Case: THE PIPE LINE CASES
Abbreviation: Pipe Line Cases
Decision Date: 1914-06-22
Docket Number: Nos. 481, 482, 483, 506, 507, 508
Citation: 234 U.S. 548
Volume: 234
Reporter: United States Reports
Court: Supreme Court of the United States
Jurisdiction: United States
Parties: THE PIPE LINE CASES.
Judges: 
Pages: 548–575

Head Matter:
THE PIPE LINE CASES.
APPEALS FROM THE UNITED STATES COMMERCE COURT.
Nos. 481, 482, 483, 506, 507, 508.
Argued October 15, 16, 1913.
Decided June 22, 1914.
The provision in the Hepburn Act, amending the Act to Regulate Commerce by making persons or corporations engaged in transporting oil from one State to another by pipe lines carriers' within the provisions of the act, applies to the combination of pipe lines owned and controlled by the Standard Oil Company and to the constituent corporations united in a single line, although the only oil transported is that which has been purchased by the Standard Oil Company or by such constituent corporations, prior to the transportation thereof.
As applied to existing corporations, the pipe line provision of the Hepburn Act does not compel persons' engaged in interstate transportation of oil to continue in operation, but it does require them not to continue to transport'oil for others or purchased by themselves except as' common carriers. ■ ; ■
The fact that the article transported between interstate points has been purchased by the carrier, is not conclusive against the transportation being interstate commerce; and in this casé, held that interstate transportation' Of oil purchased from the producers by the owner of the pipe is interstate commerce and under the control of •Congress.
While the control of Congress over commerce among the States cannot be made a means of exercising powers not committed to it by the Constitution,- it may require those who are common carriers in substance to become so-in form.
The provision in the Hepburn Act requiring pérsons or corporations engaged in interstate transportation of oil by pipe lines to become com- ■ mon carriers and subject to the provisions of the Act to Regulate Commerce is not unconstitutional, either as to future pipe lines of .as to the owners of existing pipe lines, as depriving them of their property without due process of law.'
Requiring a person engaged in interstate transportation'of oil by pipe lines to become a common carrier does not involve a taking of private, property, and the provision in the Hepburn Act to that effect is not unconstitutional' under the Fifth Amendment.
A corporation engaged in refining oil may draw oil from its own wells through a pipe line across a state line to its own refinery for its own use without being a common carrier under the pipe line provisions of the Hepburn Act, the transportation being merely incidental to the use of the oil at the end;
204 Fed. Rep. 798, revérsed in part and affirmed in part.
The facts, which involve the constitutionality, construction and application of the provisions in the Hepburn Act relating to interstate transportation of oil by pipe lines, are stated in the opinion.
The Solicitor General for the United States and Mr: Charles W. Needham for the Interstate Commerce Commission:
The pipe line amendment applies to these petitioners.' Congress intended the act to apply to every interstate' oil-carrying pipe line, and to compel every such interstate pipe line to. become a common carrier as a condition precedent to engaging in interstate commerce.. Whether. any particular pipe line had or had not been a common carrier prior to the passage of the act is wholly immaterial.
The debates in Congress may bfe consulted to ascertain • the evils at which the act was aimed, its legislative history, the amendments that were offered and rejected during its passage and the general history of the times. Am. Net. Co. v. Worthington, 141 U. S. 468, 473; Minns v. United States, 194 U. S. 486, 495/496; Blake v. National Bank, 23 Wall. 307, 319; Holy Trinity Church• v.' United States, 143 U. S. 457, 465; Jennison v. Kirk, 98 U. S. 453.
Here the debates show that the evil aimed at was the monopolization of the oil business by owners of private pipe lines. - Amendments restricting the application of the’ act to pipe lines engaged in transportation “for hire” of “for the public” were repeatedly rejected. 40 Cong. Rec. 6361, 6365, 6999-7009, 9254-9256.
The rule of construction followed in the Commodities Case, 213 U. S. 366, is not applicable here. That rule applies only when the statute is ambiguous. , Employers’ Liability Cases, 207 U. S. 463, 500.
The act is constitutional. It stands the test laid down in Minnesota v. Barber, 136 U. S. 313, 320; C., B. & Q. By. v. Drainage Commissioners, 200 U. S. 561, 592; Mc-Culloch v. Maryland, 4 Wheat. 421, namely, that:
The object of the act is one for which the Federal authority may properly be exercised.
The means employed have in fact a real and substantial relation to the object sought. They are reasonable and not arbitrary or beyond the necessities of the case.
The object of the pipe line amendment, to regulate interstate commerce in oil by protecting well owners and independent , refiners from duress by pipe line owners is one for which the authority of Congress may properly be exercised. Standard Oil Co. v. United States, 221 U. S. 1; Waters-Pierce Oil Co. v. Texas, 212 U. S. 86, 109; Central Lumber Co. v. South Dakota, 226 U. S. 157; Continental Paper Co. v. Voight, 212 U. S. 227, 271.
The private operation of pipe lines carrying oil in interstate commerce tends to monopoly. Standard Oil Case, 221 U. S. 1, 12, 42, 80-81; Tex. & Pac. By. Co. v. Int. Com. Comm., 162 U. S. 197, 210; Report on the Petroleum Transportation, 59 Cong., 1st Sess., House Doc. 812, pp. 29, 37, 62; Report of Int. Com. Comm., 59 Cong., 2d Sess., House Doc. 606, pp. 2,. 5, 6, 14.
No other means of transportation can possibly compete with pipe lines. If a well owner cannot ship by pipe line he cannot (practically) ship at all. Without a pipe line the small producer is as truly shut in as was the mine owner in Strickley v. Highland Boy Mining Co., 200 U. S. 597, or the arid land owner in Clark v. Nash, 198 U. S. 361. Ohio. Oil Co. v. Indiana, 177 U. S. 190. The statute is designed to prevent an unconscionable use of economic advantages.
The operation of pipe lines as common carriers is beyond question commercially practicable, as is shown by prior Federal legislation; prior Federal decisions; state legislation; state decisions; public records and. reports; current sources of information, encyclopaedias, etc.
The Fifth Amendment does not prohibit the adoption by Congress of this means, so found to be in fact reasonable and appropriate to the accomplishment of its purpose. Congress may prohibit a kind of commerce harmful to the public. Hoke v. United States, 227 U. S. 308;.The Lottery Cases, 188 17. S. 358. This power may be exerted for purely economic purposes whenever the strong, preponderant public opinion believes that there is a great -public need. Noble State Bank v. Haskell, 219 17. S. 104; C., B. & Q. R. Co. v. Drainage Commissioners, 200 17. S. 561, 592; Standard Oil Case, 22117. S. 1.
In many instances regulations have taken the form of prohibition except upon such conditions as would protect the public welfare. The Commodities Case, 213 17. S. 366; Atlantic Coast Line v. Riverside Mills, 219 17. S. 186, 202, 203; Norfolk & Western Ry. Co. v. Dixie Tobacoo Co., 228 17. S., 593; Southern Ry. v. Reid, 22217. S. 424, 438.
It is immaterial that in the present case the condition is not express but implied. The same was true of the banking act and the Carmack Amendment, 34 Stat. 584, 595; Noble State Bank v. Haskell, 219 U. S. 213; Atlantic Coast Line Case, 219 17. S. 186, 203; see also Engel v. O’Malley, 219 17. S. 128; Mugler v. 'Kansas, 123 17. S. 623.
The present statute is valid as a means of preventing owners of pipe lines from obtaining an inequitable proportion'of the oil from the common reservoir. Ohio Oil Co. v. Indiana, 177 17. S. 190, 210; Lindsley 'V. Natural Carbonic Gas Co., 220 17. S. 61. Even at common law it would have been unlawful for a single proprietor to install at great expense pumping machinery so powerful that he could rapidly draw away the entire common reservoir. Forbell v. City of N.ew York, 164 N. Y. 522, 526. See also Kansas v. Colorado, 206 U. S. 46. Clearly the use of such pumps might be forbidden by statute. Manufacturers Gas Co. v. Indiana Gas Co., 155 Indiana, 461; Oklahoma v. Kansas Gas Co., 221 IT. S. 229, 262. And if their use could be. prohibited absolutely, why could it not also be prohibited except upon condition that their owner should give to the adjacent proprietors an equitable proportion of the common property.
Nor does the law violate the Fifth Amendment in that, being general in its terms, it might cover pipe lines which are not public markets for oil. Whether purely private pipe lines must be entirely prohibited in order to give the public adequate protection is a matter of legislative discretion. Purity Extract Co. v. Lynch, 226 IT. S. 192; Booth v. Illinois, 184 IT. S. 425; Lemieux v. Young, 211 IT. S. 489; Powell v. Pennsylvania, 127 IT.. S. 678, 685; Silz v. Hesterberg, 211 IT. S. 31; Commonwealth v. Gilbert, 160 Massachusetts, 157; Knoxville Iron Co. v. Harbison, 183 IT. S. 13; The Slaughter-house Cases, 16 Wall. 36; The Pure Food Law, 34 Stat. 768, 770.
Nor does the act take property for public use without compensation. . This clearly is true.as to the prohibition of purely private operation. The exclusive element is the monopoly element. No compensation need be given for that. There is no vested right in a noxious use of property. Standard Oil Case, 221 IT. S; 1; Mugler Kansas, 123 IT.-* S. 623, 669; Commodities Casé, 213 IT. S. 366, 405; Noble State Bank v. Haskell, 220 IT. S. at 100, Union Bridge Co. v. United States, 204 IT. S. 364; Slaughter-house Cases, 16 Wall. 36; L. & N. B. Co. v. Moitley, 219 IT. S. 467; C., B. & Q. R. Co. v. Drainage Commissioners, 200 IT. S. 561,592.
The business of the appellees is gmsf-publie. The test to determine whether a business is gatm-public is by as. certaining whether public grants and franchises are essential to establish and carry on the business; if the business Cannot be carried on without such privileges it is quasipüblic; such grants and franchises.subject the business to a continuing public control; as is the case with all public utility companies requiring rights in public streets and reservations.
Public markets where agents of a business determine property rights for the public by inspecting, grading, weighing and measuring staple products regularly offered for sale at such markets, are charged with a public interest. W. W. Cargill Co. v. Minnesota R. & W. Comm., 180 U. S. 452.
Pipe lines require, and are granted, franchises to cross and run along public highways, streets, rights of way of railroads, public lands and reservations. These privileges, or some of them, have been granted to each of the appellees. Each appellee is engaged in buying crude oil in the fields of production; they have their business headquarters where oil is. bought from producers; the oil is inspected, graded and gauged for sale, by the agents of the appellees and other pipe lines.
In the Ohio Oil Case the transportation is sixty miles and across a state line. This is not a “plant facility.” It is transportation from the field of production to a point of consumption. Ownership of the pipe line, or the oil, does not change the control of Congress over it. If the State of Kansas should require a license tax of all persons or corporations bringing oik into the State" by means of pipe lines, it would be' held to be invalid as "a burden upon interstate commerce, regardless of ownership. If it can receive protection under the commerce.elause, it is ■ certainly liable to regulation under that provision of the Constitution. Robbins v. Tax. Diet, of Shelby Co., 120 U. S. 489.
Mr. John G. Miiburn, with whom Mr. Frank L. Crawford, Mr. Walter F. Taylor,. Mr '.- M. F. Elliott and Mr. Chester 0. Swain were on the brief, for appellees in Nos. 481, 482, and 483:
The Interstate Commerce Act as amended in 1906 does not apply to the appellee, nor to any owner of a private pipe liné.
The act was intended to relate to persons engaged in the business of transporting oil.. Any other interpretation raises grave and doubtful constitutional questions.
Debates in Congress may not be referred to in aid of construction of a statute. Omaha St. By. v. Int. Com. Comm., 230 U. S. 324.
As construed by the Government, the act makes common carriers of persons and corporations owning and operating private pipe lines used solely for the purpose of transporting the oik of the owners in the conduct of their private business, even though such owners have never held themselves out as common carriers, have never exercised or possessed and do not now possess any right of eminent domain, and derive no powers from state laws under which common carrier corporations are organized. It follows that the act deprives such persons and corporations of their property without due process of law, and takes it for public use without just compensation.
To make the owners of private pipe lines common carriers as to those lines is to subject private property to a public use and is a “taking” of property within the meaning of the Fifth Amendment.
Since the act, as thus construed, takes private property without providing for due compensation, it violates the Fifth Amendment.
The power of Congress to regulate interstate commerce., like all other powers delegatéd to that body, is subject to the limitations imposed by the Fifth Amendment.
The contention of the United States that just compensation is provided is untenable. The rates to be paid for transportation are not the compensation intended by the Fifth Amendment.
This act cannot be sustainéd on the theory of the United States that the operation of private pipe lines is monopolistic, that the act prohibits their operation (save as common • carriers) as an appropriate means to prevent monopolistic results, and that the adoption of this means by Congress is not within the inhibitions of the Fifth Amendment.
There is nothing inherent in the nature or operation of private pipe lines which causes a tendency to monopoly.
Neither the authorities cited nor the debates in Congress nor the Report of the Commissioner of Corporations sustains the Government’s position on this point.
Nor does the Report of the Interstate Commerce Commission, dated January 28, 1907.
Cases cited in support of position that the private operation of pipé lines tends to monopoly do not help the Government
There is no proof'of “duress” or “oppression” on part of owners of private pipe lines. Cases cited under this head are irrelevant.
The mere extent of acquisition of business or property achieved by fair and lawful means or commercial dominance fairly resulting from the ownership of . private property lawfully obtained is not the criterion of monopoly or monopolization, within the legal meaning of those words; Monopolization is the unlawful exclusion of others from opportunities and privileges which are rightfully theirs. Monopoly, in the legal sense, is the condition resulting from monopolization thus defined.
It follows therefore that the act, even regarded as an act prohibiting the operation of pipe lines save as common carriers, cannot be sustained as an appropriate means to prevent monopoly, because there is no real and substantial relation between what the act. ordains and monopoly.
. There is. no- such relation, , unless the operation of a private pipe line, in the nature of things, tends to monopolization, and ...unless that fact would justify a “taking” of property without just compensation, which is not the case. . .
In: fact, there is no prohibition in the act, nor any requirement of election.
.. . The assúmed prohibition and requirement to elect, if present in the act, would be unconstitutional.
The right to carry goods from one State to another is not a franchise to be granted or withheld by Congress at its pleasure, but is an inherent right of the citizen, which antedated the Constitution.
The act, as construed by the Government, violates the due process clause.
Each, case under the police power is to be interpreted according to its own facts.
The act cannot be sustained*, as; contended on behalf of the Interstate Commerce Commission, by resorting to the doctrine of the Elevator and Stockyards Cases, because, as applied to private pipe lines, the act does not regulate a business affected with a public interest, in the sense of those cases.
Neither the utilization by a pipe line company of the right of way of a common carrier railroad for the laying of a pipe line, nor the crossing under a public highway by such pipe line, impressés upon the pipe line or its owner the nature or the obligations of a common carrier.
. .The Ohio act of 1868 has. no; bearing upon the controversy.
Prior to the.transfer to the Standard Oil,Company of New Jersey of . the pipe lines now owned by- it, their use by the National Transit Company and New York Transit Company did not constitute them , common carrier lines. But, even had they been comhion carrier lines, they would have been released from the obligations of common carriers upon their transfer to appellee in 1906.
In support of these contentions see, amongst many cases, the following: Amer. & Eng. Encyc. of Law (2d ed.) Angelí on Highways (2d ed.); Barclay v. Howell, 6 Peters, 498; Bloomfield Gaslight Co. v. Calkins, 62 N. Y. 386; Ches. & Pot. Tel. Co. v. Mackenzie, 74 Maryland, 36; Currie v. N. Y. Transit Co., 66 N. J. Eq. 313; Elliott on Railroads; Huffman v. State, 21 Ind. App. 449; Morgan v. Louisiana, 93 U. S. 217; Oman v. Bedford-Bowling Co., 134 Fed. Rep. 64; Pemberton v. Dooley', 43 Mo. App. 176; Bexford v. Knight, 11 N. Y. 308; Boebling v. Trenton By. Co., 58 N. J. Law, 666; Starr v.‘Camden & Atl. B. B. Co., 24 N. J. Law, 592; State v. Laveratík, 34 N. J. Law, 201;' Thomas v. Ford, 63 Maryland, 346; Weller v. McCormick, 52 N. J. Law, 470; Winter ■'v. Peterson, 24 N. J. Law, 524; Wright v. Carter, 27 N. J. Law, 76; Wyoming Coal Co. v. Price, 81 Pa. St. 156.
Mr. W. S. Fitzpatrick, with whom Mr: J. B. F. Cates,Mr. L. W. Keplinger and Mr. C. W. Trickett were on the brief, for appellee in No. 506.
Mr. Albert L. Wilson for appellee in No. 507.
Mr. W. I. Lewis, Mr.. Archibald F. Jones and Mr. B. B, Lewis, for appellees in No. 508, submitted.
Docket title of these cases: No. 481. United States v. Ohio Oil Company. No. 482. United States v. Standard Oil Company. No. 483. United States v. Standard Oil Company of Louisiana. No, 506. United States v. Prairie Oil & Gas Company. No. 507. United States v. Uncle Sam Oil Company. No. 508. United States v. Benson, doing business under the Partnership Name of Tide Water Pipe Company, Limited.

Opinion:
Mr. Justice Holmes
delivered the opinion of • the; court.
By the act of Congress of June 29, 1906, c. 3591, 34 Stat. 584, the Act to Regulate Commerce was amended so that the first section reads in part as follows: "That the provisions of this Act shall apply to any corporation or any person or persons engaged fin the transportation-of oil or other commodity, except water and excépt natural or artificial gas, by means of pipe lines, or partly by pipe lines and partly by railroad, or partly by pipe lines and partly by water, who shall be considered and held to be common carriers within the meaning and purpose of this Act." Thereafter the Interstate Commerce Commission issued an order requiring the appellees among others, being parties'in control of pipe lines, to file with the Commission, schedules of their rates and charges for the transportation of oil. 24 I. C. C. 1. The appellees thereupon brought suit in the Commerce Court to set aside and annul the order, and a preliminary injunction was issued by that court, on the broad ground that the statute applies to every pipe line that crosses a state boundary and that thus construed it is unconstitutional. 204 Fed. Rep. 798. The. United States, the Interstate Commerce Commission and other intervening respondents appealed.
The circumstances in which the amendment was passed are known to every one. The Standard Oil Company, a New Jersey corporation, owned the stock of the New York Transit Company, a pipe line made a common carrier by the laws of New York, and of the National Transit Cpmpany, a Pennsylvania corporation of like character, and by these it connected the Appalachian oil field with its refineries ip the east. It owned nearly all the stock of the Ohio Oil Company, which connected the Lima-Indiana field with its system; and the National Transit Company, controlled by it, owned nearly all the stock of the Prairie Oil and Gas Company, which ran from the Mid-Continent field in Oklahoma and Kansas and the Caddo field in Louisiana to Indiana and connected with the previously mentioned lines. It also was largely interested in the. Tide Water Pipe Company, Limited, which connected with the Appalachian and other fields and pursued the methods of the Standard Oil Company about to be described. By the before mentioned and subordinate lines the Standard Oil Company had made itself master of the only practicable oil transportation between the oil fields east of California and the Atlantic Ocean and carried much the greater part of the oil between those points. Before the recent dissolution the New York and Pennsylvania Companies had extended their lines into New Jersey and Maryland to the refineries and the laws of those States did not require them to be common carriers. To meet the present amendment the Standard Oil Company took a conveyance of the New Jersey and Maryland lines, and the common carrier lines now end at insignificant places where there are neither market nor appliances except those of the Standard Oil, by which it would seem that the whole transport of the carriers' lines is received. There is what seems to be merely a formal breach of continuity when the carriers' pipes stop. The change is not material to our view of the case.
Availing itself of its monopoly of the means of transportation the Standard Oil Cómpany refused through its subordinates to carry any oil unless the same was sold to it or to them and through them to it on terms more or less dictated by itself. In this way it made itself master of the fields without the necessity of owning them and carried across, half the continent a great subject of international commerce coming from many owners but, by the duress of which the Standard Oil Company was master, carrying it all as its own. The main question is whether the act does and constitutionally can apply to the several. constituents that then had been united into a single fine.
Taking up first the construction of the statute, we think it plain that it was intended to reach the combination of pipe lines that we have described. The provisions of the act are to apply to any person engaged in the transportation of oil by means of pipe lines. The words 'who shall be considered and held to be common carriers within the meaning and purpose of this act' obviously are not in tended, to cut down the generality of the previous declaration to the meaning that only those shall be held common carriers within the act who were common carriers in a technical sense, but an injunction that those in control of pipe lines and engaged in the transportation of oil shall be dealt with as such. If the Standard Oil Company and its cooperating companies were not so engaged no one was. It not only would be a sacrifice of fact to form but would empty the act if the carriage to the seaboard of nearly all the oil east of California, were held not to be. transportation within its meaning,- because by the exercise of their power the carriers imposed as a condition to the carriage a sale to themselves. . As applied to them,while the amendment does not compel them to continue in operation it does require them not to continue except as common carriers. That is the plain meaning as has been held with regard to other statutes similarly framed. Atlantic Coast Line R. R. Co. v. Riverside Mills, 219 U. S. 186, 195, 203. Its evident purpose was to bring within its scope pipe lines that although not technically common carriers yet were carrying all oil offered, if only the offerers would sell at their price.
The only matter requiring much consideration is the constitutionality of the act. That the transportation is commerce among the States wé think dear. That conception cannot be made wholly dependent upon technical questions of title, and the fact that the oils transported belonged to the owner of the pipe line is not conclusive against the transportation being such commerce., Rearick v. Pennsylvania, 203 U. S. 507, 512. See Texas & New Orleans R. R. Co. v. Sabine Tram Co., 227 U. S. 111. The situation that we have described would make it illusory, to deny the title of commerce to such transportation,beginning in purchase and ending in sale, for the same reasons that make it transportation within the act.
The control of Congress ever commerce among the States cannot be made a means of exercising powers not entrusted to it by the Constitution, but it may require those who are common carriers in substance to become so in form. So far as the statute contemplates future pipe lines and prescribes the conditions upon which they may be established there can be no doubt that it is valid. So the objection is narrowed to the fact that it applies to lines already engaged in transportation. But, as we already have intimated, those lines that we are considering are common carriers now in everything but form. They carry everybody's oil to a market, although they compel outsiders to sell it before taking it into their pipes. The answer to their objection is not that they may give up the business, but that, as applied to them, the statute practically means no more than they must give up requiring a sale to themselves before carrying the oil that they now receive. The whole case is that the appellees if they carry must do it in a way that they do not like. There is no taking and it does not become necessary to consider how far Congress could subject them to pecuniary loss without compensation in order to accomplish the end in view. Hoke v. United States, 227 U. S. 308, 323. Lottery Case, 188 U. S. 321, 357.
These considerations seem to us sufficient to dispose of the cases of the Standard Oil Company, the Ohio Oil Company, the Prairie Oil and Gas Company and the Tide Water Pipe Company, Limited. The Standard Oil Company of Louisiana was incorporated since the passage of the amendment, and before the'beginning of this suit to break up the monopoly of the New Jersey Standard Oil Company. It buys a large part of its oil from the Prairie Oil and Gas Company which buys it at the wells in the Mid-Continent field and transfers the title to the Louisiana Company in that State. Its case also is covered by what we have said.
There remains to be considered only the Uncle Sam Oil Company. This company has a refinery in Kansas and oil wells in Oklahoma, with a pipe line connecting the two which it has used for the sole purpose of conducting oil from its own wells to its own refinery. It would be a perversion of language, considering the sense in which it is used in the statute, to say that a man was engaged in the transportation of water whenever he pumped a pail of water from his well- to his house. So as to oil. When, as in this case, a company is simply drawing oil from its own wells across a state line to its own refinery for its own use, and that is all, we do not regard it as falling within the description of the act, the transportation being merely an incident to use at the end. In that case the decree will be affirmed. In the others the decree will be reversed.
No. 507, Decree affirmed.
Nos. 481, 482, 483, 506 and 508, Decrees reversed.