Earl Warren: American Trucking Associations, et al., Appellants, versus United States of American and Interstate Commerce Commission et al., Number 8, Railway Labor Executives Association et al., Appellants, versus United States of American and Interstate Commerce Commission et al. Mr. Beardsley.
Peter T. Beardsley: Mr. Chief Justice may it please the Court. These cases are appeals from the decision of a three-judge District Court from the District of Columbia. That Court in turn upheld the decision of the Interstate Commerce Commission which authorized the wholly owned subsidiary of the Rock Island Railroad to perform unrestricted motor service between Chicago on the one hand and Omaha on the other. The Court's decision is contained in the record here at 192.T he Commission's decision is pertinent in the record at 93. The appellant's on the case are nine motor carriers holding authority from the Interstate Commerce Commission to perform operations between points and the territory of the Rock Island Railroad. The Commission's report notes that of these nine, only three of them are the carriers with real authority to serve the points and we accept that finding. And my discussion as far as carrier operations are concern here will relate largely to those three carriers. The names are Iowa, Nebraska, (Inaudible) Truck Line Inc.and the Des Moines Transportation Company. The other two appellants are American Trucking Associations and its Regular Common Carrier Conference.A.T.A.is simply the trade association and the motor carrier industry which in many cases participates before the Commission and the Courts in matters of general interest to the industry. The Conference is simply a member of the A.T.A.family whose interest are devoted specifically to motor common carriers of general commodities operating over regular routes under authority from the Interstate Commerce Commission. The appellant's in Number 8 of the Railway Labor Executive Association, the Brotherhood of Railroad Trainmen, and the Order of Railway Conductors and Brakemen. The appellees here are the Commission, Motor Transit, various traffic bureaus, and Chambers of Commerce and Groups, denominated shippers committee and employers committee of Rock Island Motor Transit. I'm a little doubtful as to the Government's status here, yet supported the Commission before the lower court but has not filed a brief before this Court. Coming to the effect of the Commission's decision here as I previously remarked, the direct effect is to authorize these completely unrestricted motor operations between Chicago and Omaha. And right here, I might touch on what seems to be a discrepancy between the map which we put in the front of our brief and that which is included in the Commission's brief. The Commission's brief stops on the east at Silvis, Illinois but the Commission's report makes it quite clear that Motor Transit already posses authority between Silvis on the one hand and Chicago with the result that Motor Transit can attacked these rights between Silvis and Chicago to the rights which are granted in this proceeding and thereby render a true service between the two points Chicago and Omaha. Now, the map which we have in our brief is the map which reflects the authority issued in the permanent certificate by the Commission in September of 1951 which incidentally Motor Transit has never conducted operations under. And the circle points, the so-called Quad Cities over here at Rock Island, Moline, etcetera, Des Moines and Omaha are the so-called key points. They are set forth -- all of the restrictions applicable to this permanent operation are set forth in the footnote at page 7 of our brief. And with respect to the key points, I'll just read the item that applies to that. "No shipments shall be transported by Motor Transit between any of the following points or through or to or from more than one of them." Now, those are the points that are shown there in the circle and as I understand that rather gobbledegookish language, it simply mean that Motor Transit under this authority could originate a shipment in Chicago for example, move through the one key point of the Quad Cities and go to any point east of Des Moines Island, it could not go into Des Moines. And in the reverse direction it would be roughly the same operation, that is to say, going to through from or between one key point but not two. Now, I've spoken of the direct effect of the decision. The indirect effect is simply this. Motor Transit presently possesses other authority which could be attacked with the authority granted here which in turn will allow Motor Transit to perform a completely unrestricted service, for example, between all of the points shown on the map in our briefs and between cities on the one hand, for example, in Kansas City and the other. In addition, by interchange, a lot of motor carriers, Motor Transit could perform service between practically any point in the country. That's the effect of the Commission's decision, route wise, if I may put it that way. Now, as to the rate wise effect. It simply means that the independent motor carriers will face the competition first in the railroad, next of Motor Transit at rate levels which are identical with that of the independent motor carriers. And finally, thirdly, the competition of truck service by Motor Transit in a movement of railroad bill freight and I might say this that with particularly with respect to low -- small shipments or relatively small shipments where there is any discrepancy in the rates of motor carriers and railroads, the rates of the railroads are usually lower. Coming now to the questions which are presented here, the first one as we see it as well as the evidence supports the Commission's order. We say it done and we agree with Commissioner (Inaudible) in dissenting who has said that the majority was simply overwhelmed by the quantity of the evidence here. To put it in the vernacular, the Commission was a victim of a snow job. Second, whether in any event the Commission has discretion to authorize the railroads to perform motor carrier operations which are completely devoid from their train service in all out competitions with independent motor carrier.
Speaker: That's a question of question of power, you say, there is no power in the Commission to make this order?
Peter T. Beardsley: Yes, sir, we do.
Speaker: Mr. Beardsley --
Peter T. Beardsley: Yes, sir.
Speaker: -- if I might ask. Do you suggest this order of the Commission, did it reserve unto the Commission's right to impose certain other conditions if it agrees to develop the (Inaudible)
Peter T. Beardsley: First of all, with respect to that the condition and incidentally, that's an entirely new thing after so many years of operation. That is to say the standard that the Commission use in there is public convenience and necessity. It never -- it has not impose in this case, any so-called auxiliary and supplemental restrictions designed to -- to limit the railroad to -- anything beyond a complete, all out motor carrier service as it has done in every important case prior to this one. And I don't -- we don't -- we contend that that reservation is imposed in this case as in the -- one of -- one of the dissenting Commissioners here, (Voice Overlap).
Speaker: Well, it is (Voice Overlap).
Peter T. Beardsley: I beg your pardon?
Speaker: It is -- the condition is in the Court?
Peter T. Beardsley: The Commission says that it reserves a right in the future to impose any conditions required by the public convenience and necessity, not by the proviso of Section 5 (2) (b), which we contend as a part of the statute that applies here. And the -- on the second question, we agreed with Commissioner (Inaudible) in his dissent to -- when he said that the Commission simply lacks the power to do what it has done in this case. The third question as we see it is simply whether the Commission after authorizing the purchase of restricted rights by a rail affiliate under Section 5, as was the case here, they subsequently void those restrictions by a grant of similar authority under Section 207 without imposing any so-called auxiliary and supplemental restrictions as required by the proviso of Section 5 (2) (b) of the Act. Here we agree with the Railroad Labor Unions that the Commission lacks that power and leave it to their counsel to discuss that one question. This case itself is simply another phase of a proceeding that began way back in 1937, when Motor Transit filed an application to purchase a so-called White Line right between Silvis, Illinois and Omaha. The Commission approved that purchase in 1941 and it reserved the right to impose auxiliary and supplemental restriction designed to limit the operations to a coordinated rail motor service. I don't think I need to dwell on the history between 1937 and 1950 because this Court said it forth very fully and very clearly in its Rock Island opinion at 340 U.S.419. In any event, we have covered it at pages 4 to 9 of our brief and I think if I may, I'll just leave it there. Six months after the Court's Rock Island decision, the Commission issued this restricted certificate, which I call the Court's attention. And as I said before Motor Transit has never conducted any operation pursuant to that certificate instead it has been operating under a so-called temporary authority since August 30th, 1951 which incidentally, is much less restricted in a permanent certificate shown in our brief. In October 1951, Motor Transit filed an application for unrestricted authority under Section 207 and hearing were held in 1952. And after the usual routine of proceedings before the Commission, it issued the report an order which we're complaining of in this case. Coming now to matters of substance if I may and dealing first with the Congressional policy which we think is involved in this case. Certainly, long prior to the time Congress regulated the Interstate Transportation by motor carrier. It has recognized the tendency of railroads to monopolize transport whenever they were given the opportunity and it had taken steps to prevent domination by other forms of transport by the railroad. For example, I -- they only refer to the Panama Canal Act of 1912 and to the policy set forth by Congress in the Transportation Act of 1920 to promote, encourage, and develop water transportation service and facilities. We've dealt with that in more detail and I will here at pages 14 to 16 of our brief. So that, when Congress came to regulate interstate transportation by motor carriers by the Motor Carrier Act of 1935, it did several things. The first thing he did was to imposed in Section 202 of the Motor Carrier Act, a duty on the Commission among other things to recognize and preserve the inherited advantages of motor transportation. But it did more than and of course that language is now embraced in the National Transportation Policy. In -- in the Section 213 of the Motor Carrier Act which covers acquisition, purchases, mergers, consolidation, etcetera, the Congress set forth the criterion by which the Commission was to be governed in what I call ordinary cases when one -- one motor carrier wants to purchase another motor carrier. And it said that the Commission shall approve the transaction if it finds that it will be consistent with the public interest. Now, that same standard of course applies to a railroad purchase of a motor carrier but two additional standards were put in that proviso of Section 213 to cover cases in which railroad seek to acquire motor carriers. Congress told the Commission that it shall not approve the transaction unless it finds that it will enable the railroad to use service by motor vehicle to public advantage in its operations. I stress those last three words because I believe they maybe the only thing about which there is really no dispute in this case. Namely, that in its operations restricts rail operation of motor vehicles to in any event something less than an all out independent motor carrier service, what I would call a "coordinated rail motor service" designed simply to improve the ultimate rail service.
William J. Brennan, Jr.: Mr. Beardsley, may I ask, the ICC order in this instance has some reservations in it, does it not? That's -- that's the right word. In any event, it's something that the Commission made anytime reexamined, is that -- is that decided?
Peter T. Beardsley: Well, I assume the Commission can always open up a docket but we argue on brief that that reservation first of all is imposed to really enable the Commission to later on open up its docket and take away from Motor Transit what it would convey here.
William J. Brennan, Jr.: Well, may I ask, is it at least sufficient, for example to enable your client at any time on additional facts or the like to ask the Commission to reopen and reconsider?
Peter T. Beardsley: Well, Mr. Justice Brennan, I would -- I don't want to dive into the question but I would -- I would say this that certainly, our people would always be willing to petition the Commission. But I think that in all fairness and in all candor, if that a fair reading of this Commission's report here indicates that they have very little chance of any success in such a case. We also, point out on our brief that a -- that an exercise of this power which the Commission purportedly reserves here would really amount to a revocation of the authority under Section 212 of the Motor Carrier Act and the Commission cannot do that.
William J. Brennan, Jr.: You mean that those are ineffective because illegal or outside the authority that the Commission --
Peter T. Beardsley: Yes.
William J. Brennan, Jr.: -- would attach to the order?
Peter T. Beardsley: Yes. Yes, sir. Now, have I fully answered your question, Your Honor?
William J. Brennan, Jr.: Yes. Thank you.
Peter T. Beardsley: Yes, sir. Now, the second -- I might say first of all of course that with respect to enabling the railroad to use a truck service in its operations the Commission couldn't and didn't make any such finding in this case.
Felix Frankfurter: Where is that Section phrased Mr. Beardsley?
Peter T. Beardsley: I'm sorry, sir. It's now contained in Section 5 -- in the proviso Section 5 (2) (b).
Felix Frankfurter: Section 5? And that's on?
Peter T. Beardsley: 49 U.S.Code Section 5 (2) (b). The second additional criteria that the Congress placed in the law with respect to railroad acquisition of a motor carrier is this, "That the Commission shall not approve the transaction unless it finds that it will not unduly restrain competition." And as to this requirement, the Commission report says here, "The operations of Motor Transit have not unduly restrained competition and there's no evidence that it proposed operations would produce such a result." We deal with these findings on brief at page 63 and I won't say anything more here about that except to point out that the findings of the Commission would seem to place the burden on the protestants to have introduced evidence in this case showing that Motor Transit's operations in the future, contrary to the past experience will not restrain competition. Now, we say that the burden in this case was on Motor Transit to satisfy every provision of the statutes and it by not introducing evidence and the Commission not finding any fault with that they have in effect transferred the verdict to satisfy that any monopoly requirement from the applicant, Motor Transit, to the protestants in the case. Coming now to the Commission's construction of this proviso of Section 5 (2) (b), I think that the District Court has set it forth very tersely and very accurately at 193-194 of the record here. And if I might, I would just like to read what the Court said. The Commission says the requirement is notably omitted from the terms of Section 207 (a) that the policy, not the terms of the requirement applies to the issuance of certificate under Section 207 (a). It says a policy requirement is not so rigid as a flat requirement in terms but is flexible and permits a grant in exceptional circumstances were the Commission finds that the public interest, convenience, and necessity require the grant. And of course the Court agreed with the Commission's theory of law and we would respectfully submit erred in so doing it. Let me, if I may try to find the flaw in that theory. First of all, it imputes an intention by Congress to require the Commission to read the language of the proviso of 5 (2) (b) into applications filed by railroads or railroad affiliates under Section 207.
Felix Frankfurter: Where is 207 printed here --
Peter T. Beardsley: 307 United States Code.
Felix Frankfurter: In one of the briefs?
Peter T. Beardsley: 49 --
Felix Frankfurter: Printed in your brief?
Peter T. Beardsley: Oh, yes, sir.
Felix Frankfurter: Where? That's what I'm looking for.
Peter T. Beardsley: It's printed at page 84 of the -- in the appendix of our brief, Mr. Justice Frankfurter.
Felix Frankfurter: 84?
Peter T. Beardsley: Yes, sir. It's Section 207 of the Interstate Commerce Act, 307 U.S.Code. Now, as I said --
Felix Frankfurter: Thank you very much.
Peter T. Beardsley: Yes, sir. With respect to this theory of the Commission, it imputes an intention of Congress to require the Commission to read the language of 5 (2) (b) in the 207 except in cases involving exceptional circumstances. Now, we submit first of all, that's a rather subtle distinction. Second of all, since obviously, Congress didn't use any words like exceptional circumstances in the law, it couldn't define it. And so, it remains under the Commission's theory for it to define what I meant by exceptional circumstances. Now, the exceptional circumstances set forth in this case is the alleged fare of independent motor carriers to provide an adequate service to smaller points and the Commission says out of what we think is completely unless they got any sympathy for the railroad's subsidiary, we will allow it to serve the major points. What -- what will the exceptional circumstances be tomorrow if the Commission has complete discretions to determine what they are? They will be almost anything which the Commission decides to apply that term to. Now, it seems to us that the short answer to that argument is this. Congress obviously was concerned with restraint of competition or it wouldn't have included this language of 5 (2) (b) in the Act. And if it had intended to confer on the Commission the authority to just simply make wholesale exceptions to the policy expressed in 5 (2) (b). Surely, it could have found a few simple words to add to the statute to make that intent clear beyond deferred venture. I might say additionally, with respect to the Commission's theory is completely contrary to the position which it took before this Court in 1950, in the Texas and Pacific case. That case too, like this case dealt with the 207 application. And I'm not going to read what the Commission said in that case. I will refer the Court to what it said at pages 25 and 26 of our brief where you'll find at set forth in the blackest print we could find. And as I said before, it's completely to the contrary of what it said then and you will find a good bit more of that black print throughout our brief here. Because with respect to every important aspect of this case, what the Commission tells the Court now is precisely the opposite of what it told the Court in 1950.
Speaker: You -- you read 207 or would like to have 207 read as it provided that no such application should be granted if the motor carrier is owned by a railroad.
Peter T. Beardsley: When a railroad makes an application under Section 207 to provide motor carrier service we contend that the language of the proviso Section 5 (2) (b) must be read into that Section 207 by the Commission. And I will deal with that in a little bit more detail on the legislative history, Mr. Justice Harlan. That is our contention. Oh, I -- I should have told the Court here when I was remarking about the difference between the Commission's approach now and what it was in 1950, I should have referred the Court to the page 23 of their brief in this case first and I didn't. There, the Commission draws the -- a distinction. It says that when a railroad purchases a motor carrier, the effect of the purchase is to remove that previously independent motor carrier from the field, therefore, that's bad for competition. It says however, when a railroad institutes its own service under Section 207, that adds a new competitor to the field, ergo, that's good for competition. Now, as I previously said, that is diametrically opposed to what it told this Court in its brief in the Texas and Pacific case in 1950. The final thing I would like to mention here with respect to the policy aspect of the case is this. At page 14 of its brief the Commission says, it comes up with this remarkable statement at least to us. It says the Court has already recognized that the proviso of Section 5 (2) (b) among other things does not preclude the Commission from authorizing ordinary and unrestricted motor carrier service by a railroad to points on -- on the other railroad and I stress this language. "To satisfy a public need for transportation service which other carriers are not providing." That statement is remarkable for two reasons. The first one is it just evades the question here. If the Commission report in this case had confined the authority granted to points at which there was a need for service and have not gone way off the line and authorized service to points as to which there isn't a question in the -- in the record that there is already plenty of adequate service, I doubt it we'd be here today. The Commission does have a statement in its report, record 115 here, that the evidence respecting a need for truck load service "is not as convincing as that with respect to the peddle operations." Now, we submit that simply is the understatement of the decade. Every witness presented by Motor Transit in this case and they presented a literal horde of them, almost 108. When they were asked on cross-examination if there was any need for additional services to the major points, they said there wasn't. That's particularly true, for example of Judge Reed, the Chairman of the Iowa State Commerce Commission. He made no bones about it. And his testimony on that phase of the case is at the record 744 and 745. In fact, I don't believe the Commission seriously contends in this case that's there's a need for additional motor service at points such as Omaha, Des Moines, Chicago, Cedar Rapids, and such as that. Rather, what he has done here is to authorize Motor Transit to provide service at these large points because it says, to do otherwise wouldn't do justice to the railroads' subsidiary. But I talked about the contention of the Commission being somewhat remarkable and as I said the first reason is, that it begs the question. But the second and even more remarkable aspect of the Commission statement is that it's exactly contrary to what this Court had to say on the Rock Island case at 340 U.S.443-44. Where the Court pointed out that the announced transportation policy of Congress didn't permit railroads to perform unrestricted motor service. Now, that's what they suggested, that Rock Island unlike this case was affected (Inaudible). I'll simply refer to the Court's decision in the T&P case again which was a Section 207 case such as this. And where the Court at 340 U.S.459 held that the same considerations justifies similar treatment to railroad motor carrier operations while the applications to perform that service is filed under Section 5 or under Section 207. I now like to deal, rather likely if I may with the legislative history and that's set forth in our brief at pages 21 to 26 in some detail. As the Court might expect, there is a considerable disparity between the Commission's interpretation of the legislative history which is applicable here in our interpretation.
Speaker: Does that mean the legislative history doesn't prove much?
Peter T. Beardsley: No, sir. We think it proves a good deal but like most litigants before the Court, we think it prove our side of the story and not theirs.
Felix Frankfurter: May I ask whether you have one set of legislative materials and they another or you draw different inferences from the same legislative materials (Voice Overlap)?
Peter T. Beardsley: I think that -- I think that I can fairly say that we draw different inferences from the same legislative material -- materials.
Felix Frankfurter: Oh, the question of having us read it and then say --
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: -- this is right, this is wrong, is that right?
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: Or left in doubt?
Peter T. Beardsley: I beg you pardon?
Felix Frankfurter: Or be left in doubt after reading it which is very frequent in my state of mind.
Peter T. Beardsley: Well, it's very frequently mind, but I'm optimistic enough to hope that the Court --
Felix Frankfurter: In this case here.
Peter T. Beardsley: -- won't be left in doubt.
Felix Frankfurter: But I just want to be sure.
Peter T. Beardsley: Yes.
Felix Frankfurter: That there isn't -- we've got the same body of materials.
Peter T. Beardsley: Of course. We rely principally here, of course, on the Rock Island and the Texas and Pacific cases which this Court decided earlier in 1951. And at that time, you had before you precisely the same legislative history which is discussed in the briefs here. I might touch on, first the so-called Shipstead Amendment. In 1938, a bill was introduced which proposed various amendments to the Motor Carrier Act. At that time Senator Shipstead also proposed to physically place in Section 207 of the Act, the precise language of the proviso of Section 5 (2) (b). Now, the Senator subsequently withdrew that Amendment and the Commission tells us in its brief that it was withdrawn only because it was controversial, not because it wasn't necessary if indeed this proviso was to be read under Section 207. The Commission says that at page 35 of its brief. And it doesn't quote at any great length from -- from what Senator Shipstead had to say at the time he withdrew his Amendment. We quote at greater length at page 24 of our brief and we think that the colloquy there in which Senator Shipstead engaged with Senator Johnson is a clear indication that the real reason his Amendment was withdrawn was simply this. Commissioner Eastman had previously appeared before the Committee and had indicated that in its administration of the law, the Commission would in any event read the proviso of 5 (2) (b) into Section 207 whenever a railroad filed an application to perform motor service under that latter Section. Coming now to the final leg of this -- of this portion of the argument if I may, of course, I don't think there can be a question in anybody's mind of what the so-called Kansas City Southern decision of the Commission is its landmark decision in this field. That was the first really important case it had dealing with the Section 207 application. And it decided in that case that it would impose the same restrictions in a railroad's -- in a certificate issued to a railroad to operate motor vehicles as it had previouslyimposed in the so-called Barker case which unlike the Kansas City Southern case arose under Section 5, where this language of the proviso was directly applicable. But as to the Kansas City Southern case there were two of them. The first one is reported in 10 M.C.C.221 and was a decision by division, 5 of the Commission. The second and subsequent Kansas City Southern case was the decision of the entire Commission. And the only difference between the two case is that in the second case, the Commission substituted for a so-called prior or subsequent rail haul restriction which it had previously used up to that time, the so-called key point requirement which is set forth in the permanent certificate which is shown in the front of our brief here. But the Commission has relied so heavily on the St.Andrews Bay case and the purpose is obvious. They are seeking something, anything as an offset to the Kansas City Southern case. They cited the St.Andrews Bay case six times in their brief and I think its worth a little bit of my time. And the first thing I'd point out to the Court is that it is a decision of the Commission's Division 5 and not of the entire Commission, as well as the second Kansas City Southern case and indeed the St. Andrews Bay case may have been -- maybe considered to have been reversed subnormally by the Kansas City Southern decision. Second, it's considerably dissimilar, factually from this case, it involved operations only between those in Alabama and Columbus, Georgia, points about 120 miles apart. Third, we think its significance to a large extent may be judged by the fact that the Commission has apparently forgotten by 1950 when it filed a brief with this Court in 1950 in the T&P case in which it included an appendix containing more than 140 previous decisions in which it had limited railroad service to auxiliary and supplemental operating, it didn't even cite the St. Andrews Bay case. Fourth, perhaps this is significant and we think so. We were just curious to see the significance of the St.Andrews Bay case so far as the agency which offered it is concerned. Now, we write it down in (Inaudible), it cited three times in the (Inaudible), in the Motor Carrier Volumes of the Commission, the last citation -- excuse me. The last citation in 1942 is never been cited in a decision of the entire Commission even. Contrary as to that, Kansas City Southern case is cited 65 times. And so, what the Commission has done here as we see it is to drag this poor old skeleton of the St. Andrews Bay case out of its closet of long forgotten proceedings and it has used it at the major premise. It has added that its minor premise and incorrect conclusion respecting the reason for the withdrawal of the Shipstead Amendment in 1938. And by putting those two things together, it has come to the syllogism which is directly contrary to this Court's language in the Rock Island case where you pointed out at 340 U.S.432 that when Congress reenacted Section 213 of the Motor Carrier Act into Section 5 (2) of the Transportation Act of 1940, it was specifically aware of the Commission's practice of limiting railroads to the performance of auxiliary and supplemental motor operations. What the Commission tells the Court here today is it when Congress moved that first Section into the second Section of the law that it was specifically aware that he Commission wasn't limiting motor operations of railroads under Section 207. Coming to the final leg of this verbal journey, if I may put it that way, I'd like to talk a little bit about the factual matters involved in this case. And about the criticism of the Commission which is contained in the report here with respect to the operation it provided by these relatively small motor carriers between the Iowa points. They are criticized first because they don't provide as much peddle service as Motor Transit.
Speaker: (Inaudible)
Peter T. Beardsley: I'm coming -- yes, sir. Peddle service is simply the business of taking a truck starting it out empty for example, moving down the highway particularly were you have a lot of small communities, as you have in this case which are contiguous to each other and which individually don't generate a whole lot of freight. And picking up at one town, say 250 pound shipment and moving on to the next center until eventually you have a truck full of freight. And then you deposit that truck, you may take it on to other points and dump it. It's -- it's that kind of operation, they so-called door-to-door movement or a town-to-town movement. And as I say, the Court is critical of the failure of the independent motor carriers here to provide as extensive a peddle operation as Motor Transit. And it comes to this conclusion at record 115. It says it would be unfair to restrict Motor Transit's operations in this case to so-called auxiliary and supplemental service, to use its words, and hand-over the truck load cream of the traffic to Motor Transit's competitors. We submit with deference that the criticism is unfounded and the conclusion is unwarranted. And we think that the Commission fell into error here by its failure to perform the duty which the Court ascribed to it in the Barker case of guarding against the danger of the development of a transportation monopoly. The Commission we believe in all candor has simply abandoned its duty and because of that abandonment it's unwilling to disturb the status quo which now exists in this Iowa area and which has existed since 1937 when the Rock Island Railroad decided to parallel its lines with unrestricted motor service.
Earl Warren: Mr. Beardsley, may I -- may I ask you this. I understood you to say earlier that -- the -- there was no question about the adequacy of the service. And -- and then I understood you to say here that the Commission did criticized --
Peter T. Beardsley: Yes, sir.
Earl Warren: -- lack of sufficiency of the service. Would you mind putting any in --
Peter T. Beardsley: Yes.
Earl Warren: -- perspective on that?
Peter T. Beardsley: I said and -- and what I meant to say was that, we don't believe there's any serious question in the record as to the adequacy of the existing motor carrier service to the larger points involved here. And that the Commission in effect has overcome that failure to prove any need for services, the larger points by simply a gift to Motor Transit of this additional service based on what I concede to be the Commission's misbegotten sympathy for Motor Transit because they are serving these small points. The Commission says in effect, "Well, they're providing good service to these small points and we're not going to make them provide that costly service and at the same time not let them serve Chicago, Omaha, etcetera, even though there really isn't any need for service at those -- at those points." Now, does that answer the question Mr. Chief Justice Warren?
Earl Warren: Yes.
Hugo L. Black: Now, what's the fallacy in that logic?(Voice Overlap)
Peter T. Beardsley: The fallacy in the Commission's logic?
Hugo L. Black: Yes.
Peter T. Beardsley: As we see it, it's this Mr. Justice Black. The railroad already provides its service to the large points. It isn't suffering one bit. It's doing very well. It has used its creature, Motor Transit, to substitute the more efficient truck service for the way train and peddle power operations which the railroad previously performed rather cumbersomely by using Motor Transit to prolong that service to these small points. A railroad is improving the efficiency of its overall service and it's doing it a lot more economically than it could have done with its railroad cost. And because it's doing it more efficiently it is able to re-train traffic in the family, so to speak, which it would, otherwise have lost. And so there is no reason for sympathy for this poor little rail motor combined. The Commission's --
Hugo L. Black: I don't -- I don't quite get your argument yet but, do you mean these small towns there are getting a service that they --
Peter T. Beardsley: Yes.
Hugo L. Black: -- didn't get before.
Peter T. Beardsley: No. I don't say that, sir.
Hugo L. Black: Peddle service?
Peter T. Beardsley: Let me -- let me point out first of all what -- what I haven't pointed out so far. Motor Transit has a monopoly conferred upon it as far as intrastate service is concerned by the Iowa State Commerce Commission. And this peddle service is performed by Motor Transit, is simply a burden that goes with the monopoly that it has.
Hugo L. Black: But whether burden or not is -- isn't it a useful service to the community?
Peter T. Beardsley: Yes, it is a useful service. But what we are saying is there -- there shouldn't be any fair criticism of independent motor carriers for not providing a service which the -- the -- which is simply -- let me put it this way, which they can't provide by virtue of the fact that they can't get into this territory in intrastate operations. That is the backbone of the service in this area. Independent motor carriers can't do that. Rock Island has the only rights. And Rock Island combines those intrastate state rights with their interstate operations. And when you get to the peddle service that's really the burden of that intrastate monopoly. They've got the monopoly. They've got to provide the service. Now, what in effect they're doing is coming to the Commission and saying, "Yes, we have a monopoly and we have to provide this service in intrastate commerce but it's expensive. And let us make up for that by serving these larger points." And that it seems to me --
Hugo L. Black: Well, if they're -- if you are right here and your position could be sustained, what would happen with reference to that particular service the communities are now getting?
Peter T. Beardsley: I don't think anything would happen to it. I -- I suspect that Rock Island will say that, "Well, they simply go out and abandon it." I believe that, if I may put it this way, simply a colossal bluff. The Commission's report points out that this Iowa area here is the very heart of the railroad's operations and certainly they are not going away and abandon the very heart of their operations and try to make it appear that they will and I think that that is a factor in -- although it's not just disposed here in --
Hugo L. Black: The argument -- on the other --
Peter T. Beardsley: -- the Court.
Hugo L. Black: The argument on the other side is that they are losing the cream and being advised to secure the heart, it doesn't have the cream --
Peter T. Beardsley: Yes.
Hugo L. Black: -- and that the only way they can make good would be to allow to enter into the cream territory.
Peter T. Beardsley: Yes, sir. But that argument overlooks what to us is the -- and what the Commission has really overlooked in this case. Namely, that you cannot view Motor Transit as a separate entity, it is a part and parcel of the Rock Island family. Now, the Commission expressed concern about the financial welfare of Motor Transit and it talked about this cream of the traffic. The railroad gets its cream and its carload tonnage. The Commission for example, in this report shed a few tears for the fact that the railroad's less carload tonnage had consistently declined over a five year period. Now, if -- it -- it struck us, it's rather strange for example if the Commission wasn't equally concern with the railroad's carload tonnage. Less carload tonnage represents one half of 1% of total tonnage transported by railroads and represents less than 3% of the revenue derived from their total transportation. Now, why didn't the Commission inquire as to the welfare of the railroad with respect to carload tonnage? If it had made that kind of an inquiry it would have found that the railroad's carload tonnage had increased from 24 to 42 and a half million tons in a period between 1940 and 1952. It would have found that the railroad revenue accruing from that transportation grows from $65 to $180 million in that same period. And so, what we're really saying here is that the -- the Commission has gone into the financial welfare, so to speak, of Motor Transit just as though it were an entirely separate entity required to stand on its own two feet. It has overlooked the obvious fact that Motor Transit is supported, subsidized, if you please, in every conceivable manner by its parent railroad. And the reason for that is obvious. Motor Transit performs operations much more efficiently and much more economically than the parent railroad could. But by looking at Motor Transit as -- as an operation which has to stand, as I say on its own two feet the Commission has in effect missed the boat. There is no occasion here for the Commission to be concerned with the welfare of the railroad. I pointed out those figures a moment ago. And certainly, as long as it doesn't have to be concerned with the financial welfare of the railroad, why does it have to be concern with the financial welfare of the railroad's creature? We fail to understand it. I did want to touch on one more point while I was on this face of the case. I believe to begin with and I think the record, a fair reading the record shows that the criticism of the motor carriers the (Inaudible) of a one serving the Iowa points is extremely unfair. And I earnestly call to the Court's attention exhibit 31, 32, and 33 in this case. I'm so earnest about it frankly because we didn't cover it on our brief. Those exhibits show, the operations of Iowa and Nebraska for a period, I believe it was September 27, 1951 to April 15th, 1952. The reason we went into them was because Motor Transit brief here at page 20 says for example, that it -- it has exclusive -- exclusive authority to serve 11 towns between Des Moines and Davenport. So, we got curious. We checked the exhibits. We found first of all that that just wasn't so. Exhibit show Iowa and Nebraska is having delivered freight to at least five of those points. But that isn't so important. I recognized that that's not significant just as one of the parties to the case made a mistake in its brief. But it seems to me that the significance of the figures that are developed by looking at those exhibits are these. We found a total of 149 shipments, we analyzed them. The largest one of those shipments weighed less than 6500 pounds. The smallest shipment weighed 22 pounds. Only five of the shipments were of a total of more than 2000 pounds, truckload cream of the traffic indeed. That's the kind of traffic that this little small operator is actually handling in this territory and we think the Commission was extremely unfair. In effect, characterizing this carrier and the other two, as in effect saying that they're shirking their duty, all they're interested in is the truckload cream of the traffic. The facts of records simply don't show that. Now, another thing that the Commission apparently overlooked in criticizing these carriers for the failure to render more service than they render is this, and we think it's extremely significant.
Felix Frankfurter: All this is on the -- on the insubstantiality of the foundation of the order.
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: We'd left the power question?
Peter T. Beardsley: Yes, sir, exactly. In other words, we think that if the Commission had properly construed the facts of record, it wouldn't have had this misbegotten sympathy for Motor Transit and it wouldn't have any occasion to reach out in any effect rewrite the statute here. Particularly, when Congress hasn't seen any need to do it. And, as I say the second factor that the Commission --
Hugo L. Black: And -- in any proposals in Congress to change that?
Peter T. Beardsley: Yes, sir. They have in this -- you -- you will see when you read our brief, that the Commission in fact, in its annual reports in several years has called the attention of Congress to the fact that it is not allowing railroads to -- to perform anything beyond an auxiliary and supplemental operations.
Felix Frankfurter: Would you take a second guess to --
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: -- the explicit, and is on that only once or ought to report which has done that?
Peter T. Beardsley: Well, we -- at page 39 of our brief under the heading, the Commission recognized as did the railroads that there was --
Felix Frankfurter: Page 39 of your main brief?
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: That's 1951?
Peter T. Beardsley: Yes, sir. We point out as in the Commission's 65th Annual Report, it said this, if I may read briefly. Some urge that the railroads in order to improve service and reduce cost should make greater use of motor transportation in conjunction with their rail operations. Our interpretation of the statute are criticized as placing undue restrictions on such use by not permitting all motor operations. This problem has been given thorough consideration that the Commission cites the Rock Island and the T&P cases. Legislation is required if there is a need in a public interest for more liberal treatment of the railroads in this respect. Notwithstanding, that statement the Commission has come along here and done exactly what it said it couldn't do without legislation to enable it to do it.
Felix Frankfurter: Any -- any reference to this matter since 1951? The reason I asked is because in the history of the Commission as I need hardly to tell you is that they agree -- they have change their mind from time to time as to what legislation is or isn't needed, I don't mean on this subject but (Voice Overlap) --
Peter T. Beardsley: Yes, sir. I understand that. And you will see at page 39 of our current brief the -- the -- on my current brief I'm talking about the main brief. We did file a reply brief and you'll see the reference to the 65th Annual Report in 1952. And a little further, over on page 40, you will see the reference to --
Felix Frankfurter: 1954.
Peter T. Beardsley: To the 68th Annual Report in 1954, where the Commission said this with respect to integration. "Efforts to obtain a relaxation of our interpretations of what the Act permits in the operation of highway motor vehicles by railroads again were made during the year we had adhered to our prior interpretation." So that --
Felix Frankfurter: Now, could I -- could I ask you not argumentatively, I would say --
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: -- argumentative, your function. But please state where the Commission stated in the clearest way, it's construction of the statute which on the mere reading of it, I could tell, they thought what they did in this case is beyond their power. Shall I put my questions here?
Peter T. Beardsley: Yes, sir. I think if you will go back to the -- to the citation from the Court's -- from the Commission's brief to this Court.
Felix Frankfurter: From your brief?
Peter T. Beardsley: Yes, sir. They told --
Felix Frankfurter: You mean, the -- the brief of the Commission?
Peter T. Beardsley: In the 1950 case, the Texas and Pacific cases.
Felix Frankfurter: No. But I mean -- I don't care about what the Commission said in their brief.
Peter T. Beardsley: Oh, I see.
Felix Frankfurter: I have (Inaudible) sympathy for this counsel opposing one --
Peter T. Beardsley: Yes.
Felix Frankfurter: -- another's briefs in that case.
Peter T. Beardsley: Yes, sir.
Felix Frankfurter: I want to know where in the report of the Commission they had laid down prior to this case their construction of the statute which you now say if they adhered would bar what they did in this case.
Peter T. Beardsley: They said it in the Barker case, another landmark decision of the Court -- of the Commission, going to the very first decision, that's M.C.C.109.
Earl Warren: Where is that in your --
Peter T. Beardsley: And that's cited at page 19 of our brief and I won't read from it. But if I may read just one sentence from it, they wrote there --
Hugo L. Black: What page are you reading from?
Peter T. Beardsley: I beg your pardon? From 19 --
Hugo L. Black: What page?
Peter T. Beardsley: From 19, Mr. Justice Black, in our brief
Hugo L. Black: Yes, thank you.
Peter T. Beardsley: And that's a citation of the Commission's Barker decision. Now, there, of course, unlike this case Barker was seeking to purchase -- I don't mean Barker, I mean the subsidiary, the Pennsylvania railroad involved there were seeking to purchase this Barker operation. And among other things, the Commission said, the language of Section 213 above quoted is evidence that Congress was not convinced that this should be done. And when it made that statement, it was talking about the second aspect of the service proposed to be rendered. In the Barker case, the railroad subsidiary proposed to render two kinds of service. First, it was going to provide a coordinated service. Second, it was going to provide a completely independent service entirely divorced from the railroad operations and --
Felix Frankfurter: According to your view then, if the Barker case represented is what you believe to be relevant to the present case. According to your view then, you invoke through that long continued -- consistent administrative practice, some of their construction.
Peter T. Beardsley: Of course.
Felix Frankfurter: Is that right?
Peter T. Beardsley: Yes, sir. And we have cited that on our brief several times.
Felix Frankfurter: That's your proposition?
Peter T. Beardsley: Yes, sir. Not only to Barker but that the Commission's consistent construction --
Felix Frankfurter: Yes.
Peter T. Beardsley: -- through the years and this Court's interpretation of the law.
Felix Frankfurter: I mean long continued, the administrative application gives meaning where there is doubt?
Peter T. Beardsley: Absolutely. And if there is any question, we simply refer this Court to its own decisions in the T&P and the Rock Island cases. Thank you.
Earl Warren: Mr. Hickey.
Edward J. Hickey, Jr.: May it please the Court. I'm appearing on behalf of the appellants in Number 8, Railway Labor Executives Association et al. And in the brief time allotted to me for oral argument, 15 minutes, I would like to address my self if I may to what I conceive to be the basic issue on the statutory power question which has been raised by the questions put in my colleague by Mr. Justice Whittaker, and Mr. Justice Harlan, and Mr. Justice Brennan. Now, basically the problem here concerns the power of the Commission under the Interstate Commerce Act to allow railroad participation in the motor carrier field and the extent to which they are permitted by statute to do that. It is true as counsel has said that for a period of 20 years the Commission's consistent practice with minor exception in cases which have never been contested, has been to read into the provisions of Section 207 which are the certificate, learning sections of -- for motor carrier certificate to public convenience and necessity. The restrictive criteria contained in the consolidation, merger, and acquisition section, specifically, the language and the restrictions set forth in Section 5 (2) (b), if I may, for the convenience of the Court, mention that they are set forth at page 45 of our principal brief. We also filed a reply brief, it's the light gray covered brief. At the very bottom of the page, the last few words starts the proviso, this Section 5 (2) (b), provided that if a carrier by railroad, subject to this part or any person which has control by such a carrier or affiliated therewith within the meaning of paragraph 6 is an applicant in the case of any such proposed transaction involving a motor carrier. These are the critical words which follow Your Honors, "The Commission shall not enter an order unless it finds that the transaction proposed would be consistent with the public interest."
Hugo L. Black: Did they find it?
Edward J. Hickey, Jr.: They did find that in -- but responsive not to this Section which they specifically disavow but responsive to the same requirement in Section 207. And will enable such carrier to use service by motor vehicle to public advantage in its operations, they did not find that. They specifically state in their report that they are not required to so find and will not unduly restrain competition. There again, Mr. Justice Black, they do make a finding with respect to competition but not pursuant to the restrictions of Section 5 (2) (b).Basically then, the case narrows to the question of the second criteria of the three contained in Section 5 (2) (b) namely, whether the railroad is permitted by statute to enter the motor carrier field, to the extent of carrying on an unrestricted motor carrier operation as distinguished from, one, which is integrated with its rail operations or to use the more familiar phrase which has been used by this Court in many of its reports and by the Commission engaged in service which is auxiliary -- auxiliary and supplemental to its rail operations. That is the basic problem here. Now, as was stated for over 20 years, the Commission has consistently followed this practice. The issue between the Commission and appellants is not that they haven't followed the practice but rather one of -- that they have followed it but that they have followed it as a matter of discretion. The Commission takes the position in its report that it has the discretion to apply or not to apply the criteria, the statutory criteria contained in Section 5 (2) (b), when entertaining an application by a railroad or railroad controlled affiliate to directly enter the motor carrier field as distinguished from acquiring and existing motor carrier under the -- under Section 5.
Felix Frankfurter: Do you -- did I understand you to say that the Commission, because they'll tell us what they contend. But are you suggesting to the Court that the Commission contend their discretion to follow or not to follow the statutory criteria?
Edward J. Hickey, Jr.: Yes, Mr. Justice Frankfurter --
Felix Frankfurter: (Voice Overlap)
Edward J. Hickey, Jr.: -- but perhaps I didn't make my self clear. They -- they treat the problem this way. They say we are dealing with an application here under Section 207 of the Interstate Commerce Act. It's through -- it's via Railroad Act. But the provisions of Section 207 of the Act do not contain the restrictive criteria which you ask us to apply. Those provisions are contained in Section 5 (2) (b).
Felix Frankfurter: They're implied?
Edward J. Hickey, Jr.: We -- we say they are implied.
Felix Frankfurter: They're implied, yes.
Edward J. Hickey, Jr.: We say you have to read the Act --
Felix Frankfurter: Now, do they say you can imply them or not as -- as the Commission -- well --
Edward J. Hickey, Jr.: I will --
Felix Frankfurter: -- that's because it can't --
Edward J. Hickey, Jr.: I will --
Felix Frankfurter: That merely means that the statute doesn't require them to apply.
Edward J. Hickey, Jr.: That's correct, sir.
Felix Frankfurter: But not if the statute did, they can exercise discretion.
Edward J. Hickey, Jr.: On this very point from the Texas and Pacific case was here. The Commission joined by its then staunched and faithful ally, the United States, took the position for which we are contending in this case. In this case, the Commission, not joined by its staunched and faithful ally, take an opposite position. I don't think I'm overstating that. The -- the reports are very clearly contained the same argument that we are making in our briefs, the brief of the Commission and the United States which is a joint brief but --
Felix Frankfurter: Let's see if we can agree with (Inaudible). If a statute lays down criteria, the Commission has no choice but it must apply those criteria whatever flexibility the criteria may leave it. If the statute does not lay down criteria but needs more maneuvering grounds of the Commission they may have discretion of stiffening to limits within which they are free by drawing on other portions of the Act.
Edward J. Hickey, Jr.: That's precisely our position, Your Honor.
Felix Frankfurter: But if --
Edward J. Hickey, Jr.: There isn't --
Felix Frankfurter: -- that -- if it's that, the latter, you must contend that it's the former that the statute gives them no choice whether by express words or when we get through with it for all practical purposes, the implications are as though written in. That must be your position, isn't it?
Edward J. Hickey, Jr.: It is my position, Your Honor.
Felix Frankfurter: All right.
Edward J. Hickey, Jr.: But you see, the -- a certain area of credence is given to this argument which perhaps because of familiarity with it in other years down through a number of years both in the Department of Justice and now in private practice, it seems to me an astonishing argument that Congress would permit the railroad to directly do what it has expressly forbidden that it may not indirectly do. And that's what this argument amounts to that -- and I say a certain area of credence is given to the argument because that precisely what the District Court said. The District Court first assigned this issue by simply stating that there are no restrictive criteria contained in Section 207 which is the provision of the Act under which the Commission was entertaining this application by the railroad. Now, our argument goes --
Hugo L. Black: Would you mind saying it's -- the government -- but I'm sure I'd like to know this (Inaudible) -- you say, that they say they can do indirectly what they cannot do directly, what they're forbidden to do directly. Would you mind stating in two (Inaudible) what they're permitted to do indirectly? How it cannot be directly?
Edward J. Hickey, Jr.: They are -- they are --
Hugo L. Black: What does it directly forbids?
Edward J. Hickey, Jr.: It indirectly forbids -- it indirectly forbids -- I used the word indirectly because I'm -- I'm using the words of the acquisition. They may not through the acquisition of a motor carrier engage in motor transportation on any basis other than a basis of coordinated rail motor transportation or auxiliary and supplemental, to the rail operations.
Hugo L. Black: That's by acquisition?
Edward J. Hickey, Jr.: That's by acquisition.
Hugo L. Black: Now, what is the other?
Edward J. Hickey, Jr.: Now, the other I say, that that being the case since Congress has expressly limited the entrance of the Commission into the field -- of railroads into the motor carrier field to that extent. That they may not directly apply for a certificate to do the same thing either --
Hugo L. Black: If the board -- if Commission is giving them a direct authority to conduct services in a way that it is forbidden to do if they inquire somebody else's (Inaudible).
Edward J. Hickey, Jr.: Exactly, sir. Now, let me very quick --
Felix Frankfurter: Well, is that -- is that necessary equal to the same thing? Congress may have a policy against acquisition with all the consequences of concentration of that and may not have a policy against forbidding subsidiary.
Edward J. Hickey, Jr.: That's perfectly --
Felix Frankfurter: That's not -- nothing unusual about that?
Edward J. Hickey, Jr.: Not at all, Your Honor, except in -- in this particular context it is for the simple reason --
Felix Frankfurter: (Inaudible)
Edward J. Hickey, Jr.: -- that this statute has been interpreted in this way. If I may quickly jump over the chronology, it was originally contained, these restrictive criteria in Section 213 (a) of the Motor Carrier Act of 1935. It was so interpreted then. In 1938, it was given some legislative ratification by Congress. In 1940, the statute was reenacted as a part of -- that language was reenacted as a part of Section 5 (2), a proviso on Section 5 (2) (b) in the light of this consistent practice by the Commission. It has been extended and as I say consistently applied and so accepted by this Court. There are four decisions of this Court which deal with this basic problem.
Felix Frankfurter: But your position is stronger than you stated, it isn't -- this is indirect from what -- they can't be direct, but your position is, that it for all practical purposes written into the Section.
Edward J. Hickey, Jr.: That is my position.
Felix Frankfurter: Which is a very different thing from direct and indirect?
Edward J. Hickey, Jr.: I -- I might -- in order to be -- the brief -- the Act, I'd refer the Court to the statement of the Commission in their report because this -- the position which counsel is taking on behalf of the Commission in its brief in our view, as we say in our reply brief, the parts from the attitude and the position which the Commission took, in its report and order in this case under review. At page 105 of the record, after the Commission had reviewed the arguments that we are not advancing, the Commission said it has claimed that these considerations mean that we do not have statutory authority to grant applicant an unrestricted certificate. We do not subscribe to this view. On page 106 of the record, one more sentence, in other words, we may issue certificate to motor carrier affiliates of railroads with or without restrictions as the circumstances may require. Now, I mentioned that to show that in our view the report in order that this under review leaves no doubt as to the Commission's position that it has the discretion to apply or not to apply the statutory restrictions of Section 5 (2) (b) in a 207 application by the railroad. It is particularly, bad we feel to have that happen in this case because actually, the only purpose of the filing of this 207 application here was to rid itself of the restrictions which had been imposed by the Commission and which had been upheld by this Court. In the Rock Island case, reported in 340 U.S., that is the express finding of the examiner of the Commission and the Commission itself takes no exceptions to that report. At page 23 of our brief, we have quoted --
Hugo L. Black: Which brief?
Edward J. Hickey, Jr.: That is our principal brief, Your Honor, the light gray covered. We have quoted the statement by the Commission or examiner which is to the effect that Motor Transit here is not even seeking new routes, new authority of any kind. It is seeking the identical authority it posses prior to September 11, 1951, when the restrictions and conditions were imposed and that the purpose of the application was simply to rid itself of those conditions. Now, we say that particularly under these circumstances for the Commission to say, that it can ignore restrictions placed by Congress on the extent to which railroad might participate either directly or through their affiliates in the motor carrier field is to exhaust the form of substance.
Speaker: Does your -- does the Commission raised any question about your standing representing the railroad employees to complain about this business?
Edward J. Hickey, Jr.: The Commission does not, Your Honor. The -- the Court invited us to comment on our standing to sue and we have done so in detail in the brief. The only reason I didn't argue with it is I wanted to get what I considered a -- our basic reason for being here. And I'm content to rest on the brief unless there's some questions by the Court on it.
Speaker: (Inaudible)
Earl Warren: Mr. Ginnane.
Robert W. Ginnane: May it please the Court.
William O. Douglas: May I know (Inaudible) what my problem is in here?
Robert W. Ginnane: Please, sir.
William O. Douglas: If you don't answer it right this minute, but during the course of the argument, I'd appreciate if you can get around with this -- this railroad subsidiary, this motor -- motor company, Motor Transit.
Robert W. Ginnane: It's a wholly owned subsidiary of --
William O. Douglas: Owned subsidiary.
Robert W. Ginnane: -- the Rock Island Railroad.
William O. Douglas: Was acquired -- it was acquired under a Section 5 proceeding, was it not by the railroad?
Robert W. Ginnane: Well --
William O. Douglas: Or its -- its predecessor has acquired it.
Robert W. Ginnane: And briefly, the Rock Island Railroad had the subsidiary Rock Island Motor Transit Incorporated. And then in 1938, the Commission authorized Motor Transit to acquire what was known as the White Line route.
William O. Douglas: Yes. Now, at that time -- at the time of the acquisition, Motor Transit could not have got under Section 5 on this record, the rights of it as now acquired under Section 207, that's right, isn't it?
Robert W. Ginnane: At that time what the Commission did, it authorized the acquisition submit to a reservation which it imposed, to impose future conditions to limit its operations to service supplementary and auxiliary to rail service.
William O. Douglas: My problem is this. If a -- if a motor carrier's subsidiary goes on under Section 5 for the -- for the acquisition proceedings subject to the limitation section, and then, would the restricted operating permit moves under Section 207 and has no restrictions limiting by the two -- by two bites of the cherry, it eliminates the restricting provision of Section 5, depletes Section 5. That -- that's the problem that worries me about this.
Robert W. Ginnane: Well --
William O. Douglas: Would you --
Robert W. Ginnane: (Voice Overlap) partial answer right now that I'd like to develop it in more detail later.
William O. Douglas: Yes.
Robert W. Ginnane: Contrary to what our friends had just said, in the original Barker acquisition, the leading Barker acquisition case, the Commission at that time -- now, let me quote briefly from it. This is back in 1937.
William O. Douglas: That was an acquisition case?
Robert W. Ginnane: That was an acquisition case and that the leading case on acquisitions that's been quoted ever since extensively by -- by the appellants. In that same case, the Commission added --
William O. Douglas: Where are you reading from that Mr. --
Robert W. Ginnane: Page 38 of the Commission's brief, at the bottom of the page. Should the restriction prohibiting service, the points which are not -- comes with registrations make it impractical or uneconomical to operate over any route. Steps may be taken to obtain modification of a term, the authority granted herein. And then again, by way of a qualification of its decision of the Barker case. And this is back in 1937, nor do our conclusions overlook the interest of the shipping public along the routes here considered. If as a result of proceedings initiated by shippers, it had shown after full hearing that existing transportation facilities are inadequate or otherwise unsatisfactory at a point in connection with which service is prohibited under the terms the order herein. That is a point which was not even a railroad station, an off railroad point. Such evidence may be a basis for our removing the restriction in the pertinent certificate and ordering the present applicants, that is the rail affiliate, to render service to that point. So, in the very early and leading acquisition case in which the plaintiffs rely, the Commission started to interpret the proviso as leaving at some flexibility to provide for a special public need for service.
Earl Warren: Did -- did they find in this proceeding what the existing transportation facilities are inadequate or otherwise unsatisfactory to the point in connection with which service is prohibited?
Robert W. Ginnane: In this case, Rock Island Motor Transit has been authorized to serve only points which are -- our stations on the Rock Island Railroad, with the exception of about three villages at the west end of the route. And hereon east, all the points authorized to be served are stations on the Rock Island Railroad. And what I'm pointing out in -- in reading from the Barker decision that from the beginning in 1937, the Commission took the position under Section 5 in an acquisition case that would authorize service even the points not served by the railroad, of course, that points near the railroad in the service -- the railroad's general service area. But the points not even served by the railroad, if necessary, to meet the public's need for service.
Speaker: Your point there being that there was no necessity for resorting to 207 that the same relief that had been granted by an application to enlarge the certificate in the 5 (b), original 5 (b) proceedings?
Robert W. Ginnane: I think that's correct, Your Honor. The -- and the Commission really specifically says so in its report in this case at page 109.
Speaker: The converse of that is, I assume what you read here that they're talking about a modification applied in these proceedings does not mean necessarily indicate their view as to what the limitations were in 207.
Robert W. Ginnane: That could -- they may well be different things and Your Honors may find. Let me bring this out at this point. In 1945, the Commission reopened the two acquisition cases involving Motor Transit here, are the case in which the Commission had authorized Motor Transit to acquire the White Line. That's the eastern segment of the route here involved. And the second acquisition case in which the Commission had authorized Motor Transit to acquire the Frederickson line, that's the western segment of the route here involved. To determine what conditions or restriction should be imposed upon Motor Transit's operations, and then these reopened proceedings, Motor Transit specifically refused to introduce evidence as to the public's need for its unrestricted motor carrier service to these points. It stood squarely and solely on the legal position that the Commission had no power to reopen it's certificates to impose such conditions. Presented to that challenge, the Commission just automatically imposed the five restrictive conditions and in that posture, the case came up through the courts to this Court in the first Rock Island case, involving only the question of the Commission's power to impose the conditions. And that question was tested on the -- on the practically naked record as it was. Solely, as a question of statutory power to impose those restricted conditions. Now, those conditions are at pages 5 and 6 of our brief. Stated briefly, they are that Motor Transit service shall be restricted to service which is auxiliary to or supplemental of the train service of the Rock Island Railroad. Now, that raised auxiliary and supplemental as used in the first condition meant under the Commission's prior decisions, restricted to service, restricted to the movement of shipments on railroad bills of lading, and of railroad rates. That's what auxiliary and supplemental was shorthand for, these shipments and railroad bills of lading and of railroad rates. The second condition, service to be restricted to points which are stationed on the Rock Island Railroad. The third was of key point restrictions, key points being Omaha, Des Moines and the Tri-City area or the contractual arrangements between Motor Transit and its rail parent should be reported to and subject to revision by the Commission. And fifth, reservation by the Commission of power -- by the Commission of power to impose further conditions. In 1951, this Court sustained the Commission's power to impose the five conditions. Following this Court's decision, Motor Transit filed an application under Section 207 for certificate of public convenience and necessity which in substance that the appellant say would authorize it to serve the points on this route without the five restrictive conditions. And in the long hearing in this application, the Motor Transit for the first time produced evidence as to public need for its unrestricted services, motor service at this point. And in November 1954, the Commission authorized Motor Transit to serve these points to transport general commodities subject to the following conditions. The conditions appear on the record at page 117.
Speaker: 117?
Robert W. Ginnane: 117, sir. First, that there may be attached from time to time that the privilege granted herein such reasonable terms, conditions, and limitations as to public convenience and necessity may require. Now, there has been contended by the appellants that that is a meaningless futile gesture. Well, the Commission did not so regard it because it discussed the matters specifically on its report. At page 115, the next of the last paragraph, the Commission states, "Applicant seeks unrestricted authority and we are satisfied that the grant of authority herein and after made should be free of restrictions except the one previously discussed and in addition, one whereby we show retained jurisdiction to impose in the future whatever restrictions or conditions if any appear unnecessary in the public interest by reason of material changes in conditions or circumstances surrounding applicant's operations in relation to those of competing motor carriers."
William J. Brennan, Jr.: (Inaudible) that information Mr. --
Robert W. Ginnane: Sir?
William J. Brennan, Jr.: What would bring into action that reservation?
Robert W. Ginnane: Normally and primarily, complaints in competing motor carriers. And may I say on the -- on the side as it were, the -- there is a -- a very bitter competitive relationship between these molds of competition. If Motor Transit starts to really shove around its independent motor carrier competitor, there will be no lack of complaints. The second condition which the Commission imposed and report now before the Court, was that contractual arrangements between Motor Transit and its parent shall be reported to -- to and subject to revision by the Commission which is identical with condition five of the prior five conditions which was sustained by this Court. Also, as the map shows that at -- that except for a few small villages on the west end route, Motor Transit service is limited under the Commission's present order, the points which are stationed on the Rock Island Railroad. That is substantially prior condition, too. So, what the Commission did here after a hearing on public convenience and necessity was to remove the restriction first of rail billing and at rail rates. And secondly, the key point restriction. And the Commission did so, on the ground that the proposed operations by Motor Transit would not unduly restrain competition. And that that service was required to meet a need for motor service which other carriers could not provide. Now, the opposed argument has a real sweep, they contend that -- that the Commission must in all circumstances, that they admit it in their brief. It must be in all circumstances, to restrict the railroad's motor carrier operations to service which is on some way combined with a train service of the railroad. For example, they asked this Court to reverse its decision in the Parker case and to hold as of -- that as a matter of law, such motor carrier operations by a railroad, it must be limited to shipments which have a prior or subsequent movement by rail. Now, the Commission contends that this proviso of Section 5 doesn't -- is not to be read into Section 207 as a rigid limitation of the issuance of certificates authorizing new or additional service.
Felix Frankfurter: Are you saying --
Robert W. Ginnane: Until the --
Felix Frankfurter: -- that the Commission broadly, do you think -- are you saying, that 207 stands by itself with that in it enforcement the Commission may draw consideration of policy through Section 5?
Robert W. Ginnane: Commissioner --
Felix Frankfurter: That's your opinion.
Robert W. Ginnane: -- put it a bit stronger. It is said that it should draw a consideration --
Felix Frankfurter: Good.
Robert W. Ginnane: -- of policy both from the national transportation -- National Transportation Policy and specifically from Section 5.
Felix Frankfurter: But when you say it should, what extent does the "should", that the "should" imply a reviewable exercise of its authority? If --
Robert W. Ginnane: Well, the -- at the extremes which we call abuse of power but there --
Felix Frankfurter: Suppose they'd say we're clear that this would be a -- this would eliminate competition and we don't believe in competition in this field. You'd say that as a clear violation of its duty to carry out a policy which is not mechanically or automatically enforceable but merely one of the considerations of public necessities and conveniences, is that it?
Robert W. Ginnane: I would, sir.
Felix Frankfurter: That's -- that's --
Robert W. Ginnane: I would, sir.
Felix Frankfurter: -- the position of the Commission.
Robert W. Ginnane: I would, sir. Now, this Court has already held in the Texas and Pacific case that the Commission is empowered to restrict a certificate issued to a railroad affiliate to service which is auxiliary and supplemental to the -- to the rail service in the specific sense of limitation to the transportation of shipments on railroad bills of lading and of railroad rates and subject to key point restrictions. The Court has never considered the extent to which the Commission must do so or whether it must do so on all circumstances. So, if again --
Felix Frankfurter: Do you mind refreshing my recollection, what's the -- what's the date of Section -- the present, what's the date of Section 5, the origin, what's the parent provision?
Robert W. Ginnane: Section 213, but --
Felix Frankfurter: Section 5.
Robert W. Ginnane: Well, this -- this --
Felix Frankfurter: Section 5 came in with conception with the current position, I believe.
Robert W. Ginnane: That's right. But this --
Felix Frankfurter: Now, that's when?
Robert W. Ginnane: This --
Felix Frankfurter: Is that 1920?
Robert W. Ginnane: 1940, Transportation Act 1940.
Felix Frankfurter: But isn't it -- wasn't it -- the inceptions in the first Transportation Act of 1920?
Robert W. Ginnane: Oh, yes.
Felix Frankfurter: The railroad.
Robert W. Ginnane: Oh, yes. There was an extensive Section 5 there on railroad consolidations only.
Felix Frankfurter: There wasn't -- this is important for me. If the present Section 5 goes back to the Transportation Act of 1920, I don't mean to come -- I don't mean the -- take that or -- or in the extents of that. I'm talking about 1920, because that's where Section 5 comes from.
Robert W. Ginnane: Yes. Section 5 as it appeared in the 1920 Act brought into the Act extensive --
Felix Frankfurter: Yes.
Robert W. Ginnane: -- provisions dealing with railroad consolidations.
Felix Frankfurter: If that was in the Act of 1920 and therefore was there when Congress passed the Act for the Motor Transportation Act in 1935, is that right?
Robert W. Ginnane: Right, sir.
Felix Frankfurter: Those of my dates?
Robert W. Ginnane: Right, sir.
Felix Frankfurter: Well then, there's a problem there as to whether, when Congress didn't say anything in terms or in authority to the expression it impliedly inserted as it argued Section 5 (Inaudible) Isn't that the position of the other side?
Robert W. Ginnane: This present proviso in Section 5 originated in Section 213 of the Motor Carrier Act. In Section 213 as --
Felix Frankfurter: That's 1935.
Robert W. Ginnane: Of the Motor Carrier Act of 1935 and that Section 213 was a separate provision dealing with mergers and consolidations of motor carriers only. Then on the -- in the general revision of the Transportation Act of 1940, 213 was consolidated with Section 5. And this proviso was moved to what is now Section 5. And I'd like to make this very clear --
Felix Frankfurter: But in the sequence of -- of legislation, it has to consider whether at the time this came in to the Act. There was outstanding a provision which is now -- it is argued, was impliedly read into a new provision.
Robert W. Ginnane: That's right, sir. But I have to add in fairness.
Felix Frankfurter: Well, (Voice Overlap) question is that's the construction.
Robert W. Ginnane: I have to add in fairness that the draftsman in 1940 made it clear in the Committee Reports that when they were transferring, this proviso from the then Section 213 to Section 5. They -- they do not mean any change in the existing law whatever that was. So, we've gone back to the original legislative history in 1935 of the Motor Carrier Act and it seems to us a -- a fair characterization of that history was that no one at that time had a precise idea as to the extent or nature of the motor carrier operation which railroad should be allowed to conduct. Commissioner Eastman pointed out to the Committees that the railroads were experimenting in some directions with motor carrier service and that he had hoped that they would continue to experiment. And for the rest of testimony before the -- and the hearings before the Committees and they have given some samples of it in our brief, was just in the general vein that there should be some restriction and rail acquisition of motor carrier operations as they said, unless the railroads can acquire all of their motor trucks and motor buses unless restore to them the monopoly which they so long enjoy. There's nothing in that 1935 history which gives any specific content to the key phrase in this proviso will enable such railroad to use service by motor vehicle, the public advantage in these operations and nothing at all was said as to whether that proviso should be read literally and rigidly into the certificate provisions of Section 207. All we can conclude from the -- from the original 1935 history is that at that time, Congress was not ready to specifically prescribe the railroad's role in motor carrier operations. Rather, it limited itself to stay a broad objective of preventing a railroad monopolization of a -- of a new mode of transportation motor carriage. We think it deliberately left the Commission with a certain amount of discretion in implementing that objective. Now, when the Act was amended and not -- when the Motor Carrier Act was amended in 1938 and then when in 1940, the Motor Carrier Act was combined with the Interstate Commerce Act and both extensively revised, Congress still apparently was not prepared to define any further what the precise role of railroads and motor transportation should be. And that unwillingness to go further into the matter is vividly illustrated by the history of the Shipstead Amendment in 1938. Now, that arose out of two cases, two early cases decided by the Commission. One of was the Barker case in which the Commission began to develop this concept of service, auxiliary and supplemental to the railroad service. But in the same year with the Barker case in 1937, the Commission took the flat position on the St. Andrews Bay Transportation Company case that the proviso did not apply in the issuance of certificates authorizing new or additional service, motor carrier service by railroads. Senator Shipstead disagreed with the Commission's conclusion and result in the St. Andrews Bay case. So, he introduced an amendment which would specifically and in terms, written into Section 207, this present proviso Section 5. His amendment was dropped or rather he withdrew it and in fairness, he apparently did it for two reasons. First, everybody told him all segments of the industry are the members of Congress, this is a controversial matter being introduced into a -- into a relatively non-controversial bill. If you press this, we'll get no legislation in this session. And the second factor, Commissioner Eastman and two other members the Commission indicated to Senator Shipstead that probably, they would agree with him in the interpretation of the Act. But nevertheless between 1938 and 1940, the Commission repeated again and again in published decisions its view that the proviso did not control proceedings under Section 207. But still on the general revision of 1940, the Commission -- Congress did nothing to reverse that interpretation. Now, in the St. Andrews Bay case, to develop further how the Commission has interpreted this. The Commission took a rather flat ball position that the proviso had nothing at all to do with the granting of certificates under 207. Well, the succeeding cases and with experience, the Commission began to qualify that view. The early cases that began to emphasize the element of shippers' special need for service. It also began to develop that the particular proposed service by railroads would not have an undue competitive effect upon independent motor carriers. And in 1938, as early as 1938, in what our friends refer to as the leading Kansas City Southern Transportation Company case and it is a leading case. The Commission developed and applied the general policy that in the absence of special circumstances, it would restrict certificates issued to railroads under Section 207 to service auxiliary and supplemental to the railroad service. Now, in 1946 in the Rock Island Motor Transit Company purchased White Line Motor Freight. That was the Commission report which was before this Court in the first Rock Island case. The entire Commission stated in detail its view of the relationship between the proviso of Section 5 and Section 207. First, the Commission pointed out as it always have that Section 207 doesn't contain any specific restriction on the issuance of certificates for new or additional service to railroads. But the Commission added, and I quote, "Giving effect however to the National Transportation Policy as declared by the Congress and as colored by the proviso of Section 5, it has been consistently recognized in proceedings under Section 207 that except where unusual circumstances prevail, every grant to a railroad or to a railroad affiliate of authority to operate as a common carrier by motor vehicle or to acquire such authority by purchase or otherwise should be conditioned so as to limit the future service by motor vehicle to that which is auxiliary to or supplemental of the rail service." And since 1946, the special circumstances document of the White Line case has been cited and applied by the Commission, in both acquisition cases and on certificate cases under Section 207 and in both imposing and then omitting or modifying restrictive conditions. Then coming to the report of the Commission, which is now before the Court, it was issued in 1954. The Commission again took the position, that the proviso of Section 5 (2) (b) does -- does not as -- itself as a direct rigid matter restrict the issuance of certificates for new service under 207. But again it noted that beginning with the Kansas City Southern case of 1938, it had followed a general policy of imposing the five auxiliary service restrictions upon certificates issued to railroads. And the Commission added, that's in the report in this case, the main purpose for the policy of imposing the five above ordered restrictions or modifications thereof was to prevent the railroads from acquiring motor operations through affiliates and using them in such a manner as to unduly restrain competition of independently operated motor carriers. This policy wasn't as sound and should be relaxed only with a circumstances clearly established that the grant of authority has not resulted and probably will not result in the undue restrain of competition and that the public interest requires the proposed operation, which the authorized independent motor carriers had not furnished except for it suited their convenience. But from the 1937 to the present time, the Commission has consistently held that the proviso is not to be read under Section 207 as a rigid limitation. Rather, the Commission believes that read with the National Transportation Policy, the Commission must take it into account and it does as a general policy to be applied in the absence of special circumstances of public convenience and necessity.
Hugo L. Black: What was the first case you referred to? What was the first case in which the Commission not made that decision but actually did grant privileges of this kind without findings as required by the five, of the five (Inaudible)
Robert W. Ginnane: St.Andrews Bay Transportation Company case in 1937. We submit that this interpretation of the statute long continued, unknown to Congress, unknown to the industry as a rational basis that should be sustained. And we submit further that this Court has already recognized that the proviso of Section 5 comes into play only as in certificate cases under section 207, only as a general policy against rail monopoly to be -- to be balanced against the public need for transportation service. And we find that, may it please the Court, in the Parker case in 326 U.S.in which this Court pointed out and I quote, "Section 207 (a) provides for the issuance of the certificate on application at the proposed service is or will be required by the present or future public convenience or necessity. No other provisions are here involved." Also in that case, this Court looked to the -- to the National Transportation Policy and its relationship to the problem of this case. And the Court recognized that -- that the National Transportation Policy and it's relation to this case, this type of case, has two purposes, preserving the inherited badges of each mode of transportation, here specifically, motor carrier transportation and at the same time, meeting shipper's need for transportation. The Court recognized that these objectives sometimes overlap and then -- on that where they overlap, the Commission has an important function to perform in balancing and reconciling the different congressional objectives.
Felix Frankfurter: What is the name of the Parker case, is that cited in your brief or not?
Robert W. Ginnane: Parker?
Felix Frankfurter: I.C.C.and Parker?
Robert W. Ginnane: Well, the Parker case. It's Interstate Commerce Commission versus Parker in 326 U.S.at 60.
Felix Frankfurter: Here. Thank you very much.
Robert W. Ginnane: And we think this Court's decision on the first Rock Island case is even more specific. There, the Court said, may I quote briefly, "Although Section 207 providing for the issuance of certificates of convenience and necessity has no clause requiring special justification for railroads to receive motor carrier operating rights such as appears in the proviso in Section 5. The Commission applies the rules of the National Transportation Policy, so as to read the proviso under Section 207 in order to preserve the inherent advantages of motor carrier service." And the Commission has said in -- in the White -- in the White Line case and it's reported in this case, it does indeed left to the National Transportation Policy and -- and to the Policy of Section 5 even in cases under 207.
Speaker: (Inaudible)
Robert W. Ginnane: Well, we -- it was --
Speaker: (Inaudible)
Robert W. Ginnane: We -- we cite a number of them, and quote from some of them beginning on page 41, Santa Fe Trail Stages, Burlington Transportation Extension, Interstate Lines Extension.
Speaker: (Inaudible)
Robert W. Ginnane: We -- we did not report to make an exhaustive enumeration. Also, in the -- in the prior Rock Island case.
Hugo L. Black: Suppose (Voice Overlap) those cases, I suppose in your brief, did not restrict the service auxiliary and supplemental to the railroad but did they make findings that are required under 5 (b)
Robert W. Ginnane: No, sir. They did not.
Hugo L. Black: (Voice Overlap) the competitions.
Robert W. Ginnane: No, sir. They did not. They were decided and -- and under the Commission's view, that's -- they were certificate cases for a new or additional service under -- under Section 207 that it was not required to make those findings. Also, in the Rock Island opinion, this Court pointed out undoubtedly, the Commission has not consistently required each rail affiliate and motor carrier to forego motor billings or tariffs. Key points to break traffic are relatively new. Rail affiliates have been committed to leave the line of the railroad to serve communities without other transportation service. These divergences however are an exercise of the discretionary and supervisory power with which Congress has endowed the Commission. And in support of that -- and of that support of that conclusion, this Court cited the Commissions decision on the White Line case, to which I referred a few minutes ago, as well as this decision in the Wellman case, in which the Commission acting under 207 had authorized a railroad to meet and perform unrestricted motor service to points on its station where there was a peculiar need for service. At the same time, we contend that this Court has already in effect in that and disposed of, the appellant's argument that this construction of Section 207 will defeat and evade the policy of the proviso of Section 5. Or even if the proviso applies in Section 207 cases, we take this Court has already recognized particularly in the Rock Island case that it does not embody any specific and universal restriction of motor carrier operations by a railroad to service a -- railroad bills of lading, rail rates or to service which -- or to shipments which have a prior or subsequent movement by rail.
William O. Douglas: Does this tell a definite burden of prove or competition?
Robert W. Ginnane: I beg your pardon?
William O. Douglas: Does it got to -- can tell a definite burden of proof?
Robert W. Ginnane: To show the effect on competition?
William O. Douglas: Yes.
Robert W. Ginnane: I would think so, sir.
William O. Douglas: You would?
Robert W. Ginnane: Yes, sir.
William O. Douglas: Yes.
Robert W. Ginnane: And one if the unique features of this case if I may sort of break over the division of argument with counsel for Motor Transit. One of the unique features of this case is the basis which the Commission had for it's conclusion, the Rock Island's operations in the past and the probable future would not have produced an undue restraint on competition was in the circumstance that between 1938 to 1951, a period of about 13 years, Motor Transit was in fact operating on this route without any restrictions. During that period --
Earl Warren: 1938 until when?
Robert W. Ginnane: 1951.
Earl Warren: 1951.
Robert W. Ginnane: A period of about 13 years. Motor Transit operated on this route without any restrictions and during that period in brief, its competitors prospered. In other words, in this case, almost uniquely, the Commission did not have to make a purer prediction or prophecy as to what the effect on competition would be. It -- it had a record of 13 years up to the three years of its decision in this case in which they judged what the competitive effect would be. And then in addition, the Commission imposed conditions which in effect leave Motor Transit under continuing surveillance by the Commission in its relationship with its -- in its competing relationships with independent motor carriers in that general area.
Speaker: (Inaudible)
Robert W. Ginnane: Motor Transit is now operating under a -- under a temporary certificate which contains two limitations. One limits them -- one of the limitations limits them to shipments not exceeding 5000 pounds and -- and the other limitation imposes these two key point restrictions, Chicago and Omaha. But until -- but from 1938 to 1951, they were operating without any restrictions at all and -- and it -- and it was the -- the relationship with their competitors during that 13 year period which was the principal basis for the Commission's conclusion that their proposed operations for the future without restriction would not have an undue restraint on competition.
Felix Frankfurter: Do I always simplify your position of the Commission by this summary of -- that Section 5, the proviso of 5 (b) expressing the public policy which is binding on the Commission to the extent, to then extent as though 217 had another clause, the Commission must take into account the other case involved in the (Inaudible) where the question was that. The Commission was taken into account the public policy expressed by -- by the proviso and further that you say the Commission did include -- count on these records. Does that oversimplify the position of the Commission?
Robert W. Ginnane: No, sir. I think that's a third general statement of it. The same as we must take into account at the various provisions of the National Transportation Policy.
Speaker: By what authority in the (Inaudible)
Robert W. Ginnane: Because in 1938, the Commission authorized Motor Transit to acquire this pipeline without any restrictions but subject to a reservation in the Commission of the power to impose conditions. The Commission did not impose those conditions until following this Court's decision upholding its power to do so in 1951. That's the 13-year period. May I surrender the balance of my -- our time to counsel for Rock Island Motor Transit?
Earl Warren: Mr. Howland.
Alden B. Howland: May it please the Court. I have lived more than 60 years in the City of Des Monies which of course is the center of the territory which is involved in this case. The territory involved extends generally between the Mississippi River at the Cities of Rock Island, Moline and in East Moline, Illinois and Davenport, Iowa across the central part of the State of Iowa to Council Bluffs and Omaha which are on the Missouri River. And it is between these points that the certificate which is here under review was issued by the Commission after extensive hearings in which 14 days time was consumed in hearing approximately 180 witnesses. It is necessary, I think, that the Court have in mind the character of the territory involved. Iowa of course is principally, an agricultural state. At the easterly end of this territory are the manufacturing and distributing cities to which I have referred. Moline and Rock Island and East Moline are the center of the farming industry. 55 miles west of Davenport is located Iowa City which has a population of approximately 20,000. The City of Des Monies is located 177 miles west of Davenport and 137 miles to the west of Des Monies, we have the cities of Council of Bluffs, Iowa and Omaha, Nebraska. Now, interspersed along U.S.Highway 6 between these points are communities of varying sizes, of varying types, ranging in population, from towns of a few hundred to cities of 12 -- 14,000 and which are centers of manufacturing and commerce. As Mr. Ginnane has pointed out, the White Line Motor Freight Company was one of the pioneer operators in interstate commerce and intrastate commerce across the State of Iowa and it served the Chicago, Omaha area, having a route on which it operated with closed doors and with no service across the State of Illinois until it reached Moline, East Moline, and Rock Island. And then it had a distribution service across the State of Iowa from the Davenport to Council Bluffs and Omaha, Nebraska. It had grandfather rights under the Motor Carrier Actof 1935. In October 1937, the Rock Island Railroad subsidiary and the White Line Motor Freight Company jointly applied to the Interstate Commerce Commission for approval of a transaction by which the rail subsidiary would acquire the operating authority and practically all of the physical equipment incident to the operation of the White Line truck route. The Commission approved that acquisition but it reserves to itself the prerogative and the reservation and restriction of imposing at some time in the future. The condition or restriction that it might impose restrictions to -- which would ensure that the service rendered would be auxiliary and supplemental to the rail service of the railroad company. In 1944, the Frederickson route was acquired which parallel the Rock Island rail line in the westerly part of the State of Iowa, a much smaller operation.
Speaker: (Inaudible)
Alden B. Howland: That run from Atlantic up through Ireland and (Inaudible) to Omaha and add some intermediate routes that connected in to either main lines or rail lines of the Rock Island. It was a much smaller operation. It was in 1945, after seven years of unrestricted operation on the White Line routes that the Commission announced that it was reopening both the Frederickson acquisition which it had approved without any restriction but as to which no certificate had been issued. And that it was reopening the White Line case as well to consider the question, as to whether any restriction should be imposed at that time.
Speaker: Those -- the original acquisitions were under Section 5?
Alden B. Howland: Those acquisition cases were under Section 213 as it was originally. Of course, it had become Section 5 (2) (b) by 1944 when the Frederickson route was acquired.
Speaker: Yes. (Inaudible)
Alden B. Howland: That's right. They were both purchases. So, at that time, perhaps inadvisably, the -- the Rock Island people challenged the power of the Commission to impose those restrictions at that late date after approving the acquisitions. And when the Commission imposed the restrictions which Mr. Ginanne referred to, the power of the Commission was challenged by an action in United States District Court at Chicago and the lower court there set aside the Commission's action as unauthorized. And an appeal was taken to this tribunal where the power of the Commission to impose the restrictions was sustained by a vote of five justices to four. After the issuance of the mandate of this Court, in that proceeding, we went back to the Commission. We made a showing that there was a lack of service along the White Line and Frederickson routes by other motor carriers and there was a -- affidavits were filed and a showing was made to the effect that during the year 1950, carriers who possessed authority to serve points on the White Line route had turned over to the Rock Island Motor Transit Company for delivery on that route at various junction points, 5500 individual shipments. The Commission first gave us temporary authority having imposed all of the restrictions, to handle shipments not in excess of 2000 pounds and after a hearing was held at Des Monies in September of 1951, they raised that -- that weight limit to 5000 pounds and we've been operating in the interim with a 5000-pound weight limitation upon any one shipment. And the record shows without any dispute here that that works a hardship on a great many of the communities and that there are many shippers who need a service for 10,000, 12,000, 15,000-pound shipments or truckload shipments, as the case may be. Now --
Speaker: (Inaudible)
Alden B. Howland: At this hearing, as I said, we produced approximately 180 witnesses. 101 of them were businessmen engaged in various types of business on the White Line routes. Ten of them were businessmen engaged in various business endeavors on the Frederickson routes. Then we produced representatives of Chambers of Commerce from Chicago, from the Tri-Cities of Davenport, Iowa, Rock Island, Moline and East Moline, Illinois, Des Monies, Burlington, Iowa, Omaha, Nebraska, Minneapolis, Minnesota and others who took the witness stand and testified to the need or a continuation of this service which Rock Island Motor Transit Company had been performing to this area for a period of 13 and a half years during the time that the operation was unrestricted.
William J. Brennan, Jr.: Well, Mr. Howland, this was an original proceeding now, wasn't it?
Alden B. Howland: We've filed it as a Section 207 case.
William J. Brennan, Jr.: But actually, in effect which you've been telling us is just a step in their business from the beginning, is that it?
Alden B. Howland: Well, it -- we thought we could prove public convenience and necessity and the Commission after an exhaustive review agreed with us on that statement.
William J. Brennan, Jr.: On the history of it, it's just another step in the long stage of it, is that it? Since you first (Voice Overlap) --
Alden B. Howland: Yes. I think that that's a fair statement, if you please, Mr. Justice Brennan. Now, not only did we have in this hearing the support of shippers and receivers of freight at various points that are on this route, we had the support of connecting motor carriers who interlined freight with the Rock Island Motor Transit Company at Chicago, at the Tri-City area, and at other points on the line. There were some eight or nine individual motor carrier officers who appeared before the examiner and testified to the need for a continuation of Rock Island Motor Transit's service to the area. Now, they testified that they possessed in some instances, authority to serve these points but that the volume of business that would be available to them was not sufficient to warrant operation by them over some of the -- some segments of these routes and they interchanged and interlined freight shipments destined to these points from Chicago or from eastern points with Rock Island Motor Transit at the Tri-Cities at Chicago and at another points on the routes. So, some of the motor carriers who are themselves members of the A.T.A.organization appeared in support of our application before the Commission and we put on an extensive hearing in addition to the witnesses that I have already referred to, we introduced evidence with respect to the cost of operation, the fact that this peddle service and we showed the nature of the operation, the cost of the peddle service was greater than the performance of point to point service in truckload or large quantity shipments. And it was upon this array of evidence that the Commission found that the restriction that had been imposed was unwarranted and was unnecessary so far as the protection of the independent motor carriers was concerned. Now, the contention has been made here that the presence of the Rock Island Motor Transit operation is monopolistic in character and that it is a threat to the continued existence of the so-called independent motor carriers. The evidence n this case, I submit, if it proved anything at all shows that there is not the slightest shred of foundation for such a contention. Well, we attacked the matter from the standpoint of the national level. We showed by this -- the statistical information which we introduced that in the period between 1946, when the war came to an end in 1950 that there had been a reduction of approximately 60% in the volume of less than carload rail freight.
Earl Warren: We'll recess now, Mr. --