Court Opinion

ID: 9304975
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:16:06.869438+00
Date Added: 2024-06-11T17:13:51.745048
License: Public Domain

MACK, Judge
(dissenting). I concur with the majority of the court in their construction of the statute. Because of the conclusions reached on the constitutional question, it is unnecessary for me to differentiate the several petitioners or to express any opinion on the so-called minor contentions.
*822On the fundamental question of the constitutionality of this legislation, under which, in effect, interstate transportation of oil by pipe lines is prohibited unless the transporter will act as a common carrier subject to the provisions of the interstate commerce apt, I am compelled to dissent. It is conceded in the majority opinion that an act of Congress is constitutional if its object is within the realm of federal authority, and if the means employed for its accomplishment have a real and substantial relation thereto, and are not arbitrary, ■ unreasonable, and beyond the necessities of the case.
A doubt, however, is not to be resolved against but in favor of the validity of legislation. Courts should not declare a statute unconstitutional until they are satisfied thereof beyond a reasonable doubt. Whether consistently carried out in practice or not, this has ever been a fundamental rule in our jurisprudence. Ogden v. Saunders, 12 Wheat. 213, 6 L. Ed. 606. While its application alone would compel me to dissent in this case, I do not rest my conclusions upon the existence of a reasonable doubt. In my judgment, the act is within the power of Congress to regulate interstate commerce.
This power may be exerted for many purposes: directly, to remove restraints thereon or obstructions thereto; indirectly, to conserve the public health or morals or to promote the general- welfare. The means to be adopted for the accomplishment of a legitimate purpose rest in the sound discretion of Congress subject only to the limitation hereinbefore stated. As the Supreme Court in its most recent decision bearing on this question says (Hoke v. U. S., 227 U. S. 308, 33 Sup. Ct. 281, 57 L. Ed., Feb. 24, 1913):
“Congress may adopt not only means necessary but convenient to its exercise and tbe means may bave the quality of police regulations.”
What, then, is the object of this act? Its aim is neither completely to take from the owner or absolutely to prohibit his use of pipe lines theretofore within his exclusive control; it does, however, condition that use in interstate commerce upon his permitting a like use by the general public on payment of reasonable compensation therefor; the alternative is to cease to operate them or to dispose of them.
Clearly, therefore, the general purpose is to regulate interstate commerce in oil; the immediate specific object is to remove a serious obstruction to the free play of competitive forces in the industry, to prevent a monopolization of a part of such commerce. It is immaterial that this purpose is not proclaimed in the act itself; the history of the legislation and the debates, particularly in the Senate, leave no room for doubt as to the evils which Congress and the public generally believed to exist.
In 1905 the House of Representatives had directed an investigation of the oil industry by the Bureau of Corporations. In 1906 a first report (59th Cong., 1st Sess., H. R. Doc. 812) was made, primarily on the operations of the Standard Oil Company. (This was followed in 1907 by two more elaborate reports, as well as by a report of the Interstate Commerce Commission, 59th Cong., 2d Sess., H. R. Doc. 606.) The relation of pipe lines and pipe line transportation to *823the development of the industry was fully detailed; it was therein demonstrated, not merely that the unification of many of these lines under the Standard Oil Company was the keystone of its practical monopoly in the refined products, but also that the possession of the only pipe line in any field necessarily gave the owner thereof control in the distribution of oil there produced. lie was for all practical purposes the sole available customer for the greater part of crude oil and could thus ordinarily fix the price to be paid therefor. This was due to the utter practical impossibility of competition between one dependent upon railroad transportation and one who could transport his crude product through pipe lines. The important customer of the crude oil producer is the refiner. But as refineries are generally and more advantageously located in the great markets and near the seaports, and not in the oil fields, most of the crude oil must be transported. Physically, this could be done in barrels or tank cars by railroad; economically, railroads cannot compete with pipe lines, because the actual cost oí railroad transportation is three or four times that of pipe line transportation.
A pipe line, however, is not a transportation facility readily available to the producer, as is a horse and wagon, or to-day even an automobile, to the average farmer. In the developed stage of the oil industry it is, in its very nature, analogous to the instrumentalities used by common carriers and other public-service corporations. Ordinarily these lines are hundreds of miles in length. Tike railroads, there are trunk and branch lines; to construct them requires large capital; to duplicate them between an oil field and its natural market would usually involve economic waste similar to that caused by paralleling railroad lines.
An individual or corporation controlling the pipe line transportation in any field would thus have the same opportunity of monopolizing the distribution of the crude oil from that field as the owner of the only railroad in any section would have to monopolize the distribution of most articles produced or manufactured along the line. His ownership gives him the practical power of monopolizing the purchase of the goods and of fixing the price thereof, and thereby of monopolizing interstate commerce therein, at least, in certain territories. In the one case, as in the other, governmental regulation is essential to check this evil.
The actual situation in 1906, as reported to Congress, was that most pipe lines, both common carrier and private, were under the domination of the Standard Oil Company. The Commissioner of Corporations had said that it had “all but a monopoly of the pipe lines in the United States,” and that “its control of them was one of the chief sources of its power.” 59th Cong., 1st Sess., H. R. Doc. 812, pp. 36 and 37.
In Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192, 33 Sup. Ct. 44, 57 L. Ed. -, the Supreme Court says:
“The existence of power is not to be denied simply because some innocent articles or transactions may bo found within the proscribed class. The inquiry must bo whether, considering tlio end in view, the statute passes the bounds of reason and assumes the character of a merely arbitrary flat.”
*824And so it may well be that, even if the primary purpose of the act were to prevent the use of the pipe lines as an essential element in and for the purpose of building up the Standard Oil‘Company’s monopoly in the refined products, the power of Congress is not to be denied merely because some other lines are brought within the terms of the act.
To determine, then, whether the means adopted to secure these legitimate ends are reasonable or not, we must consider what remedies were available by which the channels and instrumentalities of interstate commerce could be kept open so that- all producers on payment of a reasonable compensation might be enabled to competé freely in their natural markets.
Government ownership either through condemnation by eminent domain or through the construction of new lines would be possible; but at this' time, and until every other available measure of relief shall have proved ineffective, such a radical departure from the previous policy of regulation, entailing, in the judgment of many, evils far greater than those attempted to be cured, cannot be deemed so feasible - an alternative as to necessitate its adoption. Subjection of common carrier pipe lines to the stricter supervision and regulation prescribed by the interstate commerce act would afford only partial relief; many, if not most, of the important lines were not operated by common carriers.
Disintegration of the Standard Oil Company under the Sherman Act would probably result in freer competition, but it would not give the necessary relief to independent producers, who would still have to sell to the private pipe line owner or stimulate effectively the construction of independent refineries, which, under a regime of private pipe lines, would have difficulty in securing the crude product.
The only feasible remedy was the one adopted by Congress, to make the existing facilities available to the public generally, by prohibiting their use except on this condition. That thereby the exclusiveness of private ownership was invaded does not render the act unconstitutional. The case of Weems Steamboat Co. v. Peoples Co., 214 U. S. 345, 29 Sup. Ct. 661, 53 L. Ed. 1024, 16 Ann. Cas. 1222, held only that at common law and without statutory grant no one could compel another to permit the use of his property for just and reasonable compensation merely because the property, a private wharf, was a desirable or even an essential facility of commerce. The court, however, expressed no-opinion on the validity of legislation compelling such permission.
Congress, like the state Legislatures, can authorize the actual destruction of private property if such destruction be reasonably essential to the accomplishment of a legitimate legislative purpose. Hipolite Egg Co. v. U. S., 220 U. S. 45, 31 Sup. Ct. 364, 55 L. Ed. 364. It may prohibit and it has absolutely prohibited certain forms of interstate commerce. Hoke et al. v. U. S., supra; The Lottery Case, 188 U. S. 321, 23 Sup. Ct. 321, 47 L. Ed. 492.
Under the Sherman Act, disintegration of vast combinations of capital has been decreed, irrespective of the depreciation therein produced in the value of property. Standard Oil Co. v. U. S., 221 U. S. *8251, 31 Sup. Ct. 502, 56 L. Ed. 619, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734. Under the commodities clause common carriers are prohibited from transporting certain of their own property, and are thus compelled to part with the ownership before transportation, regardless of the loss suffered thereby. U. S. v. D. & H. Co., 213 U. S. 366, 29 Sup. Ct. 527, 53 L. Ed. 836. By the Carmack amendment the burden of responding in damages to a shipper for losses occasioned by the acts of independent, but connecting, carriers is imposed upon the initial carrier “as a condition of continuing in that traffic.” A. C. L. v. Riverside Mills, 219 U. S. 186, 31 Sup. Ct. 164, 55 L. Ed. 167, 31 L. R. A. (N. S.) 7.
And in cases not involving common carriers, prohibition acts adopt-, ed under a state power no more extensive than that granted to Congress by the commerce clause as limited by the fifth amendment have been held constitutional, despite the practical destruction thereby of most of 1lie value of brewery and distilling plants. Mugler v. Kansas, 123 U. S. 625, 8 Sup. Ct. 273, 31 L. Ed. 205. And if a state, in the regulation of private business, such as banking, in order to promote the public welfare, may “go from regulation to prohibition except upon such conditions as it may prescribe” (Noble State Bank v. Haskell, 219 U. S. 104, 31 Sup. Ct. 186, 55 L. Ed. 112, 32 L. R. A. [N. S.] 1062, Ann. Cas. 1912A, 487; see Engel v. O'Malley, 219 U. S. 128, 31 Sup. Ct. 190, 55 L. Ed. 128), is the federal government to be denied the use of like means ?
The power to regulate cannot, of course, be used, either directly or by the imposition of conditions precedent to the exercise of the right to engage in interstate commerce* as a subterfuge to extend the jurisdiction of the federal government to those matters over which the states have exclusive control. Employers’ Liability Cases, 207 U. S. 463, 28 Sup. Ct. 141, 52 L. Ed. 297. The amendment in question, however, makes no such attempt. The condition thereby imposed is not in any sense a regulation of domestic commerce; it is directly and essentially a regulation of interstate commerce alone.
The remedy prescribed by this amendment is far less drastic than that adopted to abate other restraints on interstate commerce; that it is feasible is demonstrated by the fact that many pipe lines are operated by common carriers, and that in at least two states, Kansas and West Virginia, all pipe line carriers are declared by statute to be common carriers. Therefore, in my judgment, it cannot be deemed an unreasonable or arbitrary exercise of legislative power.
But if, as is contended, the act cannot be sustained as a legitimate regulation of commerce, if it amounts to a taking of private property for public use, does it afford the owner the just compensation to which he is constitutionally entitled ? To deprive one of the entire or partial use of property is a taking thereof. A distinction, however, may well be made in the method of compensation, dependent upon whether the owner is deprived of his title, of the possession, or only of the exclusive use. Otis Co. v. Ludlow Co., 201 U. S. 140, 26 Sup. Ct. 353, 50 L. Ed. 696, and Clark v. Nash, 198 U. S. 361, 25 Sup. Ct. 676, 49 L. Ed. 1085, 4 Ann. Cas. 1171, are cases in which only the exclusive*826ness of the owner’s use of his property was invaded; his title and possession were undisturbed. In the former, only a right of action in tort was given to the upper riparian landowner for the damages that would be caused from time to time by overflowing his land pursuant to a statutory right granted to the builder of a dam; in the latter, while payment for the easement of bringing water through a neighbor's private irrigation ditch was required under a statute granting individual owners of arid land the right so to use the private property of others, no security was provided for the share of maintenance expense to be paid from time to time. Each of the statutes was held to be constitutional.
In the present case, just and reasonable compensation for the use ’to be made from time to time of these pipe lines is secured, and it may well be doubted whether any other or additional compensation can constitutionally be demanded merely because of the change in the status of the pipe line owner to that of a common carrier and the consequent subjection of the line itself and of the owner to the regulatory supervision of the Interstate Commerce Commission.