Court Opinion

ID: 9745003
Source: CourtListenerOpinion
Date Created: 2023-08-26 22:28:09.845838+00
Date Added: 2024-06-11T07:24:54.601450
License: Public Domain

JAMES ALGER FEE, District Judge
(dissenting).
The Interstate Commerce Commission have in this case departed from the traditional role of conservators of the interests of the public at large, by refusing to permit rail carriers to reduce rates on petroleum products from Portland, Oregon, to the area near Spokane, Washington, even though the Commission found such proposed rates were “compensatory considering all costs”. Thereby, the Commission not only interfered with the managerial discretion of the rail carriers,1 but also frustrated a fundamental policy established by *1003the Congress that the lowest rates should prevail where consistent with the proper service.
It has been heretofore considered axiomatic that “The Act was passed for the protection of those who pay or bear the rates”.2 The history of the legislation proves that regulation was first imposed to control high rates,3 and not until thirty years later were the Commission given authority to fix minima to prevent the carriers from destroying adequate railway service by eliminating rail competition3 and thereafter raising the rate.4
Consistently with this historical background there was written into the statutes, in 1933, a specific direction to the Commission, in the exercise of the power to prescribe just and reasonable rates, to give due consideration among other factors, “to the need, in the public interest5 of adequate and efficient railway transportation service-. at the lowest cost5 consistent with the furnishing of such service.”6
Furthermore, the Motor Transport Act of 1935 contains no language which amends the rate making clauses of the Transportation Act, although the policy announced in part is to “improve the relations between, and coordinate transportation by and regulation of, motor carriers and other carriers”.7 The historical policy as to rail rates was thereby unchanged.
The Congress, acting under a delegation of power under the Constitution, are supreme over an administrative body created by law. The Interstate Commerce Commission fall under this supreme power.8 In dealing with statutes passed by the Congress relating to the Commission, not only the power granted, but the limitations imposed, should be considered.9 The courts should construe these laws in the light of their history and should not be confined to a narrow and dry textual construction, but should neither broaden nor narrow the grants, to subserve ends which they might believe proper policy.
The legislative policy heretofore outlined must be followed by the Commission.
In order that the Commission might not overflow the canalization of legislation granting power to act, the Supreme Court of the United States has required the making of specific jurisdictional findings.10 This is no formal ceremony, but of substance11 Once findings are so made, every possible intendment must be used to sustain the conclusions. The courts should use every effort not to thwart the legislative will. But where the Congress have not granted the power of which exercise is attempted, the courts should not be astute to shore up the, foundations of jurisdiction. Otherwise, the administrative body would be controlled neither by the courts nor by its creator.
In order to determine, then, whether the fundamental policy of the Congress above outlined was upheld, the findings made by the Commission must be considered. A minority of that body wrote the opinion. *1004There are two concurring opinions, three dissenting opinions and one concurrence in dissent, while one Commissioner did not sit. The result is confusing, on account of the fact that essentials are obscured by an extended discussion contained in the opinion of the minority. An analysis of the entire document crystallizes certain negative positions. It is clear that the Commission did not find tile rates proposed were unjustly discriminatory, unduly preferential or prejudicial or in violation of the “long and short haul” clause. Nor were there findings that these rates interfered with the movement of traffic, prevented adequate or efficient service or resulted in failure of any rail carrier to earn a fair return upon its property as a whole. The Commission did not find that the rates were unjust or unreasonable, except as this may be implied in the finding that the rates were too low, which will be hereafter discussed.
Notwithstanding the fact thus shown that the rates proposed did not violate any of the standards set up by the governing statutes, the Commission failed to uphold them. It appears, then, that the minority of the Commission who joined in the opinion did not make jurisdictional findings, because none could have been made which gave legal support for the disapproval of the rate. The basis of the failure to confirm these schedules which permitted “adequate and efficient service” “at lowest cost” “in the public interest” can only be discovered in certain “phrases or sentences”.12 The conclusion is arrived at that these proposed rates “are below a minimum reasonable level and hence unlawful”. If this phrase is anything but the begging of the question, it is directly contrary to the finding of fact contained in the opinion that the rates proposed are “compensatory considering all costs”. Likewise, the policy of the lowest cost consistent with service is violated. This statement that the rates are below a reasonable minimum is not a conclusion which must be approved “when there is found to be a rational basis”13 therefor, because “the statement * * * that the proposed rates would be ‘unreasonable’ must be read in the light of the report as a whole, and then appears as a conclusion insufficient as a finding unless supported by facts more particularly stated”.14
The real basis of the opinion of the minority of the Interstate Commerce Commission is an assumption of power15 over all forms of t'ransportation and the responsibility for maintaining the financial stability of each, whether regulated or unregulated. The costs as to each are found and enter into the general picture.16
The assumptions ai;e thus broadly stated by the Commission in the opinion. “We were given power to fix minimum rates, however, primarily for the purpose of preventing destructive competition in rates and promoting the financial stability of the transportation agencies".5 says the opinion. This is followed by the statement: “We shall prescribe minimum rates which in our judgment will promote a somewhat healthier degree of prosperity for all carriers *1005concerned, by rail, by highway and by water.”5
The argument to sustain this assumption of power is made, not by the Commission itself, but in the briefs submitted, on the ground, first, that the Commission have power to equalize rates between the railroads and the motor carriers by requiring the former to charge a rate high enough to enable the latter to make a profit; second, that the Commission had power to require the rail carriers to charge rates high enough to permit the water transport to pay operative costs.
As to the primary position, competition for the railroads arose here with carriers, by motor truck, some privately owned and transporting the owners’ goods alone, others in unregulated intrastate commerce alone, others operating solely under contract and finally, regulated common carriers in intrastate and interstate commerce, respectively. It is obvious some of such carriers are entirely unregulated, others are controlled by the State of Washington alone, and some are restrained by the federal Commission. A through rail rate from Portland to Spokane is the subject of controversy here, while the motor carriers of whatever class are competitive over a portion of the distance only, i.e., from Attalia or Umatilla to Spokane. There are no joint rates involved. When the Commission prevented the railroads from charging the lowest rate compatible with adequate service because of a self-imposed guardianship over this nondescript motor transport, the duty imposed by the Transportation Act of 1920 upon that body as to the railroads and the public has been disregarded.
The Motor Transport Act was enacted “to put certain motor transport in interstate commerce under regulation”. It was not an amendment of the Transportation Act of 1920 as amended in 1933. The declaration of policy of this law did not and was not apt to change the specific declarations of 15a of the Act relating to rail transportation.17 In any event, even if the ex riven rates of truck and railroad could have been equalized,18 no authority can be found to raise a through rail rate solely competitive with water rates over a great portion of the route, for the purpose of benefiting motor carriers competitive only over another portion of the whole route.
This brings up the next point, that the Commission can protect water carriers from rail competition. The inland water transport is entirely unregulated at present. The Commission have no power to require cost accounting by the operators. The traffic here is in part between Portland, Oregon, to Umatilla, Oregon, although the Columbia is a boundary river. Apparently, these lines are contract and not common carriers. Again, these are competitive with rail over only a portion of the distance over which the rail through rates apply.
It has been judicially declared that the power of the Commission to raise rail rates to protect a water carrier, under the declaration of policy contained in the Transportation Act of 1920 applies only (1) where joint rail and water rates have been established, (2) where the railroad through disinterested malevolence attempts to destroy a water carrier. In other instances, the railroad may exercise managerial discretion to lower rates, even if the water carrier be driven off the river, if no other clauses of the Act have been violated.19
The first exception is not involved here, since there are no joint rates with any other common carrier involved. No boat or barge line has complied with the provisions of the statute by which joint rates might be established. See Title 49 U.S.C.A. § 153 (e).
As to the second exception, if the Commission had found as a fact that the rail carriers were deliberately attempting to throttle water traffic upon the Columbia, the order would be valid, in part. It is the de*1006dared policy of the Congress “to promote, encourage, and develop water transportation, service, and facilities in connection with the commerce of the United States, and to foster and preserve in full vigor both rail and water transportation.”20 The Committee of the House in 1920 indicated that this clause “would also prevent a rail carrier from destroying water competition between competitive points by prohibiting such carrier from so reducing its rates as to destroy its water competitor”.21 If “ ‘disinterested malevolence’ (American Bank & Trust Co. v. Federal Reserve Bank, 256 U.S. 350, 358, 41 S.Ct. 499, 65 L.Ed. 983 [25 A.L.R. 971]), or something akin thereto, has supplied the motive power. M. Steinert & Sons Co. v. Tagen, 207 Mass. 394, 397, 93 N.E. 584, 32 L.R.A.(N.S.) 1013; Nann v. Raimist, 255 N.Y. 307, 319, 174 N. E. 690, 73 A.L.R. 669.”, then the Commission would disapprove the rate and protect the water carrier.22 The lack of such finding appears glaring and none should be supplied.23 No “rational basis” for such a “conclusion” appears. In fact, the contrary is probably true. The rail carriers established the rate to recapture the traffic in petroleum products which has been slipping away from them because of the recent opening of the locks at Bonneville. No water carrier has intervened here on the ground that it was to be destroyed. In fact, there are indications that the oil companies are going to maintain this river traffic at all events. The great pressure to sustain the order comes from the motor carriers who are not competitive over this area.
The opinion in Mississippi Valley Barge Line Co. v. United States, supra, is binding upon this court. The implications of the decision are that a railroad may meet water competition as it chooses, if no other clauses of the Transportation Act are violated. In this connection, a pertinent factor in sustaining the managerial discretion of the railroads is the direct amendment of the specific clause relating to railroads after the act had been in operation for years. Any implications contained in the former declaration of policy were thereby overthrown.
If the sentences above quoted relating to the power to fix minimum rates are placed upon the broad basis of the right to consider all carriers, by rail, by highway and by water, of whatever class or variety, the Commission are usurping a power, so tar denied by Congress,24 judicially declared not to exist 25 and long abandoned by that body itself.26
If the Commission had simply declared the right to control all forms of transportation but had not gone further and based thereon the authority to prevent rail carriers from making available adequate and efficient service at the lowest cost “in the public interest”, no harm might have resulted.
But the Commission further say: “Our duty in the exercise of that power is not done, therefore, if we allow competitive rates to gravitate to the lowest possible level.”
The mandate of the Congress, which is supreme over the Commission, directs that rail rates shall be so allowed to gravitate, if proper service is maintained.
This “duty”, then, is in direct violation of the historical policy above outlined. It disregards the fact that if all transportation agencies are put under regulation as contemplated by pending legislation, provisions permitting reduction of rates in the public interest to a point where these are barely *1007compensatory will probably be included in accordance with historical policy.
These expressions adopt the theory that all forms of transportation, rail, highway and water, must be on an equality as to rates,27 and that none may lower its rate on a particular commodity, so that another form of transport, regulated or unregulated, might be crowded out of the particular field. The Congress, on the other hand, have adopted as to rail carriers the lowest cost to the public consistent with service as a criterion. The conflict between the two ideas is irreconcilable and the policy of the Congress must be sustained.28
The hearing and debates of the Congress on the pending legislation prove that it has been assumed that the theory that the Commission should produce equality of opportunity by rate fixing has never been conceded.29 On the other hand, a bitter conflict has been waged over the attempt to place regulation of water carriers under the Interstate Commerce Commission, instead of leaving them at present in large part unregulated and in part regulated by the Maritime Commission,30 and over the attempt to place motor transport and rail carriers on equality of regulation.
The fundamental flaw in the Commission’s position is the attempt “to create that equality of opportunity which should fairly apportion the traffic between the rail lines and the river-truck routes”. In this instance, the supposedly desirable result was accomplished by establishing an equality of rate between the rail carriers and the motor transport carriers in interstate commerce. Adherence to the principle that one type of regulated carrier must keep rates on a particular commodity between certain areas up to a point where regulated transport of another type may make a profit over only part of the distance, denies equality of opportunity and fails to take advantage of the inherent advantages of each form of transportation. Competition between different forms might eliminate the form of carrier which did not possess those qualifications. The public bears the cost, which the Congress have so far declared must be as low as possible consistent with adequate transportation service. It is clear that in proving equality of rates among regulated carriers here the unregulated carriers are also permitted to operate if they choose at a high profit or to undercut the rates to such an extent that they can absorb the traffic to capacity.
The apportionment of the traffic requires the Commission to disregard the inherent advantages of each form of transportation. Furthermore, apportionment apparently requires adherence to the theory that the rail carrier cannot lower its rates below the point where the unregulated carriers can operate at a profit. In these days when rail carrier finance is of moment and certain railroads are in a precarious condition, this doctrine will have a corollary. The Commission can scarcely refuse to require trucks and water carriers to keep up rates on wheat downstream31 at a level on which the railroad can make a compensatory return on that traffic, if that body have control of, and have the responsibility of apportioning the traffic fairly between, all forms .of transportation. The violation of the principles of lowest cost consistent with proper service would in that instance be crystal clear not only to the Commission but to the public in whose interest the principle was established.
The Commission made one finding which laid the basis for a proper conclusion sustaining the proposed rates. It is positively *1008found that these through rates “are compensatory considering all costs.”32 Since the rates are lower than any others offered it must be assumed this is the “lowest cost” attainable “in the public interest”. Specifically, this finding guarantees the possibility of the maintenance of “adequate and efficient railway service” while the schedule was in effect. This finding, in the absence of any intimation that the proposed rates violated any other provision of the governing statute, laid an unshatterable foundation for approval thereof.
The Congress, not the Commission nor the courts, should initiate radical departures from a policy long declared to be in the public interest.
The order should be set aside or modified.

 United States v. Chicago, Milwaukee, St. Paul & Pacific RR Co., 294 U.S. *1003499, 506, 55 S.Ct. 462, 79 L.Ed. 1023; Texas & Pacific Ry. v. United States, 289 U.S. 627, 636, 53 S.Ct. 768, 77 L.Ed. 1410.

 Texas & Pacific Ry. v. United States, supra, 289 U.S. at page 638, 53 S.Ct. at page 772, 77 L.Ed. 1410.

 Skinner & Eddy Corp. v. United States, 249 U.S. 557, 564, 39 S.Ct. 375, 63 L.Ed. 772.

 If these rates are lowered to meet water competition they cannot thereafter be raised, unless “upon changed conditions other than the elimination of water competition”. 49 U.S.C.A. § 4, par. (2).

 Emphasis supplied.

 49 U.S.C.A. § 15a(2).

 49 U.S.C.A. § 302(a).

 The Commission acts “as an agency of Congress, to apply the law of the land to facts developed of record in matters committed by Congress to our jurisdiction”. St. Louis & O’Fallon Ry. Co. v. United States, 279 U.S. 461, 487, 49 S.Ct. 384, 388, 73 L.Ed. 798.

 The courts have prevented an exercise of power where the Commission has attempted to act extralaterally. See Interstate Commerce Commission v. Diffenbaugh, 222 U.S. 42, 46, 47, 32 S.Ct. 22, 56 L.Ed. 83; Anchor Coal Co. v. United States, D.C., 25 E.2d 462, 472; St. Louis & O’Fallon Ry. Co. v. United States, supra; Southern Pacific Co. v. Interstate Commerce Commission, 219 U. S. 433, 449, 450, 31 S.Ct. 288, 55 L.Ed. 283.

 “in the absence of a finding of essential basic facts, the order cannot be sustained. Florida v. United States, 282 U.S. 194, 215, 51 S.Ct. 119, 75 L.Ed. 291.” Atchison Ry. v. United States, 295 U.S. 193, 202, 55 S.Ct. 748, 752, 79 L.Ed. 1382.

 United States v. Baltimore & Ohio RR Co., 293 U.S. 454, 464, 55 S.Ct. 268, 79 L.Ed. 587.

 United States v. Chicago, Milwaukee, St. Paul & Pacific R. R. Co., supra.

 Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286, 287, 54 S.Ct. 692, 694, 78 L.Ed. 1260.

 United States v. Chicago, Milwaukee, St. Paul & Pacific RR Co., supra [294 U.S. 499, 55 S.Ct. 465, 79 L.Ed. 1023]; Florida v. United States, 292 U.S. 1, 54 S.Ct. 603, 78 L.Ed. 1077; Southern Pacific v. Interstate Commerce Commission, supra.

 “ * * * although the order made by the Commission may have been couched in a form which would cause it, superficially considered, to appear to be but the , exercise of an authority to correct an unreasonable rate, yet if it plainly results from the record that the order of the. Commission was not the exercise of such an authority, but was baseupon the assumption by that body of the possession of a power not conferred by law, the mere form given by the Commission to its action does not relieve the courts from the duty of reviewing and correcting an abuse of power.” Southern Pacific Company v. Interstate Commerce Commission, supra, 219 U.S. at page 443, 31 S.Ct. at page 290, 55 L.Ed. 283.

 An order of the Commission may be set aside “because facts and circumstances were considered which could not legally influence the conclusion, Interstate Commerce Commission v. Diffenbaugh [supra]; Florida East Coast Lines v. United States, 234 U.S. 167, 187, 34 S. Ct. 867, 58 L.Ed. 1267.” St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 75, 56 S.Ct. 720, 736, 80 L.Ed. 1033.

 Emphasis supplied.

 Emphasis supplied.

 See Ann Arbor R. Co. v. United States, 281 U.S. 658, 50 S.Ct. 444, 74 L.Ed. 1098.

 In this connection, the Commission have recognized the fact that in considering rail and truck competition, the lowest cost should prevail to take advantage of the inherent facilities of each form. It is said: “The public interest, the advancement of which is the main purpose of the law, does not require that one type of transportation agency be protected from the competition of another when such competition results from the ability of the latter to render adequate and efficient service at lower cost to itself and resulting lower charges to the public.” Petroleum from California to Oregon, 214 I.C.C. 668, 677. See Petroleum Between Washington and Oregon Points, 225 I.C.C. 382.

 Mississippi Valley Barge Line Co. v. United States, supra.

 Section 500 Transportation Act 1920, 49 U.S.O.A. § 142.

 House Report No. 456, 66th Congress, 1st Session 1919, page 19.

 Mississippi Valley Barge Line Co. v. United States, supra.

 “Recently this court has repelled the suggestion that lack of express finding by an administrative agency may be supplied by implication. Panama Refining Co. v. Ryan, 293 U.S. 388, 433, 55 S.Ct. 241, 79 L.Ed. 446.” Atchison Ry. v. United States, supra.

 If tie specific rate clause set out in Title 49 U.S.C.A. § 15a(2), passed June 16, 1933, is inconsistent with the declaration of policy in the Transportation Act of 1920, the prior law is overruled as to rates of rail carriers. The question of rail rates is determined by the provisions of the Interstate Commerce Act, and the rate clause overrules a declaration of policy. Ann Arbor R. Co. v. United States, supra, 281 U.S. at pages 668, 669, 50 S. Ct, at page 444, 74 L.Ed. 1098.

 Mississippi Valley Barge Line Co. v. United States, supra.

 Petroleum from California to Oregon, 214 I.C.C. 668; Petroleum Between Washington and Oregon Points, 225 I.C.C. 382; Receipt and Delivery Service At Eastern Points, 225 I.C.C. 789; Malt Liquors from. New Orleans to Texas Points, 227 I.C.C. 439.

 The theory of equality of rate is directly contrary to the declaration of policy of the Motor Transport Act, Sec. 202, 49 U.S.C.A. § 302(a), which requires recognition and preservation of the “inherent advantages” of each form of transportation.
“One of the ‘inherent advantages’ of such transportation which we must thus ‘recognize and preserve’ is its economy under certain conditions, as compared with other forms of transportation, and another is its ability under certain conditions to provide better service”. Petroleum Between Washington and Oregon Points, 225 I.O.O. 382, concurring opinion of Commissioner Eastman.

 See Note 9.

 gee Hearings before the Committee on Interstate Commerce, Seventy-Sixth Congress, April 3 to 14, 1939, 6, 7, 368-370.

 See Hearings before the Committee on Interstate Commerce, Seventy-Sixth Congress, 613-654, 660-711.

 This return traffic of wheat downstream appears in the record. Strangely enough, it seems not to have been mentioned by anyone involved in comparison with the rail rates on the same commodity.

 “There is no suggestion in the report that the rates have been so reduced as to be less than compensatory”. United States v. Chicago, Milwaukee, St. Paul & Pacific R. R. Co., supra.