In April 1974, virtually all the Nation's railroads, including
appellees, the Chessie System, filed with the Interstate Commerce
Commission (ICC) a joint petition for a general revenue increase,
stating as a reason therefor that "billions of dollars are needed
immediately and in the coming decade for maintenance and
improvement of the Nation's rail transportation plant." Though the
ICC on June 3, 1974, suspended the operation of the new schedules,
it authorized the railroads to file new tariffs subject to
conditions that would assure that the additional revenue would be
expended for "delayed capital improvements" and "deferred
maintenance" of plant and equipment, defining those terms in a
subsequent order, which also permitted up to 3% of the revenue
derived from the increase to be applied to higher nonfuel material
and supply costs. Thereafter, appellees, alleging that they had no
"deferred maintenance" or "delayed capital improvements" that would
qualify under the ICC's definitions; that they were precluded from
applying the additional revenues to earlier commitments; and that
they were placed at a competitive disadvantage with railroads that
could meet the ICC's conditions, sought reconsideration from the
ICC. Dissatisfied with the ICC's response, appellees brought this
suit attacking the lawfulness of the conditions imposed and seeking
to have the ICC's orders set aside. The District Court issued an
injunction prohibiting the ICC from enforcing against appellees
those portions of the challenged orders that required revenues to
be spent for specified purposes, concluding that "Congress has not
authorized the [ICC] to control a carrier's expenditure of funds as
a condition to withholding the suspension of rates."
Held: The ICC may, as a condition for not suspending
and subsequently investigating the lawfulness of a proposed tariff,
require the railroads to devote the additional revenues for the
purposes the carriers invoked in support of the increase. Pp.
426 U. S.
509-515.
(a) Imposition of the condition precedent to the immediate
Page 426 U. S. 501
implementation of the rate increase was directly related to the
ICC's statutory mandate to assess the reasonableness of the rates
and to suspend them if there was a question as to their legality.
Instead of suspending the proposed rates for the seven-month
statutory period, as it could have done, the ICC offered an
alternative more precisely tailored to the particular circumstances
presented. P.
426 U. S.
514.
(b) Since the District Court held that the ICC did not have the
power to impose conditions on the refiling of the tariff, it did
not consider appellees' contention that their inability to use the
new revenues makes the ICC's action arbitrary and capricious as to
them, and that question may, if appellees choose, be raised on
remand. P.
426 U. S.
515.
392 F.
Supp. 358, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, and REHNQUIST, JJ., joined.
STEVENS, J., filed a dissenting opinion, in which STEWART, J.,
joined,
post, p.
426 U. S. 521.
POWELL, J., took no part in the consideration or decision of the
case.
MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
This case is here on direct appeal, pursuant to 28 U.S.C. §§
1253, [
Footnote 1] 2325, from
an order of the District Court which permanently enjoined the
Interstate Commerce
Page 426 U. S. 502
Commission from enforcing, against the appellee railway system,
[
Footnote 2] an order requiring
the application of increased revenues to deferred capital
improvements and deferred maintenance as a condition for the
nonsuspension of the rate increases.
392 F.
Supp. 358 (ED Va.1975).
In April, 1974, the Nation's railroads, [
Footnote 3] including the appellees, filed with the
Interstate Commerce Commission a joint petition for a general
revenue increase "with respect to the revenue needs of all carriers
by railroad operating in the United States." App 97.
Ex parte
No. 305, Nationwide Increase of Ten Percent in Freight Rates
and Charges, 1974. The proposed tariffs included a 10% increase in
the level of freight rates. In their petition, the railroads
alleged in part:
"The railroad industry is capital-intensive, and must generate
huge amounts of capital annually just to replace stationary
facilities and equipment as it becomes worn out or obsolete. When
earnings are inadequate to support this level of spending, as now,
then a process of asset liquidation occurs accelerating as
facilities and equipment are consumed by increased traffic. Even if
the liquidation of assets is arrested by earnings sufficient to
support maintenance and replacement, there is a further need to
modernize and expand capacity if the railroads are to be able to
meet sharply increasing demands
Page 426 U. S. 503
upon them for economic and efficient transportation. There is
presently an abundance of data and analysis which reliably
establishes that billions of dollars are needed immediately and in
the coming decade for maintenance and improvement of the Nation's
rail transportation plant."
App. 107.
On June 3, 1974, the Commission entered an order which noted
"that the nation's railroads are in need of additional freight
revenues to offset recently incurred costs of materials, other than
fuel, and to provide an improved level of earnings. . . ."
Jurisdictional Statement 42a. The Commission found that the
Nation's railroads were "in danger of further deterioration
detrimental to the public interest . . . ,"
ibid., and
recognized that,
"without the additional revenues to be derived from increased
freight rates and charges, the earnings of the nation's railroads
would be insufficient to enable them, under honest, economical and
efficient management, to provide adequate and efficient railroad
transportation services. . . ."
Ibid. The Commission concluded that
"the increases proposed would, if permitted to become effective,
generate additional revenues sufficient to enable the carriers to
prevent further deterioration and improve service."
At the same time, it noted that,
"if the schedules were permitted to become effective as filed
and without conditions designed to promote service improvements,
the increases proposed would be unjust and unreasonable and
contrary to the dictates of the national transportation policy. . .
."
Id. at 42a-43a. The Commission, therefore, suspended
the operation of the new schedules, but authorized the railroads to
file new tariffs, subject to conditions providing that revenues
generated by the increases
"should be expended for capital improvements and deferred
maintenance of plant and equipment and the amount needed for
increased
Page 426 U. S. 504
material and supply cost, other than fuel."
Id. at 46a. [
Footnote
4]
On July 18, 1974, the Commission entered the second pertinent
order in this case. This order defined "deferred maintenance"
[
Footnote 5] and "delayed
capital improvements." [
Footnote
6]
Page 426 U. S. 505
The order also provided that,
"up to 3 percentage points of the 10-percent authorization may
be applied to increased material and supply costs, excluding fuel,
provided such costs have been incurred."
On July 30, appellee Chessie System sought reconsideration of
the Commission's order of July 18
"for the reason that, under the Commission's definitions of
deferred maintenance and delayed capital improvements, they will be
unable to apply any of the increased revenues derived from the Ex
parte No. 305 proceeding (other than those earmarked for increased
material and supply costs) to any projects now scheduled or which
may be scheduled in the foreseeable future."
App. 222. Chessie alleged it had no such "deferred maintenance"
or "delayed capital improvements":
"
No worthwhile project on Chessie System designed to improve
its transportation service to the shipping public has ever been
deferred because financing or funding was not available. None will
be, as long as Chessie System earnings are at levels adequate
enough to attract capital. Chessie System has never stinted in its
expenditures to provide adequate and efficient transportation
service to its customers."
(Emphasis in original.)
Id. at 223.
Page 426 U. S. 506
Chessie further noted that it had made significant expenditures
for capital improvements in the six months prior to the Commission
order. It pointed out that these projects did not qualify under the
Commission's definition, because the funds had been committed
before June 1, 1974, and the projects "had not been deferred
because funding or financing was not available."
Id. at
224. Unless it was permitted to apply these additional revenues to
these earlier commitments, contended Chessie,
"[t]hey will simply lie dormant in a sterile, segregated account
which will result in several serious consequences both to Chessie
System and the shipping public."
Id. at 225. Basically, argued Chessie, the consequence
of the order was to place Chessie
"at a distinct competitive disadvantage
vis-a-vis other
railroads, which, for one reason or another, have deferred
maintenance or delayed capital improvements within the meaning of
the Commission's order. These lines will be able to use the
additional revenues to buy cars and other equipment, while Chessie
System's money will lie fallow. In effect, the order penalizes
Chessie System and other efficient carriers, and rewards only those
railroads which are inefficient."
Ibid. Chessie specifically asked the Commission to
permit the expenditure of funds generated by the increases for any
valid corporate purpose if the railroad had no deferred maintenance
or deferred capital improvements as defined by the Commission's
order. Chessie, for the first time, also argued that the
Commission, "exceeded its statutory authority by conditioning the
use to which the revenues derived from Ex parte No. 305 might be
applied."
Id. at 226.
By order dated August 9, 1974, the Commission denied the
petition for reconsideration, but did significantly clarify its
earlier orders. While reiterating its intention that the authorized
increases, over and above the
Page 426 U. S. 507
increased costs of material and supplies, other than fuel, had
to be used exclusively for reducing deferred maintenance of plant
and equipment and delayed capital improvements, the Commission
left
"to the railroad managements' decision how the funds segregated
in accordance with the July 18, 1974, order shall be applied to
expenditures for the various specific items of equipment and other
properties."
Jurisdictional Statement 81a. The Commission pointed out
that
"the petition and verified statements of railroad officials
seeking the increases authorized herein are replete with references
to the need for revenues to provide funds for great, but
unspecified, amounts of deferred maintenance and delayed capital
improvements. . . ."
Id. at 81a-82a. The Commission did note that
"certain railroads . . . may have anticipated authorization of
the increases by initiating improvement projects, or scheduling or
otherwise committing and recognizing them in capital budgets prior
to June 1, 1974."
Id. at 82a. Under those circumstances, if the projects
otherwise qualified as delayed capital improvements, the Commission
stated that it would be "consistent with the Commission's intention
that the authorized increases could be applied" to those projects.
Ibid.
The present suit was commenced by Chessie on August 15, 1974.
Chessie sought to set aside the June 3, July 18, and August 9
orders of the Commission. No other railroad joined in this action.
On August 18, a single District Judge issued a temporary
restraining order which prohibited the Commission from "enforcing
the limiting conditions on the use of plaintiffs' revenues and of
certain reporting conditions included in [the] Orders. . . ." App.
33.
On August 16, most of the country's railroads filed with the
Commission another petition for clarification
Page 426 U. S. 508
and modification of its July 18 and August 9 orders. The
Commission reopened the matter and held oral argument on August 27.
Appellee Chessie System resisted appearing at this argument on the
ground that its filing a complaint in the United States District
Court deprived the Commission of further jurisdiction over it. The
Commission, however, ordered that counsel representing the Chessie
System be present at oral argument and be prepared to orally "show
cause why any change should be made in the conditions and
requirements contained in the outstanding orders in this
proceeding." Jurisdictional Statement 91a-92a.
On October 3, the Commission concluded that, if any railroad was
"unable to use the full amount of the funds generated by the
increase for deferred maintenance or delayed capital improvements,"
it might "expend such funds for new and additional capital
improvements providing advance approval is obtained from the
Commission. . . ."
Id. at 104a. Chessie amended its
complaint in the District Court to challenge this order, as well.
It claimed that its maintenance and capital projects will not
qualify as "new and additional capital improvement," App. 37, under
the Commission's order, since that order defined such projects as
those "over and above those presently undertaken, scheduled or
otherwise committed. . . ."
Id. at 38.
The District Court enjoined the Interstate Commerce Commission
from enforcing against Chessie those portions of the challenged
orders that required revenues derived from
Ex parte No.
305 to be spent for specified purposes. After rejecting the
preliminary defenses raised by the Commission, the court concluded
that the conditions imposed by the Commission on the expenditures
of the increased revenues were unlawful. The
Page 426 U. S. 509
court began with the proposition that the Commission can impose
conditions that have been expressly or impliedly authorized by law.
It found, of course, no express authorization in the Interstate
Commerce Act for the Commission to condition withholding suspension
of a rate increase on how the additional revenue is spent.
Examining the possibility of implied authority, the court noted
that the Commission had not previously conditioned withholding the
suspension of rates on control of a railroad's expenditures, and
that, therefore, no court had considered the precise issue
presented by this case. However, the District Court noted that it
had been held, in other contexts, that the Commission lacks
statutory authority to order the railroads how to spend their
funds.
Missouri Pacific R. Co. v. Norwood, 42 F.2d 765
(WD Ark.1930),
aff'd, 283 U. S. 249
(1931);
ICC v. United States ex rel. Los Angeles,
280 U. S. 52,
280 U. S. 70
(1929). These cases, said the District Court,
"unmistakenly establish that the Commission has no general power
to control a railroad's expenditures. No provision of [49 U.S.C.] §
15(7), authorizing suspension of rate increases, implies that the
Commission may exercise, as an incident to suspension, the control
over expenditures that Congress has otherwise withheld from
it."
392 F. Supp. at 367. The court therefore concluded "that
Congress has not authorized the Commission to control a carrier's
expenditure of funds as a condition to withholding the suspension
of rates."
Ibid. We noted probable jurisdiction. 423 U.S.
923 (1975).
The precise question presented in this case, while one of first
impression in this Court, is also a narrow one. In their
application before the Commission, the railroads sought to justify
the proposed general revenue increase on several grounds, including
the need for additional funds for deferred capital and deferred
maintenance expenditures.
Page 426 U. S. 510
We are confronted with the question of whether the Commission
may, as a condition for not suspending and subsequently
investigating the lawfulness of a proposed tariff, require the
railroads to devote the additional revenues to a need which, they
allege, justifies the increase.
The overall statutory mandate of the Commission in railroad
ratemaking proceedings can, for present purposes, be stated quite
simply. The Congress has charged the Commission with the task of
determining whether the rates proposed by the carriers are "just
and reasonable." 49 U.S.C. § 1(5). [
Footnote 7] In fulfilling this obligation, the Commission
must assess the proposed rates not only against the backdrop of the
National Transportation Policy, 54 Stat. 899, 49 U.S.C. preceding §
l, but also with specific reference to the statutory criteria set
forth by the Congress to guide the ratesetting process. [
Footnote 8] These provisions, in short,
require the Commission to ensure that the rate imposed on the
traveling or the shipping
Page 426 U. S. 511
public will support both an economically sound and efficient
rail transportation system.
This Court has recently set out the regulatory scheme for the
setting of railroad rates mandated by the Interstate Commerce Act,
24 Stat. 379, as amended, 49 U.S.C. § 1
et seq. See
United States v. SCRAP, 412 U. S. 669,
412 U. S.
672-674 (1973). Rates, in the first instance, are set by
the railroads. The proposed rate is filed with the Commission, and
notice is given to the public. After 30 days' notice (or a shorter
period, if authorized by the ICC), the rate becomes effective. 49
U.S.C. § 6(3). The Commission has the authority, during that 30-day
period, to suspend the proposed tariff for a maximum of seven
months in order to investigate the lawfulness of the new rates. 49
U.S.C. § 15(7). [
Footnote 9] At
the end of the seven-month
Page 426 U. S. 512
suspension period, the proposed rate becomes effective unless
the ICC has, prior to the deadline, completed the investigation and
found that the rate is unlawful.
See generally Arrow
Transportation Co. v. Southern R. Co., 372 U.
S. 658 (1963).
Ex parte No. 305, the proceeding
at issue here, was a "general revenue proceeding." The railroads,
while not seeking specific authority for an increase in the rate
applicable to any particular commodity or group of commodities,
proposed to increase the average rates charged.
The power to suspend the proposed rates pending investigation --
the regulatory tool at issue here -- was
Page 426 U. S. 513
added to the Interstate Commerce Act by the Mann-Elkins Act of
1910, 36 Stat. 552. Its purpose was to protect the public from the
irreparable harm resulting in unjustified increases in
transportation costs [
Footnote
10] by giving the Commission "full opportunity for . . .
investigation" [
Footnote 11]
before the tariff became effective. It provided a
"means . . . for checking at the threshold new adjustments that
might subsequently prove to be unreasonable or discriminatory,
safeguarding the community against irreparable losses and
recognizing more fully that the Commission's essential task is to
establish and maintain reasonable charges and proper rate
relationships."
1 I. Sharfman, The Interstate Commerce Commission 59 (1931). The
exigencies of competition, seasonal and other demand trends, and
the influences of the general economy over a seven-month period can
make implementation of this suspension mechanism a particularly
potent tool. That potency was well recognized, even at its
creation. Senator Elkins referred to it as a "tremendous power."
[
Footnote 12] Senator
Cummins characterized it as "an order in the nature of a
preliminary injunction," [
Footnote 13] a characterization later attributed to an
almost identical statute.
Air Freight Forwarder Assn., 8
C.A.B. 469, 474 (1947).
The Commission's setting of this particular condition
Page 426 U. S. 514
precedent to the immediate implementation of the rate increase
was directly related to its mandate to assess the reasonableness of
the rates and to suspend them pending investigation if there is a
question as to their legality. The ICC could have simply suspended
the rates originally proposed by the railroads for the full
statutory seven-month period. Instead, it pursued a more measured
course, and offered an alternative tailored far more precisely to
the particular circumstances presented. The railroads had made the
representation that the increase was justified, at least in part,
by the need to take care of deferred maintenance and deferred
capital expenditures. If the railroads did, in fact, use the
increased revenues for such purposes, the Commission perceived no
reason to impose a suspension of the tariff or to undertake a
lengthy investigation and, consequently, no reason to frustrate the
clear congressional intent that "just and reasonable" rates be
implemented. Delay through suspension would only have aggravated
the already poor condition of some of the railroads. On the other
hand, the Commission was cognizant of a history of poor financial
planning by the railroads in regard to outlays of this nature.
Supra at
426 U. S. 504
n. 4. If the revenues derived from the new tariffs, once received,
were used for other purposes, an investigation prior to their
implementation might indeed be warranted.
In upholding what we find to be a legitimate, reasonable and
direct adjunct to the Commission's explicit statutory power to
suspend rates pending investigation, we do not imply that the
Commission may involve itself in the financial management of the
carriers.
See ICC v. United States ex rel. Los Angeles,
280 U. S. 52
(1929). The action taken by the Commission here is both
conceptually and functionally different from any attempt to
Page 426 U. S. 515
require specific management action, whether it be of a financial
or operational nature; it specified no particular projects, and it
set no priorities. In deciding not to suspend the rates and
investigate their lawfulness on the condition that the revenues be
used in the broadly defined areas of "delayed capital improvements"
and "deferred maintenance," the Commission simply held the
railroads to their representation that the increase was justified
by needs in these two areas. The railroads were, of course, not
required to submit a tariff imposing such a condition on the use of
the resulting revenue. They had the option to continue to insist on
an unconditional increase, to submit proof of its reasonableness to
the Commission, and, if successful, or if the investigation were
not completed within the statutory seven-month period, to collect
rates based on the new tariffs.
In this Court, Chessie has argued that its particular financial
situation makes it unable to use
Ex parte No. 305
revenues, and, consequently, the application of the Commission's
action to it is arbitrary and capricious. The Commission, on the
other hand, submits that there is sufficient evidence in the
proceedings before it to demonstrate that Chessie did, in fact,
have deferred maintenance items upon which these revenues could be
expended. Moreover, the Commission points out that Chessie was not
required to join the other railroads in the cancellation of the
original tariff and the refiling of the one conditioned on the use
of revenues in these two areas. Since the District Court held that
the Commission did not have the power to impose conditions on the
refiling of the tariff, it did not address this question. Chessie,
if it so chooses, may raise the matter on remand in the District
Court.
Accordingly, the judgment is reversed, and the case is
Page 426 U. S. 516
remanded for further proceedings consistent with this
opinion.
Reversed and remanded.
MR. JUSTICE POWELL took no part in the consideration or decision
of this case.
|
426
U.S. 500app|
APPENDIX TO OPINION OF THE COURT
Selected Sections of the Railroad Revitalization and Regulatory
Reform Act, Pub.L. No. 94-210, 90 Stat. 31:
Sec. 202. (a) Section 1(5) of the Interstate Commerce Act (49
U.S.C. 1(5)) is amended by inserting "(a)" immediately after "(5)"
and by adding at the end thereof the following new sentence: "The
provisions of this subdivision shall not apply to common carriers
by railroad subject to this part."
"(b) Section 1(5) of the Interstate Commerce Act (49 U.S.C.
1(5)), as amended by subsection (a) of this section, is further
amended by adding at the end thereof the following new
subdivisions:"
" (b) Each rate for any service rendered or to be rendered in
the transportation of persons or property by any common carrier by
railroad subject to this part shall be just and reasonable. A rate
that is unjust or unreasonable is prohibited and unlawful. No rate
which contributes or which would contribute to the going concern
value of such a carrier shall be found to be unjust or
unreasonable, or not shown to be just and reasonable, on the ground
that such rate is below a just or reasonable minimum for the
service rendered or to be rendered. A rate which equals or exceeds
the variable costs (as determined through formulas prescribed by
the Commission) of providing a service shall be presumed, unless
such presumption is rebutted by clear and convincing evidence, to
contribute to the going concern value of the carrier or carriers
proposing such rate (hereafter in this paragraph referred to as the
'proponent carrier'). In determining variable costs, the Commission
shall, at the request of the carrier proposing the rate, determine
only those costs of the carrier proposing the rate and only those
costs of the specific service in question, except where such
specific data and cost information is not available. The Commission
shall not include in variable cost any expenses which do not vary
directly with the level of service provided under the rate in
question. Notwithstanding any other provision of this part, no rate
shall be found to be unjust or unreasonable, or not shown to be
just and reasonable, on the ground that
Page 426 U. S. 517
such rate exceeds a just or reasonable maximum for the service
rendered or to be rendered, unless the Commission has first found
that the proponent carrier has market dominance over such service.
A finding that a carrier has market dominance over a service shall
not create a presumption that the rate or rates for such service
exceed a just and reasonable maximum. Nothing in this paragraph
shall prohibit a rate increase from a level which reduces the going
concern value of the proponent carrier to a level which contributes
to such going concern value and is otherwise just and reasonable.
For the purposes of the preceding sentence, a rate increase which
does not raise a rate above the incremental costs (as determined
through formulas prescribed by the Commission) of rendering the
service to which such rate applies shall be presumed to be just and
reasonable."
" (c) As used in this part, the terms -- "
" (i) 'market dominance' refers to an absence of effective
competition from other carriers or modes of transportation, for the
traffic or movement to which a rate applies; and"
" (ii) 'rate' means any rate or charge for the transportation of
persons or property."
" (d) Within 240 days after the date of enactment of this
subdivision, the Commission shall establish, by rule, standards and
procedures for determining, in accordance with section 15(9) of
this part, whether and when a carrier possesses market dominance
over a service rendered or to be rendered at a particular rate or
rates. Such rules shall be designed to provide for a practical
determination without administrative delay. The Commission shall
solicit and consider the recommendations of the Attorney General
and of the Federal Trade Commission in the course of establishing
such rules."
"
* * * *"
"(e) Section 15 of the Interstate Commerce Act (49 U.S.C. 15),
as amended by this Act, is further amended -- "
"(1) by adding at the end of paragraph (7) thereof the following
new sentence: 'This paragraph shall not apply to common carriers by
railroad subject to this part.'; and"
"(2) by inserting a new paragraph (8) as follows:"
" (8)(a) Whenever a schedule is filed with the Commission by a
common carrier by railroad stating a new individual or joint rate,
fare, or charge, or a new individual or joint classification,
regulation, or practice affecting a rate, fare, or charge, the
Commission may, upon the complaint of an interested party or upon
its own initiative, order a hearing concerning the lawfulness of
such rate, fare, charge,
Page 426 U. S. 518
classification, regulation, or practice. The hearing may be
conducted without answer or other formal pleading, but reasonable
notice shall be provided to interested parties. Such hearing shall
be completed and a final decision rendered by the Commission not
later than 7 months after such rate, fare, charge, classification,
regulation, or practice was scheduled to become effective, unless,
prior to the expiration of such 7-month period, the Commission
reports in writing to the Congress that it is unable to render a
decision within such period, together with a full explanation of
the reason for the delay. If such a report is made to the Congress,
the final decision shall be made not later than 10 months after the
date of the filing of such schedule. If the final decision of the
Commission is not made within the applicable time period, the rate,
fare, charge, classification, regulation, or practice shall go into
effect immediately at the expiration of such time period, or shall
remain in effect if it has already become effective. Such rate,
fare, charge, classification, regulation, or practice may be set
aside thereafter by the Commission if, upon complaint of an
interested party, the Commission finds it to be unlawful."
" (b) Pending a hearing pursuant to subdivision (a), the
schedule may be suspended, pursuant to subdivision (d), for 7
months beyond the time when it would otherwise go into effect, or
for 10 months if the Commission makes a report to the Congress
pursuant to subdivision (a), except under the following
conditions:"
" (i) in the case of a rate increase, a rate may not be
suspended on the ground that it exceeds a just and reasonable level
if the rate is within a limit specified in subdivision (c), except
that such a rate change may be suspended under any provision of
section 2, 3, or 4 of this part or, following promulgation of
standards and procedures under section 1(5)(d) of this part, if the
carrier is found to have market dominance, within the meaning of
section 1(5)(c)(i) of this part, over the service to which such
rate increase applies; or"
" (ii) in the case of a rate decrease, a rate may not be
suspended on the ground that it is below a just and reasonable
level if the rate is within a limit specified in subdivision (c),
except that such a rate change may be suspended under any provision
of section 2, 3, or 4 of this part, or for the purposes of
investigating such rate change upon a complaint that such rate
change constitutes a competitive practice which is unfair,
destructive, predatory or otherwise undermines competition which is
necessary in the public interest."
" (c) The limitations upon the Commission's power to suspend
rate
Page 426 U. S. 519
changes set forth in subdivisions (b)(i) and (ii) apply only to
rate changes which are not of general applicability to all or
substantially all classes of traffic and only if -- "
" (i) the rate increase or decrease is filed within 2 years
after the date of the enactment of this subdivision;"
" (ii) the common carrier by railroad notifies the Commission
that it wishes to have the rate considered pursuant to this
subdivision:"
" (iii) the aggregate of increases or decreases in any rate
filed pursuant to clauses (i) and (ii) of this subdivision within
the first 365 days following such date of enactment is not more
than 7 per centum of the rate in effect on January 1, 1976;
and"
" (iv) the aggregate of the increases or decreases for any rate
filed pursuant to clauses (i) and (ii) of this subdivision within
the second 365 day-period following such date of enactment is not
more than 7 per centum of the rate in effect on January 1,
1977."
" (d) The Commission may not suspend a rate under this paragraph
unless it appears from specific facts shown by the verified
complaint of any person that -- "
" (i) without suspension the proposed rate change will cause
substantial injury to the complainant or the party represented by
such complainant; and"
" (ii) it is likely that such complainant will prevail on the
merits. The burden of proof shall be upon the complainant to
establish the matters set forth in clauses (i) and (ii) of this
subdivision. Nothing in this paragraph shall be construed as
establishing a presumption that any rate increase or decrease in
excess of the limits set forth in clauses (iii) or (iv) of
subdivision (c) is unlawful or should be suspended."
" (e) If a hearing is initiated under this paragraph with
respect to a proposed increased rate, fare, or charge, and if the
schedule is not suspended pending such hearing and the decision
thereon, the Commission shall require the railroads involved to
keep an account of all amounts received because of such increase
from the date such rate, fare, or charge became effective until the
Commission issues an order or until 7 months after such date,
whichever first occurs, or, if the hearings are extended pursuant
to subdivision (a), until an order issues or until 10 months
elapse, whichever first occurs. The account shall specify by whom
and on whose behalf the amounts are paid. In its final order, the
Commission shall require the common carrier by railroad to refund
to the person on whose behalf the amounts were paid that portion of
such increased rate, fare, or charge found to be not justified,
plus interest at a rate which is
Page 426 U. S. 520
equal to the average yield (on the date such schedule is filed)
of marketable securities of the United States which have a duration
of 90 days. With respect to any proposed decreased rate, fare, or
charge which is suspended, if the decrease or any part thereof is
ultimately found to be lawful, the common carrier by railroad may
refund any part of the portion of such decreased rate, fare, or
charge found justified if such carrier makes such a refund
available on an equal basis to all shippers who participated in
such rate, fare, or charge according to the relative amounts of
traffic shipped at such rate, fare, or charge."
" (f) In any hearing under this section, the burden of proof is
on the common carrier by railroad to show that the proposed changed
rate, fare, charge, classification, rule, regulation, or practice
is just and reasonable. The Commission shall specifically consider,
in any such hearing, proof that such proposed changed rate, fare,
charge, classification, rule, regulation, or practice will have a
significantly adverse effect (in violation of section 2 or 3 of
this part) on the competitive posture of shippers or consignees
affected thereby. The Commission shall give such hearing and
decision preference over all other matters relating to railroads
pending before the Commission and shall make its decision at the
earliest practicable time."
"
* * * *"
"Sec. 205. Section 15a of the Interstate Commerce Act (49 U.S.C.
15a) is amended -- "
"(1) by adding at the end of paragraph (2) and at the end of
paragraph (3) the following new sentence: 'This paragraph shall not
apply to common carriers by railroad subject to this part.';
and"
"(2) by redesignating paragraph (4) as paragraph (6), and by
inserting immediately after paragraph (3) the following new
paragraph:"
" (4) With respect to common carriers by railroad, the
Commission shall, within 24 months after the date of enactment of
this paragraph, after notice and an opportunity for a hearing,
develop and promulgate (and thereafter revise and maintain)
reasonable standards and procedures for the establishment of
revenue levels adequate under honest, economical, and efficient
management to cover total operating expenses, including
depreciation and obsolescence, plus a fair, reasonable, and
economic profit or return (or both) on capital employed in the
business. Such revenue levels should (a) provide a flow of net
income plus depreciation adequate to support prudent capital
outlays, assure the repayment of a reasonable
Page 426 U. S. 521
level of debt, permit the raising of needed equity capital, and
cover the effects of inflation and (b) insure retention and
attraction of capital in amounts adequate to provide a sound
transportation system in the United States. The Commission shall
make an adequate and continuing effort to assist such carriers in
attaining such revenue levels. No rate of a common carrier by
railroad shall be held up to a particular level to protect the
traffic of any other carrier or mode of transportation, unless the
Commission finds that such rate reduces or would reduce the going
concern value of the carrier charging the rate."
[
Footnote 1]
For cases filed after March 1, 1975, review of Interstate
Commerce Commission orders is in the court of appeals with further
review possible by petition for writ of certiorari to this Court.
Pub.L. 93-584, 88 Stat.1917. The present case was filed prior to
March 1, 1975.
[
Footnote 2]
Appellees are the Chesapeake and Ohio Railway Co., the Baltimore
and Ohio Railroad Co., and the Western Maryland Railway. These
railroads are known as the Chessie System, and will be referred to
as such or as Chessie throughout this opinion.
[
Footnote 3]
Except the Long Island Railroad.
[
Footnote 4]
The Commission elaborated:
"The Commission has previously expressed its dissatisfaction
with the evidence introduced by the respondents in general revenue
proceedings. In the subject proceeding, the evidence introduced by
the railroads is far from satisfactory, especially, for example,
the respondents' failure to identify and quantify the costs of
deferred maintenance."
Jurisdictional Statement 47a.
". . . Accordingly, as previously indicated, the Commission
intends that revenues generated by increases authorized herein,
over and above the amount needed for increased material and supply
costs, other than fuel, will be used by the respondents exclusively
for reducing deferred maintenance of plant and equipment and
delayed capital improvements in order that rail
service to
the shippers will be improved. The Commission expects that the
authorized increases will enable the respondents to expend
substantially more for maintenance and capital improvements than in
recent years, and will evaluate respondents' compliance with this
directive. Respondents' failure to apply the increased revenues as
heretofore specified will result in the cancellation of these
authorized increases."
Id. at 48a. (Emphasis in original.)
[
Footnote 5]
"[T]he accrued deterioration or deficiency in the physical
operating condition of railroad track structures, cars and
locomotives, and other property used in the provision of
transportation service resulting from the failure and/or inability
to properly maintain plant and equipment, which produces an adverse
effect on railroad operations to an extent that services to
shippers have been rendered partially or wholly inadequate and/or
has resulted in diminishing the railroads' competitive ability. . .
."
Id. at 56a.
[
Footnote 6]
"[A]ctually planned, specifically identified capital
improvements necessary for the provision of adequate or improved
transportation service to shippers and which had not been
undertaken, scheduled, or otherwise committed because funding . . .
was not, or projected to be, available through June 30, 1975. They
exclude improvements in progress and those scheduled or otherwise
committed and recognized in capital budgets in effect are
applicable on June 1, 1974. These capital improvements are further
identified as delayed expenditures which would (1) add to or
improve the carriers' plant and/or equipment so as to increase its
usefulness, capacity, durability and efficiency, and (2) which are
capitalizable in the property accounts in accordance with the
Commission's accounting regulations. . . ."
Ibid.
[
Footnote 7]
On February 5, 1976, while this case was pending, this section
was amended by § 202(a) of the Railroad Revitalization and
Regulatory Reform Act of 1976, 90 Stat. 34.
See Appendix
to this opinion for text.
[
Footnote 8]
Section 15a(2) of the Interstate Commerce Act, as added at 41
Stat. 488, and amended, 49 U.S.C. § 15a(2), provided:
"In the exercise of its power to prescribe just and reasonable
rates the Commission shall give due consideration, among other
factors, to the effect of rates on the movement of traffic by the
carrier or carriers for which the rates are prescribed; to the
need, in the public interest, of adequate and efficient railway
transportation service at the lowest cost consistent with the
furnishing of such service; and to the need of revenues sufficient
to enable the carriers, under honest, economical, and efficient
management to provide such service."
This section has been amended by § 205 of the Railroad
Revitalization and Regulatory Reform Act (
n 7,
supra).
See 426
U.S. 500app|>Appendix to this opinion for text.
[
Footnote 9]
Section 15(7) of the Interstate Commerce Act, 24 Stat. 384, as
amended, 49 U.S.C. § 15(7), provided:
"Whenever there shall be filed with the Commission any schedule
stating a new individual or joint rate, fare, or charge, or any new
individual or joint classification, or any new individual or joint
regulation or practice affecting any rate, fare, or charge, the
Commission shall have, and it is given, authority, either upon
complaint or upon its own initiative without complaint, at once,
and if it so orders without answer or other formal pleading by the
interested carrier or carriers, but upon reasonable notice, to
enter upon a hearing concerning the lawfulness of such rate, fare,
charge, classification, regulation, or practice; and pending such
hearing and the decision thereon the Commission, upon filing with
such schedule and delivering to the carrier or carriers affected
thereby a statement in writing of its reasons for such suspension,
may from time to time suspend the operation of such schedule and
defer the use of such rate, fare, charge, classification,
regulation, or practice, but not for a longer period than seven
months beyond the time when it would otherwise go into effect; and
after full hearing, whether completed before or after the rate,
fare, charge, classification, regulation, or practice goes into
effect, the Commission may make such order with reference thereto
as would be proper in a proceeding initiated after it had become
effective. If the proceeding has not been concluded and an order
made within the period of suspension, the proposed change of rate,
fare, charge, classification, regulation, or practice shall go into
effect at the end of such period; but in case of a proposed
increased rate or charge for or in respect to the transportation of
property, the Commission may by order require the interested
carrier or carriers to keep accurate account in detail of all
amounts received by reason of such increase, specifying by whom and
in whose behalf such amounts are paid, and upon completion of the
hearing and decision may by further order require the interested
carrier or carriers to refund, with interest, to the persons in
whose behalf such amounts were paid, such portion of such increased
rates or charges as by its decision shall be found not justified.
At any hearing involving a change in a rate, fare, charge, or
classification, or in a rule, regulation, or practice, after
September 18, 1940, the burden of proof shall be upon the carrier
to show that the proposed changed rate, fare, charge,
classification, rule, regulation, or practice is just and
reasonable, and the Commission shall give to the hearing and
decision of such questions preference over all other questions
pending before it and decide the same as speedily as possible."
This section has been amended by § 202(e) of the Railroad
Revitalization and Regulatory Reform Act (
n 7,
supra).
See Appendix to this
opinion for text.
[
Footnote 10]
See, e.g., S.Rep. No. 94-499, p. 13 (1975), on the
recent Railroad Revitalization and Regulatory Reform Act, 90 Stat.
31:
"Without suspension, the rate would go into effect and shippers
would pass the added cost on to consumers. Upon a finding that a
rate was unlawful, shippers could seek a refund, but no such remedy
is available to consumers. Thus, the power to suspend added an
essential element to the Commission's ability to protect the public
interest."
[
Footnote 11]
45 Cong.Rec. 3471 (1910) (statement of Sen. Elkins speaking on
behalf of the majority report).
[
Footnote 12]
Ibid.
[
Footnote 13]
Id. at 6500.
MR. JUSTICE STEVENS, with whom MR. JUSTICE STEWART joins,
dissenting.
The question presented is not whether it is desirable for a
railroad to spend its money wisely. It clearly is. The question is
not whether Congress could authorize the Interstate Commerce
Commission to regulate a railroad's expenditure of funds for
capital improvements, deferred maintenance, or costs of material.
It clearly could. The question is simply whether or to what extent
Congress did grant the Commission such authority. [
Footnote 2/1]
If the power the Commission purports to exercise in this case
really exists, it is rather surprising that it has lain dormant for
so long and has been disavowed so often. [
Footnote 2/2] Nowhere in the voluminous statutory
language
Page 426 U. S. 522
quoted by the Court can I find an authorization to the
Commission to impose direct regulatory controls on a railroad's
expenditures. Nor is the any precedent for this action in either
the Commission's decisions,
see n 2,
supra, or in the decisions of this Court.
Quite the contrary, the holdings in
ICC v. United States ex
rel. Los Angeles, 280 U. S. 52, that
the Commission lacked power to compel the railroads to construct a
new passenger station, and in
United States v. Pennsylvania R.
Co., 242 U. S. 208,
that the Commission could not order a railroad to furnish tank cars
for shipping oil, imply that the Commission possesses no such
power. [
Footnote 2/3]
Page 426 U. S. 523
If the Commission may not impose such regulation directly, it is
equally impermissible for it to do so indirectly by attaching
conditions to its approval of rate increases. [
Footnote 2/4] For periodic rate adjustments are
inevitable in response to the ever-present pressures of economic
change, and it is almost equally inevitable that carriers will
assert all available grounds in support of such adjustments. The
petition in the present case sought to justify the increase for a
variety of overlapping reasons: the increased cost of wages, fuel,
and materials; increased interest rates; the decreased access of
railroads to capital markets; the need to present deterioration of
existing equipment; the need to modernize and expand capacity
Page 426 U. S. 524
to meet increased demand; the disparity between the rate of
inflation and past increases in railroad rates. [
Footnote 2/5] Any one of these justifications
could, on the Court's rationale, furnish the predicate for
Commission regulation of decisions heretofore regarded as the
prerogative of railroad management. The Commission's power to work
its will in the form of conditional approvals, if valid, is only
slightly less pervasive than the power to regulate affirmatively.
[
Footnote 2/6]
Nor do I believe the Commission's action can be supported as an
exercise of some sort of inherent equitable power to order specific
performance by the Chessie of a commitment it has made. The
description of industry conditions in the petition for the general
rate increase was entirely accurate. It did not purport to describe
the condition of each railroad in the country. The revenue needs of
financially sound railroads, like the Chessie, are vastly different
from those of bankrupt and near-bankrupt lines. [
Footnote 2/7] General rate increase proceedings are
not principally concerned with the revenue needs of particular
railroads, but serve the quite different purpose of determining
whether an increase is appropriate on an industry-wide or an
area-wide basis. As this Court recognized in
United
States v. Louisiana, 290
Page 426 U. S. 525
U.S. 70, general rate increase proceedings would prove
impossible
"if, instead of adjudicating upon the rates in a large territory
on evidence deemed typical of the whole rate structure, [the
Commission] were obliged to consider the reasonableness of each
individual rate before carrying into effect the necessary increased
schedule."
Id. at
290 U. S. 75-76.
The primary concern must be with industry-wide or area-wide
economic conditions, not with the financial condition of particular
carriers. Indeed, the petition for a general rate increase in this
case did not contain any representations specifically addressed to
the financial condition of the Chessie, and the attached schedules
contained financial statements of the Chessie of unchallenged
accuracy. [
Footnote 2/8] There was
no misdescription of the industry, and there was no misdescription
of the Chessie.
But even if the petition had misrepresented the prosperous
financial condition of the Chessie, the proper remedy would have
been to suspend the rate increase as it applied to the Chessie.
[
Footnote 2/9] The reason the
Commission did not take this step is that it would have forced
competing railroads to lower their rates, and hence would have
denied them the increased revenues they need to make improvements.
[
Footnote 2/10] Thus, the
Commission's position is not
Page 426 U. S. 526
that conditional rate increases are necessary to maintain the
integrity of the ratemaking process, but rather that they are
necessary for either of two very different purposes: to prevent
strong railroads from making excess profits at the rates necessary
to provide a reasonable return to weak railroads; [
Footnote 2/11] or to protect weak railroads from
competition at the lower rates that would otherwise be imposed on
strong railroads. [
Footnote
2/12]
Section 15a of the Interstate Commerce Act once contained a
provision that served precisely these purposes. The Transportation
Act of 1920, 41 Stat. 456, added to § 15a a "Recapture Clause,"
which applied to
"net railway operating income substantially and unreasonably in
excess of a fair return upon the value of . . . railway property
held for and used in the service of transportation."
§ 422, 41 Stat. 489. The Recapture Clause required that one-half
the excess revenues be paid to the Commission and placed in a
special fund for loans to less prosperous railroads, and that the
remainder be kept by the railroad in a special reserve fund
that
Page 426 U. S. 527
could be used only for purposes specified in the statute. 41
Stat. 489-491. Together with the provision in the 1920 Act that
first authorized general rate proceedings, 41 Stat. 488, the
Recapture Clause permitted the Commission to prevent strong
railroads from making excess profits while enabling it to set
general rates high enough to give weak railroads a reasonable
return. [
Footnote 2/13] However,
the Recapture Clause was repealed, and the excess revenues fund
redistributed, by the Emergency Railroad Transportation Act, 1933,
§§ 205, 206, 48 Stat. 220. The repeal was in part attributable to
the economic distress of the railroads during the Great Depression,
but Congress was also impressed by reasons of a more permanent
character. The House Committee on Interstate and Foreign Commerce
reported the repealer favorably, relying on the following testimony
of the chairman of the legislative committee of the Interstate
Commerce Commission:
"'There is something incongruous in a system of regulation which
finds it necessary to permit carriers to earn more than they ought
to earn, and meets the difficulty by taking money away after
Page 426 U. S. 528
it is received.'"
H.R.Rep. No.193, 73d Cong., 1st Sess., 30 (1933).
The parallel with what the Commission has purported to do in the
present case -- permit the Chessie to earn more than it should but
forbid expenditure of the excess -- is striking. The only
difference is that the Commission asserts this power without
express authorization, relying instead upon its broad power to
prescribe "just and reasonable rates" under § 15a(2) of the
Interstate Commerce Act, as it read before its recent amendment.
[
Footnote 2/14] Ironically, that
provision was enacted by the same section of the same Act that
repealed the Recapture Clause, § 205 of the Emergency Railroad
Transportation Act, 1933, 48 Stat. 220. It is doubtful that
Congress would have used the general language of former § 15a(2) to
confer, by implication, a broader power than it had previously
granted in express terms and with specific limitations in the
Recapture Clause. It is inconceivable that it intended to do so in
the same section of the same Act that repealed the Recapture
Clause.
I would affirm the judgment of the District Court.
[
Footnote 2/1]
Cf. NAACP v. FPC, 425 U. S. 662,
425 U. S. 665.
See also id. at
425 U. S.
673-674 (BURGER, C.J., concurring in judgment)
(emphasizing the need for caution before concluding that Congress
authorized the Federal Power Commission to regulate business
practices not previously regulated by that agency).
[
Footnote 2/2]
As recently as 1971, the Commission disavowed precisely the
position it has taken in this case. Referring to a report finding a
need for the railroads to double their expenditures for equipment
and facilities, the Commission stated:
"The development of capital for investments of the type
recommended in this report remains the function of management, and
is not a measure of the reasonableness of rate levels. It is to be
hoped that the earning capacity of the carriers will be such as to
enable them to command adequate investment money on either a debt
or equity basis.
That capacity, however, has reference to their
individual management, and concerns a problem distinct from the
lawfulness of their rates."
Ex parte No. 265, Increased Freight Rates, 1970 and
1971, 339 I.C.C. 125, 180-181 (1971) (emphasis added).
The Commission has repeatedly disavowed any general power to
require railroads to purchase and maintain sufficient equipment for
adequate service.
Duralite Co., Inc. v. Erie Lackawanna R.
Co., 339 I.C.C. 312, 314 (1971);
Adequacies -- Passenger
Service -- Southern Pac. Co., 335 I.C.C. 415, 423-425 (1969);
Oliver Mfg. Supply Co. v. Reading R. Co., 297 I.C.C. 654,
658 (1956);
Jacksonville Port Terminal Operators Assn. v.
Alabama, T. & N. R. Co., 263 I.C.C. 111, 116 (1945);
Joseph A. Goddard Realty Co. v. New York, C. & St. L.R.
Co., 229 I.C.C. 497, 502 (1938). The Commission has made the
same representation to Congress. ICC 86th Annual Report 23 (1972);
ICC 84th Annual Report 9 (1970); ICC 70th Annual Report 83
(1956).
[
Footnote 2/3]
The Court distinguishes
Los Angeles, and presumably
Pennsylvania R. Co., as well, on the grounds (a) that the
Commission has conditioned the rate increase only upon expenditures
in the broad categories of "delayed capital improvements" and
"deferred maintenance," (b) that the railroads themselves
represented that they needed the increase for such expenditures,
and (c) that the Commission only exercised its suspension powers
and the railroads remained free to seek a general rate increase.
Ante at
426 U. S.
514-515. The second and third reasons are discussed
infra at
426 U. S.
523-525, and n. 6. The first is plainly insufficient,
for administrative intrusion into managerial decisionmaking does
not decrease as the scope of the decision increases. In this case,
the intrusion is great precisely because the decision is general:
whether to allocate an increase in revenues to operating expenses,
to deferred capital and maintenance expenditures, or to other
purposes. For the Chessie, the increased revenues at stake are
approximately § 29.7 million for the first three quarters of 1975.
App. 346, 357, 368, 379, 390, 401, 412, 423, 434. Nationwide, the
Commission estimated that a 10% increase would produce a 1.5
billion increase in annual revenues for the industry, of which 70%,
less increased income taxes, is subject to the disputed condition.
Ex parte No. 305, Nationwide Increase of Ten Percent in
Freight Rates and Charges, 1974; Orders of Apr. 30, 1974, May 3,
1974, and July 18, 1974; Jurisdictional Statement 8a, 33a, 59a.
[
Footnote 2/4]
An order allowing a rate increase subject to a condition is in
no sense equivalent to an order allowing a rate increase without
conditions, but upon a finding that the increase is needed for only
one purpose. In the former case, the condition may be enforced by
actions for injunctions and forfeitures. 49 U.S.C. §§ 16(7)-(9),
(12). In the latter, the railroad could not be forced to rescind
the rate increase without a full hearing to determine whether its
rates were "unjust or unreasonable." 49 U.S.C. § 15(1). By itself,
I would think proof that the increased revenue had been expended
for other purposes would be insufficient to show that the increased
rates were "unjust or unreasonable," at least in the absence of
intentional misrepresentation in the prior rate increase
proceedings.
[
Footnote 2/5]
Ex parte No. 305, supra; App 101-119.
[
Footnote 2/6]
The Commission's suspension power, upon which the Court relies,
ante at
426 U. S.
512-515, is an equally insufficient predicate for the
exercise of control over expenditures. Since the Commission cannot
impose the condition in the exercise of its ratemaking powers, it
cannot accomplish the same result by suspending the rate increase
to coerce the railroads into "consenting" to the condition by
submitting a tariff to that effect.
[
Footnote 2/7]
One railroad represented that it needed the increase in order to
meet payrolls, and another that it needed the increase to
accelerate a bankruptcy reorganization program.
Ex parte No.
305, supra; App. 109-110, 112.
[
Footnote 2/8]
Ex parte No. 305, supra, and Schedules A and B; App.
95-124, 142-154.
[
Footnote 2/9]
The broad language of §§ 15 and 15a of the Interstate Commerce
Act, both before and after their recent amendments, contemplates
suspension and regulation of rates of individual carriers.
See
ante at
426 U. S.
510-512, nn. 8, 9, and
ante at
426 U. S.
517-521.
[
Footnote 2/10]
The Commission has candidly stated its reasons for not
suspending the rate increase with respect to individual
railroads:
"In theory, the Commission could discipline a railroad that
misled it about the uses to which it would put revenues collected
only with the Commission' permission by reducing that line's rates
and requiring it to make refunds. But because the railroads compete
with each other (freight usually can be sent over two or more lines
using different routes to reach the same destination), if the
Commission ordered an offending railroad to reduce its rates, other
lines would be compelled to follow suit, and would themselves be
deprived of the funds they need to make improvements."
Brief for Appellants 22.
[
Footnote 2/11]
I do not mean to express the opinion that Chessie's profits
would be excessive at the increased rate.
[
Footnote 2/12]
The Commission's position is, in fact, somewhat broader: any
railroad that failed to make deferred capital and maintenance
expenditures in the appropriate amounts, but charged the full
increased rate, would receive an unjust and unreasonable rate.
Ex parte No. 305, supra; Order of June 3, 1974;
Jurisdictional Statement 42a-43a. Consequently, the condition was
necessary either to prevent all such railroads from receiving an
unreasonable return or to avoid imposing a lower rate on such
railroads, and thus putting competitive pressure on the railroads
that do make the prescribed expenditures.
[
Footnote 2/13]
The language of the Recapture Clause stated as much:
"(5) Inasmuch as it is impossible (without regulation and
control in the interest of the commerce of the United States
considered as a whole) to establish uniform rates upon competitive
traffic which will adequately sustain all the carriers which are
engaged in such traffic and which are indispensable to the
communities to which they render the service of transportation,
without enabling some of such carriers to receive a net railway
operating income substantially and unreasonably in excess of a fair
return upon the value of their railway property held for and used
in the service of transportation, it is hereby declared that any
carrier which receives such an income so in excess of a fair return
shall hold such part of the excess, as hereinafter prescribed, as
trustee for, and shall pay it to, the United States."
41 Stat. 489.
[
Footnote 2/14]
See ante at
426 U. S. 510
n. 8.