Oklahoma Corporation Commission v. United States, Civ. A. No. 64-142.

• Decision Date: 25 November 1964
• Docket Number: Civ. A. No. 64-142.
• Citation: 235 F. Supp. 803
• Parties: OKLAHOMA CORPORATION COMMISSION, Plaintiff, v. The UNITED STATES of America, Defendant. Department of Highways of the State of Oklahoma, et al., Intervening Plaintiffs, The Arkansas Western Railway Company et al., Intervening Defendants.
• Court: U.S. District Court — Western District of Oklahoma

235 F. Supp. 803

OKLAHOMA CORPORATION COMMISSION, Plaintiff, v. The UNITED STATES of America, Defendant Department of Highways of the State of Oklahoma, et al., Intervening Plaintiffs The Arkansas Western Railway Company et al., Intervening Defendants.

Civ. A. No. 64-142.

United States District Court W. D. Oklahoma.

November 25, 1964.

Charles O. Ham, Jr., Oklahoma City, Okl., for Okla. Corp. Commission, plaintiff.

Leonard L. Ralston and David Kline, Asst. U. S. Dist. Atty., for United States, defendant.

A. A. Schreiber, Oklahoma City, Okl., for Dept. of Highways, Bert Barefoot, Jr., Oklahoma City, Okl., for Metropolitan Paving Co., Troy Shelton, Oklahoma City, Okl., for Dolese Bros. and The Dolese Co., Tom S. Williams, Oklahoma City, Okl., for Harter Concrete Products Co., intervening plaintiffs.

John H. D. Wigger, Robert S. Burk, and B. Andrew Potter, for I. C. C., John E. McCullough, John C. Ashton, Jr., Wm. Bruce Kopper, Ernest D. Grinnell, Jr., St. Louis, Mo., and Franklin, Harmon & Satterfield, Oklahoma City, Okl., for Arkansas Western Ry. Co. and others, Don McDevitt, Chicago, Ill., for Chicago, Rock Island & Pacific RR Co., James D. Gibson, Muskogee, Okl., for Okl. & Gulf Ry., Midland Valley RR, and Okl. City-Ada-Atoka Ry., intervening defendants.

Before HILL, Circuit Judge, and DAUGHERTY and BROWN, District Judges.

PER CURIAM.

This action was brought by the Oklahoma Corporation Commission to enjoin, annul and set aside an order entered February 27, 1964, by the I. C. C. in a proceeding entitled "No. 34034, Oklahoma Intrastate Freight Rates and Charges." Upon petition of eighteen (18) principal railroads operating in Oklahoma, the I. C. C. commenced an investigation under section 13(4) of the Interstate Commerce Act¹ to determine whether or not rates and charges of the common carriers by railroad, or any of them, for the intrastate transportation of certain commodities made or imposed by authority of the State of Oklahoma had caused or will cause, by reason of the failure of such rates and charges to include increases corresponding to those permitted by the I. C. C. in the interstate rates and charges on like traffic in Ex Parte Orders Nos. 162, 166, 168, 175, 196, 206, 212, and 223, any undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce, on the one hand, and interstate or foreign commerce, on the other, or any undue, unreasonable, or unjust discrimination against, or undue burden on, interstate or foreign commerce; and, if so, to determine what rates and charges should be prescribed to remove any unlawfulness found to exist.

After a hearing, the I. C. C. made findings as set out below.² The said findings were implemented by an order of the I. C. C. dated February 27, 1964, as clarified by an order of the I. C. C. dated April 3, 1964. Thereafter, pursuant to a hearing before this Court, a refunding provision was put into effect by order of the Court, permitting the involved rates and charges to go into effect. This was done pending the completion of judicial review and the further order of this Court.

Many courts have had previous occasions to consider actions of this character. On such occasions, they have stated that an order of the I. C. C. carries a strong presumption of validity which is not weakened by the fact that it has been challenged in court and that the scope of judicial review of administrative orders of the I. C. C. is very limited. I. C. C. v. Jersey City, 322 U. S. 503, 64 S.Ct. 1129, 88 L.Ed. 1420; Rochester Telephone Corp. v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147. Administrative orders entered by the I. C. C. in the exercise of its power are not to be overturned on judicial review unless they are based upon a mistake of law, are made without a hearing, exceed constitutional limits, are unsupported by the evidence, or for some other reason amount to an abuse of power. State Corp. Commission of Kansas v. United States, D.C., 216 F.Supp. 376. This Court has no concern with the correctness of the I. C. C.'s reasonings or the soundness of its conclusions, nor may the court substitute its own view for the administrative judgment. United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821. It is the I. C. C., not the reviewing court, that judges the weight of the evidence, Atchison, T. & S. F. Ry. Co. v. United States, D.C., 218 F.Supp. 359. All pertinent evidence bearing on the issues tendered the I. C. C. in a proceeding such as this should be submitted to it in the first instance and should not be received by the Federal District Court in a suit to set aside and enjoin the enforcement of the Commission's order as though it were conducting a trial de novo. New York v. United States, 331 U.S. 284, 67 S.Ct. 1207, 91 L.Ed. 1492.

Applying these rules to the instant situation, two basic questions must be answered, namely, whether or not the I. C. C. applied an erroneous rule of law in reaching its conclusion and whether or not the record reveals substantial evidence to support said conclusion.

Prior to answering the above questions, there are two "procedural" problems which should be disposed of by the Court. First, the plaintiff asserts that the denial by the I. C. C. of its motion for further hearing and reconsideration prevented the plaintiff from securing a "full hearing" as required by the I. C. Act and the Administrative Procedure Act. We cannot agree. Section 17(6) of the I. C. Act provides that a rehearing may be granted and shall be governed by such general rules as the I. C. C. may establish. The U. S. Supreme Court, in I. C. C. v. Jersey City, supra, held that "it has been almost a rule of necessity that rehearings were not matters of right, but were pleas to discretion". The reason for this is that if it was otherwise "there would be little hope that the administrative process could ever be consummated in an order that would not be subject to reopening." Northern Valley Transfer, Inc. v. I. C. C., D.C., 192 F.Supp. 600, 606. Since there is absent any affirmative showing of abuse of discretion by the I. C. C. in denying said motion, we find no error. Second, the plaintiff contends that the order of April 3, 1964,³ entered by I. C. C., was a modification of its previous order and therefore notice and a hearing are required by law. The defendants counter by saying that this April 3, 1964, order was a clarification of the intent of the previous order which makes no substantive change and no notice and hearing are required. Section 16(6) of the I. C. Act provides that when an order is to be suspended or modified, it shall be "upon such notice and in such manner as it (I. C. C.) shall deem proper", while the power of the I. C. C. to correct inadvertent errors is found in Section 17(3) of the I. C. Act. American Trucking Ass'ns v. Frisco Transportation Co., 358 U.S. 133, 79 S.Ct. 170, 3 L.Ed.2d 172. It seems clear to the Court that the April 3 order simply states explicitly what is implicit in the previous order and decision. It simply makes clear that the scope of the findings made in this matter are limited to the commodities involved and the rate schedule submitted by the carriers. The order makes no substantive change in the previous order and therefore we can see no legal reason, either pursuant to the provisions of the I. C. Act or the A. P. Act, for holding that notice and a hearing are necessary to due process. No Authority has been cited to the Court to sustain such a position and diligent research has produced none.

Another question should be answered before the review of the record is undertaken. The plaintiff seems to contend that the order of the I. C. C. must contain both a finding of (1) "undue or unreasonable advantage, preference, or prejudice as between persons or localities in intrastate commerce on the one hand and interstate or foreign commerce on the other hand"; and a finding of (2) "any undue, unreasonable, or unjust discrimination against, or undue burden on, interstate or foreign commerce." This is not the case. The statute, Section 13(4) of the I. C. Act, is couched in alternative phrasing which gives the I. C. C. the choice between (1) and (2) above, so that its order can be based upon either a finding of (1), or a finding of (2). In this case we are dealing with the (2) alternative and the first (1) alternative is not involved. See King v. United States, 344 U.S. 254, 269 fn. 14, 73 S.Ct. 259, 97 L.Ed. 301 and cases cited therein.

The power of the I. C. C. to require states to raise their intrastate rates depends upon whether intrastate traffic is contributing its fair share of the earnings required to meet maintenance and operating costs and yield a fair return on the value of property directed to the transportation service both interstate and intrastate. North Carolina v. United States, 325 U.S. 507, 65 S.Ct. 1260, 89 L.Ed. 1760; United States v. Louisiana, 290 U.S. 70, 54 S.Ct. 28, 78 L.Ed. 181. Therefore, it seems clear that whether or not the involved intrastate rates have created an unreasonable or unjust discrimination against interstate commerce is determined "primarily by criteria or factors pertaining to the overall profitable operation of the railroad carriers involved in interstate commerce". State Corp. Commission of Kansas v. United States, supra, 216 F. Supp. p. 380. In other words, it is system-wide experience that warrants the greatest consideration because, in that respect, the ultimate purpose of promoting a safe, adequate, economical and efficient national transportation system under the I. C. Act can best be effectuated. Ibid.

Following a complete and thorough examination of the record, in light of the above principles, the Court concludes that the I. C. C. applied the correct rule of law to the problem which was before it for consideration.

Turning to the substantial evidence question, the Court under...