Houston Railway vs. United States [1916]

Hughes C. J. These suits were brought in the commerce court . . . to set aside an order the Interstate ,Commerce Commission dated March 11, 1912, upon the ground it exceeded the Commission's authority . .

The gravamen of the complaint, said the Interstate Commerce Commission, was that carriers made rates out of Dallas and Houston Texas points into eastern Texas which much lower than those which they extended into Texas from Shreveport. The situation may be briefly described: Shreveport is about 40 miles from the state line, and 231 miles from Houston Texas, on the line of the Houston, East & West Texas and Houston and Shreveport Companies; it is 189 miles from Dallas, on the line of the Texas & Pacific. Shreveport competes with both cities for the trade of the intervening territory. The rates on these lines from Dallas and Houston rerely, eastward to intermediate points as, were much less, according to distance from Shreveport westward to the points. It is undisputed that the deference was substantial, and injuriously affected the commerce of Shreveport....

The Interstate Commerce Commission that the interstate class rates out of Shreveport to named Texas points were unable, and it established maximum class rates, and it established maximum class rates for this traffic.... The point of the objection to the order is that, as the discrimination found by the Commission to be unjust arises out of the relation of intrastate rates, maintained under states authority, to interstate rates that have been upheld as reasonable, its correcvas beyond the Commission's power. The invalidity of the order is challenged upon two grounds:

1. That Congress is impotent to control the intrastate charges of an interstate carrier even to the extent necessary to prevent in jurious discrimination against interstate traffic. . ..

Congress is empowered to regulate,—that is, to provide the law for the government of interstate commerce; to enact "all appropriate legislation" for its protection and advancement . . . As it is competent for Congress to legislate to these ends, unquestionably it may seek their attainment by requiring that the agencies of interstate commerce shall not be used in such manner as to cripple, retard, or destroy it. The fact that carriers are instruments of intrastate commerce, as well as of interstate commerce, does not derogate from the complete and paramount authority of Congress over the latter, or preclude the Federal power from being exerted to prevent the intrastate operations of such carriers from being made a means of injury to that which has been confided to Federal care. Wherever the interstate and intrastate transactions of carries are so related that the government of the one involves the control of the other it is Congress, and not the state, that is entitled to prescribe the final and dominant rule, for otherwise Congress would be denied the exercise of its constitutional authority, and the state, and not the nation, would be supreme within the national field....

It is for Congress to supply the needed correction where the relation between intrastate and interstate rates presents the evil to be corrected, and this it may do completely, by reason of its control over the interstate carrier in all matters having such a close and substantial relation to interstate commerce that it is necessary or appropriate to exercise the control for the effective government of that commerce.

It is also clear that, in removing the injurious discriminations against interstate traffic arising from the relation of intrastate to interstate rates, Congress is not bound to reduce the latter below what it may deem to be a proper standard fair to the carrier and to the public. Otherwise, it could prevent the injury to interstate commerce only by the sacrifice of its judgement as to interstate rates. Congress is entitled to maintain its own standard as to these rates, and to forbid any discriminatory action by interstate carriers which will obstruct the freedom of movement of interstate traffic over their lines in accordance with the terms it establishes.

Having this power, Congress could provide for its execution through the aid of a subordinate body; and we conclude that the order of the Commission now in question cannot be held invalid upon the ground that it exceeded the authority which Congress could lawfully confer.

Decree of the Commerce Court affirmed. Justices LURTON and PITNEY dissenting.