George A. Rheman Company v. United States

• Decision Date: 27 July 1955
• Docket Number: Civ. A. No. 4962.
• Citation: 133 F. Supp. 668
• Court: U.S. District Court — District of South Carolina
• Parties: The GEORGE A. RHEMAN COMPANY and J. C. Hagler, Jr., and T. W. Hagler, a partnership, doing business as Hagler Truck Company, Plaintiffs, v. UNITED STATES of America and the Interstate Commerce Commission, Defendants.

133 F. Supp. 668

The GEORGE A. RHEMAN COMPANY and J. C. Hagler, Jr., and T. W. Hagler, a partnership, doing business as Hagler Truck Company, Plaintiffs, v. UNITED STATES of America and the Interstate Commerce Commission, Defendants.

Civ. A. No. 4962.

United States District Court E. D. South Carolina.

Argued June 27, 1955.

Decided July 27, 1955.

Frank A. Graham, Jr., Columbia, S. C., and Frank B. Hand, Jr., Washington, D. C., for complainants.

N. Welch Morrisette, Jr., U. S., Atty., Columbia, S. C., Stanley N. Barnes, Asst. Atty. Gen., and James E. Kilday and John H. D. Wigger, Sp. Assts. to Atty. Gen., for the United States.

Samuel R. Howell, Acting General Counsel, Washington, D. C., and James Y. Piper, Asst. General Counsel, for Interstate Commerce Commission.

T. Allen Legare, Jr., Charleston, N. C., and James B. Craighill, Charlotte, N. C., for intervenor Greater Charleston Chamber of Commerce.

Before PARKER, Circuit Judge, and WARLICK and WILLIAMS, District Judges.

PARKER, Circuit Judge.

This is an action by two common carriers by motor vehicle to enjoin and set aside an order of the Interstate Commerce Commission, being the tenth order in Ex parte No. MC-37, entered December 15, 1954, redefining and extending the commercial zone of the City of Charleston, South Carolina. 63 M.C.C. 127. The contention of plaintiffs is that the entry of the order was not a proper exercise of the rule making power of the Commission under section 4 of the Administrative Procedure Act, 5 U.S.C.A. § 1003, and that it was void because an adjudicatory hearing was not held in accordance with section 5 of that act. 5 U.S.C.A. § 1004. A court of three judges has been constituted as required by statute, hearing has been had upon the record made before the Commission and the case has been submitted for final decree.

Part II of the Interstate Commerce Act, 49 U.S.C.A. § 301 et seq., confers upon the Interstate Commerce Commission power to regulate common carriers by motor vehicle operating in interstate or foreign commerce. The effect of sections 202(c) and 203(b) (8) of the Act, 49 U.S.C.A. §§ 302(c) and 303(b) (8), "* * * is partially to exempt from regulation under part II of the act all purely local motor transportation, in interstate or foreign commerce, within municipalities or within the commercial zones thereof, and partially to exempt from direct regulation under part II similar local operations, namely, transfer, collection and delivery performed within the `terminal areas' of line-haul carriers in connection with some intercity or intercommunity line-haul service." Commercial Zones and Terminal Areas, 54 M.C.C. 21, at page 50.

What was to be exempted under sections 202(c) and 203(b) (8) was not defined with particularity in the statute but was left to be covered by the rule making power of the Commission which was granted by section 204(a) (6) of the Act, 49 U.S.C.A. § 304(a) (6), which provides that it shall be the duty of the Commission "To administer, execute, and enforce all provisions of this chapter, to make all necessary orders in connection therewith, and to prescribe rules, regulations, and procedure for such administration". Cf. American Trucking Ass'ns v. United States, 344 U.S. 298, 312, 73 S.Ct. 307, 97 L.Ed. 337.

In 1946 the Commission established a uniform population mileage formula for defining the commercial zones of all municipalities in the United States, except for a few cities the commercial zones of which had theretofore been individually defined. See Ex parte No. MC-37, Commercial Zones and Terminal Areas 46 M.C.C. 665. In its Third Supplemental Report in Ex parte No. MC-37, 48 M.C. C. 418, the Commission, interpreting section 203(c) (2) of the Act, found the "terminal areas" of motor carriers subject to its jurisdiction to be co-extensive with the commercial zones of the cities authorized to be served by them. In its Sixth Supplemental Report in Ex parte No. MC-37, 54 M.C.C. 21, the Commission elaborated its previous finding somewhat and found that a certificate or permit issued by it to a motor carrier, authorizing service at a particular municipality, should be construed as authorizing service at all points within the commercial zone of such municipality as defined by the Commission, but not beyond the territorial limits (if any) fixed in such certificate or permit.

The City of Charleston is situated on the southern end of the narrow peninsula formed by the confluence of the Ashley and Cooper Rivers. Due to the peculiar geography of its site, the growth of the city, both commercial and residential, has been up the peninsula and beyond its northern corporate limits, which have not been changed since 1849. Under the MC-37 formula the commercial zone of the City of Charleston embraced the municipality itself, all unincorporated areas within four miles of its corporate limits, and all of any other municipality any part of which lay within four miles of the corporate limits of Charleston. Much of the more recent industrial growth of the area has been outside that zone and particularly along the Cooper River, where new port facilities have been built.

The Greater Charleston Chamber of Commerce on May 5, 1954, filed with the Commission a petition asking that the Charleston commercial zone be enlarged to include unincorporated areas within a radius of 15 miles from the midpoint of the northern corporate boundary of the city. The apparent object of the Chamber of Commerce was to obtain an increase in interstate motor carrier service available to the rapidly developing industrial areas and port facilities lying outside the present commercial zone. This petition was referred by the Commission to its field representative at Columbia, S. C. He gave some 193 parties, representing shippers, carriers operating in the area, and others, notice of a conference to be held with regard to the requested extension. At this conference, held in Charleston on June 22, 1954, some 39 persons appeared, including representatives of plaintiffs herein.

Based on information obtained at this conference and through field surveys, and acting pursuant to section 4(a) of the Administrative Procedure Act, 5 U. S.C.A. § 1003(a), the Commission on July 30, 1954, issued a "notice of proposed rule making", describing the boundaries of the Charleston commercial zone as it proposed to extend them, the extensions being much less than those proposed by the Chamber of Commerce. The notice was published in the Federal Register, 19 Fed.Reg. 4882 (August 4, 1954), and copies were served on all persons who had attended the June conference. It stated that no oral hearing would be held, but that data, views, arguments, and information on the proposed revisions would be received in writing up to September 15, 1954. Of the four responses, two supported the proposed revision and two were opposed, one of the latter being filed by plaintiffs.

On December 15, 1954, Division 5 of the Commission issued the Tenth Supplemental Report in Ex parte No. MC-37, 63 M.C.C. 127, and the order which is here under attack. The Commission made findings of fact as to the commercial and industrial growth of the area which it proposed to include within the commercial zone, as follows:

"Since the 1940's a great increase in population and in commercial and industrial activity has taken place in the immediate area of Charleston. During this period, the South Carolina State Ports Authority has been instrumental in developing the port facilities. These facilities, together with the Navy Yard, extend from the southernmost tip of the peninsula to a terminal located approximately 2 miles north of the commercial zone limits as presently defined. When shipments are consigned to the Port of Charleston, it is often impossible to determine whether they will be discharged at piers within or without the presently defined zone. All of the port activities are directed by a single management.

"Some 22 industrial establishments are located outside the presently defined limits but within the zone limits proposed by our notice. These industries are served by motor and rail carriers at the same rates as those in the City of Charleston. In instances where consignees are located outside the presently defined commercial zone, it is, however, often necessary to make transfer of lading at Charleston.

"It is estimated that more than 20,000 new families have moved into the Charleston area in the past four years, most of whom have settled in an area outside the presently defined zone limits but within the proposed limits. The present density of population in Charleston is such that most new residents have been forced to find homes outside the limits of the presently defined zone. Water for the new homes, commercial establishments, and industries is provided by the City of Charleston; nontoll local telephone service is provided; and electric lights and transit facilities are provided from Charleston.

"Others supporting the proposal include the South Carolina State Ports Authority, United Piece Dye Works, the 456th Troop Carrier Wing (M), and the Shell Oil Company. They, and others, have installations outside the presently defined zone limits but within those proposed, and each has had difficulties in shipping or receiving freight because of its location."

The contentions of the motor carriers who opposed the proposed extension were noted and dealt with, the Commission adhering to the position taken by it in St. Louis, Mo.-East St. Louis, Ill., Commercial Zone 61 M.C.C. 489, 493-494, and quoting therefrom as follows:

"In determining the limits of a commercial zone, we are directing our attention to an impersonal situation which exists as an economic fact, and not to the effect on individual parties. The effect of the exemption which it has established is the responsibility of the Congress. In essence the rail carriers' objection to the procedure followed in determining the territorial

...