Interstate Commerce Commission v. Oregon Pacific Industries, Inc 8212 1210

• Decision Date: 19 February 1975
• Docket Number: No. 73,73
• Citation: 420 U.S. 184,43 L.Ed.2d 121,95 S.Ct. 909
• Parties: INTERSTATE COMMERCE COMMISSION, Appellant, v. OREGON PACIFIC INDUSTRIES, INC., et al. —1210
• Court: U.S. Supreme Court

420 U.S. 184

95 S.Ct. 909

43 L.Ed.2d 121

INTERSTATE COMMERCE COMMISSION, Appellant,

v OREGON PACIFIC INDUSTRIES, INC., et al.

No. 73—1210.

Argued Nov. 20, 1974.

Decided Feb. 19, 1975.

Syllabus

Service Order No. 1134, promulgated by the Interstate Commerce Commission (ICC) without notice or hearing pursuant to its emergency powers under § 1(15) of the Interstate Commerce Act, which limited the holding time of lumber cars at reconsignment points to five working days and subjected the shipper holding the car at such points for more than that period to the sum of the rates from origin, to hold point, to destination, held within the ICC's power under § 1(15) to avoid undue detention of freight cars used as places of storage, during an emergency freight car shortage that the ICC, exercising its expertise, found to exist. Pp. 187-191. 365 F.Supp. 609, reversed.

Charles H. White, Jr., Washington, D.C., for appellant.

Seymour L. Coblens, Portland, Or., for appellees.

Opinion of the Court by Mr. Justice DOUGLAS, announced by Mr. Chief Justice BURGER.

This is an appeal from a judgment of a three-judge District Court, 28 U.S.C. § 1253, which held invalid an order of the Interstate Commerce Commission promul- gating a car Service Order¹ under § 1(15) of the Interstate Commerce Act, as amended, 41 Stat. 476, 49 U.S.C. § 1(15).² Oregon Pacific Industries v. United States, 365 F.Supp. 609 (Ore. 1973).

Lumber is often moved to market on a wholesalers' sale-in-transit schedule. Cars are sent to hold points, where in time reconsignment orders are received for shipment to customers of wholesalers. The tariffs allow indefinite holding, subject to demurrage charges for detention in excess of 24 hours, but the Commission found that these demurrage charges never discouraged shippers from lengthy holding of cars. In 1973 there was, according to the Commission, a transportation 'emergency' which required 'immediate action to promote car service in the interest of the public and the commerce of the people.' Accordingly, on May 8, 1973, the Commission, sua sponte, without notice and hearing, entered its Service Order No. 1134 which limited the hold time at reconsignment points to five days (120 hours), exclusive of Saturdays, Sundays, and holidays. If the lumber cars were held at reconsignment points longer than five working days, the reconsignment privilege would be lost and the shippers would be subject to local or joint tariff rates from the point of origin to the hold point, and from the hold point to the ultimate destination.

The District Court held that there were four categories of emergency action which the Commission could take under § 1(15):

'(a) to suspend . . . rules, regulations, or practices then established with respect to car service '(b) to make . . . directions with respect to car service . . . during such emergency as . . . will best promote . . . service . . . (and provide compensation as between carriers). SU '(c) to require . . . common use of terminals, . . . and

'(d) to give directions for preference or priority in transportation . . ..'

The District Court held that the Commission's authority under (b), (c), or (d) would not support the order in this case and that the order could be sustained, if at all, only under (a). It concluded that (a) was not adequate since the challenged order did not 'suspend' any rule or regulation 'with respect to car service.' It reasoned that the order 'condones the practice of sales-in-transit' for an indefinite time but requires shippers employing the practice to pay a higher rate to the carriers than the demurrage rate under the prior order. That was, in its view, a rate order having no place under § 1(15), which gives the Commission power to act sua sponte in an 'emergency' in a narrow group of cases. 365 F.Supp., at 612.

The District Court pointed out that § 1(10) defines 'car service' as 'the use . . . movement . . . and return of . . . cars . . . used in the transportation of property . . . by any carrier by railroad'; and it emphasized that "car service' connotes the use to which the vehicles of transportation are put (by a carrier); not the transportation service rendered by means of them,' 365 F.Supp., at 611; Peoria & P.U.R. Co. v. United States, 263 U.S. 528, 533, 44 S.Ct. 194, 68 L.Ed. 427. We emphasized in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 743, 92 S.Ct. 1941, 1944, 32 L.Ed.2d 453, that car service rules dealt with the management of 'a single common pool' of cars 'used by all roads,' and that they pertain to railroad use of cars. Since 'railroad use' involves shippers, we think the District Court read § 1(15) too narrowly.

We noted in Allegheny-Ludlum that § 1(15) traces back to the Each Car Service Act of 1917, 40 Stat. 101.³ 406 U.S., at 744, 92 S.Ct., at 1944. The use of freight cars as warehouses—the practice which prompted the Commission to act in the present case—was one of the evils at which the original Car Service Act, was aimed.

Mr. Esch, sponsor of the legislation, said:⁴

'Another cause of car shortage is the holding of cars on the part of shippers themselves, using the car as a species of warehouse, instead of promptly unloading it. I think that is quite a universal evil throughout the United States, but it is due in some measure to the lack of warehouse and elevator facilities at the terminals.

'Mr. MADDEN. If the gentleman will yield to me, I would like to ask him one question. I would like to ask the gentleman if there is any provision in this bill to compel railroad companies to pay demurrage to the shippers in case they failed to furnish the cars within the time they were required for the shipment of the goods?

'Mr. ESCH. The gentleman means reciprocal demurrage?

'Mr. MADDEN. This gives the Interstate Commerce Commission the right to authorize them to charge certain demurrage of the shipper if he fails to unload the car. Ought not the shipper to have a claim against the railroad company in case they fail to furnish the cars?

'Mr. ESCH. I have no doubt under the proposed amendment, in case of emergency, the commission could make any rules or regulations that they saw fit that would promote the transit of freight, because the power is very broad, and necessarily so.'

And the Reports make clear that one aim of the Act was 'to the end that the public may receive the best possible service in transportation.'⁵ Car shortages, it was found, resulted in short supplies of basic foods in the markets 'with attendant high prices.'⁶ The interests of shippers and consumers—not the carriers alone—were very much in the fore-front.

As we have noted, Peoria & P.U.R. Co., supra, emphasized that the car service authority extends to the 'use' of cars and not to a 'transportation service,' but there the issue was whether one carrier was bound to perform switching services for another carrier. The Court held that it was not; power over the 'use' of cars, however, was left undisturbed. In this connection it is obvious that a shipper by rail does not 'rent' a vehicle as to shippers by truck. The cars are all 'used' under the management of carriers, who naturally receive directions or requests from shippers. The cars cannot be used efficiently to serve the needs of shippers and consumers if they are used not as carriers but as warehouses.

In Turner, Dennis & Lowry Lumber Co. v. Chicago, M. & St. P.R. Co., 271 U.S. 259, 46 S.Ct. 530, 70 L.Ed. 934, demurrage to prevent 'undue detention' of cars 'loaded with lumber held for reconsignment' was fixed by the Commission without notice. The Court, speaking through Mr. Justice Brandeis, upheld the charge saying: 'All demurrage charges have a double purpose. One is to secure compensation for the use of the car and of the track which it occupies. The other is to promote car effi- ciency by providing a deterrent against undue detention.' Id., at 262, 46 S.Ct., at 531. In Inversen v. United States, 63 F.Supp. 1001, aff'd per curiam, 327 U.S. 767, 66 S.Ct. 825, 90 L.Ed. 998, the Commission entered a car Service Order limiting reconsignment privileges to a specific number of days and providing that cars held in excess of that time would be subject to the sum of the local rates from origin to reconsignment point to destination.⁷ It was held that the demurrage item was a 'rule' respecting 'car service' within the meaning of § 1(15). The holding in Iversen was implicit in the holding in Turner.⁸

The District Court suggested that the Service Order was invalid because its effect was to 'fix' rates and charges during an emergency—a power not covered by § 1(15). That precise point was raised in Iversen, 63 F.Supp., at 1006, and the ruling, which we affirmed, was contra. Suspending or changing demurrage charges may increase the transportation charges; but, as Turner makes clear, demurrage charges have a dual purpose; and it is enough if one of them is a deterrent against undue detention of cars. As we said in Turner, at times the cause of 'undue detention' of freight cars is that they are used 'as a place of storage, either at destination or at reconsignment points, for a long period while seeking a market for the goods stored therein.' 271 U.S., at 262, 46 S.Ct., at 531. The substitution of tariff rates already fixed and on file for the old demurrage rate is not an unreasonable method of accelerating the movement of freight cars. That was the aim and purpose of the present Service Order; and it was promulgated in an 'emergency'⁹ which the Commission, using its expertise, found to exist. We cannot say the order was unreasonable on the record before us. Insofar as appellees raise questions of unfairness, they are precluded by the opinions of Mr. Justice Holmes in Avent v. United States, 266 U.S. 127, 45 S.Ct. 34, 69 L.Ed. 202, and of Mr. Justice Brandeis in Turner, Dennis & Lowry Lumber Co. v. Chicago, M. & St. P.R. Co., supra, 46 S.Ct. 530, 70 L.Ed. 934, which disposed of due process...