William O. Douglas

“ It is the task of the transportation system to carry commodities from points of production to consuming centers throughout the United States and to the ports for export. The more freely and cheaply the products are carried, the more competition there will be, the more production there will be, and the better will our transportation system serve our national economy. ”

“ The class rate traffic is largely that of small shippers, who do not have the ability to obtain the benefit of the lower exception or commodity rates.
We cannot, therefore, treat this case as if it were one where the Commission, in spite of a showing of some increased cost in the West, reduced all freight rates to a level of equality with the East. It is a case of determining whether the discrimination against one small class of traffic is warranted by the showing of some increased cost in the West. ”

“ The balancing and weighing of these interests is a delicate task. 'Whether a discrimination in rates or services of a carrier is undue or unreasonable has always been regarded as peculiarly a question committed to the judgment of the administrative body, based upon an appreciation of all the facts and circumstances affecting the traffic.' Swayne & Hoyt, Ltd. ”

“ As we said earlier, § 3 (1) does not dicate a policy of national uniformity in rates; it only requires that the lack of uniformity in rates among and between territories be justified by territorial conditions. The finding of the Commission, if supported by evidence, that the revenue needs of carriers in one territory demand a lower or a higher rate in that territory is a justification for a difference in rates as between that territory and other territories. The order of the Commission granting the general rate increase is not before us and we intimate no opinion on it. ”

“ These problems of transportation economics are complicated and involved. For example, the determination of transportation costs and their allocation among various types of traffic is not a mere mathematical exercise. Like other problems in cost accounting, it involves the exercise of judgment born of intimate knowledge of the particular activity and the making of adjustments and qualifications too subtle for the uninitiated. ”

“ For example, it costs more to carry freight over the mountains in two trains than to carry it on the plains in one train. Likewise, we must recognize the fact that railroad transportation service and rates depend somewhat on the intensity of the traffic. In long stretches of territory with no traffic, shippers must pay more for railroad service than do shippers in a densely settled part of country where traffic is plentiful and where there is much competition from busses, trucks, and things of that kind. ”

“ It is, therefore, argued that what the Commission has sought to do is to equalize economic advantages, to enter the field of economic planning, and to arrange a rate structure designed to relocate industries, cause a redistribution of population, and in other ways to offset the natural advantages which the territory has over another. ”

“ It is no less inequality to have equality among unequals. The findings do not reveal how it happened that putting 10% on and taking 10% off respectively will beget just the right adjustment. I am not suggesting that one might not dig out of the record inexplicit, argumentative support for the view that an increase of 10% in Official Classification Territory rates will still leave the level of rates within that Territory not unreasonable, and that a decrease of 10% in Western Territory will leave the carriers the required reasonableness of rates within that Territory. ”

“ Mile for mile, a higher average charge is made for transportation under the present classifications in the more sparsely settled areas of the South and West than is more in the denser traffic regions of the Northeast. Why, then, should not the alleged discrimination be removed by lowering the high rates of the South and West? The answer is that they cannot be reduced further than the ten percent already ordered in this proceeding, because the railroads of the South and West, in view of their costs, could not bear further decrease. ”

“ Administrative experts no doubt have antennae not possessed by courts charged with reviewing their action. And so it may well be that to the expert feel the justifiable correction of an imbalance between Official Territory rates and the rates of other territories is a shift of 10% in the respective rates-Official Territory rates increased 10% and rates elsewhere decreased 10%. But courts charged as they are with the review of the action of the Commission, ought not to be asked to sustain such a mathematical coincidence as a matter of unillumined faith in the conclusion of the experts. ”

“ The Commission has concluded that while cost studies are highly relevant to these rate problems they are not conclusive. It said in this case:
'Discretion and flexibility of judgment within reasonable limits have always attended the use of costs in the making of rates. Costs alone do not determine the maximum limits of rates. Neither do they control the contours of rate scales or fix the relations between rates or between rate scales. Other factors along with costs must be considered and given due weight in these aspects of rate making.' 262 I.C.C. p. ”

“ We have seen that those cost figures run higher in the West than in the East; that even when no constant costs common to all traffic are allocated to less-than-carload traffic, the deficit in the West is substantially higher than that in the East. The Commission noted that less-than-carload traffic as a whole is carried at a deficit in all territories, except possibly in the South. ”

“ Congress has never intimated, much less declared a purpose to deprive the territory in which fifty percent of the nation's consumers reside of the benefit of this policy. The Ramspeck resolution did no more than to direct the Commission's attention to earnest complaints that the South and West were being mistreated in the matter of rail rates, and very properly to direct that they determine such complaints on their merits. ”

“ A large volume of all traffic moves across territorial boundaries and therefore becomes common to two or more territories. And as respects the balance, the Commission found striking similarity in the consists of the traffic so far as its revenue-producing characteristics are concerned. The manufactures and miscellaneous commodity group embraces traffic which moves at relatively high rates, i.e., rates which, ton-mile for ton-mile, make a substantially greater than average contribution to the constant costs. ”

“ In North Dakota we have a large volume of wheat to transport in the fall of the year, and because we have that large volume, and because our territory is practically level, we have a rather beneficial rate on wheat as compared with some other territories. Our railroad commission and traffic experts are afraid that the provision to which reference has been made will take that special rate away from us. ”

“ The fact that relatively small amounts of freight move by class rates proves not that the regional and territorial discrimination is slight, but that the rate structure as constituted holds no promise of affording the various regions or territories that parity of treatment which territorial conditions warrant. The Commission in substance concluded that that result could not be achieved unless traffic was, in the main, moved on class rates. ”

“ It happens that some of the areas richest in natural resources in the United States are sparsely populated. If the raw materials making up those natural resources are to be converted into finished products in that vicinity, allowing the area some economic benefit from their conversion, it will be necessary to transport considerable volumes of finished goods for long distances. ”

“ But by administrative succession and judicial fiat the regulatory power of the Federal Government over commerce is now used to force a surtax on transportation of one section of the country admittedly not needed to compensate the railroad for the carriage but to take away from its inhabitants one of the advantages inherent in its density of population, regardless of the disadvantages which density of population also causes. ”

“ As we have said, this proceeding pertains only to class rates, which move but a small percentage of the traffic. It is, therefore, argued that the Commission should not have made adjustments in those rates without bringing about some equalization of exception and commodity rates under which the bulk of the traffic is moved. But there is no reason in law why the Commission need tackle all evils in the rate structure or none. It may take one step at a time. ”

“ But that takes too narrow a view of the problem confronting the Commission. We start of course with some showing of actual discrimination against shippers by reason of their use of class rates. But the main case of discrimination made out by the record is one against regions and territories. We assume that a case of unlawful discrimination against shippers by reason of their geographic location would be an unlawful discrimination against the regions where the shipments originate. But an unlawful discrimination against regions or territories is not dependent on such a showing. ”

“ So the only other way of equalizing the rates and making it as costly to move goods there as anywhere in the United States, is to make the shippers in the Northeastern territory pay the railroads this additional 10% which they have not asked and do not need. ”

“ The same is true where, as here, the Commission in order to eliminate territorial discriminations proceeds under § 15 (1) to fix new reasonable rates. If the hands of the Commission are tied and it is powerless to protect regions and territories from discrimination unless all rates involved in the rate relationship are controlled by the same carriers, then the 1940 amendment to § 3 (1) fell far short of its goal. We do not believe Congress left the Commission so impotent. ”

“ The Commission has not placed the western roads in a straight jacket. It has made an interim reduction onless-than- carload class rates as an incident to its removal of discriminations in carload class rates. It has indicated the course to be followed by the carriers, as a part of the overall classification and class rate problem, to make certain that these rates are compensatory. We are thus dealing with a problem which is in flux, an interim order made necessary as a result of a comprehensive revision of entire rate structures. ”

“ Perhaps the most incomprehensible of the Court's grounds for sustaining this order is that we do not have here a 'revenue problem.' It is admitted that the Northeastern rates before increase are not proved nor found by the Commission to be noncompensatory to the railroads, or otherwise wise to threaten harmful effects upon the revenues and transportation efficiency of the carriers who get the increase. ”

“ As to the consists, it is said that the eastern roads have a much heavier percentage of freight of a kind that produces excess revenue to carry the general expenses. Findings of the Commission are relied upon as showing that the eastern roads' preponderance of high-grade traffic affords a greater source of revenue than does the high percentage of law rate products carried by the western roads. [27] These undisputed facts are said to disprove the Commission's finding that the consists of traffic in the respective territories do not warrant the present differences in class rates. ”

“ Then, also, the percentages of the total traffic in each territory which fall under the several commodity groups are not only very siilar in th e East, South, and West, but each group yields about the same percentage of the total revenues in each of the territories. The choice of groupings is plainly a specialized problem in transportation economics upon which the Commission is peculiarly competent to pass. ”

“ The Commission's findings under § 3 (1) are first challenged on the ground that there is no finding that the corresponding class rates are actually charged to or demanded of competing shippers in the several territories. That is to say, no unlawful discrimination in favor of a shipper in Official Territory and against a shipper in Southern Territory can be said to exist unless it is shown that the southern competitor is actually required to pay the higher interterritorial class rates. ”

“ While the western roads vigorously challenge the Commission's finding, their argument is in the main directed to the point that some disparity in rates between East and West is justified by differing territorial costs. ”

“ They insure prospective shippers not only that the rates are just and reasonable per se bt that the y are properly related to those of their competitors. Shippers are then not dependent on their ability to get exception rates or commodity rates after their industries are established and their shipments are ready to move. They have a basis for planning ahead by relying on a coherent rate structure reflecting competitive factors. ”

“ The Commission cannot eliminate discrimination-i.e., harmonize the rate relations between territories-in disregard of the reasonableness of the readjusted rates within each territory. The Interstate Commerce Act must be applied in its entirety and the different sections which make an articulated whole cannot be treated disjointedly. ”