1. Under § 13(4) of the Interstate Commerce Act, the Interstate
Commerce Commission is given plenary power to remove the
discrimination created by intrastate rates against interstate
commerce by raising intrastate rates so that the intrastate traffic
may produce its fair share of the revenue required to meet
maintenance and operating costs and to yield a fair return on the
value of property devoted to the transportation service. P.
292 U. S.
479.
2. In a hearing before the Interstate Commerce Commission to
determine whether intrastate switching rates in the Chicago
Switching District should be increased to the level of interstate
rates in order to do away with discrimination against interstate
commerce, the question whether a cost study used at an earlier
hearing was adequate and representative of conditions existing at
the time of the later hearing, or should be refined and
supplemented, was a question of fact for the determination of the
Commission, which will not be disturbed when supported by evidence.
P.
292 U. S.
480.
3. Findings of the Interstate Commerce Commission supporting its
order for the raising of intrastate rates to the level of
interstate rates for switching in the Chicago Switching District
are to be read in the light of traffic conditions in the District
as disclosed in the evidence before the Commission and described in
its report. P.
292 U. S.
481.
4. Findings of the Interstate Commerce Commission showing that
the Chicago Switching District (situate part in Illinois and part
in Indiana) is essentially a unit, so far as switching movements
are concerned, that the interstate and intrastate traffic are
commingled and handled indiscriminately in the same manner, often
in the same trains and by the same crews, that the movements have
no relation to main-line-hauls, but are chiefly between local
industries, and involve a complete service originating and
terminating within the District, that transportation conditions
throughout the District are substantially similar, that the
established interstate scale is reasonable, and not shown to cause
any undue preference or advantage to persons or localities in
intrastate or interstate commerce,
Page 292 U. S. 475
that the lower intrastate rates have resulted, and will result,
in unjust discrimination against interstate commerce, that they
caused loss of carrier revenue, and that their increase to the
level of the interstate rates will probably result in increase of
such revenues -- held ample to support the Commission's order
raising the intrastate rates accordingly. P.
292 U. S.
482.
5. Where the conditions under which interstate and intrastate
traffic move are found to be substantially the same with respect to
all factors bearing on the reasonableness of the rate, and the two
classes are shown to be intimately bound together, there is no
occasion to deal with the reasonableness of the intrastate rates
more specifically, or to separate intrastate and interstate costs
and revenues. P.
292 U. S.
483.
6. The effect of maintaining an intrastate rate lower than the
reasonable interstate rate is necessarily discriminatory wherever
the two classes of traffic, inextricably intermingled, are carried
on, as in the Chicago Switching District, under substantially the
same conditions. P.
292 U. S.
485.
7. There was evidence in support of the Commission's conclusion
that the area should be treated as a unit, and a uniform blanket or
group rate applied within it, rather than distance or zone rates.
P.
292 U. S.
485.
8. An order, made applicable to all carriers in the Chicago
Switching District, directing that intrastate switching rates shall
be maintained on a parity with the interstate rates
"contemporaneously applied by said carriers," interpreted in the
light of the report, applies to interstate carriers whose rails in
the district are confined to one State and which, for that reason,
have filed no interstate switching rate, and requires them to adopt
the prescribed intrastate rate. P.
292 U. S.
486.
9. The rule that a carrier may not be required to remove
discrimination against a locality unless it participates in both
the prejudicial and preferential rates is irrelevant to proceedings
under § 13(4) of the Interstate Commerce Act for removal of
discrimination against interstate commerce caused by intrastate
rates maintained by state authority. P.
292 U. S. 487.
Affirmed.
Appeal from a decree of the District Court, constituted of three
judges, which dismissed a bill brought against the United States
and 37 railroad corporations by two
Page 292 U. S. 476
ratemaking commissions of the States of Illinois and Indiana,
respectively, and by other parties, to set aside an order of the
Interstate Commerce Commission. That Commission intervened.
MR. JUSTICE STONE delivered the opinion of the Court.
This is an appeal under the Urgent Deficiencies Act of October
22, 1913, c. 32, 38 Stat. 208, 219-220, from a decree of a District
Court for Northern Illinois, three judges sitting, which dismissed
the complaint upon which appellants sought to set aside an order of
the Interstate Commerce Commission.
The order, made under § 13(3)(4) of the Interstate Commerce Act,
directed the removal of unjust discrimination against interstate
commerce, resulting from disparity of the intrastate and interstate
switching rates of interstate rail carriers in the Chicago
Switching District, lying partly in Illinois and partly in Indiana.
It provided that the intrastate rate should be not less than the
interstate switching rates prescribed in an earlier order
Page 292 U. S. 477
of the Commission in Switching Rates in Chicago Switching
District, 177, I.C.C. 669, of 3� per 100 pounds for one-line-hauls,
3.5� for two-line-hauls, and 4� for three-or more line-hauls of
carloads of minimum weight of 60,000 pounds. The rates, both
interstate and intrastate, which were thus displaced were commodity
rates of 2.5� per 100 pounds for one- and two-line-hauls, and 3�
for three or more line-hauls. The rates are for district intrastate
switching movements, having no relation to mainline movements. They
are chiefly between local industries, involve a complete service
originating and terminating within the district, and embrace a
loaded and empty car movement and two complete terminal
services.
The Commission, of its own motion, began the first proceeding in
Switching Rates in Chicago Switching District,
supra, in
which the carriers, interested shippers, and the state commissions
of Illinois and Indiana were parties, and in the course of which
extensive hearings were conducted jointly by the Interstate
Commerce Commission and the two state commissions. Pending this
proceeding, the carriers were directed by the Interstate Commerce
Commission to make a cost study of switching movements in the
District. This study, which involved the preparation of statistics
showing the longest, shortest, and average hauls within the
District and detailed cost data for selected periods in 1926-1927
was completed and submitted to the Commission, and was an important
part of the evidence on which it based its decision.
In its report and order, made July 31, 1931, the Commission
found the rates which it prescribed for interstate switching
service to be reasonable for future application on all commodities
shipped within the District, except railway equipment on its own
wheels. It also stated that a large percentage of the traffic was
intrastate in character, but that the record did not disclose any
difference
Page 292 U. S. 478
in the conditions surrounding the handling of the interstate and
intrastate movements. It made no order with respect to the
intrastate traffic, but expressed the hope that the two state
commissions would bring the intrastate rates into harmony with the
interstate rates which it had prescribed.
The state commissions failed to prescribe a higher level of
intrastate rates, and the carriers of the District, shortly after
the new rates became effective, filed with the Interstate Commerce
Commission a petition to establish an increased rate for intrastate
traffic, whereupon the Commission, on November 2, 1931, reopened
the proceeding for further hearing with respect to the relationship
of intrastate and interstate rates. A complaint filed with the
Commission by numerous shippers attacking the lawfulness of the
interstate switching rates was assigned for hearing with the
proceeding already pending.
At the hearings, the state commission, in one proceeding, and
the shippers, in the other, offered evidence which, by stipulation,
was treated as received in both, to show that the interstate
switching rates were unreasonably high, and in support of
allegations that the cost study made in the first proceeding was
defective because of changed conditions. The Commission
consolidated the two dockets in one report, and, by its report and
order of July 3, 1933, 195 I.C.C. 89, assailed here, it dismissed
the complaint of the shippers with respect to the interstate rates
and placed the intrastate rates on the same basis as the interstate
rates already in effect. Before the hearings were closed, motions
of the state commissions and shippers, appellants here, that a
further and more detailed cost study be made, which it was
contended would be more representative of the traffic, and which
would reflect conditions in 1932, five years after the period
selected for study, were denied. The same questions were raised by
motions to reopen the proceedings in the two dockets, or
Page 292 U. S. 479
for reargument, to reconsider the cost study, which were also
denied.
In the District Court below, the case was submitted upon the
pleadings, the two reports and orders of the Commission, and
certified copies of the evidence and exhibits before the Commission
in the second proceeding. The court dismissed the complaint upon
findings of fact and law, rejecting the several contentions which
appellants make before us.
The scope and application of § 13(4) Interstate Commerce Act
have so recently been fully considered in opinions of this Court in
United States v. Louisiana, 290 U. S.
70;
Florida v. United States, ante, p.
292 U. S. 1;
see
also Georgia Public Service Comm'n v. United States,
283 U. S. 765;
Florida v. United States, 282 U.
S. 194,, that it is unnecessary to repeat that
discussion here. Under § 13(4), the Interstate Commerce Commission
is given plenary power to remove the discrimination created by
intrastate rates against interstate commerce by raising intrastate
rates so that the intrastate traffic may produce its fair share of
the revenue required to meet maintenance and operating costs and to
yield a fair return on the value of property devoted to the
transportation service. The question for decision is whether the
order of the Commission directing the removal of the discrimination
is supported by the findings, based upon substantial evidence.
The numerous objections to the order are grounded, for the most
part, on an elaborate analysis and discussion of the evidence. All
have received our attention, but, so far as they require our
discussion, they may be summarized as follows: (1) The order of the
Commission is void because of its abuse of discretion in denying
the motions for an order requiring that the original cost study be
supplemented by a further and more detailed study which would
reflect conditions in 1932 and in denying
Page 292 U. S. 480
the petition for reopening the proceedings or reargument for
reconsideration of the effect to be given the cost study. (2) The
order is not supported by the findings. (3) Certain essential
findings are not supported by evidence. (4) The order is too
indefinite to be applied.
1. The alleged abuse of discretion by the Commission is not that
it refused to consider the contention of appellants as to the
sufficiency of the cost study in the light of the facts relied
upon,
see Atchison, T. & S.F. Ry. Co. v. United
States, 284 U. S. 248, but
that it decided these contentions wrongly. There can be no serious
doubt that the cost study faithfully represented conditions
obtaining during the periods in 1926-1927 selected for study. It
was characterized by the Commission as "perhaps more exhaustive"
than any previously undertaken in proceedings involving switching
charges. To the seven carriers of the thirty-five serving the
District originally chosen for study during selected periods, eight
others were added on the initiative of the Commission. A request of
certain of the appellants that the Chicago Junction Railway be
included in the study was denied, the Commission pointing out in
both reports that, because of the short hauls on this line, it did
not regard the traffic as representative. Appellants urge
specifically that, if all the lines in the District were not to be
included, this line should have been in order to make the study
fairly representative, but the Commission considered the issue of
fact so raised, and decided to the contrary.
The principal contention is that conditions since 1927 have so
changed that a new study should be made. The changes emphasized are
(1) falling off in volume of traffic; (2) improvement of highways
in the District resulting in diversion of traffic from the rail
lines for movement by truck; (3) the decline in value of many of
the articles transported; (4) reduction in wages and cost of
supplies, and (5) curtailment of the amount of service rendered
by
Page 292 U. S. 481
carriers to industries within the District. In considering these
changes on the basis of the data already in the record, the
Commission pointed out that they had resulted in increased unit
costs because unaccompanied by a corresponding or proportionate
decrease in operating expense. It also concluded upon the basis of
data before it that, in view of the improvement of highways and
trucking facilities and other changes in conditions affecting
traffic, the Commission could not, even though it were its duty to
do so, provide a rate which would enable the railroads to compete
successfully with trucking movements, by which the traffic had been
diverted. The Commission decided that, on the record before it, it
was able to consider the effect of the factors suggested by
appellants, and that a new cost study was unnecessary.
Whether or not the cost study was representative, whether the
study should have been more refined, and whether it should have
been supplemented as appellants desired are questions of fact the
determination of which is within the competence of the Commission.
The Commission reached its conclusion after full hearing and
thorough consideration of all questions presented. As the record
affords a sufficient basis for the Commission's determination, it
is not subject to review in the courts.
See Manufacturers'
Railway Co. v. United States, 246 U.
S. 457,
246 U. S. 481;
Assigned Car Cases, 274 U. S. 564,
274 U. S.
580.
2. The Commission's findings are to be read in the light of
traffic conditions fully disclosed in the evidence and described in
the Commission's report. The Chicago Switching District comprises
an area of more than 600 square miles, served by 35 railroads,
which maintain there more than 5,000 miles of track, serving 4,000
private industries. The District is essentially a unit so far as
switching movements are concerned. Interstate and intrastate
traffic are commingled in switching movements and handled in the
same manner indiscriminately,
Page 292 U. S. 482
often in the same trains and by the same crews. As already
noted, the movements have no relation to mainline hauls, are
chiefly between local industries, involve a complete service
originating and terminating within the District, a loaded and empty
car movement, and two complete terminal services.
In the original proceeding, no party took the position that a
rate should apply on intrastate traffic within the District
different from that applied to interstate traffic, the only
substantial issue being whether the rates finally adopted and
applied to interstate traffic were too high. In the second
proceeding, after considering and stating at length the evidence
showing the effect upon interstate commerce of the lower rates
prevailing upon intrastate traffic of the same general character,
and the probable effect in an increased return to the carriers if
the intrastate rate were raised to the interstate level, the
Commission found that the transportation conditions throughout the
Chicago Switching District are substantially similar; that they are
no more favorable to interstate movements than to intrastate
movements within the District; that the established interstate
scale of rates was reasonable and not shown, when applied to
intrastate, to have or cause any undue preference and advantage to
the persons or localities in intrastate commerce, or any undue
preference and advantage to persons and localities in interstate
commerce; that the lower intrastate rates had resulted, and would
for the future result, in unjust discrimination against interstate
commerce. The report dealt at length with the evidence showing
probable increase in revenue which would result if the intrastate
rates were raised to the interstate level; comparisons based on the
recorded traffic in 1926 and in November, 1931, and January, 1932,
indicated a loss of revenue by the maintenance of the lower
intrastate rate in excess of $1,000,000. These findings, which are
supported by detailed subsidiary findings
Page 292 U. S. 483
in the report, are ample to support the order.
Florida v.
United States, supra. T hey disclose no such defects as were
found in
Florida v. United States, 282 U.
S. 194, or urged in
United States v. Louisiana,
supra.
Specific objections to the sufficiency of the findings, so far
as they are not already disposed of by what has been said, are that
there is no finding that the intrastate rates, before the increase,
were less than maximum reasonable rates, and there was no finding
which separated interstate and intrastate property, revenues, and
expenses of the carriers so as to make it possible to compare
revenues with cost for the two classes of traffic considered
separately. But these objections, and others which we need not stop
to consider in detail, leave out of account the nature of the
traffic and the significance of the principal and subsidiary
findings showing that the conditions throughout the District were
substantially the same for both classes of traffic, which were
handled in the same manner. The inquiry in both proceedings was
directed to the commerce of the District as a unit. The decision in
the first proceeding that the increase in interstate rates was
reasonable was made in the hope that the state commissions would
bring intrastate rates into harmony. When they failed to do so, the
Commission reaffirmed its finding that the new interstate rates
were reasonable and found that the intrastate rates must be raised
in order that the intrastate traffic may bear its fair hare of the
revenue burden. It is plain from the nature of the inquiry that the
rate level, to which both classes of traffic were raised, was found
reasonable on the basis of the traffic as a whole. Where the
conditions under which interstate and intrastate traffic move are
found to be substantially the same with respect to all factors
bearing on the reasonableness of the rate, and the two classes are
shown to be intimately bound together, there is no occasion to deal
with the reasonableness of the intrastate
Page 292 U. S. 484
rates more specifically, or to separate intrastate and
interstate costs and revenues.
Compare American Express Co. v.
Caldwell, 244 U. S. 617;
United States v. Louisiana, supra; Florida v. United States,
supra.
3. Appellants contend there is no evidence in the record to
support the Commission's findings that the prescribed interstate
rate was reasonable, or that, after the increase in that rate, the
old intrastate rate unjustly discriminated against interstate
commerce. Appellants reach their conclusion as to the
reasonableness of the interstate rate by disregarding the cost
study as evidence because, as is contended, it was erroneously
considered by the Commission. But, as we have already said, it was
for the Commission to determine whether the cost study was
adequate, or whether it was necessary to refine or supplement it in
order to make it dependable evidence for the purpose of ratemaking.
The study itself afforded evidence of the reasonableness of the
rate fixed, and, upon the whole record, there was abundant support
for the Commission's finding, which was carefully and thoroughly
considered in its report. There is no basis upon which the courts,
not authorized to weigh evidence, could reexamine or disregard its
conclusion.
The increased intrastate rate applied to grain, to which
specific objection is made, does not stand on a different footing.
This objections is also predicated upon the mistaken assumption
that the Commission should have disregarded the cost study and
traffic analysis as evidence. It is true that the rates on grain
were not included in the all-commodity rate prevailing in the
District before the first proceeding was initiated, and were not
uniform throughout the District, but the proceeding was reopened by
the Commission to investigate the lawfulness of "all rates and
charges . . . of all carload traffic" interstate, and their
relationship to like rates and charges intrastate.
Page 292 U. S. 485
It acted upon a record showing that the grain moved
intra-District, under the same conditions as other commodities, and
the Commission had before it evidence showing that the cost of the
traffic largely exceeded the revenue derived from the old rates,
and that a rate on a distance or zoning basis was
impracticable.
Similarly, the finding of unjust discrimination against
interstate commerce made in the second report rests upon evidence.
The effect of maintaining a lower rate intrastate than the
reasonable interstate rate is necessarily discriminatory wherever
the two classes of traffic, inextricably intermingled, are carried
on, as in the District, under substantially the same conditions.
Compare United States v. Louisiana, supra. Moreover, it
appeared that many of the railroads cannot move traffic between
points of origin and destination in Indiana and between points of
origin and destination in Illinois without crossing the state line,
and thus subjecting the shippers to the interstate rate; that some
of the industries are located on both sides of the state line, and
that some of the assembling yards and interchange tracks overlap
state lines. On the other hand, many industries, in preference to a
more direct interstate route, resort to intrastate routes to obtain
lower rates, although they are so-called "unnatural" routes,
against the flow of traffic, and therefore entail additional
expense in handling. Evidence to show the extent of the burden upon
the carriers' revenues, and the diversion of traffic from interest
the to "unnatural" intrastate movements, is found both in the
testimony of the carrier witnesses and in exhibits of record.
Appellants recur to their criticism of the cost study, and
insist that, in view of differences between average lengths of haul
in intrastate and in interstate movements, costs and revenues
intrastate and interstate should have been segregated. But this
objection is directed not only to the conclusion of the Commission,
already considered,
Page 292 U. S. 486
that the cost study was representative and dependable evidence,
but is based upon the assumption that the Commission should
disregard the long history of rates in the Switching District, in
the course of which a commodity rate, generally applicable without
regard to distance, had been built up through the District, and
that, upon a review of the evidence, we are free to reject the
Commission's conclusion that a distance or zone rate should not
apply. Upon this subject there was substantial evidence supporting
the reasonableness of uniform commodity rates in preference to a
distance or zone rate. So far as this objection is of any force, it
goes only to the weight of the evidence, and not to the want of it.
Treating an area as a unit and applying a uniform blanket or group
rate within it, as is the common practice with respect to switching
rates, is within the competence of the Commission.
See St.
Louis Southwestern Ry. Co. v. United States, 245 U.
S. 136,
245 U. S. 138,
Note 1,
245 U. S. 141;
United States v. Illinois Central R. Co., 263 U.
S. 515,
263 U. S. 518,
Note 1;
Virginian Ry. Co. v. United States, 272 U.
S. 658,
272 U. S. 660,
272 U. S.
664.
4. Appellants contend that the order cannot be applied to
certain carriers whose rails extend only into the Illinois section
of the District. As, in terms, it directs that intrastate rates be
established on the level of the interstate switching rates
maintained by the carriers who are parties to the proceeding, it is
said to be inapplicable to those carriers which, because they do
not cross state lines in their switching operations, have filed no
interstate switching rates. But we think the order is not to be
read so narrowly. It is made applicable to all the carriers in the
District, and directs that the intrastate switching rates shall be
maintained on a parity with the interstate rates "contemporaneously
applied by the said carriers." On its face, it would seem that the
quoted phrase was intended only to describe the intrastate
rates
Page 292 U. S. 487
maintained by such of the carriers as had occasion to establish
interstate switching rates. But, if this were doubtful, the order
is to be read with the report.
Georgia Public Service Comm'n v.
United States, supra,
283 U. S. 771;
American Express Co. v. Caldwell,
supra, 244 U. S. 627.
So read, there can be no doubt that it was intended to prescribe
for all intrastate traffic within the District the same rate as
that prescribed for all interstate traffic there, and that
interstate carriers whose rails are confined to either state, and
which for that reason have filed no interstate switching rates, are
nevertheless required to adopt the prescribed intrastate rate.
Appellants also urge that interstate carriers whose rails reach
only the Illinois part of the District cannot be required to remove
a discrimination against interstate commerce unless they
participate in both the prejudicial and preferential rates, as was
said in
Texas & Pacific Ry. Co. v. United States,
289 U. S. 627,
with respect to discriminations between localities forbidden by § 3
of the Act. But this restriction has no relevance to proceedings
under § 13(4) directed to the removal of discriminatory intrastate
rates maintained by state authority. By that section, the
Interstate Commerce Commission is expressly authorized to prescribe
the intrastate rates which will remove the discrimination.
Affirmed.