New York v. United States

Supreme Court

New York v. United States

331 U.S. 284, 67 S. Ct. 1207, 91 L. Ed. 1492, 1947 U.S. LEXIS 2898

Supreme Court of the United States·Decided June 9, 1947·No. NO. 343·Published·Cited by 177 cases

Opinions

Opinion of the Court by

Mr. Justice Douglas,

announced by Mr. Justice Burton.

The orders of the Interstate Commerce Commission, which appellants seek to have set aside, resulted from two separate investigations instituted by the Commission on its own motion in 1939 to inquire into the lawfulness or unlawfulness of most of the then existing rate-making standards for interstate railroad class freight rates in the United States. One investigation related to classifica[290]*290tions¹ under which commodities move by rail freight.' The other related to class rates.² The two investigations were consolidated and were covered by one report, as the problems of classification and of class rates³ are closely interrelated. The findings of the Commission as to classifications are not directly involved here. For the orders of the Commission under attack are interim orders which affect only class rates, increasing them in some areas and decreasing them in others. But a review and summary of the Commission’s findings both on classifications and [291]*291on class rates are essential for an understanding of the problem.

While there are three major classification territories, there are five major rate territories.⁴ Official Territory, roughly speaking, lies east of the Mississippi and north of the Ohio and Potomac Rivers; it also includes most of Virginia. Southern Territory lies south of Official Territory and east of the Mississippi. Western Trunk-Line Territory is located approximately between Official Territory and the Rocky Mountains. Southwestern Territory lies south of Western Trunk-Line Territory and west of the Mississippi and includes Arkansas, Texas, Oklahoma, and part of Louisiana. Mountain-Pacific Territory includes Montana and New Mexico and all territory west of the Rockies. Only Mountain-Pacific Territory is not involved in these cases.

The three major classifications are Official, Southern and Western.⁵ But there is great lack of uniformity in the classifications. The problem is one with which the Commission has long wrestled.⁶ But prior to the present [292]*292investigation its chief accomplishment in this field had been to establish classification uniformity within the separate territories. National classification uniformity was still in the main lacking. Many differences between classifications on a particular rating are matters of substance'; others are matters of nomenclature. Moreover, there has been a tendency among carriers to work against the evolution of uniform classifications by making exceptions which remove commodities from the classifications for rate-making purposes.

Section 1 (4) of the Interstate Commerce Act as amended, 24 Stat. 379, 54 Stat. 899,900,49 U. S. C. § 1 (4) provides that it shall be the duty of common carriers to establish just and reasonable classifications applicable to through freight rates and charges. Section 1(6) prohibits every unjust and unreasonable classification. Section 3 (1) prohibits discrimination. And § 15 (1) empowers the Commission to prescribe just, fair, and reasonable classifications, after a finding that existing classifications are unlawful. The Commission found that the existing classifications are unlawful and will continue to be unlawful until there is national uniformity of classification. It found that differences in the applicable classifications affect the levels of the class rates as much as or more, in some instances, than the differences in the levels of the class rate scales themselves. It found that shippers in one territory pay more than shippers in another territory on the same article because of classification differences; that territorial boundaries separating classification territories are artificial and cause serious complications; that where geographic conditions produce divergent costs, revenue requirements, or other conditions requiring rate adjustments, the adjustments should be made not in the basic classification itself but in the rate levels or by the creation of legitimate exceptions to the classification; that amongst the classifications there was no real uniformity [293]*293of classification ratings although the same classification principles are applicable throughout the nation. It concluded that without such uniformity it is impossible to maintain just and reasonable relationships between class rates for competing commodities; that it is feasible for the carriers to establish a uniform classification. The Commission gave the railroads the opportunity to take the initiative in preparing the new uniform classification— an invitation which, we are advised, has been accepted.

Prior to this proceeding the Commission made four major class rate investigations — one for each of the rate territories except Mountain-Pacific.⁷ These established class rate structures on a regional basis, i. e. they established some degree of uniformity in class rates within each territory or subdivision of a territory. But they did not deal with interterritorial class rates by harmonizing regional rate adjustments one with the other. As a result there are separate interterritorial rate structures applicable to freight traffic moving from one territory into another.

These territorial class rate structures are exceedingly complicated. There is no basic uniformity amongst them and they are computed by varying formulae.

The Commission found that class rates within Southern, Southwestern and Western Trunk-Line territories, and from those territories to Official Territory, were generally much higher, article for article, than the rates within Official Territory. It found that higher class rates have impeded the development and movement of class rate [294]*294freight within Southern, Southwestern and Western Trunk-Line territories and from those territories to Official Territory. It concluded that neither the comparative costs of transportation service nor variations in the consists ⁸ and volume of traffic within the territories justified those differences in the class rates. The Commission also determined that equalization of class rates is not dependent on equalization of non-class rates and that interterri-torial rate problems can be solved only by establishing substantial uniformity in class ratings and rates.

Section 1 (4) and (5) (a) of the Act require rates and charges to be just and reasonable. The Commission found that the intraterritorial class rates applicable to the territories in question and the interterritorial class rates between the territories violate those provisions.

Section 3 (1) of the Act outlaws undue or unreasonable preferences or advantages to any region, district, or territory.

Free access — add to your briefcase to read the full text and ask questions with AI