Ayrshire Collieries Corp. v. United States
335 U.S. 573 (1949)

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U.S. Supreme Court

Ayrshire Collieries Corp. v. United States, 335 U.S. 573 (1949)

Ayrshire Collieries Corp. v. United States

No. 25

Argued November 12, 15, 1948

Decided January 3, 1949

335 U.S. 573

Syllabus

Two proceedings under § 15(7) of the Interstate Commerce Act involved rail rates on bituminous coal between producing areas long grouped for ratemaking purposes in Indiana, Illinois, and western Kentucky, and destinations in northern Illinois and Beloit, Wis. One resulted from a proposal of certain carriers to increase rates between certain points. The other was an investigation instituted by the Commission into existing intrastate rates between certain points in Illinois, to determine whether they were discriminatory, preferential, and prejudicial against interstate commerce and in favor of intrastate commerce. After hearing and considering both proceedings together on the same record, the Commission found that certain existing and proposed rates would result in unjust discrimination and undue preference and prejudice in violation of §§ 2 and 3 of the Act. It issued an order in which it disapproved a dual basis of rates, specified rates which it approved, and ruled that the proposed rates would be unreasonable to the extent that they exceeded the approved rates.

Held:

1. In these proceedings, the Commission had authority to determine the lawfulness of existing rates, as well as the proposed new rates. Pp. 335 U. S. 581-583.

2. The Commission was justified in concluding that the present and proposed system of dual rates, under which single-line rates from certain points in a group to certain destinations were substantially lower than joint-line rates from other points in the same group to the same destinations, was an unjust discrimination within the meaning of § 2, and would create an undue preference and prejudice as between different points in the same groups in violation of § 3(1) of the Act. Pp. 335 U. S. 583-587.

(a) The preferential treatment of shippers at some points in a group as against shippers at other points in the same group was an unjust discrimination within the meaning of § 2. Pp. 335 U. S. 585-587.

(b) In view of the fact that the whole system of ratemaking on a group basis was not challenged in these proceedings, the Commission's

Page 335 U. S. 574

conclusions that the establishment of a dual basis of rates for this coal mining region defeats the system of grouping by unjustly discriminating against some shippers and in favor of others in the same group, and that this unjust discrimination can be avoided only by the establishment and maintenance of a single rate basis, cannot be challenged successfully on this record. P. 335 U. S. 587.

3. The Commission was justified in finding that the differentials maintained by certain carriers as between certain of the Indiana groups constituted an undue preference and prejudice in violation of § 3 (1) of the Act and in prescribing fair and reasonable differentials between the Indiana groups and the Illinois groups. Pp. 335 U. S. 588-593.

(a) In the circumstances of this case, the Commission was justified in using averages as a measure of the relationship between the rates of the Indiana groups, on the one hand, and the Illinois groups, on the other, even though the resulting differentials were not based strictly upon the factor of distance. Pp. 335 U. S. 588-591.

(b) In considering these rates, the Commission was justified in taking into consideration the element of competition. P. 335 U. S. 592.

(c) It also has the consumer interest to safeguard, as well as that of producers and carriers. P. 335 U. S. 592.

(d) In fashioning a differentially related and finely balanced rate structure in this complex situation, the Commission has a broad discretion in accommodating the factors of transportation conditions, distance, and competition, so long as no statutory requirement is overlooked. P. 335 U. S. 593.

4. Having undertaken to curb unlawful practices by prescribing just and reasonable rates pursuant to §§ 15(1) and 15(7), the Commission did not exceed its authority by failing to afford the carriers alternative methods of removing the discrimination which was found to exist. Pp. 335 U. S. 593-594

5. Having found a forbidden discrimination or preference in rates, the Commission could remove it without finding that the preferential rates were noncompensatory. P. 335 U. S. 594.

Affirmed.

Having found that certain existing and proposed rail rates on shipments of bituminous coal would result in unjust discrimination and undue preference and prejudice, the Interstate Commerce Commission issued an

Page 335 U. S. 575

order in which it disapproved a dual basis of rates, specified rates which it approved, and ruled that the proposed rates would be unreasonable to the extent that they exceeded the approved rates. 263 I.C.C. 179. A three-judge District Court dismissed two complaints seeking to set this order aside. On appeal to this Court, affirmed, p. 335 U. S. 594.

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