Court Opinion

ID: 8719143
Source: CourtListenerOpinion
Date Created: 2022-11-26 08:14:02.848214+00
Date Added: 2024-06-11T16:58:57.389952
License: Public Domain

DIMOCK, District Judge
(concurring in the result).
The opinion of the Court has my concurrence in every part except where it. holds that these plaintiffs have no “inherent advantage” over the rail carriers. In my opinion, these plaintiffs have an inherent advantage over the rail carriers. The majority holds that the plaintiffs cannot succeed because they have-no such inherent advantage. I would hold that they could not succeed because *727the Commission carefully fixed rates which preserved that inherent advantage.
In my view, the Commission properly expressed the rule when it said “rail rates reduced from a normal level to meet water competition may be no lower than necessary to meet the competition, and may not be so low as to cast a burden upon other traffic.” If the rail rates áre no lower than necessary “to meet”, as distinguished from “to eliminate”, water competition, any inherent advantage of water competition will be preserved.
Congress has declared its policy to ■“preserve in full vigor both rail and water transportation”.1 Congress has also declared it to be its policy “to recognize and preserve the inherent advantages” of all “modes of transportaiion”.2 These two provisions immediately present the problem of maintaining rail and water transportation in full' vigor and, at the same time, preserving the inherent advantages of each. Obviously, both injunctions cannot be tabeen literally and co-exist. If the inher■ent advantages of rail transportation are ¡such that water transportation cannot ■survive in competition with rail transportation, it would' be impossible to preserve those inherent advantages and still 'keep water transportation in full vigor.' The Commission harmonized the two injunctions by adopting the rule implicit in the sentence above quoted from the 'Commission’s report. I understand that .rule to be that the rail'carrier may. not reduce its rates from a normal level to -meet water competition'below the point -necessary to meet the water competition •and, even if necessary to meet water •competition, may not reduce the rate so 'low as to cast a burden upon other traffic. To illustrate, if the only Congressional injunction were to preserve in full vigor both rail and water transportation, that would require the Commission to "keep rail rates so high that existing -water competition would not be stifled •even though the rail rates so fixed were higher than a normal level. The additional injunction, however, that the inherent advantages of both modes must be preserved requires that the rail carrier shall not be required to increase its normal rates. If the rail carrier’s inherent advantage is such that it can, at its normal rates, drive the water competition out of business, it may do so despite the injunction to preserve all modes of transportation in full vigor. If, however, water competition has sufficient inherent advantage so that it can survive with rail rates kept at the normal level, the rail rates, as stated by the Commission, “may be no lower than necessary to meet the competition”. In other words, the rail rates may be reduced to the point, and only to the point, where rail and water competition each can survive in full vigor. Rail rates may not be reduced even to that point if it is so low as to cast a burden upon other rail traffic. Wherever it would be necessary to go beyond that unpassable point in order to meet water competition, the inherent advantage of the water carriage will drive out the rail competition just as the inherent advantage óf rail carriage will drive out water competition if water carriage cannot exist in the face of rail carriage at normal rates.
All this involves very difficult determinations: (a) the “normal” rate, (b) the rate which “meets” competition and (c) the rate at the point just sufficient not to cast the burden on other traffic or, in other words, the “compensatory” rate. These determinations, though difficult, are not impossible.
The “normal” rate, in the sense used by the Commission, is the rate that the rail carrier would have fixed but for the water competition. Ordinarily, the rate charged by the rail carrier before water competition appeared would be a good measure of such a normal rate. It would be proper to assume that a rate so charged would yield a fair return.
*728The rate which “meets” competition is the lowest rate of the rail carrier which will leave open to the water carrier the field where the less exacting of the shippers are willing to put up with the inferior service of the water carrier in order to take advantage of its lower rates.
The compensatory rate, as above stated, is the rate which is just sufiicient not to cast a burden on other traffic. I agree with the majority that it contains a minimum return on investment. In the case of the rail carrier, it is the lowest rate in the range within which the carrier, but for special statutory directions such as the ones involving preservation of modes of transportation in full vigor and preservation of inherent advantage, would be free to adjust its charges. See U. S. v. Chicago, M., St. P. & P. R. Co., 294 U.S. 499, 506, 55 S.Ct. 462, 79 L.Ed. 1023.
The Commission’s rule, which seems to me correct, is that the rail carrier’s rates cannot be reduced below normal where there is water competition unless the water carrier’s rates are so low as to take away from the rail carrier business which would naturally have gone to the rail carrier. The rail carrier has a natural following of shippers who need its fast and dependable service. The water carrier has a natural following of shippers who can put up with its slow and uncertain service. When the rail carrier offers its superior service at a rate inordinately low the water carrier’s natural following is enticed to use the rails in spite of the lower rates of the water. When the water carrier offers its inferior service at a rate inordinately low the rail carrier’s natural following is enticed to use the water in spite of the superior service of the rails.
The normal rail rates must not be cut to a point where the rail carrier invades the water carrier’s natural market. That would rob the water carrier of its “inherent advantage”. On the other hand, if the water carrier’s rates have to be so high that the water carrier’s natural following finds it more advantageous to use the rails and pay normal rail rates, water carriage has no inherent advantage and the rail carrier will be permitted to charge its normal rates. Similarly, if the rail carrier’s compensatory rates are so high that the rail carrier’s natural following finds it more advantageous to use the water and pay the low water rates, rail carriage has no inherent advantage and the rail carrier will not be permitted to reduce its rates below the compensatory level.
As I understand the language used by the Commission, it is a contradiction in terms to speak of barge carriage rates low enough to outweigh the inferiority of barge carriage which will be higher than the rail rates established by the Commission. The only way that anyone can tell whether a water carriage rate is low enough to outweigh the inferiority of water carriage to rail carriage is to compare the water carriage rate with the rail carriage rate. To outweigh the inferiority of water carriage to rail carriage the water carriage rate per ton must be lower — much lower — than the rail carriage rate per ton established by the Commission.
When we are considering whether a rail rate has been reduced farther than is necessary to meet water competition we must compare the reduced rail rate with the compensatory rate for the corresponding water carriage. Whether or not this compensatory rate is low enough to outweigh the inferiority of water carriage depends upon the rate charged for the superior rail carriage. If the rail carrier’s rate is lower than this compensatory water carriage rate, water carriage will not be preserved in full vigor as required by Congress. If this lower rail carriage is the rail carrier’s normal rate, that in itself demonstrates the inherent advantage of rail carriage over water carriage. If, however, there is a rate level, between the maximum of the normal rail carriage rate and the minimum of the compensatory rail carriage rate, enough higher than the compensatory water rate so that the differential in favor of the wa*729ter rate outweighs, in the judgment of water carriage’s natural following, the inferiority of the water carriage, rail rates must be fixed at that level.
It is true that under the Commission’s rule a rail carrier might be required to keep its rates at a point far above the compensatory level in order not to drive water carriage rates below a compensatory level. The fact that the resulting rail carriage rates were almost normal and the water carriage rates were only compensatory would not, however, mean that there was no inherent advantage in the water carriage. The inherent advantage to the shippers who pay rates is at least as important as to the carriers who receive them and, in the case supposed, the less exacting shippers who could put up with the slow and uncertain water carriage would have the benefit of the inherent advantage of the lower rates charged for water carriage.
The avowed purpose of the Commission was to fix the rail rates at the level required by the rule and above defined. Plaintiffs complain that the rail rates were fixed at a level where the differential in favor of the water rates did not outweigh the inferiority of the water service.
As the majority opinion demonstrates, the rail rates which were fixed left a substantial differential in favor of water carriage rates. I can find no reason for saying that this differential was too small to outweigh the inferiority of barge service and the Commission necessarily found that it was great enough to do so. After finding that the rates fixed by the rail carriers were “lower than necessary to meet the barge-truck competition”, the Commission declared “that such unlawfulness can and should be removed by the establishment of” the rates which it ordered in force. It would be captious to say that the Commission did not find that the level of the rates that it fixed was the level necessary to meet barge-truck competition.
The Court’s opinion indicates a belief that water carriage can have no inherent advantage unless compensatory water carriage rates are so low as to require the rail carrier to reduce its rates below the compensatory level in order to meet water carriage competition. The majority explain the references to “inherent advantage” in the opinion of I. C. C. v. Mechling, 330 U.S. 567, 67 S.Ct. 894, 91 L.Ed. 1102, by the statement that, there, the barge carriers’ costs were so low that they could operate at rates that would at once be compensatory to them, would outweigh the inferiority of their service, and would yet undercut any rates for the same haul that were compensatory to the roads. I do not think that the Supreme Court in the Meehling case treated the barge carriers as able to undercut compensatory rail rates except in the sense that they were able to carry at rates per ton which were less than the rates per ton at which the railroads were able to carry. Justice Black wrote, 330 U.S. at page 570, 67 S.Ct. at page 896, “Although barge lines were much slower than railroads, they were less expensive to operate and therefore could afford to transport freight much more cheaply than railroads.” There was no finding in the Meehling case that the barge carriers’ rates were so low that the rail carriers would have to reduce their rates below a compensatory level to meet barge carriage competition. The Commission there merely found, 330 U.S. at page 578, 67 S.Ct. 894, that the barge carriers were charging less than the railroads could afford to charge for the same haul. Far from a state of affairs where the railroads could not meet barge competition without reducing their rates below a compensatory basis, it appears that the railroads under their existing rates were to some extent meeting the competition. The Supreme Court goes no farther than to say, 330 U.S. at page 571, 67 S.Ct. 894, that “much” of the railroads’ business from localities that could be served by either *730barge or rail shifted to barges because of the cheaper barge rates.
I cannot, therefore, think otherwise than that the water carriers in the case at bar showed an “inherent advantage” within the meaning of the Congressional injunction. Since, however, I find evidence that the Commission recognized and gave full effect to that inherent advantage I agree with the majority’s result.

. § 142, title 49 U.S.Code.

. Preceding § 1, title 49, U.S.Code (Preamble to the Interstate Commerce Act)