United States Texas v. State of Louisiana

• Decision Date: 06 November 1933
• Docket Number: No. 17,17
• Citation: 290 U.S. 70,78 L.Ed. 181,54 S.Ct. 28
• Parties: UNITED STATES et al. (TEXAS & N.O.R. Co. et al., Interveners) v. STATE OF LOUISIANA et al
• Court: U.S. Supreme Court

290 U.S. 70

54 S.Ct. 28

78 L.Ed. 181

UNITED STATES et al. (TEXAS & N.O.R. Co. et al., Interveners)

v STATE OF LOUISIANA et al.

No. 17.

Argued Oct. 13, 1933.

Decided Nov. 6, 1933.

Appeal from the District Court of the United States for the Eastern District of Louisiana.

The Attorney General and Mr. Daniel W. Knowlton, of Washington, D.C., for appellants.

Messrs. Wylie M. Barrow, of Baton Rouge, La., and Gaston L. Porterie, of Marksville, La., for appellees.

Mr. Justice STONE delivered the opinion of the Court.

This is an appeal under the Urgent Deficiencies Act of October 22, 1913, 38 Stat. 208, 219, 220 (28 USCA §§ 47, 47a), Judicial Code, § 238 (28 USCA § 345), from a final decree of a District Court, of three judges, for Eastern Louisiana, which made permanent an interlocutory decree staying an order of the Interstate Commerce Commission. The order directed the removal of unjust discrimination against interstate commerce resulting from intrastate rates maintained by rail carriers in Louisiana, by prescribing an increase in intrastate rates on specified commodities, in amounts equal to increases in interstate rates on the same commodities, established by appellant carriers under the authority of an earlier order of the Commission in the Fifteen Per Cent Case, 1931, 178 I.C.C. 539; 179 I.C.C. 215.

In the Fifteen Per Cent Case the Commission, acting under section 15a(2) of the Interstate Commerce Act, 49 USCA § 15a(2), after an extensive hearing, granted permission to the carriers of the country to add a surcharge to established rates in amounts varying with different commodities but not exceeding in any case 10 per cent. of the basic rate. Thereupon the railroads of the country, including those operating in Louisiana, added the permitted surcharges to their interstate rates and most states authorized like increases in their intrastate rates. Others failed to increase the intrastate rates, and the state of Louisiana by its Public Service Commission refused to allow the increase on some thirty-seven commodities and on all less than carload lots. The carriers filed petitions invoking the exercise of the power of the Commission under section 13(3) and (4) of the Interstate Commerce Act, as added by Transportation Act 1920, § 416, 41 Stat. 484 (49 USCA § 13(3, 4) to remove undue discrimination by those intrastate rates against interstate commerce. This proceeding, after an extended investigation and hearings by the Commission, resulted in the order challenged here. Increase in Intrastate Rates, 186 I.C.C. 615. It requires the carriers to charge, upon specified commodities and all less than carload lots in intrastate commerce in Louisiana, 'rates which shall be not lower than the rates now in force and applicable to the interstate transportation of said traffic within the State of Louisiana, plus the surcharge authorized by the findings in the Fifteen Per Cent Case * * * on corresponding interstate traffic, so long as such surcharges are maintained. * * *'

In setting aside the order, the court below rested its decision upon the inadequacy of the Commission's find- ings. It thought that as the Commission, in the Fifteen Per Cent Case, 1931, did not find that the several interstate rates resulting from the authorized surcharges would each be just and reasonable, there was no basis for raising the intrastate rates under section 13(3) and (4) (49 USCA § 13(3, 4), see Florida v. United States, 282 U.S. 194, 51 S.Ct. 119, 75 L.Ed. 291; cf. Georgia Pub. Serv. Commission v. United States, 283 U.S. 765, 51 S.Ct. 619, 75 L.Ed. 1397;, and that the order could not be supported as a revenue measure because there were no findings that the increased rates would produce an increase in carrier income. It is also argued here that the order assailed is invalid because the Commission, in its earlier order, did not require the carriers to increase their rates interstate, but only permitted them to do so at their option.

1. The Transportation Act of 1920, by § 422, 41 Stat. 488, added § 15a(2) to the Interstate Commerce Act (49 USCA § 15a(2),¹ for the first time laid on the Commission the affirmative duty to establish rates for interstate rail carriers '* * * so that carriers as a whole (or as a whole in each of such rate groups of territories as the commission may from time to time designate) will, under honest, efficient and economical management and reasonable expenditures for maintenance of way, structures and equipment, earn an aggregate annual net railway operating income equal as nearly as may be, to a fair return upon the aggregate value of the railway property of such carriers held for and used in the service of transportation. * * *' See Wisconsin Railway Comm. v. C., B. & Q.R.R., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; Dayton-Goose Creek Ry. v. United States, 262 U.S. 456, 44 S.Ct. 169, 68 L.Ed. 388, 33 A.L.R. 472; New England Divisions Case, 261 U.S. 184, 189, 43 S.Ct. 270, 67 L.Ed. 605. Associated provisions calculated to preserve carrier income in the interests of an efficient transportation service were those empowering the Commission to permit pooling of traffic and earnings, section 407 of the Transportation Act amending section 5 Interstate Commerce Act (49 USCA § 5), and to fix minimum, as well as maximum rates, section 418 of Transportation Act amending section 15(1) Interstate Commerce Act (49 USCA § 15(1), to preclude the absorption of traffic of weaker competitors by cutthroat competition. See New England Divisions Case, supra, page 190 of 261 U.S., 43 S.Ct. 270, 67 L.Ed. 605.

Under earlier acts the Commission had been given power to remove unjust discrimination in rates or service between shippers or localities, section 2 Act of February 4, 1887, 24 Stat. 379, 880; section 3 Interstate Commerce Act (24 Stat. 380), and rates in interstate commerce were required to be reasonable 'in the sense of furnishing an adequate compensation for the particular service rendered and the abolition of rebates.' Wisconsin Railway Comm. v. C., B. & Q.R.R., supra, page 585 of 257 U.S., 42 S.Ct. 232, 236, 66 L.Ed. 371, 22 A.L.R. 1086; section 1 Act of 1887; section 4 Act of 1906, 34 Stat. 589; section 15 Interstate Commerce Act (24 Stat. 384). Under these acts the Commission had the power to order the carriers to desist from discrimination against interstate shippers by intrastate rates, Shreveport Case, 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341, but until the Transportation Act it was without authority to prescribe intrastate rates.

By section 416 of the Transportation Act, adding section 13(4) to Interstate Commerce Act (49 USCA § 13(4), directly involved here, the Commission was given power to remove unjust discrimination by intrastate rates against interstate commerce, by prescribing minimum intrastate rates.² This court has consist- ently held that this section is to be construed in the light of section 15a(2) and as supplementing it, so that the forbidden discrimination against interstate commerce by intrastate rates includes those cases in which disparity of the latter rates operates to thwart the broad purpose of section 15a to maintain an efficient transportation system by enabling the carriers to earn a fair return. So construed, section 13(4) confers on the Commission the power to raise intrastate rates so that the intrastate traffic may produce its fair share of the earnings required to meet maintenance and operating costs and to yield a fair return on the value of property devoted to the transportation service, both interstate and intrastate. Wisconsin Railway Commission v. C., B. & Q.R.R., supra, pages 586, 587, 588, 589, 590 of 257 U.S., 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; New York v. United States, 257 U.S. 591, 601, 42 S.Ct. 239, 66 L.Ed. 385; Florida v. United States, supra, page 211 of 282 U.S., 51 S.Ct. 119, 75 L.Ed. 291; Louisiana v. United States, 284 U.S. 125, 131, 52 S.Ct. 74, 76 L.Ed. 201; see Nashville, Chattanooga & St. Louis Railway v. Tennessee, 262 U.S. 318, 43 S.Ct. 583, 67 L.Ed. 999.

As pointed out in the reports of the Commission in this case and others (see Increased Rates, 1920, 58 I.C.C. 220; New York Passenger Fares, 59 I.C.C. 290), section 15a, by its terms, commands the Commission, in providing the required revenue by increasing rates, to deal with the carriers of the nation as a whole or in broad classes, and as this court recognized in the New England Divisions Case, supra, pages 197, 198 of 261 U.S., 43 S.Ct. 270, 67 L.Ed. 605, this requirement would be nullified and the administrative arm of the Commission paralyzed, if instead of adjudicating upon the rates in a large territory on evidence deemed typical of the whole rate structure, it were obliged to consider the reasonableness of each individual rate before carrying into effect the necessary increased schedule.

It cannot be supposed that Congress, in placing this duty on the Commission, intended, in the absence of some express provision compelling it, that the Commission should follow a procedure which would preclude its acting effectively, if at all. That such was not its intention appears from the words of the statute. It does not, in terms, command the Commission to find that each rate prescribed under section 15a is just and reasonable, as prerequisite to a general increase in rates. It provides only that the action of the Commission in raising rates so that they may yield a fair return is to be 'in the exercise of its power to prescribe just and reasonable rates,' with the qualification, in the proviso to the granted authority to increase rates, 'that the commission shall have reasonable latitude to modify or adjust any particular rate which it may find to be unjust or unreasonable. * * *' When read in the light of the subject-matter to which the section is to be applied, the production of increased revenue by a nation-wide or group increase of rates, it is apparent that these provisions...