Opinion ID: 1490749
Heading Depth: 1
Heading Rank: 4

Heading: The Effect of Exemption if Allowed in the Case at Bar.

Text: What is the effect of the exemption clause of Section 4, pt. II, ( l ), 15 U.S.C.A. § 833 ( l )? If, as the petitioner contends, this clause serves to relieve it of the provisions of Sections 4, 15 U.S.C.A. §§ 831-833, and 4-A, 15 U.S.C.A. § 834, of the Act, it is obvious that it need not remain a code member and would not be bound by any of the regulatory provisions relating to marketing, minimum price areas, unfair methods of competition or discrimination, referred to in those sections. If, on the other hand, the coal produced by the petitioner is not subject to the application of the conditions and provisions of the code provided for in Section 4 [sections 831-833], or of the provisions of Section 4-A [834], as provided in Section 3(b), 15 U.S.C.A. § 830(b), the coal produced by the petitioner would be subject neither to regulation nor to the 19½% excise tax. The Supreme Court in the Sunshine Coal Company case, 310 U.S. page 392, 60 S.Ct. page 912, 84 L.Ed. 1263, stated that the tax    was intended to apply only to those sales by non-code members which `would be' subject to regulation under section 4. In other words, all the coal produced by the petitioner (save that small quantity which goes to its employees) would be subject to regulation under Section 4, 15 U.S.C.A. §§ 831-833, since all of it with the exception indicated goes into interstate commerce, if the exemption provisions of subsection ( l ) cannot be applied for its benefit. By availing itself of the exemption of subsection ( l ), the petitioner avoids both the 19½% tax and the regulatory provisions of Section 4, 15 U.S. C.A. §§ 831-833, and 4-A, 15 U.S.C.A. § 834. The Lackawanna Railroad Company, which is now able (quite properly) to obtain a large portion of its coal at a low cost, would be able to obtain that coal at a still lower cost because its subsidiary, the petitioner, would be relieved of the necessity of code cost and obligations of code membership and the excise tax of 19½% could not be imposed upon the producer, the Lackawanna Railroad Company at the same time remaining relieved of any obligation or liability for management of the properties. It is obvious that a literal interpretation of Section 4, pt. II( l ), 15 U.S.C.A. § 833( l ), will not allow the petitioner to be relieved of the burden of Sections 4, 15 U.S.C.A. §§ 831-833, and 4-A, 15 U.S.C. A. § 834, for the coal produced by the petitioner is not consumed by it or transported by it to itself. Quite the opposite is in fact the case, for substantially all the coal produced by the petitioner is produced for the benefit of the Lackawanna Railroad Company, is transported to that company and is disposed of to it. Moreover, Section 17(c), 15 U.S.C.A. § 847(c), as we have already stated, defines the term producer as including corporations engaged in the business of mining coal and the petitioner is certainly a producer within the precise definition of the statute. It is at this juncture that the petitioner invokes the agency rule in an attempt to arrive at the same result which would be achieved by true ownership and management of its properties by the Lackawanna Railroad Company.