Opinion
Civ. A. No. 8219.
May 14, 1956.
John Patterson, Atty. Gen., and William H. Sanders, Asst. Atty. Gen., State of Alabama, and, Morris K. Sirote, Sirote, Permutt, Friend Friedman, Birmingham, Ala., for plaintiffs.
James E. Kilday and Frederica S. Brenneman, Attys., Dept. of Justice, Washington, D.C., and Atley A. Kitchings, then U.S. Atty., Birmingham, Ala., for United States.
Leo H. Pou, Associate Gen. Counsel, Interstate Commerce Commission, Washington, D.C., for Interstate Commerce Commission.
Cabaniss Johnston, Sadler Sadler, and Gibson Gibson, Birmingham, Ala., Clarence Raymond, Louisville, Ky., James A. Bistline, Washington, D.C., E.D. Grinnell, Jr., St. Louis, Mo., Walter C. Scott, Jr., Savannah, Ga., Erle J. Zoll, Jr., Chicago, Ill. and John W. Adams, Jr., Mobile, Ala., for intervening railroad defendants.
Before RIVES, Circuit Judge, LYNNE, Chief Judge, and GROOMS, District Judge.
This is an action against the United States and the Interstate Commerce Commission (hereinafter referred to as the Commission), brought in this court, under 28 U.S.C. § 1336 and 2321 through 2325, by the State of Alabama, Alabama Public Service Commission (hereinafter referred to as the Alabama Commission), Alabama Coal Agency, a non-profit, voluntary, unincorporated association, whose members are engaged in the business of mining commercial coal within the State of Alabama and selling same, and five named corporations which are engaged in the scrap iron business in the State of Alabama. They ask the Court to enjoin, set aside and annul the reports and order of the Commission, dated April 4, 1955, 294 I.C.C. 579 and October 17, 1955, ___ I.C.C. ___, in its Docket No. 31321, Alabama Intrastate Rates and Charges on Coal, Lumber and Scrap Iron.
The effect of the order under attack is to require all railroads operating in Alabama to increase Alabama intrastate rates and charges on bituminous coal to the levels prevailing on June 15, 1953 (prior to a general downward revision ordered by the Alabama Commission in its Docket No. 12865) and to apply to those increased rates the same respective increases as are, and for the future may be, maintained by the railroads on like interstate traffic between points in Alabama and adjoining states, under the Commission's authorizations in Ex Parte No. 175, Increased Freight Rates, 1951, 280 I.C.C. 179, 281 I.C.C. 557, 284 I.C.C. 589, and 289 I.C.C. 395, and, further, to require such railroads to increase the present intrastate rates on scrap iron, where lower than the interstate scale rates applying, between points in Alabama and between points in Alabama and adjoining states, so that they will respectively be on the same level as the corresponding alternating interstate scale rates subject to the same minimum weights of 30,000, 50,000, and 80,000 pounds. (294 I.C.C. 579, 591)
Intervening as defendants as a matter of right pursuant to the provisions of 28 U.S.C. § 2323 and Rule 24(a), Fed. Rules Civ.Proc. 28 U.S.C. all affected railroads became parties in this proceeding.
Commencing in 1940, in obedience to the spirit of Sections 13(2) and 15a(2) of the Interstate Commerce Act and in conformity with the National Transportation Policy stated in Section 1 of the Transportation Act of 1940, the Commission undertook a continuing nationwide investigation of interstate railroad freight rates. In Ex Parte No. 162, Increased Railway Rates, Fares and Charges, 1946, 264 I.C.C. 695, 266 I.C.C. 537; Ex Parte 166, Increased Freight Rates, 1947, 269 I.C.C. 33, 270 I.C.C. 93, 270 I.C.C. 403; Ex Parte 168, Increased Freight Rates, 1948, 272 I.C.C. 695, 276 I.C.C. 9; and Ex Parte 175, Increased Freight Rates, 1951, 280 I.C.C. 179, 281 I.C.C. 557, 284 I.C.C. 589, 289 I.C.C. 395, the Commission, taking cognizance of steadily advancing operating costs, authorized the railroads to increase their interstate freight rates and charges for the purpose of providing the carriers with additional revenue to meet mounting costs for equipment materials, supplies and wages. Implicit in these proceedings was the finding that increased operating costs were not confined to interstate traffic but were also related to the movement of intrastate traffic, and the contemplation, in determining the amounts of authorized increases, that like increases would be applied to intrastate traffic.
Sec. 13(2), 36 Stat. 550; as amended, 41 Stat. 484, 49 U.S.C.A. § 13(2); Sec. 15a(2); 54 Stat. 912, 49 U.S.C.A. § 15a (2).
Sec. 1 of the Transportation Act of 1940, inserting a preamble to the Interstate Commerce Act, 54 Stat. 899, 49 U.S.C.A. note preceding section 1.
In addition to the statements of the Commission in this regard in the instant proceeding at sheets 17-18 of its original report, April 4, 1955, and at sheet 11 of its report on reconsideration, October 17, 1955, see also: Louisiana Intrastate Freight Rates and Charges, 291 I.C.C. 279, 314, and Increased Freight Rates, 1951, 284 I.C.C. 589, 660.
On June 23, 1953, the present railroad defendants filed with the Commission a petition alleging that the revised scale of intrastate rates on commercial coal authorized by the Alabama Commission in its Docket No. 12865, by order dated February 27, 1953, and effective June 16, 1953, so reduced existing rates that most of the revenue increases derived from prior Ex Parte Proceedings had been eliminated. The petition further alleged that by that action, and by its order in its Docket No. 13124, authorizing a flat 10 per cent increase on this reduced scale (in lieu of the 12 per cent increase with a 40-cent-per-ton maximum authorized for interstate coal in Ex Parte 175), the Alabama Commission required the railroads to maintain unreasonably low rates which did not produce a fair share of necessary revenues, and which resulted in undue, unreasonable and unjust discrimination against interstate commerce in violation of Section 13(3) and (4) of the Interstate Commerce Act.
The order established "base rates" based on the average mileage to common destinations in Alabama from "base group" mines in Alabama, with fixed differentials to be added or subtracted when the coal originated from other or "differential groups" of mines. (Exhibit 99)
General increases authorized in interstate rates by Ex Parte 162. Increased Railway Rates, Fares and Charges, 1946, 264 I.C.C. 695 and 266 I.C.C. 537, were secured for Alabama Intrastate Coal only after a Section 13 proceeding determined that denial by the Alabama Commission of these increases was discriminatory. Alabama Freight Rates and Charges, 274 I.C.C. 439. Similarly, the increases prescribed on interstate coal in Ex Parte 166, Increased Freight Rates, 1947, 269 I.C.C. 33, and 270 I.C.C. 81, 93 and 403 (three reports), and in Ex Parte 168, Increased Freight Rates, 1948, 272 I.C.C. 695 and 276 I.C.C. 9, required action by the Commission before they were authorized in Alabama, Alabama Intrastate Rates and Charges, 1950, 278 I.C.C. 605.
To A.P.S.C 115 162 166 168 Rate 162-168 A.P.S.C
Exhibit 98.
By amendment to their petition, dated November 12, 1953, the railroads asked the Commission also to investigate alleged unreasonably low intrastate rates on scrap iron which the Alabama Commission had on four occasions refused to increase to the higher interstate levels. A history of the general rate adjustment on scrap iron in Southern territory established in June, 1932, is contained in Exhibit 83 of the record before the Commission.
The hearing before the Commission was conducted by an examiner and resulted in a record consisting of 532 pages of testimony and 132 exhibits. The Examiner issued a proposed report; the present plaintiffs excepted thereto; the present defendant rail carriers replied to the exceptions; the issues were argued before the Commission; the Commission issued its report of April 4, 1955; the plaintiffs filed petitions for reconsideration and reargument; the rail carriers replied to such petitions; the Commission reopened the proceeding for reconsideration, and after carefully reexamining the evidence, affirmed its prior decision in its report of October 17, 1955, and simultaneously issued its order of which plaintiffs are here complaining.
A Court of three judges has been constituted as required by statute; the case has been heard upon the record made before the Commission and the briefs and arguments of counsel, and, by agreement of the parties, has been submitted for final decree.
Prolific diligence of counsel for the competing parties has produced original and supplemental briefs in behalf of plaintiffs, aggregating 215 pages, and in behalf of defendants, aggregating 174 pages. No pertinent decision of Commission or Courts has escaped their attention either by citation or by discussion. Adroitly they have dissected the testimony of witnesses and the exhibits considered by the Commission for the avowed purpose of demonstrating the substantiality of the evidence, on the one hand, or of illustrating on the other, that, due to its dissembling nature, it does not rise above the level of mere rags and tatters. Cf. United States ex rel. Lindenau v. Watkins, D.C., 73 F. Supp. 216.
To respond to each ardent insistence of counsel would result in an unduly extended opinion. We are content to dispose of plaintiffs' assault upon the power of the Commission to increase intrastate rates in order to remove discrimination against interstate commerce and upon the constitutionality of Section 13(3) and (4), under which it purported to act, by citing: Simpson v. Shepard, (Minnesota Rate Cases), 1913, 230 U.S. 352, 33 S.Ct. 729, 57 L. Ed. 1511; Houston, East and West Texas Railway Company v. United States, (Shreveport Rate Case), 1914, 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341; Railroad Commission of Wisconsin v. Chicago, Burlington Quincy Railroad Company, 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371; State of New York v. United States, 257 U.S. 591, 42 S.Ct. 239, 66 L. Ed. 385; State of Louisiana v. United States, 290 U.S. 70, 54 S.Ct. 28, 78 L.Ed. 181; State of Texas v. United States, 337 U.S. 911, 69 S.Ct. 1162, 93 L.Ed. 1722.
Laboring painfully the proposition that the Commission misapplied, indeed misapprehended, the law, plaintiffs assert that it treated the proceeding before it as one involving "rates" and not "revenue"; that its ultimate conclusion, spawning its ill-begotten order, was rested merely upon an obvious disparity between interstate and interstate rates upon the same commodities; that, in short, it construed Section 13(4) as a self-executing requirement of complete uniformity in such rates. Cf. State of North Carolina v. United States, 325 U.S. 507, 65 S.Ct. 1260, 89 L.Ed. 1760. We do not agree. Clearly emerging from its discussion of its basic and subsidiary findings, appearing in both its original and reconsidered reports, is its awareness that its power to interfere with the rate-making function of a State may only be exercised when it may demonstrate that the State-prescribed rate injuriously affects interstate commerce.
The limited scope of our review of the order complained of requires neither redefinition nor elaboration. It has been spelled out in Interstate Commerce Commission v. Union Pacific R. Co., 222 U.S. 541, 547, 32 S.Ct. 108, 56 L.Ed. 308; Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286, 54 S. Ct. 692, 78 L.Ed. 1260; Rochester Telephone Corp. v. United States, 307 U.S. 125, 139, 59 S.Ct. 754, 83 L.Ed. 1147; and Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456.
Leaving no stone unturned, plaintiffs vigorously assail each of the five findings of the Commission, reproduced in the margin. Each of them has been examined separately and collectively, to determine whether, assuming that each was supported by substantial evidence, there were present the essential elements to support the Commission's action in supplanting State-prescribed intrastate rates.
Each of such findings has been subjected to judicial scrutiny on other occasions and has been approved both as to adequacy and clarity. It would be pure supererogation to add a gloss to the rationale of such pertinent opinions. In capsule form we asquiesce as follows:
Finding No. 1. King v. United States, 344 U.S. 254, 73 S.Ct. 259, 97 L.Ed. 301; State of North Carolina v. United States, D.C., 128 F. Supp. 718, 721, affirmed 350 U.S. 805, 76 S.Ct. 45.
Finding No. 2. King v. United States, supra; State of North Carolina v. United States, supra; Louisiana Public Service Commission v. United States, D.C., 125 F. Supp. 180, affirmed 348 U.S. 885, 75 S.Ct. 206, 99 L.Ed. 695; State of Tennessee v. United States, D.C., 113 F. Supp. 634, affirmed 346 U.S. 891, 74 S. Ct. 222, 98 L.Ed. 394.
Finding No. 3. King v. United States, supra; State of North Carolina v. United States, supra; Louisiana Public Service Commission v. United States, supra; State of Tennessee v. United States, supra.
Finding No. 4. King v. United States, supra; State of Tennessee v. United States, supra; State of North Carolina v. United States, supra; Louisiana Public Service Commission v. United States, supra.
Finding No. 5. King v. United States, supra; State of Tennessee v. United States, supra; State of North Carolina v. United States, supra; Louisiana Public Service Commission v. United States, supra.
In performing our reviewing function we are not permitted to assume that the findings, which we hold to be adequate, are supported by substantial evidence. We have not done so. For it was on this front that the main battle was pitched. In oral arguments and in briefs, unsurpassed in this court for precision in factual presentation and analysis, counsel for the competing parties have hotly contested the substantiality literally of each scrap of evidence thought either to support or to detract from the validity of each finding.
Mindful that there has been entrusted to our keeping the question as to whether on the record as a whole there is substantial evidence to support the Commission's findings, we have essayed a painstaking, time-consuming search of the entire record to determine whether the reports and order of the Commission are "justified by a fair estimate of the worth [of the evidence, including the testimony of witnesses] or its informed judgment on matters within its special competence or both." Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 490, 491, 71 S.Ct. 456, 466, 95 L.Ed. 456.
Considering the record as a whole and taking into account contradictory evidence and evidence from which conflicting inferences may be drawn, we hold that there was substantial evidence to support the following findings of fact made by the Commission:
1. Finding No. 1, in its entirety.
2. The involved Alabama intrastate rates are abnormally low.
3. Traffic in the affected commodities moving under the rates prescribed by the Alabama Commission fails to produce its fair share of the revenues required by the railroads.
4. The burden cast upon interstate commerce by the abnormally low Alabama rates is undue and results in discrimination against such commerce.
5. The intrastate rates prescribed by the Commission will not result in unreasonable rates or charges.
6. Finding No. 5, in its entirety.
For the sake of brevity we pretermit a discussion of the evidence which we conclude meets the test of substantiality and upholds the foregoing findings. Nor do we deem it necessary to refer to its source in the transcript of the testimony or in the exhibits since counsel, in briefs, have devoted much time and space to its analysis and criticism.
In the atmosphere of the oral arguments there was created an impression that the gravest question before the Court related to the ultimate conclusion of the Commission, expressed in its Finding No. 3. It concluded, in substance, that the Alabama intrastate rates, which it prescribed, would remove the undue, unreasonable, and unjust discrimination against interstate commerce existing as a result of the rates authorized by the Alabama Commission. Essentially, as the Commission recognized, the validity of this conclusion depends upon its subsidiary finding (Finding No. 4) that increased intrastate rates can reasonably be expected to result in an increase in the carriers' revenues. United States v. Louisiana, 290 U.S. 70, 80, 54 S.Ct. 28, 78 L.Ed. 181; State of Florida v. United States, 282 U.S. 194, 51 S.Ct. 119, 75 L.Ed. 291.
That such a finding is necessarily more prophetic than empirical in nature is self-evident. On this point there is a striking parallel between the record evidence in this case and that found by the Court to have been abundant in State of South Carolina ex rel. South Carolina Public Service Commission v. United States, D.C.S.C. 1956, 136 F. Supp. 897. There, as here, the Court was concerned with the conflicting predictions of traffic experts for the affected carriers and representatives of interested shippers as to what effect increased intrastate rates might be expected to have on the railroads' revenues. The former, with one accord, estimated that such higher rates would produce more revenue; the latter with obvious sincerity, were convinced that they, conjoined with competing economic factors, would result in the diversion of traffic in coal and scrap iron to carriers by truck. We are in agreement with that Court's approach to the evaluation of irreconciliable opinion testimony and deem it unnecessary to elaborate upon Judge Parker's reasoning.
Once before this Court has declared that it is the task of the Commission and not of the courts to pass upon the weight and credibility of the evidence. American Trucking Assn's v. United States, D.C., 101 F. Supp. 710, affirmed 344 U.S. 298, 73 S.Ct. 307, 97 L.Ed. 337. We do not assume the role of triers of fact to test the validity of relevant opinions of witnesses in the light of their training, experience, interest and general competency and the facts and circumstances on which their respective opinions were based. That is precisely the function which the Commission, aided by its expertise, is designed to perform.
That is not to say that naked opinions, unsupported by any facts, would be considered substantial evidence. That is not the case before us. Traffic studies on coal and scrap iron conducted for a period of three months under the depressed Alabama rates on coal and for a period of four to five months under existing rates on scrap iron were referred to by railroad witnesses. Resort to records of movements of these same commodities during equivalent periods in other years enabled them to project the results of such studies on a full twelve months' basis. Assuming no diminution of traffic, they demonstrate that very considerable additional revenue would have been produced had the higher rates prescribed by the Commission then been in effect.
Of the opinion that the proposed rates would result in virtually no diversion of traffic in either commodity, the railroad witnesses at least had some precedent upon which to rely. At the request of the coal shippers and as an experiment, rates and charges on coal were lowered voluntarily by the rail carriers in 1939 through 1941. The result was a drastic decrease in revenues without any concomitant increase in coal traffic. Moreover, Exhibit 14 shows that the movement of coal and scrap iron in the southern region, largely transported by the Alabama carriers, during the period 1946 through 1952, under greatly increased rates, produced substantial increases in revenue.
The most impressive indication that there may be negligible loss of rail traffic in coal to trucks was derived from the railroads' Exhibit 18. Under increased rates the diversion of coal traffic to trucks was only 9.3% in 1952, as compared with 12.6% in 1949.
An attempt to articulate the statistical information assembled in the 132 exhibits would involve a process of arithmetical progression and would extend this opinion ad infinitum. We recognize that reliance upon the totality of past experience is inherent in the exercise of managerial discretion in forecasting future trends. While we cannot be sure that the increased rates will result in additional revenues we are satisfied, after reviewing the record as a whole, that there was substantial evidence to support the Commission's findings that they will.
Our omission of references to evidence offered in behalf of plaintiffs is not intended as an indication that we have weighed it and found it wanting. The integrity, ability and sincerity of each of their witnesses touch our sensibilities. But "The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body." Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 286, 54 S. Ct. 692, 694, 78 L.Ed. 1260.
For the reasons stated, the prayer to set aside and enjoin the enforcement of the order of the Commission will be denied and the action will be dismissed.
From Alabama Base Groups Prescribed Total Reduction A.P.S.C. Increases Required in Including- — Dkt. 1923 by X- X- X- X- 12865 X- by . . (In cents per net ton) Birmingham, Ala. 79 84 99 119 131 90 47 41 Phoenixville, Ala. 79 84 99 119 131 105 47 26 Mineral Springs, Ala. 79 84 99 119 131 90 47 41 Sylacauga, Ala. 125 130 155 186 205 160 75 45 Athens, Ala. 150 160 185 222 244 185 84 59 Montgomery, Ala. 145 155 180 216 238 185 83 53Exhibit 98.