1. An order of the Interstate Commerce Commission requiring a
horizontal increase of intrastate passenger fares and excess
baggage charges, to correspond with fares and charges fixed for
like interstate service in the same state, cannot be sustained
under § 13 of the Interstate Commerce Act, as amended by the
Transportation Act of 1920, as an order to remove undue and
unreasonable prejudice to persons traveling in interstate commerce,
when it broadly embraces not only the intrastate rates to and from
border points, which may work discrimination against interstate
passengers and localities, but also those between points more
remotely internal from which no such prejudice can arise upon the
facts found by the Commission. P.
257 U. S. 579.
The Shreveport Case, 234 U. S. 342, and
Illinois Central R. Co. v. Public Utilities Commission,
245 U. S. 493,
distinguished.
2. Such an order is not validated by a clause saving the right
of the state, or other party in interest, to apply to the
Commission for a modification as to particular intrastate fares or
charges. P.
257 U. S.
580.
3. The Transportation Act of 1920, § 422 (§ 15a), provides in
part that the Commission, in the exercise of its power to prescribe
just and reasonable rates, shall initiate, modify, establish, or
adjust such rates so that carriers as a whole, or in groups or
territories designated by the Commission, will earn an aggregate
net income equal to a fair return on the aggregate value of their
railway property held and used for transportation; that the
Commission shall determine what percentage of such aggregate
property value constitutes a fair return, and such percentage shall
be uniform for the groups or territories, and that, in making such
determination, it shall give due consideration to the
transportation needs of the country and the necessity of enlarging
transportation facilities in order to provide the people of the
United States with adequate transportation.
Page 257 U. S. 564
Held:
(a) The effective operation of the Transportation Act reasonably
requires that intrastate traffic over the lines of interstate
carriers pay a fair proportionate share of the cost of maintaining
an adequate railway system. P.
257 U. S.
585.
(b) While § 15a,
supra, confers no power on the
Commission to deal with intrastate rates, § 416 (§ 13, par. 4) of
the same act, in authorizing it to remove and in forbidding and
declaring unlawful "any undue, unreasonable, or unjust
discrimination against interstate or foreign commerce," clearly
contemplates that such discrimination, resulting from intrastate
rates unduly low as compared with interstate rates as fixed under §
15a, and tending to thwart the purpose of that section, may be
removed by the Commission. P.
257 U. S.
586.
(c) The act being clear on this point, reports and debates of
Congress cannot be resorted to to introduce ambiguity. P.
257 U. S.
588.
(d) The valuation required by § 15a is not confined to that part
of the property of the interstate carrier used in interstate,
segregated from that used in intrastate, commerce. P.
257 U. S.
587.
(e) Raising the level of the intrastate rates in such case is an
incident to the effective control of the interstate system, and
does not violate the proviso against the Commission's regulating
traffic wholly within a state. P.
257 U. S.
588.
(f) The act as so applied is within the power of Congress over
interstate commerce. P.
257 U. S.
589.
(g) The action of the Commission under it respecting intrastate
rates should be directed to substantial disparity which operates as
a real discrimination against and obstruction to interstate
commerce, leaving state authorities to deal with intrastate rates
inter sese on the general level found fair by the
Commission. P.
257 U. S.
590.
Affirmed.
The proceeding out of which this case has grown, known as the
Wisconsin Passenger Fares, began in an investigation by the
Interstate Commerce Commission under paragraphs 3 and 4 of § 13 of
the Interstate Commerce Act as amended by § 416 of the
Transportation Act of 1920 (41 Stat. 484) into alleged undue and
unreasonable discrimination against interstate commerce arising out
of intrastate railroad rates in Wisconsin. The interstate carriers
by steam railroad of the state were
Page 257 U. S. 565
made respondents, and the governor and state Railroad Commission
were duly notified. The Interstate Commerce Commission made its
report and order November 27, 1920. Wisconsin Passenger Fares, 59
I.C.C. 391.
The Commission had investigated the interstate rates of carriers
in the United States in a proceeding known as Ex parte 74,
Increased Rates, 58 I.C.C. 220, for the purpose of complying with §
15a of the Interstate Commerce Act as amended by § 422 of the
Transportation Act of 1920 (41 Stat. 488). That section requires
that the Commission so adjust rates that the revenues of the
carriers shall enable them as a whole or by groups to earn a fixed
net income on their railway property. The Commission ordered an
increase for the carriers in the group of which the Wisconsin
carriers were a part, of thirty-five percent in interstate freight
states, and twenty percent in interstate passenger fares and excess
baggage charges, and a surcharge upon passengers in sleeping cars
amounting to fifty percent of the charge for space in such cars to
accrue to the rail carriers. Thereupon the carriers applied to the
Wisconsin Railroad Commission for corresponding increases in
intrastate rates. The state commission granted increases in
intrastate freight rates of thirty-five percent, but denied any in
intrastate passenger fares and charges on the sole ground that a
state statute prescribed a maximum for passengers of two cents a
mile.
In the Wisconsin Passenger Fares, the Interstate Commerce
Commission found that all of the respondent carriers of Wisconsin
transported both intrastate and interstate passengers on the same
train, with the same service and accommodations; that the state
passenger paying the lower rate rode on the same train, in the same
car, and perhaps in the same seat with the interstate passenger who
paid the higher rate; that the circumstances and conditions were
substantially similar for interstate as for intrastate passenger
service in Wisconsin; that travelers destined
Page 257 U. S. 566
to, or coming from, points outside the state found it cheaper to
pay the intrastate fare within Wisconsin and the interstate fare
beyond the border than to pay the through interstate fare; that
undue preference and prejudice were shown by the falling off of
sales of tickets from border line points in Minnesota and Michigan
to stations in Wisconsin, and by a marked increase in sales of
local tickets from corresponding border line points in Wisconsin to
stations in Wisconsin; that the evidence as to the practice with
respect to passenger fares applied in like manner to the surcharge
upon passengers in sleeping and parlor cars and to excess baggage
charges.
The Commission further found that the fare necessary to fulfill
the requirement as to net income of this interstate railroad group
under § 15a was 3.6 cents per mile, and that this was reasonable,
that the direct revenue loss to the Wisconsin carriers due to their
failure to secure the twenty percent increase in intrastate fares
would approximate $2,400,000 per year if the three-cent fare fixed
by the President under federal war control were continued, and
$6,000,000 per year if the two-cent fare named in the state statute
should become effective.
The Commission found that there was undue, unreasonable and
unjust discrimination against persons traveling in interstate
commerce and against interstate commerce as a whole, and ordered
that the undue discrimination should be removed by increases in all
intrastate passenger fares and excess baggage charges and by
surcharges corresponding with the increases and surcharges ordered
in interstate business.
The order was made without prejudice to the right of the
authorities of the state or of any other party in interest to apply
in the proper manner for a modification of the order as to any
specified intrastate fares or charges if the latter were not
related to the interstate fares or charges in such a way as to
contravene the provisions of the Interstate Commerce Act.
Page 257 U. S. 567
The carriers filed bills in equity, of which the present is one,
in the district court to enjoin the State Railroad Commission and
other state officials from interfering with the maintenance of the
fares thus ordered and published.
Application for interlocutory injunction was made to the
district court under § 266 of the Judicial Code. After a hearing
before three judges, they granted an interlocutory injunction from
which this appeal was taken.
Page 257 U. S. 578
MR. CHIEF JUSTICE TAFT, after stating the case, delivered the
opinion of the Court.
The Commission's order, interference with which was enjoined by
the district court, effects the removal of the unjust
discrimination found to exist against persons in interstate
commerce, and against interstate commerce by fixing a minimum for
intrastate passenger fares in Wisconsin at 3.6 cents per mile per
passenger. This is done under paragraph 4 of § 13 of the Interstate
Commerce Act, as amended by the Transportation Act of 1920, which
authorizes the Interstate Commerce Commission, after a prescribed
investigation, to remove
"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,
Page 257 U. S. 579
or unjust discrimination against interstate commerce."
We have two questions to decide.
First. Do the intrastate passenger fares work undue prejudice
against persons in interstate commerce, such as to justify a
horizontal increase of them all?
Second. Are these intrastate fares an undue discrimination
against interstate commerce as a whole which it is the duty of the
Commission to remove?
We shall consider these in their order.
First. The report and findings of the Commission undoubtedly
show that the intrastate fares work an undue discrimination against
travelers in interstate commerce and against localities
(
Houston & Texas Ry. v. United States, 234 U.
S. 342) in typical instances numerous enough to justify
a general finding against a large class of fares. In a general
order thus supported, possible injustice can be avoided by a saving
clause allowing anyone to except himself from the order by proper
showing. This practice is fully sustained by precedent in what was
done as a sequence of the
Shreveport Case (
Houston
& Texas Ry. Co. v. United States, supra).
See
Meredith v. St. Louis Southwestern R. Co., 34 I.C.C. 472; Railroad
Comm'n. of Louisiana v. Arkansas Harbor Terminal Railway Co., 41
I.C.C. 83;
Eastern Texas R. Co. v. Railroad Commission,
242 F. 300;
Looney v. Eastern Texas R. Co., 247 U.
S. 214. In
Illinois Central R. Co. v. Public
Utilities Commission, 245 U. S. 493,
245 U. S. 508,
this Court indicated its approval of such practice which was
adopted by the Commission. Business Men's League of St. Louis v.
Atchison & S.F. R. Co., 49 I.C.C. 713. Any rule which would
require specific proof of discrimination as to each fare or rate
and its effect would completely block the remedial purpose of the
statute.
The order in this case, however, is much wider than the orders
made in the proceedings following the
Shreveport and
Illinois Central cases. There, as here, the report of the
Commission showed discrimination against persons
Page 257 U. S. 580
and localities at border points, and the orders were extended to
include all rates or fares from all points in the state to border
points. But this order is not so restricted. It includes fares
between all interior points, although neither may be near the
border and the fares between them may not work a discrimination
against interstate travelers at all. Nothing in the precedents
cited justifies an order affecting all rates of a general
description when it is clear that this would include many rates not
within the proper class or the reason of the order. In such a case,
the saving clause by which exceptions are permitted cannot give the
order validity. As said by this Court in the
Illinois Central
R. Co. case,
"it is obvious that an order of a subordinate agency, such as
the Commission, should not be given precedence over a state rate
statute otherwise valid unless, and except so far as, it conforms
to a high standard of certainty."
See also American Express Co. v. Caldwell, 244 U.
S. 617,
244 U. S.
627.
If, in view of the changes, made by federal authority, in a
large class of discriminating state rates, it is necessary from a
state point of view to change nondiscriminating state rates to
harmonize with them, only the state authorities can produce such
harmony. We cannot sustain the sweep of the order in this case on
the showing of discriminations against persons or places alone.
Second. The report of the Commission shows that, if the
intrastate passenger fares in Wisconsin are to be limited by the
statute of that state to two cents per mile, and charges for extra
baggage and sleeping car accommodations are to be reduced in a
corresponding degree, the net income of the interstate carriers of
the state will be cut six millions of dollars below what it would
be under intrastate rates on the same level with interstate rates.
Under paragraphs 3 and 4 of § 13 and § 15a as enacted in §§ 416 and
422, respectively, of the Transportation Act
Page 257 U. S. 581
of 1920 (which are given in part in the margin,
*) are such
reduction and disparity an "undue, unreasonable or unjust
discrimination against interstate or foreign commerce" which the
Interstate Commerce Commission may remove by raising the intrastate
fares? A short reference to the circumstances inducing the
legislation and a summary of its relevant provisions will aid the
answer to this question.
Page 257 U. S. 582
The Interstate Commerce Act of 1887, 24 Stat. 379, was enacted
by Congress to prevent interstate railroad carriers from charging
unreasonable rates and from unjustly discriminating between persons
and localities. The railroads availed themselves of the weakness
and cumbrous machinery of the original law to defeat its purpose,
and this led to various amendments culminating in the amending Act
of 1910, 36 Stat. 539, in which the authority of the Commission in
dealing with the carriers was made summary and effectively
complete. Whatever the causes, the fact was that the carrying
capacity of the railroads did not thereafter develop
proportionately with the growth of the country, and it became
difficult for them
Page 257 U. S. 583
to secure additional investment of capital on feasible terms.
When the extraordinary demand for transportation arose in 1917, the
Congress and the President concluded to take over all the railroads
into the management of the federal government, and by joint use of
facilities, which the Anti-Trust Law was thought to forbid under
private management, and by use of government credit, to increase
their effectiveness. This was done by appropriate legislation and
executive action under the war power. From January 1, 1918, until
March 1, 1920, when the Transportation Act went into effect, the
common carriers by steam railroad of the country were operated by
the federal government. Due to the rapid rise in the
Page 257 U. S. 584
prices of material and labor in 1918 and 1919, the expense of
their operation had enormously increased by the time it was
proposed to return the railroads to their owners. The owners
insisted that their properties could not be turned back to them by
the government for useful operation without provision to aid them
to meet a situation in which they were likely to face a
demoralizing lack of credit and income. Congress acquiesced in this
view. The Transportation Act of 1920 was the result. It was adopted
after elaborate investigations by the Interstate Commerce
Committees of the two Houses.
Under Title II, it made provision for the termination of federal
control March 1, 1920, for the refunding of the carriers'
indebtedness to the United States, and for a guaranty for six
months to the carriers of an income equal to the war-time rental
for their properties, and directed that, for two years following
the termination of federal control, the Secretary of the Treasury,
upon certificate of the Commission, might make loans to the
carriers not exceeding the maximum amount recommended in the
certificate, out of a revolving fund of $300,000,000.
Under Title IV, amendments were made to the Interstate Commerce
Act which included § 13, paragraphs 3 and 4, and § 15a, already
quoted in the margin. The former for the first time authorizes the
Commission to deal directly with intrastate rates where they are
unduly discriminating against interstate commerce -- a power
already indirectly exercised as to persons and localities, with
approval of this Court in the
Shreveport and other cases.
The latter, the most novel and most important feature of the act,
requires the Commission so to prescribe rates as to enable the
carriers as a whole or in groups selected by the Commission to earn
an aggregate annual net railway operating income equal to a fair
return on the aggregate value of the railway property used in
transportation. For two years, the return is to be
Page 257 U. S. 585
5 1/2 percent, with 1/2 percent for improvements, and thereafter
is to be fixed by the Commission.
The act sought to avoid excessive incomes accruing, under the
operation of § 15a, to the carriers better circumstanced by using
the excess for loans to the others and for other purposes. The act
further put under the control of the Interstate Commerce
Commission, first, the issuing of future railroad securities by the
interstate carriers; second, the regulation of their car supply and
distribution and the joint use of terminals; and, third, their
construction of new lines, and their abandonment of old lines. The
validity of some of these provisions has been questioned. Upon that
we express no opinion. We only refer to them to show the scope of
the congressional purpose in the act.
It is manifest from this very condensed recital that the act
made a new departure. Theretofore, the control which Congress
through the Interstate Commerce Commission exercised was primarily
for the purpose of preventing injustice by unreasonable or
discriminatory rates against persons and localities, and the only
provisions of the law that inured to the benefit of the carriers
were the requirement that the rates should be reasonable in the
sense of furnishing an adequate compensation for the particular
service rendered and the abolition of rebates. The new measure
imposed an affirmative duty on the Interstate Commerce Commission
to fix rates and to take other important steps to maintain an
adequate railway service for the people of the United States. This
is expressly declared in § 15a to be one of the purposes of the
bill.
Intrastate rates and the income from them must play a most
important part in maintaining an adequate national railway system.
Twenty percent of the gross freight receipts of the railroads of
the country are from intrastate traffic, and 50 percent of the
passenger receipts. The ratio of the gross intrastate revenue to
the
Page 257 U. S. 586
interstate revenue is a little less than one to three. If the
rates, on which such receipts are based, are to be fixed at a
substantially lower level than in interstate traffic, the share
which the intrastate traffic will contribute will be
proportionately less. If the railways are to earn a fixed net
percentage of income, the lower the intrastate rates, the higher
the interstate rates may have to be. The effective operation of the
act will reasonably and justly require that intrastate traffic
should pay a fair proportionate share of the cost of maintaining an
adequate railway system. Section 15a confers no power on the
Commission to deal with intrastate rates. What is done under that
section is to be done by the Commission "in the exercise of its
powers to prescribe just and reasonable rates" --
i.e.,
powers derived from previous amendments to the Interstate Commerce
Act, which have never been construed or used to embrace the
prescribing of intrastate rates. When we turn to paragraph 4, § 13,
however, and find the Commission for the first time vested with a
direct power to remove "any undue, unreasonable, or unjust
discrimination against interstate or foreign commerce," it is
impossible to escape the dovetail relation between that provision
and the purpose of § 15a. If that purpose is interfered with by a
disparity of intrastate rates, the Commission is authorized to end
the disparity by directly removing it, because it is plainly an
"undue, unreasonable, and unjust discrimination against interstate
or foreign commerce" within the ordinary meaning of those
words.
Counsel for appellants, not able to satisfy their meaning by the
suggestion of any other discrimination to which they apply, are
forced to the position that the words are tautological, and a mere
repetition of
"any undue or unreasonable advantage, preference or prejudice as
between persons and localities in intrastate commerce, on the one
hand, and interstate or foreign commerce, on the other hand,"
which precede them. In view of their apt application
Page 257 U. S. 587
to the most important purpose of the legislation, we are not at
liberty to take such a view. If "undue, unreasonable and unjust
discrimination against interstate or foreign commerce" are
tautological, why are they followed by the phrase "which is hereby
prohibited and declared to be unlawful"? To accompany a meaningless
phrase with words of such special emphasis would be unusual.
It is urged that, in previous decisions, notably the
Minnesota Rate Cases, 230 U. S. 352, the
Shreveport case,
supra, and the
Illinois
Central case,
supra, the expression "unjust
discrimination against interstate commerce" was often used when, as
the law then was, it could only mean discrimination as between
persons and localities, and therefore that it is to be given the
same limited meaning here. But here, the general words are used
after discrimination against persons and localities have been
specifically mentioned. The natural inference is that, even if they
include what has gone before, they mean something more. When we
find that they aptly include a kind of discrimination against
interstate commerce which the operation of the new act for the
first time makes important and which would seriously obstruct its
chief purpose, we cannot ignore their necessary effect.
Counsel for appellants are driven by the logic of their position
to maintain that the valuation required for the purposes of § 15a
to be ascertained pursuant to § 19a of the Interstate Commerce Act
(37 Stat. 701; amended 41 Stat. L. 493) is to be only of that part
of the property and equipment of the interstate carriers which is
used in commerce among the states, and must be segregated from that
used in intrastate commerce. This is contrary to the construction
which, since the enactment of § 19a, March 1, 1913, the Commission
has put upon that section in carrying out its injunction. It is
inadmissible. The language of § 15a refutes such interpretation.
The percentage
Page 257 U. S. 588
is to be calculated on "the aggregate value of the railway
property of such carriers held for and used in the service of
transportation." To impose on the Commission the duty of separating
property used in the two services when so much of it is used in
both, and to do this in a reasonably short time for practical use,
as contemplated by the statute, would be to assign it a well nigh
impossible task. This, of itself, prevents our giving the words
such a construction unless they clearly require it. They certainly
do not.
It is objected here, as it was in the
Shreveport case,
that orders of the Commission which raise the intrastate rates to a
level of the interstate structure violate the specific proviso of
the original Interstate Commerce Act, repeated in the amending
acts, that the Commission is not to regulate traffic wholly within
a state. To this the same answer must be made as was made in the
Shreveport case,
234 U. S. 342,
234 U. S. 358,
that such orders as to intrastate traffic are merely incidental to
the regulation of interstate commerce, and necessary to its
efficiency. Effective control of the one must embrace some control
over the other in view of the blending of both in actual operation.
The same rails and the same cars carry both. The same men conduct
them. Commerce is a unit, and does not regard state lines, and
while, under the Constitution, interstate and intrastate commerce
are ordinarily subject to regulation by different sovereignties,
yet when they are so mingled together that the supreme authority,
the Nation, cannot exercise complete effective control over
interstate commerce without incidental regulation of intrastate
commerce, such incidental regulation is not an invasion of state
authority of a violation of the proviso.
Great stress is put on the legislative history of the
Transportation Act to show that the bill was not intended to confer
on the Commission power to remove any discrimination against
interstate commerce involved in a
Page 257 U. S. 589
general disparity between interstate and intrastate rates.
Committee reports and explanatory statements of members in charge
made in presenting a bill for passage have been held to be a
legitimate aid to the interpretation of a statute where its
language is doubtful or obscure.
Duplex Co. v. Deering,
254 U. S. 443,
254 U. S. 475.
But, when taking the act as a whole, the effect of the language
used is clear to the court, extraneous aid like this cannot control
the interpretation.
Pennsylvania R. Co. v. International Coal
Co., 230 U. S. 184,
230 U. S. 198;
Caminetti v. United States, 242 U.
S. 470,
242 U. S. 490.
Such aids are only admissible to solve doubt and not to create it.
For the reasons given, we have no doubt in this case.
Counsel for the appellants have not contested the constitutional
validity of the statute construed as we have construed it, although
the counsel for the state commissions whom we permitted to file
briefs as
amici curiae have done so. The principles laid
down by this Court in the
Minnesota Rate Cases,
230 U. S. 352,
230 U. S.
432-433, the
Shreveport case,
234 U.
S. 342,
234 U. S. 351,
and the
Illinois Central case,
245 U.
S. 493,
245 U. S. 506,
which are rates cases, and in the analogous cases of
Baltimore
& Ohio R. Co. v. Interstate Commerce Commission,
221 U. S. 612,
221 U. S. 618;
Southern Ry. Co. v. United States, 222 U. S.
20,
222 U. S. 26-27;
Second Employers' Liability Cases, 223 U. S.
1,
223 U. S. 48,
223 U. S. 51, we
think, leave no room for discussion on this point. Congress, in its
control of its interstate commerce system, is seeking in the
Transportation Act to make the system adequate to the needs of the
country by securing for it a reasonable compensatory return for all
the work it does. The states are seeking to use that same system
for intrastate traffic. That entails large duties and expenditures
on the interstate commerce system which may burden it unless
compensation is received for the intrastate business reasonably
proportionate to that for the
Page 257 U. S. 590
interstate business. Congress, as the dominant controller of
interstate commerce, may therefore restrain undue limitation of the
earning power of the interstate commerce system in doing state
work. The affirmative power of Congress in developing interstate
commerce agencies is clear.
Wilson v. Shaw, 204 U. S.
24;
Luxton v. North River Bridge Co.,
153 U. S. 525;
California v. Pacific Railroad Co., 127 U. S.
1,
127 U. S. 39. In
such development, it can impose any reasonable condition on a
state's use of interstate carriers for intrastate commerce it deems
necessary or desirable. This is because of the supremacy of the
national power in this field.
In
Minnesota Rate Cases, 230
U. S. 399, where relevant cases were carefully reviewed,
it was said:
"The authority of Congress extends to every part of interstate
commerce, and to every instrumentality or agency by which it is
carried on, and the full control by Congress of the subjects
committed to its regulation, is not to be denied or thwarted by the
commingling of interstate and intrastate operations. This is not to
say that the Nation may deal with the internal concerns of the
state as such, but that the execution by Congress of its
constitutional power to regulate interstate commerce is not limited
by the fact that intrastate transactions may have become so
interwoven therewith that the effective government of the former
incidentally controls the latter. This conclusion necessarily
results from the supremacy of the national power within its
appointed sphere."
It is said that our conclusion gives the Commission unified
control of interstate and intrastate commerce. It is only unified
to the extent of maintaining efficient regulation of interstate
commerce under the paramount power of Congress. It does not involve
general regulation of intrastate commerce. Action of the Interstate
Commerce Commission in this regard should be directed to
substantial disparity which operates as a real discrimination
Page 257 U. S. 591
against, and obstruction to, interstate commerce, and must leave
appropriate discretion to the state authorities to deal with
intrastate rates as between themselves on the general level which
the Interstate Commerce Commission has found to be fair to
interstate commerce.
It may well turn out that the effect of a general order
increasing all rates, like the one at bar, will, in particular
localities, reduce income instead of increasing it, by discouraging
patronage. Such cases would be within the saving clause of the
order herein, and make proper an application to the Interstate
Commerce Commission for appropriate exception. So, too, in practice
when the state commissions shall recognize their obligation to
maintain a proportionate and equitable share of the income of the
carriers from intrastate rates, conference between the Interstate
Commerce Commission and the state commissions may dispense with the
necessity for any rigid federal order as to the intrastate rates,
and leave to the state commissions power to deal with them and
increase them or reduce them in their discretion.
The order of the district court granting the interlocutory
injunction is
Affirmed.
* Paragraphs 3 and 4 of § 13 of § 416 and § 15a of § 422 of the
same act are as follows:
"(3) Whenever in any investigation under the provisions of this
Act, or in any investigation instituted upon petition of the
carrier concerned, which petition is hereby authorized to be filed,
there shall be brought in issue any rate, fare, charge,
classification, regulation, or practice made or imposed by
authority of any state, or initiated by the President during the
period of Federal control, the Commission, before proceeding to
hear and dispose of such issue, shall cause the state or states
interested to be notified of the proceeding. The Commission may
confer with the authorities of any state having regulatory
jurisdiction over the class of persons and corporations subject to
this Act with respect to the relationship between rate structures
and practices of carriers subject to the jurisdiction of such state
bodies and of the Commission, and to that end is authorized and
empowered, under rules to be prescribed by it, and which may be
modified from time to time, to hold joint hearings with any such
state regulating bodies on any matters wherein the Commission is
empowered to act and where the ratemaking authority of a state is
or may be affected by the action taken by the Commission. The
Commission is also authorized to avail itself of the cooperation,
services, records, and facilities of such state authorities in the
enforcement of any provision of this Act."
"(4) 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 interstate or
foreign commerce, 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, or discrimination. 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."
Section 422 of the Transportation Act, 1920, 41 Stat. 488.
"The Interstate Commerce Act is further amended by inserting,
after section 15, a new section to be known as § 15a and to read as
follows:"
"Section 15a(1)."
"
* * * *"
"(2) In the exercise of its power to prescribe just and
reasonable rates, the Commission shall initiate, modify, establish
or adjust such rates so that carriers as a whole (or as a whole in
each of such rate groups or 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 fair return
upon the aggregate value of the railway property of such carriers
held for and used in the service of transportation. . . ."
"(3) The Commission shall from time to time determine and make
public what percentage of such aggregate property value constitutes
a fair return thereon, and such percentage shall be uniform for all
rate groups or territories which may be designated by the
Commission. In making such determination, it shall give due
consideration, among other things, to the transportation needs of
the country and the necessity (under honest, efficient, and
economical management of existing transportation facilities) of
enlarging such facilities in order to provide the people of the
United States with adequate transportation;
Provided that,
during two years beginning March 1, 1920, the Commission shall take
as such fair return a sum equal to 5 1/2 percentum of such
aggregate value, but may, in its discretion, add thereto a sum not
exceeding one-half of one percentum of such aggregate value to make
provision in whole or in part for improvements, betterments, or
equipment which, according to the accounting system prescribed by
the Commission, are chargeable to capital account."
"(4) For the purposes of this section, such aggregate value of
the property of the carriers shall be determined by the Commission
from time to time and as often as may be necessary. The Commission
may utilize the results of its investigation under § 19a of this
Act, insofar as deemed by it available, and shall give due
consideration to all the elements of value recognized by the law of
the land for ratemaking purposes, and shall give to the property
investment account of the carriers only that consideration which,
under such law, it is entitled to in establishing values for
ratemaking purposes. Whenever, pursuant to § 19a of this Act, the
value of the railway property of any carrier held for and used in
the service of transportation has been finally ascertained, the
value so ascertained shall be deemed by the Commission to be the
value thereof for the purpose of determining such aggregate
value."