulate intrastate rates stems from its authority to promote and protect interstate commerce. See Shreveport Rate Case (Houston East & West Texas R. Co. v. U.S.), 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341.
By § 13(4) of the Act the Commission is empowered to regulate intrastate rates which are found to be discriminatory. The key to this regulatory authority is discrimination against interstate commerce, which presupposes that somehow or other the particular intrastate rates interfere with or prejudice interstate commerce. This principle is explicit in § 13(4)
and in the decisions of the Court, both before and after the enactment of § 13(4).
The Commission, of course, is authorized to regulate intrastate rates so that intrastate operations will provide a fair share of the carriers' revenue.
See Wisconsin R. Commission v. Chicago, B. & Q.R. Co., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371. But that authority rests on the Commission's power to remove discrimination. If, for example, intrastate freight operations fail to produce an adequate return as determined by reference to the cost of the intrastate operations and the investment in the intrastate business, interstate commerce is discriminated against. But there is no such failure in this case. Intrastate freight operations in Florida are amply profitable and carry their fair share of the load. The Commission nevertheless has saddled the intrastate freight business with the deficits from the interstate passenger business. If there is any discrimination here, it is against the local Florida shipper.
'(4) Whenever in any such investigation (where rates made by authority of a state are in issue) the commission, after full hearing, finds that any such rate, fare, charge, classification, regulation, or practice causes any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other hand, or any undue, unreasonable, or unjust discrimination against interstate or foreign commerce, which is hereby forbidden and declared to be unlawful, it shall prescribe the rate, fare, or charge, or the maximum or minimum, or maximum and minimum, thereafter to be charged, and the classification, regulation, or practice thereafter to be observed, in such manner as, in its judgment, will remove such advantage, preference, prejudice, or discrimination. Such rates, fares, charges, classifications, regulations, and practices shall be observed while in effect by the carriers parties to such proceeding affected thereby, the law of any State or the decision or order of any State authority to the contrary notwithstanding.' (Italics supplied.) 41 Stat. 484, 49 U.S.C. 13(4), 49 U.S.C.A. § 13(4).
§ 13(2), 36 Stat. 550, as amended, 41 Stat 484, 49 U.S.C. 13(2), 49 U.S.C.A. § 13(2); § 15a(2), 54 Stat. 912, 49 U.S.C. 15a(2), 49 U.S.C.A. § 15a(2); § 1 of the Transportation Act of 1940, inserting a preamble to the Interstate Commerce Act, 54 Stat. 899, 49 U.S.C. note preceding § 1, 49 U.S.C.A. note preceding section 1.
For earlier reports see Ex Parte No. 148, Increased Railway Rates, Fares and Charges, 1942, 248 I.C.C. 545. The several proceedings under §§ 15a or 13(4) referred to in this opinion deal at length with many commodity and other rates or charges besides those which are controlled by the general percentage increases referred to in the opinion. While such variations are important and significant in adjusting each order to specific situations, their consideration is not necessary to the determination of the issues before us. The percentages used in this opinion are those which were adopted by the court below for illustrative purposes. 101 F.Supp. 941, 943944.
In Ex Parte No. 166, 270 I.C.C. 403, 421, the tabulations of overall percentage increases in freight rates include intrastate traffic. The report says: 'The table which relates to class I railroads, covers all traffic, intrastate as well as interstate, and assumes increases to have been approved on intrastate traffic similarly to those upon interstate traffic in the same territory, for the whole time.' In referring to revenue from operations for a 'constructive,' normal year, the report says: 'This estimate is upon the assumption that timely similar adjustments will be made upon intrastate traffic.' Id., at 428. As to rates of return on property values it adds: 'They presuppose that generally similar increases will be permitted by State authorities on intrastate traffic, or may become effective otherwise.' Id., at 437. See also, 269 I.C.C. at 39, 9495, and 270 I.C.C. at 440.
'* * * From 1923 through 1933 both the number of passengers carried and the revenues from passenger fares declined uninterruptedly. Passengers carried declined from slightly less than 1 billion in the earlier year to less than half that figure, or 433 millions, in round numbers, in the later year. Revenues from passenger fares fell from $1,148 millions to $329 millions, a decline between these 2 years of more than 70 percent. This development was accompanied, except for 1 year, by an uninterrupted increase in the passenger service operating ratio from 81.29 percent in 1923 to 101.22 percent in 1930, the latter being the first year of the 11 years 192030 in which there was an operating deficit in this service. Since that year there has been an annual operating deficit in passenger service, except during the war years 194245.
276 I.C.C. at 36, 40; see also, pp. 1431 for data as to value, revenue, expenses, operating income rate of return, traffic, efficiency, etc., and pp. 3240 as to passenger deficits.
'In the exercise of its power to prescribe just and reasonable rates the Commission shall give due consideration, among other factors, to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed; to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service; and to the need of revenues sufficient to enable the carriers, under honest, economical, and efficient management to provide such service.' 54 Stat. 912, 49 U.S.C. 15a(2), 49 U.S.C.A. § 15a(2).
'It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions;all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy.' 54 Stat. 899, 49 U.S.C. note preceding § 1, 49 U.S.C.A. note preceding section 1.
'These findings are without prejudice to the right of the authorities of the State of Florida, or any other interested party, to apply for a modification thereof as to any specific intrastate rates or charges on the ground that they are not related to the interstate rates or charges on like traffic in such a way as to contravene the provisions of the Interstate Commerce Act.' (Italics supplied.) 278 I.C.C. at 7274.
As Mr. Justice Hughes speaking for the Court in the Shreveport case said, 234 U.S. at page 351, 34 S.Ct. at page 836: 'Congress is empowered to regulate,that is, to provide the law for the government of interstate commerce; to enact 'all appropriate legislation' for its 'protection and advancement' (The Daniel Ball, 10 Wall. 557, 564, 19 L.Ed. 999, 1001); to adopt measures 'to promote its growth and insure its safety' (County of Mobile v. Kimball, 102 U.S. 691, 696, 697, 26 L.Ed. 238240); 'to foster, protect, control, and restrain' (Second Employers' Liability Cases (Mondou v. New York, N.H. & H.R. Co.), 223 U.S. 1, 47, 53, 54, 32 S.Ct. 169, 56 L.Ed. 327, 345, 347, 348, 38 L.R.A.,N.S., 44). Its authority, extending to these interstate carriers as instruments of interstate commerce, necessarily embraces the right to control their operations in all matters having such a close and substantial relation to interstate traffic that the control is essential or appropriate to the security of that traffic, to the efficiency of the interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms and without molestation or hindrance.'