William O. Douglas

“ It also seems clear that under § 530 of the California Public Utilities Code this discretion of the federal officers may be exercised and reduced rates used only if the Commission approves. The question is whether California may impose this restraint or control on federal transportation procurement.
We lay to one side these cases which sustain nondiscriminatory state taxes on activities of contractors and others who do business for the United States, as their impact at most is to increase the costs of the operation. ”

“ In the present case, the challenge is not to a rate 'order' but to a statute which requires the United States to submit its negotiated rates to the California Commission for approval. The United States wants to be rid of the system that subjects its procurement services to that form of state supervision.
We come to the merits. Congress has provided a comprehensive policy governing procurement. ”

“ The provision in the law, respecting land-grant rates, which imposes on the United States the obligation to pay 'the full applicable commercial rates,' 49 U.S.C. § 65, 49 U.S.C.A. § 65, applies only to rates fixed by the Interstate Commerce Commission and is made expressly subject to § 22 of the Interstate Commerce Act.↑ The findings of the District Court state: 'Under the theory of rate regulation in California and elsewhere, every common carrier is required to have in existence at all times a published rate to cover the shipment of every known item between every conceivable point. ”

“ The Government has contended that disproportionately high rates would be imposed on military traffic because special 'commodity' rates normally have not been established for many articles peculiar to military transportation, thus requiring recourse to higher 'class' rates. The State has countered with the suggestion that the Commission might authorize retroactive rates which would enable the Government in effect to achieve commodity rates after shipments of presently unscheduled items. ”

“ There is a large volume of military traffic between points in California. For many years the United States has negotiated special agreements with carriers as to the rates governing the transportation of government property. Property for the armed services has usually been transported at negotiated rates substantially equal to or lower than those applicable to regular commercial shipments. ”

“ Indeed, the very intention of the California Legislature in making special provision for the Government to negotiate with the Commission was to enable it to secure advantageous rates which would not even have been possible if the rate schedules were binding upon all shippers without the possibility of administratively granted exceptions. ”

“ We also need do no more than mention cases where, absent a conflicting federal regulation, a State seeks to impose safety or other requirements on a contractor who does business for the United States. ”

“ For § 486 requires common carriers to file their rates with the Commission. Section 493 provides that no common carrier shall engage in transportation until its schedules of rates have been filed. Section 494 provides that no common carrier 'shall charge, demand, collect, or receive a different compensation for the transportation of persons or property * * * than the applicable rates * * * specified in its schedules filed * * *.' (A like provision is contained in Art. XII, § 22 of the California Constitution.) ”

“ I see no good reason for departing now from that wise policy. In my view the Government should be remitted to the California Commission and courts to test there, in the first instance, the application of this statute, and the federal courts should withhold final judgment on constitutionality until the true effect of the statute has thus become known. The Government, however, should be permitted to proceed during this period as it had before § 530 was amended, for any possibility of state interference with military or other governmental operations would thereby be avoided. ”

“ I would not so extend the doctrine of implied federal immunities, especially when Congress has the undoubted power to deal directly with such matters according to its assessment of the competing state and federal interests involved. ”

“ This rate structure is known as the class or 'paper rate.' Since the channels of commercial traffic are regular and well defined in accordance with the stability of trade, large commercial shippers seldom use the class rate but negotiate rates with the carriers known as 'commercial rates,' which are peculiarly suited and adapted to the requirements of the commerce involved. ”

“ Moreover, no rates exist for much of the military traffic, which means that, unless the United States can negotiate rates for each shipment, the shipments will be delayed for Commission action unless shipped under the established rates which are higher than negotiated rates. ”

“ Notes
↑ Cal.Stat.1951, c. 764, p. 2045.↑ California Public Utilities Code § 3515 defines a 'highway permit carrier' as 'every highway carrier other than a highway common carrier or a petroleum irregular route carrier.'↑ The purpose of this subsection is 'to place the maximum responsibility for decisions as to when it is impracticable to secure competition in the hands of the agency concerned.' S.Rep. No. 571, 80th Cong., 1st Sess., p. 8. ”