Tom C. Clark

“ The circumstances that go to the setting of a rate, however, are not necessarily confined to such costs, but may include a wide range of other considerations such as the ability of traffic to bear the increase and the economic condition of an industry. Costs, furthermore, may be considered indirectly through the factors that generate costs, such as the quality of the service rendered, the physical characteristics of the area through which the traffic moves, average loading, average length of haul, density of traffic, and so forth. ”

“ It is apparent that the factors that may reasonably be found to enter into costs are inexhaustible in number and too changing in significance to permit a definitive catalogue to be drawn up. Least of all should such a task be undertaken by courts that cannot be assumed to have familiarity with, let alone specialized knowledge of, the practicalities of the transportation industry, and whose contact with these matters is necessarily episodic. ”

“ In the case of interstate traffic, one rate set for an entire interstate movement may take into account not only conditions within the State whose intrastate rates are in question, but also conditions in surrounding States. In comparing cost factors, therefore, it may be necessary to consider not only whether interstate and intrastate traffic as they move through the State move under the same conditions, but also the conditions under which interstate traffic moves beyond the borders of the State. ”

“ Intrastate commuter service was of much heavier volume than interstate, both in number of passengers and passenger miles, but the Commission pointed out that increased costs from such density went far to offset its advantages. Wear and tear on equipment was increased, and since traffic was concentrated at rush hours, additional crews and equipment needed to handle it were idle during the rest of the day. There was evidence that intrastate trains made more stops than interstate trains and used coaches that were older, more crowded, and not air-conditioned. ”

“ Embedded in it are some of the advantages in simplicity of administration that would follow if this Court had expanded, as it might well have done, the doctrine of discrimination against persons or localities to permit state-wide orders protecting all interstate shippers against discrimination without reference to revenues. At the same time, there remains an opportunity for intrastate shippers or a state commission to show to the Interstate Commerce Commission's satisfaction the existence of specific factors favoring intrastate traffic in general that should not wisely be ignored. ”

“ When a § 13 proceeding follows regulation of rates on comparable interstate traffic, furthermore, evidence introduced in the interstate proceedings, whether they are general revenue proceedings or directed to specific rates, will, to a greater or less extent, also bear on conditions surrounding the movement of intrastate traffic, and it may not be unreasonable for the Commission to assume, in the absence of persuasive evidence to the contrary, that the conclusions it has drawn from such evidence about general conditions are equally applicable to a particular State. ”

“ Understanding in such a complex area as rate regulation, and the feel for the subject essential to successful administration, come only from saturation in the elements of the problem by those constantly concerned. Even to the Commission, what one year has appeared an inconsiderable factor in appraising relative transportation conditions affecting costs has the next, in the light of new experience, been deemed highly relevant. ”

“ Intrastate transportation is primarily the concern of the State. Federal power exists in this area only when intrastate tariffs are so low that an undue or unreasonable advantage, preference, or prejudice is created as between persons or localities in intrastate commerce on the one hand and interstate commerce on the other, or when those rates cast an undue burden on interstate commerce. ”

“ In regard to the average length of haul, for example, if terminal costs are fixed, the longer the haul the more the carrier will realize per mile unless the rate is itself graduated to take this fact into account. Interstate hauls are probably on the whole longer than intrastate hauls. Where passenger service is concerned, wholly different factors may become important in deciding whether fare differentials are justified. For instance, coaches used in intrastate suburban or commuter service may require more cleaning and average fewer passenger miles per day than through coaches. ”

“ In such a context a determination of discrimination too easily becomes simply an inquiry into reasonableness, an inquiry the Commission is not empowered to make in respect to intrastate fares. By being compelled to make findings reflecting a broader view of the profitableness of intrastate operations, the Commission is made to give assurance that intrastate commerce has in fact been compared with interstate commerce and discrimination found. ”

“ The results of a traffic study, separately listing interstate and intrastate terminations of the commodities involved, bore indirectly on density. A greater proportion of intrastate than interstate traffic was handled in costly local trains. A cost study based on waybills showing average load, haul, and rates charged was introduced to show that intrastate rates provided a greater return above cost than rates on interstate movements; the Commission rejected this evidence on the ground that the information in the waybills was unreliable. ”

“ The Court finds that there was no justification for the Commission's conclusion that density figures introduced by petitioners were unreliable. Such a judgment by the Court on the basis of these statistics is indeed puzzling.
Exhibit 64 compares, for four Class I carriers in Utah, freight density (ton-miles per mile of main-line track) for 'intrastate' operations with this density for each carrier's system as a whole. In each case the 'intrastate' density is greater than the system density. It is important to understand just what is being compared in this exhibit. ”

“ Once there is evidence of the general nature here introduced, it is for those who contend that intrastate conditions are dissimilar to come forward with convincing evidence showing what specific factors affecting costs are more favorable. Statements in earlier opinions of the Court indicate that such is in fact present law. [7] It is the only workable solution. ”

“ Instead there was general testimony that the conditions surrounding intrastate and interstate transportation in Alabama were substantially similar, and that the witnesses knew of no conditions in Alabama that would justify different intrastate rates. There was some evidence that the tonnage of fertilizer moving intrastate was much greater than that moving interstate, and that ton-miles per loaded car of fertilizer were greater in Alabama than in the Southern District as a whole. ”

“ But this assumption is no through ticket permitting it to approach the question of intrastate rates with partiality for a uniform increase. Rate uniformity is not necessarily the goal of federal regulation, nor can the Commission's wishful thinking be substituted for substantial evidence. Section 13 is not cast in terms of 'assumption' or 'partiality.' As applied to this case, it contemplates an inquiry into intrastate rates and conditions within Utah, and any conclusion that interstate operating conditions equally exist there must be ticketed on more than assumption. ”

“ Since the purpose of the proceeding is to increase the contribution to revenues from intrastate traffic, there must be a finding that higher rates will in fact result in increased revenues. If business is unable to bear the higher rates, and either production will be curtailed or traffic diverted to cheaper modes of transport, increased rates may actually decrease revenues. ”

“ Statistics introduced by the railroads as to comparative economic conditions showed recent economic improvement to be greater percentagewise in the West and particularly in Utah than in other sections. The emphasis recently has switched from agriculture to industrial and mining activity, with its resulting increase in traffic-a factor tending to suggest more favorable railroad operating conditions. ”

“ Case-by-case adjudication, without scrutiny of underlying generalizations or presuppositions, must culminate in an effort to determine whither we are going, and whether the direction cut by the specific instances should be further pursued or whether it represents a deviation from the path demanded by the purpose of the regulatory legislation. ”

“ More elaborate findings have not been required because of the practical impossibility, at least where the traffic is mingled and carried on as one operation, of accurately segregating costs between interstate and intrastate commerce. ”

“ This conclusion may have been justified in the Wisconsin case itself. However, the limitation imposed by that case and later cases upon the effective scope of the persons-localities basis of discrimination, because of stringent evidentiary requirements, seems to have derived more from the origin of the prohibition in the particular kind of situation presented by the Shreveport case than from restrictions inherent in the regulatory scheme contemplated by the statute. ”

“ There is nothing in the record to indicate that the higher rate of return for the D&RGW is due to the fact that a substantial part of its traffic is Utah intrastate traffic. It may be due to any one of a number of factors: the railroad as a whole may be more efficiently operated than the UP or the SP ”

“ It follows a general revenue proceeding raising interstate rates, and seeks to apply the same increase there granted to intrastate traffic.
The validity of the Commission's state-wide order was not impaired because as to particular traffic or carriers in the State a rate increase might not be justified. It may be that an increase in rates on certain traffic will decrease revenues, or the operations of one carrier may already be exceptionally profitable. Factors affecting costs may vary throughout the State. ”

“ Finally, we note an absence in the findings of any indication that the Commission concerned itself with the revenues derived from, or the conditions incident to, intrastate passenger operations. While a sweeping inquiry into those operations is not required, we believe that in light of our opinion in Chicago, M., St. P. & P.R. Co. v. State of Illinois, supra, the findings must reflect consideration of these factors in arriving at a general intrastate freight level. ”

“ There was also considerable evidence that bore indirectly on traffic density in these commodities: tonnage moved in each of the States; producers throughout the territory, in Louisiana, and in western Louisiana; total production in western Louisiana; shipments to particular consumers; estimates, based on the Louisiana highway program and population statistics, of probable future consumption. In addition there was the usual general testimony on similarity of conditions, and references to Commission findings in earlier proceedings on the same question. ”

“ Thus it is clear that there were good reasons for rejecting the evidence in Exhibit 64, [6] but even if the comparison offered were the best, the Commission surely would not be compelled to accept the density evidence as conclusive. Density is only one of a multitude of factors affecting costs, and what is gained by high density may be lost because of some other factor. High density itself, as was shown in State of New York v. ”