Baltimore & Ohio Railroad Company v. United States (345 U.S. 146)/Dissent Douglas

Mr. Justice DOUGLAS, with whom The CHIEF JUSTICE concurs, dissenting.

Baltimore & Ohio R. Co. v. United States, 298 U.S. 349, 56 S.Ct. 797, 80 L.Ed. 1209, established a rule of procedure that entitles a carrier to raise the issue of confiscation in judicial proceedings for review of an order of the Commission, even though it has not tendered the issue in the hearings before the Commission but only on a petition for reconsideration after the order was issued. That rule of procedure was challenged by Mr. Justice Brandeis in an opinion in which three other Justices joined. Id., 298 U.S. at page 381, 56 S.Ct. at page 813. There has been much discussion in the briefs and on oral argument concerning the wisdom and propriety of that rule. Whatever may be concluded on the merits, it is a rule on which litigants are entitled to rely until and unless it is overruled. Appellants properly relied on it here. After the Commission entered this rate order, the appellants filed a petition for reconsideration, offering to prove that the costs of operation under the new rates would exceed the revenues. The District Court therefore erred when it ruled that evidence bearing on the issue of confiscation was inadmissible in these review proceedings because it had not been tendered in the hearings before the Commission. 105 F.Supp. 631.

The Court, without deciding that issue, assumes that the tender of proof on the issue of confiscation was timely, but concludes that even if a confiscatory rate were established, the carriers would be entitled to no relief. That ruling is, in my view, quite unjustified on the record before us.

Appellants offer to prove that their costs of handling the traffic are greater than the revenues which the traffic will produce under the new rates. We must assume under the Court's ruling that that is the fact. What justification then is there for the Commission forcing the carriers to haul the traffic at less than cost?

One will read the record in vain for any clue. The report of the Commission is largely a hodge-podge of statistics dealing with rates on vegetables from Texas, California, Arizona, and New Mexico to eastern and northern points. The Commission was apparently bent on leveling down some of the rates out of Texas to make them more nearly equal to those out of California, Arizona, and New Mexico. The reasons are not disclosed.

There is no suggestion or intimation that the vegetable markets were suffering by reason of the Texas rates.

Texas growers and shippers complained that the rate structure was unduly prejudicial to them and unduly preferential to growers and shippers in California, Arizona, and New Mexico. The record shows that the former were in competition with the latter in various markets. But the Commission held that there was 'no persuasive evidence' that the Texas rates had an adverse effect on the Texas growers and shippers. The Commission in other words refused to find that the rates were unduly prejudicial under § 3 of the Interstate Commerce Act. 49 U.S.C. § 3, 49 U.S.C.A. § 3.

The Commission did, however, find that the Texas rates were unreasonable; and it proceeded to prescribe 'reasonable' rates pursuant to § 15(1) of the Act.

Can a confiscatory rate be a 'reasonable' rate under the statutory and constitutional system within which the Commission operates? It is incredible to me that Congress used 'reasonable' in such an odd and unusual sense. The history of ratemaking, reviewed in Northern Pacific R. Co. v. North Dakota, 236 U.S. 585, 35 S.Ct. 429, 59 L.Ed. 735, denies it. Perhaps there will be exceptions. Perhaps dire emergencies will arise, making it necessary in the public interest to compel the transportation of certain commodities at less than cost. But certainly such a step should not be taken without appropriate findings showing why the confiscatory rate is a 'reasonable' one.

This controversy on the merits may be insubstantial. The proof of confiscation may fail. It may be established, as one of the appellees contends, that the carriers since 1940 have voluntarily published rates yielding less than half the revenue per car to be yielded by the new rates. But the issues tendered should be tried. If we assume that the prescribed rates are confiscatory, it is, in my view, impossible to say on the present record that they are 'reasonable.'