Case Name: CHAMPLIN REFINING CO. v. UNITED STATES (INTERSTATE COMMERCE COMMISSION, Intervener)
Court: United States District Court for the Western District of Oklahoma
Jurisdiction: United States
Decision Date: 1945-03-21
Citations: 59 F. Supp. 978
Docket Number: Civil Action No. 1559
Parties: CHAMPLIN REFINING CO. v. UNITED STATES (INTERSTATE COMMERCE COMMISSION, Intervener).
Judges: Before MURRAH, Circuit Judge, and VAUGHT and CHANDLER, District Judges.
Reporter: Federal Supplement
Volume: 59
Pages: 978–986

Head Matter:
CHAMPLIN REFINING CO. v. UNITED STATES (INTERSTATE COMMERCE COMMISSION, Intervener).
Civil Action No. 1559.
District Court, W. D. Oklahoma.
March 21, 1945.
Harry O. Glasser, of Enid, Old., and Dan Moody, of Austin, Tex., for plaintiff.
Edward Dumbauld and W. B. Watson Snyder, Sp. Asst. Attys. Gen., Wendell Berge, Asst. Atty. Gen., and Charles E. Dierker, U. S. Dist. Atty., of Oklahoma City, Okl., for defendant.
Nelson Thomas, Interstate Commerce Commission,' and Daniel W. Knowlton, Chief Counsel Interstate Commerce Commission, both of Washington, D. C., for intervening defendant.
Before MURRAH, Circuit Judge, and VAUGHT and CHANDLER, District Judges.

Opinion:
CHANDLER, District Judge.
This is- a suit to enjoin, set aside and annul an order of the Interstate Commerce Commission, dated June 12, 1944, requiring plaintiff to comply with the provisions. of the Commission's valuation procedure, as authorized by 49 U.S.C.A. § 19a.
This Court's jurisdiction is based upon statutory provisions authorizing suit to bq brought against the United States and requiring trial before a court of three judges, 28 U.S.C.A. § 41 (28), 28 U.S.C.A. § 45, 46, 47 and 48. These provisions refer to suits to enjoin, set aside, annul, or suspend any order of the Interstate Commerce Commission.
Plaintiff, Champlin Refining Company, is a corporation organized under the laws of New Mexico with charter powers to produce, buy, sell and transport petroleum, to refine petroleum and to buy, sell and deal in the refined products of petroleum. It operates a refinery at Enid, Oklahoma, being authorized by the State of Oklahoma to do business within its borders.
The crude oil supplied to the refinery is obtained from numerous producing wells throughout the State of Oklahoma, some owned by plaintiff and some owned by other parties. It is collected and brought to the Enid Refinery by pipe lines of plaintiff's wholly owned subsidiary, Cimarron Valley Pipe Line Company.
The pipe line under consideration extends from plaintiff's refinery at Enid, Oklahoma, across Kansas, Nebraska, and a part of South Dakota, to Rock Rapids, Iowa. The construction of the line was begun by the Cimarron Valley Pipe Line Company in 1935 and completed as far as Superior, Nebraska, in the latter part of that year. The Cimarron Valley Pipe Line Company sold and conveyed its pipe line to Superior, Nebraska, to the Champlin Refining. Company, on June 10, 1935, before it was ever used. An extension of the pipe line from Superior, Nebraska, to Rock Rapids, Iowa, was completed about May 1, 1940. The total cost of construction as of December, 1940, was $3,198,-028.66.
The line is 516 miles long, constructed of six inch welded pipe, is seamless and has no connection with any other pipe line. It is so constructed and equipped that products can be discharged from it only at Hutchinson, Superior and Rock Rapids. Plaintiff operates storage tanks and railroad and truck delivery facilities at these terminals. All products transported are owned by plaintiff and refined at its refinery at Enid, Oklahoma.
Plaintiff sells the products transported over the pipe line in "spot-market" and "contract" sales in both of which types of transactions the purchaser pays an amount equal to the refinery price at Enid, Oklahoma, plus an amount designated as a "differential". This differential is an amount equal to the through railroad rate from Enid, Oklahoma, to destination, less the charges paid out by the purchaser for the short-haul transportation from the pipe line terminal to destination. The charges, however, are modified in some sales to meet the competitive prices made by other refineries.
The line is not used as a "gathering line" to bring crude oil to the refinery from the producing wells. The Cimarron Valley Pipe Line Company is employed for that purpose. It is what is known as a "products pipe line" used for the transportation of refined petroleum products. In the construction of the line, the right of way was secured by purchase and not by condemnation proceedings. Some condemnation proceedings were instituted by the Cimarron Valley Pipe Line Company prior to the purchase of the line by the plaintiff, but subsequently were dismissed and the property purchased.
Plaintiff publishes no tariffs with the Interstate Commerce Commission, or any other regulatory body, and accepts no oil products for transportation for other parties, or the general public. It does not permit any person, firm, or corporation, other than itself, to use its pipe line, its facilities, or anything pertaining to them, as a means of transportation of petroleum or any other commodity.
The only question involved is whether plaintiff is a "pipe line company" within the terms of the Interstate Commerce Act.
In 1906 the Interstate Commerce Act was amended to read as follows:
"Sec. 1. That the provisions of this Act shall apply to any corporation or any person or persons engaged in the transportation of oil or other commodity, except water and except natural or artificial gas, by means of pipe lines, who shall be considered and held to be common carriers within the meaning and purpose of this Act, and to any common carrier or carriers engaged in the transportation of passengers or property wholly by railroad from one State or Territory of the United States, to any other State ." 34 Stat. 584.
In 1920 .the Act was further amended to read as follows:
"(1) That the provisions of this Act shall apply to common carriers engaged in—

"(b) The transportation of oil or other commodity, except water and except natural or artificial gas, by pipe line,
"(c) from one .State to any other State.
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"(3) The term 'common carrier' as used in this Act shall include all pipe-line companies; and all persons, natural or artificial, engaged in such transportation or transmission as aforesaid as common carriers for hire. » 41 Stat. 474.
"19a. That the commission shall, as hereinafter provided, investigate, ascertain, and report the value of all the property owned or used by every common carrier subject'to the provisions of this Act." 37 Stat. 701. 49 U.S.C.A. § 1(1) (b, c), (3), 19a.
The construction of the Act was before the Court in Pipe Line Cases, 234 U.S. 548, 34 S.Ct. 956, 58 L.Ed. 1459, and Valvoline Oil Co. v. United States, 308 U.S. 141, 60 S.Ct. 160, 84 L.Ed. 151.
In Pipe Line Cases the Court was considering interstate pipe lines already engaged in transportation at the time of the passage of the 1906 amendment. The matter under consideration was the constitutionality of the act as applied to such companies. It held that certain of the companies were common carriers in substance if not in form and fell within the coverage of the Act even though engaged in the business at the time of the amendment.
With reference to the Standard Oil Company of Louisiana which was incorporated after the passage of the amendment, the Court held the act applicable for this same reason or because it entered the business of interstate transportation of oil by pipe line after the passage of the 1906 amendment.
As to the Uncle Sam Oil Company, the Court held that, being engaged in transporting its own oil for its own use, the transportation involving neither purchase nor sale, such transportation was not transportation in commerce. The Court also undoubtedly took into consideration the fact that the company having entered the field as a purely private pipe line prior to the passage of the 1906 amendment and having vested rights, arbitrary classification of such line as a common carrier would be unconstitutional.
The Uncle Sam Oil Company case must be distinguished from the instant case upon the ground that plaintiff is transporting oil products to market for sale to the public and thus is engaged in transportation in commerce within the meaning of the Act. The time of transfer of title, whether at Enid, Oklahoma, or at Hutchinson, Superior, Rock Rapids or at purchaser's place of business, is technical. In either instance the public pays the transportation charge. A charge or "differential" equal to rail rates is added in "spot-market" sales to the current price of the oil products at Enid, Oklahoma, on the date of the delivery. In "contract" sales the products are sold at contract price for an agreed period of time plus this same "differential".
In either "spot" or "contract" sales the effect on the public is the same as if title passed to the purchaser at the refinery. The purpose of the broad coverage of the Act was to make it impossible for pipe line carriers to escape its terms upon such technicalities.
In the Valvoline Oil Co. case, the company asserted that the oil flowing through its lines was not in commerce until after preparation for market, thereby admitting that after such preparation the transportation would be in commerce. In the instant case, the products are refined products being transported to market and are, therefore, transported in commerce.
We think the foregoing conclusions are inescapable from consideration of the plain terms of the Act and the following quotation from the opinion in Pipe Line Cases [234 U.S. 548, 34 S.Ct. 958]:
"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 pipe line is not conclusive against the transportation being such commerce. 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. The control of Congress over commerce among the states cannot be made a means of exercising powers not intrusted 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 pipe lines 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 limes already engaged in transportation." (Emphasis supplied.)
Plaintiff attempts to demonstrate that it does not fall within the coveráge of the Act by asserting that it is not in fact a common carrier. The Act makes it a statutory common carrier.
The fact, if true, that plaintiff is a private carrier is immaterial since it is covered by the Act and chose to enter the business of transportation of oil products after the enactment thereof.
In our opinion, the plain meaning of the Act as amended is that its provisions apply to all engaged in the interstate transportation of oil or other commodities, except water and except natural or artificial gas, by pipe Une.
The Act states that its provisions shall apply to "common carriers engaged in the transportation of oil or other commodity, except water and except natural or artificial gas, by pipe line". It then defines the term "common carrier" to include "all pipe line companies and all persons, natural or artificial, engaged in such transportation or transmission as aforesaid as common carriers for hire".
In the Valvoline Oil Co. case the Court, in referring to the last clause of the definition of "common carrier" said [308 U.S. 141, 60 S.Ct. 162]:
"This clause is a conjunctive and not a modifier. It does not affect the generality of the first clause as to pipe-line companies."
The Court said in the Pipe Line Cases in construing the 1906 amendment:
"The provisions of the act are to apply to any person engaged in the transportation of oil by means of pipe lines."
Congress intended to include all pipe lines without regard to whether they were private lines or carried for the public.
In the Valvoline Oil Co. case the Court held that the provision in the 1920 amendment that the Act applied to "all pipe-line companies" did not narrow the coverage of the Act. We think this change in verbiage was made for the purpose of making it clear, if any doubt was created by the Uncle Sam Oil Company decision, that all future pipe lines engaged in the interstate transportation of oil or other commodities, exrcept water and natural or artificial gas, were covered by its terms.
The contention is made that plaintiff is not an interstate pipe line company; that it is a refining company. It is authorized by its charter, among other things, to transport petroleum. It produces and purchases oil and, through its wholly owned subsidiary, Cimarron Valley Pipe Line Company, transports it by pipe line from points in Oklahoma to its refinery at Enid, Oklahoma, and after refining, transports the products from its refinery through its own line to Kansas, Nebraska and Iowa for the purpose of sale. Plaintiff could just as logically take the position that it is a "producer" or "carrier".
Valvoline Oil Company was engaged in the refining business, had similar charter powers, and transported oil to its two refineries. The Court there stated:
"There is no controversy over whether appellant is an interstate pipe line company. Obviously it is." (Emphasis supplied.)
As in the Valvoline Oil Co. case, plaintiff claims that to hold the Act applicable to it amounts to the taking of its property without due process of law. This contention is answered by the Court in the Pipe Line Cases. Plaintiff is a "future" pipe line company.
Plaintiff's petition to enjoin and annul the order of the Interstate Commerce Commission should be dismissed. Defendant is requested to prepare and submit findings of fact, conclusions of law and judgment in accordance with the views herein expressed.
An amendment was suggested in the Senate limiting the coverage to pipe lines "carrying for the public". Senator Lodge opposed this and in sponsoring the amendment as passed stated:
"But the amendment suggested by the Senator from Ohio to my amendment, to the effect that no pipe line, unless it carries for the public shall come, under this rule, will, as the Senator from Minnesota (Mr. Nelson) says, absolutely destroy the value of my amendment." 40 Cong.Rec. 6361 — 65.