United States v. Interstate Commerce Commission (352 U.S. 158)/Opinion of the Court

This appeal requires a determination of whether railroads serving the port of Norfolk, Virginia, must grant the United States an allowance for the Government's performance of certain wharfage and handling services on its own export freight. For shippers who conform to the requirements of the tariff, the railroads assume these charges as a part of the rate. The United States, however, found it impractical to conform to the tariff requirements.

The present litigation was instituted pursuant to 28 U.S.C. § 2325, 28 U.S.C.A. § 2325, in a three-judge District Court of the District of Columbia by the United States, through its Department of the Army, against the Interstate Commerce Commission and the United States, to set aside the Commission's order in United States v. Aberdeen & Rockfish R. Co., 289 I.C.C. 49. That order dismissed a complaint filed by the United States on November 20, 1951, against several named railroads charging them with violations of the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq. The District Court, one judge dissenting, dismissed the complaint. 132 F.Supp. 34. We noted probable jurisdiction. 350 U.S. 930, 76 S.Ct. 302.

Since May 1, 1951, the railroads have refused to pay an allowance to the Army for the wharfage and handling services the Army performs on military export traffic passing through Army base piers in Norfolk, Virginia. The railroads have assumed in their tariffs the obligation to furnish these accessorial services for all shippers that comply with their tariffs. And, in accordance with these tariffs, the railroads have furnished the services for commercial shippers at public sections of the same piers without additional charge. These services were performed for the Army and the railroads by the same private company-for the Army under contract to carry out its orders for terminal and storage services; for the railroads by contract to act as the carriers' agent in accordance with their tariffs.

The Army sought a determination that the railroads' refusal to make an allowance to it to the same extent that the railroads paid the private company, Stevenson & Young, for handling of private shipments subjected the Government to unjust discrimination and constituted an unreasonable practice in violation of §§ 1, 2, 3, and 6 of the Interstate Commerce Act. The Army also requested an order that the railroads cease and desist from such refusal in the future.

The transfer of export freight from rail carriers to outbound water carriers is made on piers or wharves that allow the unloading of freight from railroad cars to within reach of ships' tackle. Railroads are under no statutory obligation to furnish such piers or to unload carlot freight, Pennsylvania R. Co. v. Kittaning Iron & Steel Mfg. Co., 253 U.S. 319, 323, 40 S.Ct. 532, 533, 64 L.Ed. 928. In general the railroads have taken on the duty of wharfage and handling for freight consigned for overseas shipment. In some instances railroads have charged for the use of the piers ('wharfage') and the necessary 'handling' separately from their charge for line-haul transportation. In other cases there has been only a single factor export rate (one inclusive charge) providing for limited shipside delivery with the railroad furnishing these accessorial services pursuant to their tariffs at no extra charge to the shipper. The latter practice has been generally followed by railroads serving North Atlantic ports. Where railroads do not have their own piers, they have provided these services by contracting with commercial terminal operators.

The Norfolk piers, involved in this matter, were managed by such operators. They were built by the United States after World War I and have been leased in part or in whole to a series of commercial operators since then. The leases were cancelled during World War II but they were leased to Stevenson & Young, a private terminal operator, at the end of that war. The railroads here involved, using the single factor shipside rate described above, contracted with Stevenson & Young, as their agent, to perform the wharfage and handling for 25¢ per ton for wharfage and 75¢ per ton for handling on both commercial and military freight. But with the advent of the Korean hostilities, the Government again cancelled the leases and the Army took entire control of the piers. Apparently the military shipments require special handling and storage. To assure its complete satisfaction, the Army hired Stevenson & Young to perform those services under a general pier-operating contract for the Army. The unused portions of the piers were later released by the Government, by a contract dated December 28, 1951, for the commercial operations of Stevenson & Young. By that contract Stevenson & Young leased the unused parts for 1952 from the United States, for a public commercial maritime terminal. It was over these leased portions of the piers that the lessee carried on its public warehousing activities in accordance with the railroad tariffs.

A typical tariff arrangement appears in the note below. It is the basic exhibit in this case. It was bottomed on a contract of April 5, 1947, between the Pennsylvania Railroad and Stevenson & Young. By that contract Stevenson & Young, as a public wharfinger, agreed to act 'as directed by the Railroad' and as its agent for wharfage and handling of 'export, import, coastwise and intercoastal freight' in accordance with the tariff upon the facilities it acquired on the Army base. The agent assumed responsibility for freight charges and care of freight in its charge. It agreed, paragraph 4, that:

'The Terminal (Stevenson & Young) shall provide adequate     facilities for the handling and storage of the freight      subject to this agreement, shall provide access to the      Railroad or its agent, the Norfolk and Portsmouth Belt Line      Railroad, for the delivery of cars to and from shipside      without interference or interruption, and shall load and unload cars promptly without      delay of freight or railroad equipment.'

'This agreement shall terminate absolutely and immediately     whenever the Terminal ceases to operate the said facilities      as a public wharfinger for the handling of freight, and in      any event shall be terminable by either party on thirty days      notice in writing.'

A large amount of private commercial traffic continued over the released portions of the piers, and the railroads continued to absorb the cost of that wharfage and handling by paying Stevenson & Young $1.00 per ton of freight.

The result of the Army's insistence on operating its own pier facilities is that the Army pays the same export rates without receiving wharfage and handling services as commercial shippers do for whom the railroads provide those services at no additional charge. Because the Army provides these services itself, it claims a right to the $1.00 per ton payment paid by the railroads on behalf of the commercial shippers.

In terms of the Interstate Commerce Act, the Government bases its argument on two grounds:

'The railroads' refusal to absorb wharfage and handling     charges on Army freight to the same extent that they absorb      such charges on civilian freight moving over the same piers      under identical rates is unjustly discriminatory in violation      of Section 2 of the Interstate Commerce Act.'

and

'The railroads' refusal to pay for wharfage and handling on     Army freight was an unjust and unreasonable practice in      violation of Section 1(6) of the Act.' It should be noted that the United States is not attacking the form of the tariff, which provides for both line-haul service and the accessorial services in the single factor export rate. Consequently, this case involves only charged discrimination and injustice. Cf. United States v. Interstate Commerce Commission, 337 U.S. 426, 437-438, 69 S.Ct. 1410, 1416, 1417, 93 L.Ed. 1451. In short, the United States seeks to be excepted from the tariff requirement that calls for the shipper to use a public wharfinger under contract to the railroads for performance of the wharfage and handling.

This controversy is similar to one that arose out of the Army's cancellation of the Norfolk pier leases during World War II, United States v. Aberdeen & Rockfish R. Co., 269 I.C.C. 141. Interpreting railroad practices much like those now before this Court, the I.C.C. determined that the Army was not being discriminated against. However, on review, the Court of Appeals for the District of Columbia remanded the case to the I.C.C. for further exposition and clarification. 91 U.S.App.D.C. 178, 198 F.2d 958. On remand the I.C.C. reaffirmed its earlier determination and no appeal has been taken from that order. 294 I.C.C. 203. Because the question of whether the Army was discriminated against following the Government's World War II lease cancellation has never been finally passed upon, the District of Columbia ruling is not inconsistent with the Commission's conclusion in this litigation.

The Government asserts that it is charged more on its export shipments through the Norfolk Army Base than commercial shippers under substantially similar circumstances. Such an exaction would be, of course, an unjust and unreasonable practice of discrimination. But it seems apparent that the circumstances of Army shipments are markedly different from those of private shippers that receive wharfage and handling services. Moreover, it seems equally clear that the Army is treated identically with those shippers who for business reasons do not care to comply with the tariff requirements.

The Army routed its export shipments direct to itself at the Army base as consignee. As is shown by the contracts summarized above, the entire Army base property was under military control except for the commercial operations of Stevenson & Young. The base included piers, bulkheads, railways and storage warehouses, and railroad switches, tracks and yards. The Commission found that the Army had determined 'that ports of embarkation must be operated by personnel of the military service and civilian employees of the Government.' 289 I.C.C., at 53.

Although the Army hired the Stevenson company to operate the Army portion of the base, the Army's control was 'absolute.'

'(An Army yardmaster) is on duty at all times to give     instructions for disposition of cars of Army freight      delivered at the base. When either the Belt Line or the     Virginian has cars for delivery, the yard clerk at the base      is notified by telephone. If placement at a pier or warehouse     is ready for any of those cars, the carrier is told where to      make delivery. These instructions are confirmed in writing     and handed to the conductor when he arrives at the base. Cars     for which placement orders are not ready are left in the pier      No. 1 yard by the Belt Line and in the uptown yard by the Virginian, in accordance with a general      understanding as to the disposition of such cars.' 289      I.C.C., at 54-55.

Such direction was necessary. As the Commanding Officer said, in regard to switching and placing by the carriers:

'The Witness: If you would let them switch themselves, that     have to know what they are doing, we have to give them the      switch list and know what to do with it.

'Q. Will you permit them to do it at their own convenience,     in an orderly manner? A. I don't know how any business can be     run, if you run it at the convenience of someone else. They     couldn't possibly to it at their own convenience, unless      their convenience coincided with our requirement.

'Q. And yet you couldn't permit the terminal operator to     operate in a normal way. A. No, because that involves a     management problem. You would have to have a management team     in here to settle the accounts of the terminal operator. They     don't work for nothing, as you quite well know. Somebody has     to monitor all that, manage the whole thing, and direct the      bringing in of the cargo. That is all in over-lay staff of     ours, which is large enough.'

This Army control over the movement of freight of those portions of the piers that were not leased to Stevenson & Young left the railroads serving the base without authority in those areas to direct the switching, spotting and removal of the cars according to their own convenience. 289 I.C.C., at 64.

The fact that the Army controls its areas of the base, and the fact that the railroads handle their own wharfage and switching on their portions as they choose, are not mere formal differences. They are factors in traffic movement.

'It is the right of every shipper including the Government as     here concerned, to prohibit a carrier from performing      switching upon private tracks, even though the carrier might      be willing and able to perform the service. When so     prohibited by the shipper, as was here done by the Army, the      carrier's obligation to perform the service is discharged,      and the payment of allowances to the shipper for its      performance of the service, in whole or in part, would be      unlawful, except as a voluntary concession of the carriers to      the Government under section 22.' 289 I.C.C., at 65.

The problems of the assumption by the carriers of the costs of wharfage and handling at ports have a long history. The Norfolk area has not been an exception, as has been heretofore indicated. See 352 U.S. 168, 77 S.Ct. at page 247, supra. When the Government again in 1951 found it desirable to cancel the leases, it was familiar with the various facets of the controversy over wharfage and handling.

It is obvious that the method of handling government freight does not comply with the tariff requirements. It does not move over wharf properties owned, leased and operated by the Stevenson company 'as a public terminal facility of the rail carriers.' Rule 47(b), n. 7, supra.

'At all times during that period, military traffic was stored     on and handled over wharf and other properties on the Army      Base which were under the exclusive control of the Army.' 289      I.C.C., at 60.

Any deviation from tariffs by carriers violates § 6(7) of the Act, 49 U.S.C., 49 U.S.C.A. § 6(7), unless they grant a concession under § 22.

The Government actually is being treated just as any shipper who decides not to take advantage of the services offered in the tariff. It seeks a preference over these other shippers who take deliveries of export rate traffic at piers under their own control, so-called private piers. The general practice at North Atlantic ports is to refuse to absorb handling charges at private piers, even though they are absorbed where the carriers have control of the facilities. The record shows 84 private piers along the Atlantic Coast where the railroads make no allowance or compensation for handling or wharfage. It was testified:

'One of the principal limitations on the port practices which     I shall mention is the restriction of the loading practice to      railroad or other public piers, as distinguished from private      piers operated by shippers.'

There was no evidence to the contrary and the Commission accepted that situation as a fact. 289 I.C.C., at 58, 61, 63. The difference between a public and a private pier under the tariffs is whether the railroads have control of the areas directly or through their agents, or whether the shipper or consignee has control.

There is no objection to such a practice generally, whether the line-haul rates and the handling rates are stated in a single factor rate or separately. To require the carriers to furnish such accessorial services at every private pier would disperse the traffic, cause the maintenance of more crews or watchmen, and thus add to the cost of transportation.

The Government contends that it is not in the same position as other shippers who control private piers, because it took control of the Norfolk piers to meet a national emergency. But we think that the emergency cannot convert the Government's operation of its private piers into a category different from that of private shippers. And the fact that the operations of the Government and the railroads are in the same pier area seems to us immaterial. If the railroads gave an allowance here, excepting one given under § 22 of the Act, they would have to give it at all private piers where the shipper wanted to handle wharfage at its own discretion. Cf. Merchants' Warehouse Co. v. United States, 283 U.S. 501, 51 S.Ct. 505, 75 L.Ed. 1227; Weyerhaeuser Timber Co. v. Pennsylvania R. Co., 229 I.C.C. 463.

The Government has the right to have its shipments accorded the same privileges given others. Moreover, in emergencies its traffic may have 'preference or priority in transportation,' 49 U.S.C. § 1(15), 49 U.S.C.A. § 1(15), d and it may be granted and may accept preferences in rates. But the Government cannot otherwise require extra services or allowances. In the situation here presented, it could have used the same facilities as commercial shippers and obtained the benefits of the tariff. The evidence to this effect is uncontradicted. The Commission accepted it as a fact. 289 I.C.C. at 58, 60-61, 63.

The Commission drew from the above circumstances a conclusion that the tariffs and conduct of the railroads are not shown to have been unlawful.

The United States argues that carriers cannot perform accessorial services in such a way that 'some shippers would pay an identical line-haul rate for less service than that required by other industrial plants.' United States v. United States Smelting, Refining & Min. Co., 339 U.S. 186, 197, 70 S.Ct. 537, 544, 94 L.Ed. 750. To do so would indeed violate § 2 of the Interstate Commerce Act. But the Smelting case is not apposite. We affirmed a Commission order enjoining intra-plant car switching and spotting services after termination of the line haul. It terminated at a 'convenient point' on a siding at consignee's plant. Our decision there turned on and upheld the Commission's power to determine the end point of the line haul. Because the line-haul tariffs included only car movement to and from that convenient point, some shippers received more service than others for the line-haul rate. 339 U.S. at page 197, 70 S.Ct. at page 543. Thus our determination was based on the unlawful preference allowed some shippers by the tariffs since those discriminated against could not get the same service as other shippers.

Furthermore, whether the circumstances and conditions are sufficiently dissimilar to justify differences in rates or charges is a question of fact for the Commission's determination.

The District Court dismissed the complaint on the record before the Commission, and we affirm.

Affirmed.

Mr. Justice BRENNAN took no part in the consideration or decision of this case.

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