State of Oklahoma v. United States

• Decision Date: 09 August 1960
• Docket Number: Civ. A. No. 7909.
• Citation: 193 F. Supp. 261
• Parties: STATE OF OKLAHOMA, Acting by and through the CORPORATION COMMISSION, et al., Plaintiffs, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Western District of Oklahoma

193 F. Supp. 261

STATE OF OKLAHOMA, Acting by and through the CORPORATION COMMISSION, et al., Plaintiffs, v. UNITED STATES of America et al., Defendants.

Civ. A. No. 7909.

United States District Court W. D. Oklahoma.

August 9, 1960.

James G. Welch, William Anderson and Fred J. Hansen, Oklahoma City, Okl., for plaintiff.

Paul W. Cress, U. S. Atty., Oklahoma City, Okl., Robert A. Bicks and John H. D. Wigger, Washington, D. C., for defendant.

Before MURRAH, Circuit Judge, CHANDLER, Chief Judge, and RIZLEY, District Judge.

MURRAH, Circuit Judge.

This suit involves another episode in the continuing, empiric process, instituted in 1925 by the Hoch-Smith resolution, 42 Stat. 801, 49 U.S.C.A. § 55, of administratively adjusting the sensitive organism, which is the grain rate structure, to achieve a greater degree of fairness and equity. See Board of Trade of Kansas City v. United States, 314 U.S. 534, 62 S.Ct. 366, 86 L.Ed. 432. Plaintiffs here seek to set aside an Interstate Commerce Commission order resetting the railroad rates for hauling grain from the midwest, particularly Oklahoma and Kansas, to the southeastern states via Memphis. This court has jurisdiction of the many parties and of the subject matter. 5 U.S.C.A. § 1009; 28 U.S. C. §§ 1336, 1337, 1398, 2284, 2321-2325; 7 U.S.C.A. §§ 1291, 1622.

The challenged order and report were entered in State Corporation Commission of Kansas v. Atchison, Topeka & Santa Fe Railway Co. Docket No. 29777 and cases consolidated therewith, 301 I.C.C. 703 (1957). The first order and report in these "Docket 29777" proceedings, 289 I.C.C. 553 (1953), were remanded by the Kansas federal court on the ground that the rates prescribed were "unjust and arbitrary" because "* * * the Commission employed an improper standard, one which had no relation to the problem before it * * *." State Corporation Commission of Kansas v. United States, D.C.Kan.1954, 128 F.Supp. 646, 652. After reconsideration on remand, the Commission, in the order and report here challenged, adhered to the rates set by the prior 1953 order.¹ On further review, the majority of the Kansas court found that the infirmities of the prior report had been removed by detailed discussion of a number of factors, viz., distance, historical relationship, the general rate break plan, interrelationship of the rates in question, and the national grain rate structure. State Corporation Commission of the State of Kansas v. United States, D.C.Kan., 184 F.Supp. 691.

Yet the Secretary of Agriculture, intervening as the only party before us with no ax to grind, contends that the rate order is void for lack of requisite subsidiary findings—essentially the same problem that concerned the Kansas court in its determination whether there was a rational basis for the order. As defendants United States and Interstate Commerce Commission point out, by intervening for the first time at this stage of the proceedings, the Secretary is bound by the issues as cast and is precluded from injecting any new issues. However, the question whether the order is rationally based on substantial evidence is at least implicit in the principal contention of the original plaintiff from the inception of the lawsuit, and so it is proper, we think, for the Secretary to urge this same contention, albeit in different tenor and terms.

We are impressed with the Secretary's argument, for most assuredly, though the present rates assumedly contain inequities, the Commission abuses its powers if it "corrects" the situation merely by fabricating new rates out of thin air and christening them "fair and equitable". See Secretary of Agriculture v. United States, 350 U.S. 162, 167, 76 S.Ct. 244, 100 L.Ed. 173; Alabama Great Southern Railroad Co. v. United States, 340 U.S. 216, 228, 71 S.Ct. 264, 95 L.Ed. 225; Luckenbach S.S. Co. v. United States, D.C.S.D.N.Y.1954, 122 F.Supp. 824, 828. In our case, the Commission, after considering the factors above enumerated, found the existing rates prejudicial and preferential to the extent that they differed from the rates prescribed.² And, we have found it indeed difficult to discern any rational connection between these prescribed corrective rates and the inequities which they were designed to correct. But our doubts in that respect, though grave, are not sufficient to cause us to differ from our Kansas brethren, for we are able to perceive that the report, taken as a whole, may, as they point out, conceivably communicate a sufficiently explicit rationale.

But other considerations not involved in this most recent Kansas case require further judicial scrutiny. The principal contention of the original plaintiff herein, the State of Oklahoma, joined by interveners Enid Board of Trade and Oklahoma Millers Association, is that the Commission abused its discretion in denying an Oklahoma motion to reopen, reconsider, and modify the order in view of newly discovered evidence, the so-called Kroll studies. As we understand them, these studies describe the actual movement of grain throughout the areas here involved on the basis of a scientific sampling of traffic data, and allegedly indicate that Kansas and other areas to the north and west thereof now hold a market advantage over Oklahoma in the southeast. Oklahoma argues that because it is precluded by geography and the overall rate structure from competing with these other states for northern and eastern markets, it should have the advantage at this southern market, and that the reduction of differentials by this order will operate only to increase the present inequities. We are unable to say what effect, if any, these studies should be given. Indeed, it is not for us to say. See United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 66 S.Ct. 687, 90 L.Ed. 821; Interstate Commerce Commission v. City of Jersey City, 322 U.S. 503, 64 S.Ct. 1129, 88 L.Ed. 1420. But we observe that the studies may have distinct relevancy, for we were advised at the bar of the court that they were introduced in subsequent proceedings before the Commission, identified as Docket No. 31874. As the Commission points out in its report, "* * * the rates from all of the producing areas in the West to the South are now before us under the complaints embraced in or consolidated with No. 31874. The parties here are also parties of record in these proceedings. The reduced-rate proposals here considered, or a modification thereof, will undoubtedly be presented as a part of the record in those * * * proceedings * * * and they can be reexamined along with the evidence of a number of other parties, including a number of railroads not parties to the instant proceedings, who have a vital interest in the railroad grain-rate structure. Our conclusions herein are without prejudice to those reached in those proceedings." 301 I.C.C. at 747. Indeed, Commissioner Murphy, dissenting, was of the opinion that "* * * it would be more logical and more fully reflect the evidence either to prescribe an adjustment with much less drastic increases or to dismiss the proceedings, without prejudice to different conclusions in No. 31874, * * * in which these same rates and others are under consideration and in which the unfinished record is already more comprehensive than has been presented in the instant proceedings." 301 I.C.C. at 750.

A further consideration involving No. 31874 is introduced by the intervening Southern Railroads, who complain that because of drastic, voluntary rate reductions throughout the southern states subsequent to the order, it has no relation to existing conditions and should therefore be remanded to the Commission for reconsideration in light thereof, or in the alternative consolidated with the proceedings in No. 31874. The Southern Railroads were parties to the 1959 Kansas case, and the order there is res judicata as to their contentions except with respect to these subsequent changed conditions, which allegedly radically affect the underlying equities. Cf. Atchison, Topeka & Santa Fe Railway Co. v. United States, 284 U.S. 248, 52 S.Ct. 146, 76 L.Ed. 273. Again, it is beyond our competency to adjudge what effect, if any, these changed rates should have on the portion of the rate structure here involved. But we understand that the current rates are all before the Commission in No. 31874.

To be sure, we are fully aware that the province of fixing rates lies exclusively with the Commission, and furthermore, that their discretion in granting motions for rehearing, consolidation and the like, is broad indeed. We know we are concerned only with whether the rates are rationally based on fact and law, never with their wisdom. See United States v. Pierce Auto Freight Lines, Inc., supra; Interstate Commerce Commission v. City of Jersey City, supra; Board of Trade of Kansas City v. United States, supra.

However, in view of the admittedly more comprehensive consideration which is now being given these precise questions in No. 31874, plainly all that is here involved is whether these prescribed rates should go into effect pending the effectuation of new rates as the result of those proceedings. In these circumstances, the effect of this order can in any event be little more than interlocutory. And we were advised at the bar of the court, that in No. 31874, the taking of evidence has closed, and the issues have been finally submitted to the Commission.³

These considerations, coupled with the doubt occasioned by the lack of clear subsidiary findings, leads us to conclude that the matter ought to be remanded to the Commission for such action as it deems appropriate in light of the No. 31874 proceedings.

Consistent with this view, we must deny the motions of interveners Indianapolis and Chicago Boards of Trade, for contrary to their entreaties, the Commission's order as it affects them is expressly predicated upon the effectuation of the rates as therein set for southern Kansas. See 301 I.C.C. at 747, 750; 289...