STATE CORPORATION COM'N OF STATE OF KANSAS v. United States

• Decision Date: 01 April 1963
• Docket Number: Civ. A. No. T-3169.
• Parties: STATE CORPORATION COMMISSION OF the STATE OF KANSAS, Plaintiff, v. The UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Kansas

216 F. Supp. 376

STATE CORPORATION COMMISSION OF the STATE OF KANSAS, Plaintiff, v. The UNITED STATES of America, Defendant.

Civ. A. No. T-3169.

United States District Court D. Kansas.

April 1, 1963.

Byron M. Gray, Charles C. McCarter, Gen. Counsel, State Corp. Commission, Topeka, Kan., for plaintiff.

Lee Loevinger, Asst. Atty. Gen., John H. D. Wigger, Atty., Dept. of Justice, Washington, D. C., Newell A. George, U. S. Atty., Topeka, Kan., for United States.

Robert W. Ginnane, Gen. Counsel, Stanton P. Sender, Atty., Interstate Commerce Commission, Washington, D. C., for Interstate Commerce Commission.

Roth H. Gatewood, Topeka, Kan., William P. Higgins, Omaha, Neb., Harvey Huston, Chicago, Ill. for defendant railroad companies.

Before Delmas C. HILL, Circuit Judge, Arthur J. STANLEY, Jr., Chief Judge, and George TEMPLAR, District Judge.

TEMPLAR, District Judge.

This action was brought by the Kansas Corporation Commission to enjoin, annul, and set aside an order entered July 31, 1962, by the Interstate Commerce Commission in a proceeding entitled "No. 33239, Kansas Interstate Freight Rates and Charges." Upon petition of thirteen principal railroads operating in Kansas, the Interstate Commerce Commission commenced an investigation under section 13(4) of the Interstate Commerce Act 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 Kansas had caused or will cause, by reason of the failure of such rates and charges to include increases corresponding to those permitted by the Interstate Commerce Commission in the interstate rates and charges on like traffic in Ex Parte Orders Nos. 206 and 212, 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 Interstate Commerce Commission made findings which are hereinafter set out:

"1. The conditions incident to the intrastate transportation within Kansas of crushed stone, sand, gravel, road aggregates, chat, and agricultural limestone; clay draintile, clay sewer pipe, and related articles; light-weight building aggregates, including expanded clay or shale cinders; hay; and petroleum and petroleum products are no more favorable than those incident to the interstate transportation of like traffic to, from, and through points in Kansas.

"2. The amounts and percentages by which interstate freight rates and charges on the commodities named in finding 1 between points in Kansas and points in adjoining States were increased, as authorized in Ex Parte Orders Nos. 206 and 212, are just and reasonable.

"3. The present Kansas intrastate freight rates on the commodities named in finding 1, imposed by authority of the State, are abnormally low, and are not contributing their fair share of the revenues required by the respondents to enable them, under honest, economical and efficient management, to provide adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service, thereby accomplishing the purposes of the Interstate Commerce Act, as set forth in the national transportation policy declared by the Congress, to develop and preserve a national transportation system adequate to meet the needs of the commerce of the United States, of the postal service, and of the national defense.

"4. The burden thus cast upon interstate commerce is undue in and to the extent that those intrastate rates and charges are less than they would be on the basis herein approved; and such intrastate rates and charges cause, and for the future will cause, undue, unreasonable, and unjust discrimination against, and an undue burden on, interstate commerce.

"5. The unlawfulness herein found to exist should be removed by applying to the Kansas intrastate rates and charges, on the commodities described in finding 1, the same respective increases as are maintained by the respondents on like interstate traffic between points in Kansas and points in adjoining States, as authorized in Ex Parte Orders Nos. 206 and 212, provided that increases may not be made in intrastate rates to levels higher than the interstate rates on like traffic to, from, or through points in Kansas, for like or greater short-line distances over the same lines of railroad.

"6. The establishment of increases in rates and charges as provided in finding 5 will not result in unreasonable rates or charges, nor in rates or charges that are unreasonable in relation to interstate rates or charges, and will increase the revenues of the respondents by substantial amounts.

"7. The present intrastate rates on bituminous coal, and on refractories and related articles, are not shown to cause undue or unreasonable, advantage, preference, or prejudice, or undue, unreasonable, or unjust discrimination against, or an undue burden on, interstate or foreign commerce." (315 I.C.C. 223 at p. ___.)

The foregoing findings were implemented by an order of the Interstate Commerce Commission under date of July 31, 1962. Thereafter, after this Court had issued a temporary restraining order staying the effectiveness of the Commission's order, the Commission itself on September 11, 1962 issued a further order postponing indefinitely compliance with its order of July 31, 1962 until the completion of judicial review.

This Court has had previous occasions to consider actions of this character. On these other occasions, it has determined that the scope of judicial review is very limited under the doctrine of administrative finality and that administrative orders of the Interstate Commerce Commission entered by it in the exercise of its powers, when dealing with matters particularly under its jurisdiction are not to be set aside by this court on review unless such orders are found to exceed constitutional limits, are based upon a mistake of law, have been made without the required hearing, are found to be unsupported by the evidence submitted and considered by the Commission in making its determination, or for some other reason may be found to be an abuse of power by the body acting within the scope of its authority. (See State Corpn. Com. of Kansas v. United States, D.C., 184 F.Supp. 691, and cases therein cited.)

Applying these rules to the instant situation, it is readily apparent that we must first determine whether or not the Interstate Commerce Commission has applied an erroneous rule of law in reaching its conclusion that the Kansas Corporation Commission's intrastate rates upon certain commodities are undue, unreasonable, unjust, and an undue burden on interstate commerce.

The particular section under which the Interstate Commerce Commission predicated its action reads as follows:

"Whenever in any such investigation the Commission, after full hearing, finds that any such rate, fare, charge, classification, regulation, or practice causes 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 hand, or any undue, unreasonable, or unjust discrimination against, or undue burden on, interstate or foreign commerce (which the Commission may find without a separation of interstate and intrastate property, revenues, and expenses, and without considering in totality the operations or results thereof of any carrier, or group or groups of carriers wholly within any State), which is hereby forbidden and declared to be unlawful, it shall prescribe the rate, fare, or charge, or the maximum or minimum, or maximum and minimum, thereafter to be charged, and the classification, regulation, or practice thereafter to be observed, in such manner as, in its judgment, will remove such advantage, preference, prejudice, discrimination, or burden; Provided, That upon the filing of any petition authorized by the provisions of paragraph (3) of this section to be filed by the carrier concerned, the Commission shall forthwith institute an investigation as aforesaid into the lawfulness of such rate, fare, charge, classification, regulation, or practice (whether or not theretofore considered by any State agency or authority and without regard to the pendency before any State agency or authority of any proceeding relating thereto) and shall give special expedition to the hearing and decision therein. Such rates, fares, charges, classifications, regulations, and practices shall be observed while in effect by the carriers parties to such proceeding affected thereby, the law of any State or the decision or order of any State authority to the contrary notwithstanding." 49 U.S. C.A. § 13(4)

It is clear to the Court, after examining this section and the entire record, that whether or not the rates imposed by the Kansas Corporation Commission 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. Also, a factor that may be considered is the likelihood, or unlikelihood, that rail traffic in the various commodities involved may be consigned via truck carriers upon an increase in the intrastate rates. However, in the final analysis, it is system-wide experience that warrants the greatest consideration because, in that way, the purposes of the Interstate Commerce Carrier Act can best be effectuated. Furthermore, the Interstate Commerce Commission must construe the act to "promote safe, adequate, economical, and efficient service...