American Commercial Lines, Inc. v. Louisville & Nashville R. Co.

PETITIONER: American Commercial Lines, Inc.
RESPONDENT: Louisville & Nashville R. Co.
LOCATION: United States District Court of Maryland

DOCKET NO.: 797
DECIDED BY: Warren Court (1967-1969)
LOWER COURT:

CITATION: 392 US 571 (1968)
ARGUED: Apr 23, 1968 / Apr 24, 1968
DECIDED: Jun 17, 1968

Facts of the case

Question

Media for American Commercial Lines, Inc. v. Louisville & Nashville R. Co.

Audio Transcription for Oral Argument - April 24, 1968 in American Commercial Lines, Inc. v. Louisville & Nashville R. Co.

Audio Transcription for Oral Argument - April 23, 1968 in American Commercial Lines, Inc. v. Louisville & Nashville R. Co.

Earl Warren:

Number 797, American Commercial Lines Incorporated versus Louisville and Nashville Railroad Company et al.

Number 804, American Trucking Association versus Louisville and Nashville Railroad Company.

Number 808, The American Waterways Operators versus Louisville and Nashville Railroad Company and Number 809, Interstate Commerce Commission versus Louisville and Nashville Railroad Company.

Mr. Goodman.

Leonard S. Goodman:

Mr. Chief Justice and may it please the Court.

In this case, the Pennsylvania Railroad, now the Penn Central Transportation Company and other railroads sought to cut their rate on ingot molds which are iron forms in which molten steel is cast from $11.86 per ton to $5.11 per ton to capture traffic that had moved for a decade by combination barge and truck service.

The Commission found that the new railroad rate would impair an inherent cost advantage of the barge-truck mode of transportation.

The Commission ordered the railroads to cancel the offending rate.

The District Court of three judges reversed the Commission's decision and the Commission is here today on direct appeal.

This is the first rate case to reach the courts involving the standards governing the fair competition between regulated carriers of different modes of transportation since this Court's decision in the New Haven case.

Interstate Commerce Commission versus New York, New Haven and Hartford decided in 1963 reported in 372 of the United States Reports.

The New Haven case was the first in which this Court addressed itself to the role of the Commission in overseeing rate competition among different modes of transportation following the 1958 Amendments to the Interstate Commerce Act.

Like the New Haven case, the present case involves the meaning of the 1958 Amendment to Section 15 (a) (3) of the Act.

The Amendment added this language.

Rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation giving due consideration to the objectives of the National Transportation policy declared in this Act.

And the particular objective of the transportation policy that is here in issue again like New Haven is the recognition and preservation of inherent cost advantages as between competing modes of transportation.

When the present case was before the Commission, the railroads and the barge lines followed strictly the format described in the New Haven case for presenting the issue of which mode possesses an inherent cost advantage.

The railroads first showed that their newly reduced rate of $5.11 would more than cover their long-term out of pocket costs of $4.69 and hence the reduced rate was just unreasonable from the standpoint of railroad revenue requirements.

They then showed their full cost of carrying this traffic to be $7.59 that is the out of pocket cost of $4.69 plus a share of the constant expenses of running the railroad.

The barge-truck mode then claimed an inherent cost advantage and brought forth data relating to its own cost.

The barge-truck mode showed that the railroads were reducing their rate below the barge-truck full cost of $5.19 and they are on a full cost basis.

The barge-truck mode possessed an inherent cost advantage.

The railroads countered by saying that no cost comparison should be made.

They then said that if one is to be made, the costs on the barge side should include the governmental cost of improving the water rights of way or the Commission should ignore on the rail side of the equation, all rail constant costs.

The Commission held it would not follow either of the railroads suggestions.

Determination of inherent cost advantage requires a cost comparison.

William O. Douglas:

None of these roads are land railroads, are they?

Leonard S. Goodman:

I don't know the answer to that question.

Citing a proceeding in which it had given more detailed consideration to the question of what costs are relevant to a comparison between railroads and barge lines, the Commission held that it would adhere to a comparison of full costs of the two competing modes and down the basis -- on the basis of such a comparison here the rail rate impaired the barge lines low cost advantage and should be cancelled.

When the case came before the lower court, the lower court held agreeing with the railroads that no comparison of rates was necessary or proper as a matter of law since the railroad rate of $5.11 more than covered the rail out of pocket costs of $4.69.