Public Service Commission of Utah v. United States

PETITIONER:Public Service Commission of Utah
RESPONDENT:United States
LOCATION:United States District Court for the Northern District of Illinois, Eastern Division

DOCKET NO.: 15
DECIDED BY: Warren Court (1957-1958)
LOWER COURT:

CITATION: 356 US 421 (1958)
ARGUED: Dec 09, 1957
DECIDED: May 19, 1958

Facts of the case

Question

Audio Transcription for Oral Argument – December 09, 1957 in Public Service Commission of Utah v. United States

Earl Warren:

Number 15, Public Service Commission of Utah and Utah Citizens Rate Association, Appellants, versus United States of America and Interstate Commerce Commission.

Mr. Rampton.

Calvin L. Rampton:

If the Court please.

This is an appeal from a three-judge court in the District of Utah.

The action was brought by the appellants here, the plaintiff below, for the purpose of setting aside an order of the Interstate Commerce Commission taking jurisdiction of and raising Utah intrastate railroad freight rates under the provisions of Section 13 (4) of the Interstate Commerce Commission.

The decision below was a 2-to-1 decision.

The majority report was concurred in by Circuit Judge Pickett and Judge Ritter and a minority opinion written by Judge Christensen.

The opinions are — appear in the record.

The manner in which this case arose is as follows.

In 1951 or shortly before that date, the railroads, class one railroads of the United States made application to the Interstate Commerce Commission for an increase in substantially all interstate rail freight rates.

The first hearing on this application which was given the Number Ex Parte 175, and by which I will refer to the proceedings hereafter, all railroads in the United States were granted permission to increase their freight rates by 2% with certain hold-down which are not material here.

At a subsequent hearing, the eastern roads were permitted to take an additional 7% and the western and southern roads an additional 4%.

And there’s still a third here on hearing under Ex Parte 175.

The eastern roads were permitted to take an additional 6% and the western and southern roads an additional 9% so that all told under Ex Parte 175, the interstate rate — freight rates of all the railroads with, as I said, certain hold-downs which are not material here were increased by 15%.

Shortly after the original application was made with the public or with the Interstate Commerce Commission, the class one railways which operated within and through the State of Utah, made application to the Public Service Commission of Utah for authority to increase their intrastate rates by the same percentages being sought in the Interstate Commerce Commission on interstate rates.

The time of the first increase before the I.C.C., a hearing was held for the Utah Commission.

The conclusion of this hearing, the Utah Commission ruled, the railroads have not introduced evidence sufficient to authorize the increase of the intrastate rates.

The time of the second order in the Ex Parte 175, a further petition was filed with the Utah Commission but no hearing was ever had on that.

And then at the time of the final order, in Ex Parte 175 on the — that had build up to 15%, a third petition was filed by the Utah Commission with this class one railways and a full hearing was held thereon and at the conclusion of the hearing, the Utah Commission ruled that the petitioning railroads have not introduced evidence sufficient to authorize the increase of the Utah intrastate rates and held that the application was denied subject to the right of the railroad to make a petition to reopen to introduce the additional evidence if they could do it.

The railroads did not make further application to the Utah Commission nor did they take any appeal in the Utah courts, rather they made application to the Interstate Commerce Commission under the provisions of Section 13 to have the Interstate Commerce Commission take jurisdiction of this Utah rates and raise them.

The Interstate Commerce Commission proceeded with a hearing of the Utah intrastate rates.

And at the conclusion of that hearing, issued the report and order which appears evidence in the court below in which they held that the requisite jurisdictional facts had been established to authorize the Interstate Commerce Commission to take jurisdiction of the Utah rates.

They did take jurisdiction of the Utah intrastate rail rates and ordered them increased by 15% with certain restricted hold-down which again are not material here.

Felix Frankfurter:

Is any member of your Commission sit with the I.C.C.?

Calvin L. Rampton:

I’m not sure, Your Honor.

The case was heard by an examiner and tried to visualize the — I argued the case but I can’t recall whether one of our Commissioners sat at the time the Section 13 case was held.

On the opinion, he did not.

An action was brought —

Felix Frankfurter:

He must have been notified of course?

Calvin L. Rampton:

They appeared as a party.

Calvin L. Rampton:

The Commission appeared as a party

Felix Frankfurter:

A party but —

Calvin L. Rampton:

Yes, but not — it wasn’t in a joint board hearing —

Felix Frankfurter:

It’s not.

Calvin L. Rampton:

— if that’s what Your Honor want to know.

No, it was not.

This action as I’ve stated then — was then brought in the three-judge court to set aside this order.

A preliminary injunction was entered holding the rates out of effect while the matter was considered and this stayed in effect until a matter was decided on its merits and as I’ve stated by two to one decision, the action if the Interstate Commerce Commission was upheld by the Utah three-judge court.

Now, we are not here of course protesting the power of the Interstate Commerce Commission to take jurisdiction of intrastate rates in a proper case.

We recognized the necessity where interstate and intrastate service is rendered by a common economic unit that somebody must have overall control to determine that too much of the burden is not shifted one way or the other and even before the Section 13 was adopted, this Court have already decided that that power existed inherently in the Interstate Commerce Commission.

That was in the Houston case.

The interstate — the Section 13 was merely a codification of the Houston case and it decided or it establishes that the Interstate Commerce Commission can take jurisdiction of purely intrastate rates only if one of two conditions exists.

The first condition is, if the intrastate rates are so low that they make a discrimination between persons shipping on — in interstate commerce on the one hand and intrastate commerce on the other.

Now, with regard to that first ground of jurisdiction, the Interstate Commerce Commission decided that the railroads did not establish that ground of jurisdiction in this case and so we need to concern ourselves no further here with the first ground of jurisdiction under the 13th Section.

The second ground of jurisdiction under which the railroad or the I.C.C.may take jurisdiction of intrastate rates is this, if the rates are so low that they cast a burden on interstate commerce.

In other words, if the intrastate revenue — net revenue that is the amount of railroads can keep after paying the expenses is so low that it does not pay the railroads return on that portion of the capital, devolves the intrastate commerce and therefore that an extra financial burden must be placed on interstate commerce then the Interstate Commerce Commission in that situation may take jurisdiction of intrastate rates and raise them.

Felix Frankfurter:

That was not codification.

That was new — that was new legislation.

That was not — it could not have done that under the Shreveport doctrine.

Calvin L. Rampton:

That may well be, Your Honor.

At the present time —

Felix Frankfurter:

Yes.

Calvin L. Rampton:

— because that is under the Section 13.

That is the basis upon which the I.C.C.took jurisdiction in this case.

They held that the evidence did establish that the Utah intrastate rates were so low that they did cast a burden upon —

Felix Frankfurter:

But it makes an important distinction Mr. Rampton because under the Shreveport doctrine, it was merely — Interstate Commerce Commission has power to find specific discrimination against a specific rate or commodity by virtue of the state rate.

In other words, the area of jurisdiction was ever so much more restricted.

This has nothing to do with your case (Voice Overlap)

Calvin L. Rampton:

That is right.

Felix Frankfurter:

But this is a very different thing.

Calvin L. Rampton:

I appreciate that, Your Honor.

We’re concerned here with the overall earnings and not with any specific rate that is being considered.

Now, furthermore, we’re not here attacking the findings of the Interstate Commerce Commission in this case.

We’ll agree that the findings of the Interstate Commerce Commission in this case meet the requirements that this Court laid down in the recent King case.

In fact, they were copied verbatim from the King case as merely as I can determine with merely a change in the word here and I make the Florida case fit the Utah situation.

William J. Brennan, Jr.:

You mean the ultimate finding?

Calvin L. Rampton:

What’s that?

William J. Brennan, Jr.:

You mean the ultimate finding?

Calvin L. Rampton:

The ultimate findings.

Yes, Your Honor.

The ultimate findings I should say subsidiary findings we do quarrel with, but the ultimate findings, we do not.

They meet — they meet the demand of the King case.But we do say that there is not sufficient evidence under the King case, even under the King case to find in this situation that the Utah intrastate rates are as low as to cast a burden on interstate commerce.

Now, obviously, the most practical and direct way if you could do it, I think they can but the railroad said they can’t.

In the King’s case said they don’t have to, to show what your intrastate rates were returning, whether it would be breakdown revenues, cost, and make an allocation of your equipment and work up an intrastate rate of return.

Felix Frankfurter:

Would it — would it trouble you, your argument — the order of your argument if you tell us now what specific findings you challenge?

Calvin L. Rampton:

Yes.

We challenge the findings — I’ll try to give it verbatim.

I may not be able to.

Felix Frankfurter:

Don’t — just indicate what kind of issues were —

Calvin L. Rampton:

The findings that conditions affecting the transportation of Utah freight intrastate are not more favorable than those affecting interstate traffic.

With — from the points in Utah to points beyond Utah, that is the specific finding that we attack and we say that is the thing which they didn’t prove even under the formula which is laid down in the King case.

Now under the King case —

Felix Frankfurter:

You — you challenge — you say there’s no support for that, if there were support for that, would the conclusion of the Commission flow from that finding?

Calvin L. Rampton:

Yes, under the doctrine in the King case.

Felix Frankfurter:

Yes.

So that we — so that you invite us, indeed we have to go to the record to find out what the Commission could on this record have reached that — made that finding, is that right?

Calvin L. Rampton:

That is right.

That’s — that’s the whole — that’s the whole case we have, Your Honor.

Felix Frankfurter:

That’s the case.

William J. Brennan, Jr.:

Well now, may I ask in that same connection.

William J. Brennan, Jr.:

I’m looking at page 118 and 119 of the record.

By numbers, which of those findings are involved under your position?

Calvin L. Rampton:

Well, all of them would be involved in directly but the one that is involved directly at the moment would be number one.

The one we attack directly, we say their balance of them falls along one if one falls, that’s at the top of page 118.

And that finding of course, number one finding on page 118, that’s — that’s something you got to have under the King case and you’ve got to have it supported under the King case because the King case rest upon just exactly that finding there.

The King case, as I read it, and also the Illinois Commerce case which it quotes, is merely a syllogistic reasoning, it says this in effect, “You’re relieved to breaking down your revenues, your expenses and your investment between intrastate and interstate, if you can meet this test.

And it’s a test — it is a syllogism in fact”.

The King case based upon a syllogism is this.

Your major premise is the railroads are in need of a general overall increase in their railroad rates.

Your minor premise is this, “All factors which affect the reasonableness of rates are identical or reasonably similar as to both intrastate and interstate commerce.

Therefore, you should have an increase in intrastate rates”.

Now, if either your major or minor premise breaks down of course your conclusion doesnt follow.

And we say that in this case, the finding number one being the minor premise in that syllogism has broken down and so that the conclusion, that Utah intrastate rate is abnormally low doesn’t follow.

William J. Brennan, Jr.:

Well now your — your minor premise is all factors.

Calvin L. Rampton:

All — all major — all material factors.

We don’t say that you must get laid down to the most minute factor.

William J. Brennan, Jr.:

Well there are several hundred actual factors.

Calvin L. Rampton:

Oh I — I assume so.

But all material factors affecting the thing we think must be shown — if you’re going to rely on the King case, must be shown to be not more favorable in favor of intrastate commerce and they aren’t.

They have interstate commerce.

William J. Brennan, Jr.:

Would it disorganize your argument now just briefly to spell out what you consider the material factor?

Calvi L. Rampton:

What I consider the material factor that they did not prove and that we think we’d prove — we think we picked up a burden of proof that we didn’t have to bear and show that there was a difference.

And that is the question of density of traffic.

That’s the —

William J. Brennan, Jr.:

The key?

Calvin L. Rampton:

That’s the key to the thing in my opinion.

Earl Warren:

Density of traffic —

Calvi L. Rampton:

Density of traffic, Your Honor.

Now in order to prove that all facts which —

Felix Frankfurter:

I’m a little bothered by this rigorous syllogistic problem that you put to us.

Felix Frankfurter:

And though this is just an exercise in formal logic —

Calvin L. Rampton:

Well I — I believe —

Felix Frankfurter:

Is it —

Calvin L. Rampton:

I believe the King case is an exercise in formal logic, Your Honor.

In other words, you — you are — all you’ve got in regard to the — to the earnings of the railroad or your overall earnings, they say they can’t break them down.

They say they can’t break their earnings out or maybe they could break their earnings out but they couldn’t break their cost and their investments on intrastate.

And so, we’re dealing with overall figures of the railroad —

Earl Warren:

Yes.

Calvin L. Rampton:

— with both intrastate and interstate lumped in there.

All right now, I will agree and I’m not calling with the fact that they did a good job in this case of establishing a need for overall revenue about 80% of their evidence goes to that point and they’ve established that they need some additional money.

All right, now the question is, where does it got — come from it?

It doesn’t prove a thing merely to prove you need additional money.

That doesn’t prove that the intrastate rates aren’t contributing their share, if we just go that far.

Felix Frankfurter:

All right.

Calvin L. Rampton:

All right, now we come to the second step which I say is the minor premise in syllogism which is this.

They must show that all of material factors affecting the two classes of traffic are the same and if they can establish that, then under the King case it follows that both intrastate and interstate rates should move out.

Calvi L. Rampton:

Yes.

Calvin L. Rampton:

If that breaks down, then the — then it doesn’t follow at all.

It may be that one or the other should go up and should take that one or the other should —

Felix Frankfurter:

I’m — I’m suggesting that this is not a problem in arithmetic or mathematics that the fact does — elements of the problem will awfully dubious, ambivalent and illusive.

Calvin L. Rampton:

Well I — I quite agree with that, Your Honor.

But, I feel that — and I might say that I had one for the judge’s below that felt along with me that this matter of density of traffic was a major factor that not all — now, we felt the burden of proof on that belong to them.

We should felt that they should show that all major factors are the same.

They didn’t put a word in on density of traffic then we picked up the ball when we don’t think we have to carry it and we showed that there was a great deal of difference in density of traffic only to have the Interstate Commerce Commission rather dismiss our figures.

Now, I’ll come to that a little more fully in just a moment if I may.

On the question of the level of the rates themselves and of course that’s the first thing you’ve got to consider is which now is higher for a comparable service, the intrastate or interstate rates.

There was a — there was evidence on both sides there and we’re not asking this Court to weigh that evidence at this time.

We feel that the evidence heavenly preponderates in favor of the — of our position that the intrastate rates from Utah were already considerably higher for a comparable service without the 15% increase in the interstate rates or before they got.

But once again I say there was evidence on both sides of that and we’re not here asking the Supreme Court to weigh the evidence that was before the Interstate Commerce Commission of the court below.

But now, going to the other side of the picture, and you’ve got to go to both sides of the picture in determining the thing.

Calvin L. Rampton:

That is the question of cost in rendering the service because we’re not worried of gross revenues here as Mr. Collins so well points out in his brief.

What we’re worrying about is how much the railroads have left over to spend.

So you’ve got to go to the other side of the thing and look at the cost factor.

What do we have in the way of identity of factors that affect the cost of rendering railroad service intrastate and interstate?

Now, the railroads introduced one bit of evidence on that point, a one bit of evidence only and if that evidence is sufficient, I suppose, I have no standing before this Court.

If it’s not, I should prevail.

The evidence that they introduced and they didn’t have to introduce it at all because this Court has taken the judicial notice of it several times and so as the Commission.

The evidence they introduced is the identity of cost factors was the fact that intrastate and interstate shipments are commonly mingled on the same cars, handled over the same rails to the same station to the same billing crews and so forth.

Now, I — it’s our position that while that does establish that many of these factors are similar, it does ignore entirely the question of density of traffic which we feel that one of the major items which go to make up the revenue cost of rendering the service of the railroad.

And I think the reason that the density of traffic is a major factor affecting cost is quite obvious.

You can break railroad cost or any transportation cost or I suppose the cost of doing business in any business down roughly into two categories.

That is your fixed cost and your variable cost.

Your fixed cost stays just about the same regardless of how much you produce.

Your variable cost tends to vary almost exactly with your output.

And generally, your output on the railroad is raised in terms of ton miles.

So your fix cost saying the same regardless of your output of ton miles will bear heavier on each ton mile as your density decreases.

And as your density goes up, your fixed cost staying the same will be scattered out and spread over a greater number of ton miles and so the greater the density, the lower the cost of producing each ton mile.

William J. Brennan, Jr.:

What you mean really is to lower the portion of a fix cost, is it?

Calvin L. Rampton:

Yes.

Earl Warren:

Or unit?

Calvin L. Rampton:

Yes, as your density increases you — your proportion of the fixed cost becomes lower proportionately on each unit of transportation produce.

William J. Brennan, Jr.:

Now, can you tell us quickly what — what’s the contest in the apportionment?

Calvin L. Rampton:

We —

William J. Brennan, Jr.:

Is it in the record?

Calvin L. Rampton:

Yes, it’s in the record.

I might say this, Your Honor.

The railroads, although we feel that they have the burden, showed nothing on that.

They said we ship — we ship interstate and intrastate commerce on the same cargo with the same rails period.

That’s it.

That’s all we’re going to put in.

Calvin L. Rampton:

That’s all we have put in on identity.

We then went on and showed by a study which we have and which appears in the record exhibits and — Exhibit 65 I believe —

William J. Brennan, Jr.:

In the second volume?

Calvin L. Rampton:

It’s in the second volume.

I will attempt to find it here.

It shows that in regard to the four major railroads —

William J. Brennan, Jr.:

What page is it?

Calvin L. Rampton:

The Exhibit 64 it’s referred to in my brief if I remember Your Honor but I can’t seem to locate it very quickly.

Is it on page 548 (Inaudible)

Calvin L. Rampton:

548, let me see, Your Honor.

It’s Exhibit 64 I believe.

(Inaudible)

Calvin L. Rampton:

It’s Exhibit 64 on page 548 which shows the density of traffic intrastate or system-wide on the various railroads concerned for the years 1950 to 1953 and the density of traffic intrastate within the State of Utah.

And if you will examine that, you will see that in every year for each of the four railroads and these railroads makeup all 95% to 98% of the traffic that we’re concerned with here.

In each of those years, on each of those four railroads, the density was materially higher within the State of Utah than it was system-wide.

Now, this is true.

I don’t want to mislead the Court on that.

William O. Douglas:

Main-line, isn’t it?

Calvin L. Rampton:

This is main-line.

William O. Douglas:

Not first line?

Calvin L. Rampton:

No.

That’s the ground that the Interstate Commerce Commission attack it on.

There’s another ground that the counsel for the Government is attacked on in his brief.

And I’d like to mention both of those, the counsel for the Government attacks on the ground that what we call intrastate statistics are not purely intrastate.

They do include bridge traffic but of course the bridge traffic goes clear across.

We have no way of breaking it out.

But the fact that — but bridge traffic would be constant system-wide and the fact that there was a difference within the State of Utah, the density much higher there than system-wide with the bridge traffic remaining constant could be a tribute and only to the fact that Utah intrastate traffic was considerably higher than the intrastate traffic in the other States.

Do I make myself clear? Now, the problem that the I.C.C.raises to this study is this.

They say, “Well the problem of that study is they practically pushed it out of consideration was that its density of traffic for main-line rack only and not for main-line plus branch.”

Well that’s true but for the life of me, I can’t see what difference it makes, if we use branch — included branch on one side and only main-line on the other, obviously, it would be a false comparison.

Calvin L. Rampton:

But if we have main and branch system-wide as well as intrastate while it would change the density figures, it wouldn’t change their relative position.

In other words, both of them would move up or move down.

And I believe that the main-line study —

William O. Douglas:

(Inaudible) systems do not include branch.

Calvin L. Rampton:

No.

William O. Douglas:

They didn’t.

Calvin L. Rampton:

No, they do not.

Neither of them included branch figures, Your Honor.

They’re both.

Felix Frankfurter:

Well, now — let me ask you a simple-minded question that’s maybe has no bearing.

This plot, statistical comparisons leave out of all account as I’ve seen them.

The difference is in cost.

In other words, you may have less density over interstate — I mean interstate shipment and yet the burden on the road because of the great — greatness and whatnot, tunneling and so on, may have relevance it so seems to me that would not be reflected by these figures.

Calvin L. Rampton:

They may have that —

Felix Frankfurter:

Does that take me into account?

Calvin L. Rampton:

Oh no, density doesn’t take everything into account sir.

Felix Frankfurter:

No, I know density.

But do this — does the record before the Commission takes those factors into account?

Calvin L. Rampton:

It does not.

Felix Frankfurter:

Because the maintenance of an interstate road, if you please perhaps even at a — at a heavier cost, bordering on a deficit, is very important in the national system of transportation.

And it maybe that, I’m not saying it is, I don’t know.

I’m really inquiring because this is all very difficult (Voice Overlap) —

Calvin L. Rampton:

I quite agree with that, Your Honor but I believe that the identity — that’s one place I believe the railroad has born their burden of proof.

I think their testimony or if you want to put at the matter of common knowledge that your intra — or that you handle intrastate and interstate shipments on the same train, their both going to go over the same track, over the same rates and so forth —

Felix Frankfurter:

Yes, but not outside of Utah.

The condition —

Calvin L. Rampton:

The —

Felix Frankfurter:

— you’re comparing Utah conditions with — with — beyond Utah.

Calvin L. Rampton:

That is right.

Felix Frankfurter:

And therefore the beyond Utah conditions may be far less favorable or more closely and yet beneath for the national system.

Calvin L. Rampton:

Well that may well be.

Felix Frankfurter:

Now those factors all involved in here?

Calvin L. Rampton:

No, they are not and we don’t think that we bear the burden of proving or disapproving.

Felix Frankfurter:

Well, I’m not — I’m not — I’m asking for enlightenment and not for you to rigor these things.

Calvin L. Rampton:

No.

Felix Frankfurter:

But are those relevant questions?

Calvin L. Rampton:

I think perhaps that —

Felix Frankfurter:

Well they plainly (Voice Overlap) if they’re not if —

Calvin L. Rampton:

No, I think they are — I think they maybe —

Felix Frankfurter:

I’m quite naive about this.

Calvin L. Rampton:

If there is a difference then I think they are relevant.

But I think if they are relevant then it’s the railroads burden and not ours to produce them.

Felix Frankfurter:

I just have a (Voice Overlap) —

Calvin L. Rampton:

I —

Felix Frankfurter:

— deep instinct, you’re thinking that this is all a mathematical problem or a logical problem.

Calvin L. Rampton:

Well, it is.

Felix Frankfurter:

It’s a sense of formal logic.

Calvin L. Rampton:

Yes, sir.

Felix Frankfurter:

I’m not suggesting you’re resting your case on that, because we have to go to the details.

But I wonder how much more complicated the details are than these figures show.

Calvin L. Rampton:

Well, the details are complicated, Your Honor.

Felix Frankfurter:

I know.

Calvin L. Rampton:

But I think the railroads are attempting to unduly simplify them.

I believe what the railroads are doing in this case, not only in the State of Utah, but throughout the nation in 175 — it is 175, they’re attempting to push the King case to a length that this Commission never intended it to go.

I might say that I don’t agree with the King case but there is —

Felix Frankfurter:

We’ll start from there.

Calvin L. Rampton:

We’ll start from the King case and what it is and they’re attempting to prove — to push it to lengths that this Commission never intended it to go so that it forces absolute, automatic uniformity in a rate, every time you get a rate increase.

And if what — if they can prove the case before the I.C.C.by the evidence they’ve got in here then there’s no need for a Section 13 hearing.

There’s no need for a Public Service Commission hearing because every time the — the Interstate Commerce Commission says, “The railroads are entitled to additional revenues overall then by the mere application that this matter of common knowledge that you intermingle your freight, then automatically that increase should go on to intrastate freight as well as interstate.

And so, all of your — all of your problem before your State Commission and your Section 13 case is a mere surplus because they can only come out one way in the end anyway.

Calvin L. Rampton:

Now, that’s — that appears to be Mr. Collins’ position.

Now, the Government doesn’t go quite far in their brief.

They don’t say that the King case forces you definitely to that position but they say the fact that you intermingle your freight, raises a strong presumption that all factors are the same and to quote the Government’s brief, they say it is possible although not probable that notwithstanding identity in the character of interstate in interstate operations therein may exist certain circumstances.

In other words, they say once we have proved this matter of common knowledge and to intermingle them, then the burden of proof approve is on the — the opponents of an increase and to show that the factors are different.

Potter Stewart:

Mr. Rampton, may I — do I correctly get you on your use of this Exhibit 64 is merely to show that that is a difference in density which establishes the necessity to make a case for the railroads to make a case —

Calvin L. Rampton:

That’s right.

Potter Stewart:

— of proving either identity and densities or not such a different as that — it can make a difference in the result.

In other words you’re not giving us this chart or referring to it, to prove any case on your behalf, are you, beyond that they should have included as a factor to make out a case.

Calvin L. Rampton:

That is right.

Potter Stewart:

Something as it related to density, is that it?

Calvin L. Rampton:

Exactly, Your Honor.

Now, I don’t think it’s my burden.

I just — we introduced it for exactly the purpose, Your Honor set forth.

Earl Warren:

Mr. Rampton.

May I — may I trouble you just once more to relate these statistics to each other, the system statistics and the intrastate.

I don’t — I didn’t quite get your statement on it.

I’d like to ask first, do the same factors exist in — in both sides of your exhibit there, namely, the same factors and the system statistics is in the intrastate.

Calvin L. Rampton:

The answer is yes to that Your Honor.

Earl Warren:

Now, is there or are the — or is the factor of your branch lines in there?

Calvin L. Rampton:

No.

Earl Warren:

This — they have no bearing on it at all?

Calvin L. Rampton:

No.

Earl Warren:

Then — then will you tell me what your last statement was about the branch lines.

I didn’t — I didn’t quite —

Calvin L. Rampton:

The Interstate Commerce Commission said this would have been a more valuable study, had you related your traffic in arriving at a density figure, had you related your traffic move to total mileage of main-line and branch rather than merely main-line as you did?

Earl Warren:

Yes.

Calvin L. Rampton:

Now, we — we used our density figure here is total — total tons moved or total ton miles moved divided by main-line track.

Earl Warren:

Yes.

Calvin L. Rampton:

That’s what we’ve done both system-wide and what we have designated interstate.

Now, we could have done it like the Interstate Commerce Commission said, we could have taken your total ton miles and divided it by your branch line plus your main-line.

Calvin L. Rampton:

If you did, it would have given a somewhat lower density figure because you’d be taking the same ton miles in using more miles of track to divide it by.

But it would — we say it wouldn’t have changed the relative position between your intrastate statistics and your system statistics because lower them both and substantially the same proportion.

Earl Warren:

At all events, it’s your position that if the statistics do not include all the factors that — that should be in them then it’s — the burden is on the other side and not on you because it wasn’t on you in the first place.

Calvin L. Rampton:

That’s right.

Earl Warren:

Is that —

Calvin L. Rampton:

That’s exactly right, we put this in here merely for the purpose that Mr. Justice Brennan pointed out —

Earl Warren:

Yes.

Calvin L. Rampton:

— to point out the fact that here is a — not only a factor but a most material factor that they’ve missed on which they bare — bore the burden of proof.

Felix Frankfurter:

Mr. Rampton, will you please tell a stupid color and I don’t mean to — to be falsely modest about this.

Why?

Please explain the practical — enlighten me why the density of Southern Pacific within Utah should be 12 million and the system, 3 million.

Four times as much internal density —

Calvin L. Rampton:

You mean for practical standpoint?

Felix Frankfurter:

What is that mean?

That — that bothers me a little.

I don’t understand it.

Calvin L. Rampton:

Well —

Felix Frankfurter:

I know it’s four times as much but why —

Calvin L. Rampton:

For the practical standpoint, it happens this way.

Felix Frankfurter:

Yes.

Calvin L. Rampton:

It is not in the evidence.

I’m telling you something it is in the record.

Felix Frankfurter:

But this must have some meaning otherwise the figures (Voice Overlap) —

Calvin L. Rampton:

It does.

Southern Pacific comes in to Utah and California.

It extends in the Utah from the western border to Salt Lake City.

It extends through a heavy livestock company as — area and there are some salt mines and such things as that on the train so — on the track between Utah and the border.

And so between Salt Lake and the border of Utah there is heavy traffic and heavy commodity whereas you get beyond the border into Nevada and —

Felix Frankfurter:

And the repetitive — the repetitive movements gives these figures, is that it?

Calvin L. Rampton:

That’s right.

Felix Frankfurter:

Now I understand it.

William J. Brennan, Jr.:

Mr. Rampton, has the Commission to your knowledge ever used a density figure of this kind in support of a raise in intrastate rates on the 13th?

Calvin L. Rampton:

I don’t recall an intrastate case that has considered that but many cases the Interstate Commerce Commission does study density of traffic for the purpose of determining comparative rates of interstate.

William J. Brennan, Jr.:

Well let me ask you the other way.

Do you know of any interstate commerce determine — commission determination which rejected this factor in the 13 case?

Calvin L. Rampton:

Other in this one, I do not.

We introduced some other evidence which I just — my time is almost up.

I want to leave some for — for rebuttal.

There was other evidence which we introduced that we didn’t think we had to which tends to show that the railroads are a lot better-off under Utah intrastate traffic than they are elsewhere.

For instance, Bamberger Railroad Company, the only one — the only general commodity carrier that was making application that operates entirely within the State of Utah in the year preceding this hearing, showed a rate of return of some 15.93%.

In addition to that from the railroad’s own figures, you can glean these facts that Bamberger, as I say, solely within the State, showed a rate of return of 15.3%.

Denver and Rio Grande which is about half in the State of Utah and half in the State of Colorado showed a 6.06% rate of return.

The Union Pacific which has some in Utah although a much smaller percentage showed 3.56% returns while the Denver or the Southern Pacific that pass just a minute fraction of its business in the State of Utah showed only a 3.48% rate of return.

In other words, on these roads, that — from their own evidence as the percentage of the railroad business in Utah intrastate traffic tends to increase the rate of return of those roads tends to increase right along with.

Now, we say there — ones again you can determine the reason for that from the economic studies that have been put in here.

Now, they put in economic studies in this case for the purpose of showing, I think, that Utah could stand the increase.

We say it doesn’t mean anything from there because that isn’t a basis for a jurisdiction under the 13th Section.

In other words, if the I.C.C.have general jurisdiction, they may say, “We’ll put the burden on the high moving traffic” but they can’t say to Utah shippers, we know you’re paying your share now but can afford to pay more so we’ll take jurisdiction under the 13th Section.

We think —

Felix Frankfurter:

Well, let me explore that a little bit and believe me that I have despite —

Calvin L. Rampton:

Yes.

Felix Frankfurter:

— notion what I think about this case but I’m trying to understand it.

You start of course necessarily that the roads need more money.

Calvin L. Rampton:

That’s right.

Felix Frankfurter:

That presupposes that if they didn’t have more money, there’d be some default in the operation of the road as an interstate carrier.

Calvin L. Rampton:

Well, I don’t think that —

Felix Frankfurter:

Well, I don’t mean —

Calvin L. Rampton:

— presupposes that the investors wouldn’t get a fair return, I think that’s what it presupposes, Your Honor.

Felix Frankfurter:

Well, if the investors don’t get — you need some investment in order to keep the road going.

Calvin L. Rampton:

That’s right.

Calvin L. Rampton:

I agree.

Felix Frankfurter:

Therefore, you need new capital, you need —

Calvin L. Rampton:

That’s right.

Felix Frankfurter:

— replacements and all the rest of it so that if you haven’t got this money, something would happen, I don’t mean, right away, quick but something would happen.

They might — the service might be — the service might depreciate, they might get trains off.

They couldn’t raise — there are limits to which raising rates as possible —

Calvin L. Rampton:

Yes, sir.

Felix Frankfurter:

— as often as not or sufficiently often, it dries out rather than begets traffic, is that right?

Calvin L. Rampton:

That’s right.

That’s — that’s absolutely correct.

Felix Frankfurter:

Now then, to what extent these inquiries are addressed and adjunct.

To what extent maybe may the Commission take into account that they finally need money, the interstate system need money, having found they can’t raise their rates, profitably, it would it dry out staff that consequences would follow even if they didn’t — trains off or limiting the traffic or what not.

And here is a part of a general system to be sure for constitutional purposes intra versus interstate.

No one believes that more than I do.

Nevertheless, if you got one system, making a lot of money or having a very profitable business at a very conditions on which you rely against the conclusion and that it bears its fair share by taking some of the fact off the local traffic.

What’s the answer to that?

Calvin L. Rampton:

The answer to that is, I think, you can’t do it, Your Honor.

Under the Constitution, under the 13 Section because the I.C.C.doesn’t —

Felix Frankfurter:

Not the Constitution because you yourself said —

Calvin L. Rampton:

All right.

Let’s — unless —

Felix Frankfurter:

All right.

Calvin L. Rampton:

Let’s stay with —

Felix Frankfurter:

Let’s postpone the Constitution —

Calvin L. Rampton:

All right.

Felix Frankfurter:

— until we have to get there.

Calvin L. Rampton:

But under the 13th Section, the I.C.C.doesn’t have primary jurisdiction in the Utah rates, it’s gets only under extraordinary condition.

And the extraordinary condition set forth there isn’t that the railroads needs some fact here, some we can go get the condition of them taking us is the railroads leave some fact, they’re getting all they can get here.

Here’s a place up here that isn’t giving its share.

Therefore we’re going to dig in to that.

Felix Frankfurter:

I agree with that, but it isn’t getting its share because it can’t impose a greater ex hypothesi.

They’re going to be logical about it.

It can’t increase the rates of the interstate shipments.

I’m supposing this thing and I will —

Calvin L. Rampton:

Because of (Voice Overlap) competitive situations.

Felix Frankfurter:

Pardon me.

Calvin L. Rampton:

Because of competitive situations.

Felix Frankfurter:

Because the interstate traffic as such can’t bear this.

Calvin L. Rampton:

All right.

Felix Frankfurter:

There is such an element as what the traffic will bear in a legitimate —

Calvin L. Rampton:

All right.

Felix Frankfurter:

— sense, isn’t it?

Calvin L. Rampton:

Yes.

I would say definitely that under the 13th Section, you may not impose an extra burden on intrastate traffic to compensate for the fact that interstate traffic can’t bear its full share.

Felix Frankfurter:

Well —

Calvin L. Rampton:

The thing works in the reverse.

You could — you may — they may take jurisdiction of intrastate traffic only when the evidence shows that the intrastate is not bearing its share.

Felix Frankfurter:

Mr. Rampton, you’ve shown to me a delectable interest in logic.

But when you say, it can’t put an unfair burden, aren’t you a little bit begging the question because —

Calvin L. Rampton:

Well —

Felix Frankfurter:

— if as a system, if the maintenance of the system requires necessary funds and it can’t get in by raising the rate on the mere interstate and isn’t as such an interdependence between intrastate and interstate that it isn’t an unfair burden to say, here’s the profitable part of the business.

Calvin L. Rampton:

No.

My answer to that is no, Your Honor.

If they — if — if they want to — If the railroads want to address that kind of logic, the place they’ve got to go is to the Commission that holds primary jurisdiction of intrastate rates.

That is to the various state commissions.

If they could go to various state commissions and say, the intrastate — the interstate rates can’t bear their full burden, therefore, unless your men take up to some of the burden they can’t bear, you’re going to lose your rail service.

That’s the place to go with that but the I.C.C.–

Felix Frankfurter:

Do you think that I.C.C.can’t review such a determination —

Calvin L. Rampton:

I’ve —

Felix Frankfurter:

— and I’m not making any new — such a determination which naturally is influenced, I say properly influenced by a state commission in regard to mere state interest.

Calvin L. Rampton:

No.

I think they cannot, Your Honor.

I think, under the Section 13, the I.C.C.may take jurisdiction only when the interstate rates are contributing their fair share on the intrastate rates that they’re going after are not contributing their fair share.

I don’t see how you can read anything else into Section 13 or into the decisions of this Court, interpreting Section 13 other than that.

I know that you have held and I think quite properly, that 15 (a) should be read in connection with 13 (4).

But I don’t think it expands the power of the Commission under 13 (4), when you got a jurisdictional question involved.

Once you get over the jurisdictional question, I think, then perhaps 15 (a) does come in to operation, but until you get to jurisdictional requirements, I think you’ve got to look at 13 (4) further.

I will reserve the balance —

Earl Warren:

Yes you may, Mr.(Voice Overlap) —

Calvin L. Rampton:

— for rebuttal.

Earl Warren:

Mr. Weston.

Charles H. Weston:

If the Court please.

As it has been said, this case grew out of the 15% increase in interstate rates, which the Interstate Commerce Commission authorized in its 175 proceeding.

And this was the fourth general increase, rate increase given by the Commission since World War IV.

This rate increases have not been granted previously, they have been granted because of the constantly or gradually at least, rising price cost of operation.

As operating cost go up, revenue has to also otherwise that the weak roads will suffer deficits and they go into receivership.

And the stronger roads will have difficulty in financing, capital improvements, purchase of new equipment which is necessary or desirable to increase efficiency and improve service.

Now, this clear statutory authority for the Commission’s action in granting this across the board rate increases.

Section 15 (a), which was written into to the Act in 1920, they did the duty of the Commission in determining or prescribing just and reasonable rate to give consideration to the need of the carriers for revenues sufficient to enable them to provide adequate and efficient transportation service.

In effect, Congress recognized that it’s in the public interest to preserve the economic health of the railroad industry.

This new statutory provision was prompted by the par less condition, credit and income conditions of the railroads, following termination of war time federal control.

Now, the results of the railroad operation or both — those of its intrastate and its interstate operations, it was therefore appropriate for Congress when it —

Felix Frankfurter:

What was that you said about both interstate?

I just thought —

Charles H. Weston:

I say it’s — well if the revenue needs or determined by its entire operations which are naturally both intrastate and interstate and when Congress gave the condition prior to adjust interstate rates in relation to revenue requirements.

It was appropriate to give it some control over interstate rates so that the additional revenue derived from higher rates would not come exclusively from interstate commerce.

And Congress, when it enacted 15 (a) also enacted subsection (4) of Section 13.

And that Section directs the Commission if it finds that existing intrastate rates aren’t justly discriminate against interstate commerce to order those rates to remove the discrimination.

But with constant Railroad Commission case in 257 U.S., this was the first case under this Section to come before this Court.

The Court said that there was dovetail relation between 13 (4) and the present 13 (a).

Charles H. Weston:

And that there must be equality between the intrastate rate level and the interstate rate level if interstate commerce was to bear its fair proportionate share of the carriers total revenue affirmance.

There has been no departure from the meaning that was given by the Court in that first decision, to Section 13 (4).

Now, I also going to point out that the Court has consistently refused to construe either 13 (4) or 15 (a) as imposing requirements which would defeat the statutory purpose.

When revenue and expense were out of balance, a long lay in correcting the imbalance is certainly tends to defeat the statutory purpose.

And this Court has held that when the Commission is acting under these Sections, it is not to be held to requirements of proof that are so exacting, that they would make the administrative test practically impossible and would paralyze the administrative order of the Commission and thereby prevent the prompt administrative action which these Sections contemplate.

Felix Frankfurter:

Mr. Weston, could we agree as a starting point that the Commission could not in looking at the needs of the road and finding it needs more money and raise without more — without more to raise the rates both of intrastate and interstate.

Was the same considerations or on merely on the same basis or under basis of the same data by which it raises the interstate rates, 7%, 9% whatever you wish, could we agree on that?

Charles H. Weston:

I certainly, I would agree on that and of course to us —

Felix Frankfurter:

So that there’s (Voice Overlap) required, I’m not now, getting to the facts of this case.

Charles H. Weston:

Yes.

Felix Frankfurter:

I just want to get my directions.

Charles H. Weston:

Yes.

Felix Frankfurter:

So that, there is require because of the continuing authority recognized in the regulation of intrastate rate, a specific direction and a specific justification for touching intrastate road — rates.

Charles H. Weston:

Certainly, I agree to what you said.

Felix Frankfurter:

And the Commission — and this Court in addition to the other things it has held, had also rigorously insisted upon as — emphasize the importance of being specific and responsible in relation to the rate system of the State and not having a change in the rate system of the States through merely from a change in the interstate rate, you agree with that?

Charles H. Weston:

Yes.

Certainly, I agree with that.

Felix Frankfurter:

All right.

Charles H. Weston:

And it was a very considerable hearing as the record here would indicate before it was on the action taken with respect to the interstate rate.

Hugo L. Black:

Could you state in a sentence that it might not be possible what has to be shown in addition to the showing that raised — raised interstate rates 15% (Inaudible).

What has to be shown?

What is the standard on which you would determine whether the Commission was acting properly in raising the State — intrastate —

Charles H. Weston:

I think that it has to be shown that the operating conditions within the State are no more favorable than those as to interstate commerce.

I think that it has to be shown that the existing interstate rate level is below the level of the interstate rates as increased.

Hugo L. Black:

Is that — is that concededly true here, your second point?

Charles H. Weston:

That second point, I understood, was contested by appellants in the brief that I also inter — understood, Mr. Rampton to say that as to his evidence both ways on the point, he was not pressing that.

I am prepared to argue it here if the Court wishes me to.

Then in addition, I think —

Hugo L. Black:

You say that — excuse me.

Charles H. Weston:

All right.

Charles H. Weston:

In addition, it has to be fair that the rates has raised will be reasonable rates.

And that the increase in the intrastate rate will in fact add to the railroads income.

It’s frequently — the issue is frequently raised in these cases that if rates were raised, the traffic will be lost and there would be no income return and sometimes the Commission recognizes that and therefore, it does not increase rates, other times it thinks that that is not the correct conclusion and that does present an issue that has to be passed upon.

Felix Frankfurter:

Does — does Utah — I ought to know but I don’t.

Does Utah — let me start again.

There is an area within which a rate is reasonable or range.

Calvin L. Rampton:

Yes.

Felix Frankfurter:

We all agree to that.

Does Utah claim that the rate in fact would be unreasonably high or does it merely claim it for the Utah Commission to determine what within the range it should impose, which is it?

Charles H. Weston:

I don’t think that it claims the first and I think that it claims simply that the railroads have not established the case —

Felix Frankfurter:

Yes.

Calvin L. Rampton:

— for affirmative action for the Interstate Commerce Commission.

Felix Frankfurter:

But it doesn’t challenge the reasonableness which is the last point you’ve made.

Charles H. Weston:

I — I don’t believe they could in this proceeding but in any case —

Felix Frankfurter:

I don’t mean in this proceeding.

Charles H. Weston:

Yes.

Hugo L. Black:

You left me a little in doubt yet in your criteria.

Maybe — maybe it’s suggested that you could get it.

Your first one seems to be the only one that have any — cover any crucial significance here, namely, the operating conditions are different.

You mean the operating conditions in the State are different in the operated conditions outside.

Charles H. Weston:

That is the Commission has to find, I think, before it can act that the state conditions are no more favorable —

Hugo L. Black:

What do you mean by favorable?

It cost more or less or what?

What — what is a — I don’t quite yet get to understand what it is.

Charles H. Weston:

It would be the — yes.

It would be the — the effect the net return that traffic would — would yield, I would say would be operating conditions and that would — you’d have to take it into account all tractors of operating expense.

Hugo L. Black:

Suppose by reason of mass transportation.

I’m speaking in terms (Inaudible) prefer to transportation to something like a mass production.

Suppose it by reason of mass transportation inside the State.

The railroad can really make more money on the traffic that it can on interstate commerce.

Hugo L. Black:

Is that — would that come within your criteria?

Charles H. Weston:

I certainly, think it would.

I think that that would just apply the State in maintaining a lower interstate rate on that particular traffic as compared with corresponding interstate traffic.

In other words, if the conditions were such that — and it was showed and established that the — the nature of the traffic was such that it produced special economies.

I think that on that, the State could properly maintain a — as I say a lower rate in corresponding interstate traffic.

Hugo L. Black:

Suppose the total quantity of transportation inside the State, to a such nature that so many (Inaudible) the result that the intrastate in Utah actually cost less than the others.

Could you raised up Utah rates for those in the interstate commerce under your criteria?

Charles H. Weston:

I think that that would be doubtful if that result that you suggest could be doubtful if you are breaking the test all movement within the State of Utah.

Now, the Commission, if it — if all movements include, as I assume that they would in your question, many interstate movements, those already have the higher rate and there is no reason to — in my mind to think that what maybe true of the State as a whole will establish the conditions applicable to the interstate traffic.

The traffic which is — with which we’re concerned in the 13 (4) proceeding.

Felix Frankfurter:

Mr. Weston, could I ask you this in order to make this case more concrete at least for me.

Would you mind stating, forgetting all about law for the moment.

Would you mind stating, what there was before the Commission that justified its conclusion that Utah traffic wasn’t bearing its fair share in the sum total of the cost of maintaining this system, isn’t that the real question?

Charles H. Weston:

That’s the ultimate question.

Certainly —

Felix Frankfurter:

Well, I — I only get the trouble about subsidiary and it means nothing to me usually.

I want to know what the content of that is.

Now, what is the — what is there that the Commission established justifying it, to say that Utah didn’t bear it’s bear it fair share of the Southern Pacific then the real cost.

Charles H. Weston:

I think it follows from two things.

One, its finding that the operating conditions were no more favorable in Utah, that means —

Felix Frankfurter:

Well, don’t — that’s the conclusion but what appeared before the Commission.

Charles H. Weston:

Oh, well if you want me to talk about the evidence where, I can —

Felix Frankfurter:

Well, isn’t that what we finally agreed into —

Charles H. Weston:

All right.

Felix Frankfurter:

— to find out whether as a matter of fact —

Charles H. Weston:

Yes.

Felix Frankfurter:

— when you get through with the job, density more favorable or less favorable.

What is there that justified and say us or justified us in saying that there was discrimination against interstate commerce meaning by that.

And if it doesn’t mean that, you will correct me, that Utah wasn’t maintaining its fair share of the total cost of this system.

Charles H. Weston:

Well, let me devote myself to the question of the evidence relating to similarity in operating conditions.

Charles H. Weston:

Officers of the Union Pacific, in the Denver and Rio Grande and those are the two roads that carry most of the Utah traffic.

Testified that in Utah, intrastate and interstate traffic were carried in the same trains, same cars were handled by the same men in every respect in the same manner.

And that in effect, in actual operation, interstate and intrastate commerce were inextricably intermingled.

Now, where you have one transportation system serving in part interstate commerce, in part intrastate commerce.

That would seem to me the strongest possible kind of evidence that the operating conditions of the two are the same.

Harold Burton:

What do you say to the other side that points that the traffic is more dense, there’s more of it (Voice Overlap) —

Charles H. Weston:

Could I — wait just a minute.

I will come to that, yes.

Now, I don’t think that the fact that, you might say the universality of the facts to which the witnesses testified, destroys this testimony, it would seem to me to strengthen it.

It doesn’t lose its probity force because what is true in Utah is true in other places.

Now, the appellants did attempt to show or introduce evidence to overcome this proof that was before the Commission.

William J. Brennan, Jr.:

Well what’s that proof?

That’s what I don’t understand.

Charles H. Weston:

That —

William J. Brennan, Jr.:

What did that evidence proved?

Charles H. Weston:

It proves that they — when they’re operated in the same way that the — and they’re on the same train, same cars —

William J. Brennan, Jr.:

Yes, but suppose — you suppose you had hundred — a hundred car freight of which 10 cars were bound interstate and 90 cars were intrastate, would that make a difference?

Charles H. Weston:

No.

No,no.

I’ve — it seems to me that it shows that irrespective of the proportion of one to the other that you’ll be paying the same wages to your train crew using the same coal per turn —

William J. Brennan, Jr.:

Yes.

But I — I would suppose in return the 90 car intrastate would mean very much more to the railroad than the 10 car interstate traffic, wouldn’t it, even though they have the same train crew.

Charles H. Weston:

Yes.

Of course, it would in — in freight collected from the — from transporting that number but the question would be whether they should pay at a higher rate.

Supposing this, we’ll say $3 a ton for the interstate charge shouldn’t be interstate charge where the same services performed under the same conditions.

They’re the same as to the interstate charge and assuming the same distance.

Earl Warren:

But if you don’t take that into consideration, aren’t you back to the — to the point where we started when you were asked the question as to whether — whether the — the mere raising of the interstate rates gave the Commission the right to — to raise the intrastate rates without more?

Charles H. Weston:

No.

I — I say.

But I think that this evidence and more.

Charles H. Weston:

In other words, we are not in a situation without more.

Earl Warren:

Well, what is that — what does that prove, Mr. Weston as to what the cost of operating is intrastate wise and interstate wise and what is the revenue of contribution intrastate wise and interstate wise?

What is the density of the traffic and all of those things?

How does that general statement to those men bear upon those subjects?

Will you just dissect their statement and say how — and show how it bears on it?

Charles H. Weston:

It shows that whatever expense they have as to one kind of traffic is applicable to the other because they handle it as a unit.

Now —

Earl Warren:

Well, you don’t mean by that that every train — every train has both intrastate and interstate traffic on it, does it?

Charles H. Weston:

No,no.

It does not.

Earl Warren:

Now, suppose you have — supposed you have a hundred.

Suppose you have a hundred intrastate trains and one train that was interstate, wouldn’t that — wouldn’t that bear on it very greatly?

Charles H. Weston:

Well, it would not I think bear greatly on the question of whether the operating conditions are from the expense put were different.

It might bear on the — on the revenue received and if you have —

Earl Warren:

The contribution that would —

Charles H. Weston:

Yes.

Earl Warren:

— to verify (Voice Overlap) —

Charles H. Weston:

Here on then —

Earl Warren:

But isn’t that important?

Charles H. Weston:

I think under some circumstances, it maybe, yes.

Earl Warren:

Isn’t it essential to one of these hearings?

Charles H. Weston:

I think that when these identity in operating conditions is established, then it becomes incumbent to show in what respect that general proposition is not true and appellants did undertake to make such a showing here and they gave this density figures.

Earl Warren:

Who was the burden on —

Charles H. Weston:

I think —

Earl Warren:

— for showing that?

Charles H. Weston:

I think it’s initially on the railroads, but I think that after they established that the same methods are used in both inter and intrastate commerce, that then to chose special conditions affecting intrastate commerce that make that general proposition in our — rest on the — those who are contesting the application.

Hugo L. Black:

Mr. Weston, your argument leaves me a little doubt.

I understand you to say that in all cases, you have that special identity of operation.

Suppose they operate the same kind of car, place the same kind of wage in it, and therefore since there is an identity of operation is automatically followed that the Commission had a right to equalize the rate.

Now, if that’s the case, why isn’t that true all over the country with reference to every railroad?

Charles H. Weston:

I —

Hugo L. Black:

And why didn’t — why isn’t that urging if that that they have the power to say that despite Congress’ definition there that they can show identity of operation by showing what everybody knows the average kind of train with the same kind of employees is entitled to equalized rate.

Charles H. Weston:

I think that —

Hugo L. Black:

Maybe that’s right.

But I’m — I’m just wondering how you — well the way you define identity of rates, it sound — operation, it sounds that’s what you mean.

Charles H. Weston:

That’s — that’s absence in showing they would take it out of that general proposition.

Now, such proposition — such situations you gave earlier.

Let me say, supposing there was a branch line running from the mine to main consuming center.

The traffic movement was by trains, train movement regular and substantial from a showing like that that would, in my opinion, justify a lower intrastate rate for that branch line traffic then for corresponding interstate traffic.

Hugo L. Black:

Well, should the Commission show that is the burden on them or is the burden on the other end to show that there are special lines of that kind in such a state.

Charles H. Weston:

I think that because of the identity in the manner of handling and which I think grows out of the fact that we have one way over the systems.

Hugo L. Black:

But I —

Charles H. Weston:

Serving undistinguished —

Hugo L. Black:

I agree to that.

Charles H. Weston:

Well, that is the case really where the burden lies.

I think that when you establish that identity and it might not always be true then I think the burden does shift.

Hugo L. Black:

But isn’t that just the same fact by saying that what we are faced with here is there are two sections.

One of them says you’ve got to consider all national railroads.

There’s not any doubt about that.

This Court recognizes time and time again that another one gives power to change the intrastate rates if they’re unjust and discriminatory.

But if — if all you have to show there is that operations are alike because they’re always are, except maybe in special isolated instances (Inaudible).

Now, it doesn’t — doesn’t your argument leave to the conclusion that the Commission has a right to do this automatically because the train is over a line?

Charles H. Weston:

It maybe various things that might be shown that for example in raising the interstate rates would not increase revenue.

That would be a defense if it’s shown.

In other words —

Hugo L. Black:

Well, I guess that would be a little difficult to show when you get a 15% raise of freight.

People got to carry it.

Of course it’s conceivable that it might go up so high that —

Charles H. Weston:

No.

This very (Voice Overlap) track competition that makes — that in effect such as the sealing and if the sealing is already at the present level then they can’t go up without losing the traffic.

William J. Brennan, Jr.:

What else — what else — you start — you gave one that increase rates might lose traffic and now what — what else would —

Charles H. Weston:

Well, one of the example I gave earlier of special conditions is to — as to certain traffic, branch is heavy movement from the mine to consuming center with regular train movements producing operating economies.

I suppose that if you had a very heavy industrial movement from — then it might be circumstances under which —

Hugo L. Black:

Well, this is general — general increases.

Charles H. Weston:

Yes.

Hugo L. Black:

Not specialize and pick up certain things —

Charles H. Weston:

I think that when you consider that, you have to consider the fact of what the Utah Commission did.

In nearly all prior 13 (4) proceeding which at least those which have come before the courts, the State Regulatory Commission has authorized an increase transferring to interstate increase except as to particular commodities.

Now, here the Utah Commission just didn’t allow it on anything and the 13 (4) proceeding then involved all commodities.

In other words, there is sweep here that indirectly is due to what the Utah Commission did.

Hugo L. Black:

Well suppose the premise from which I understood Mr. Rampton argued is correct.

Let’s suppose it’s correct.

I understood him and maybe I understood him — I understood him to take the position of Utah or somewhat like Texas and other institute.

Utah is big of a state that by reason of vast business enterprises moving backwards and forward, here and there just different.

A lot of business.

It’s taking all that business together.

He says, they carry this stuff cheaper.

I understood there to be the line of his argument.

Charles H. Weston:

Well —

Hugo L. Black:

If he’s right in that, where they right in — was the Commission right in giving his raise?

Charles H. Weston:

Well, rather than give such a general answer, I would like to deal with the question of the traffic density and what it really signifies because that is the factor that I think, Mr. Rampton stressed more than any other.

Hugo L. Black:

I don’t ask you to see before you did it, whether where would come out —

Charles H. Weston:

Well —

Hugo L. Black:

— is that crucial or is it not.

I don’t know.

Charles H. Weston:

I think that where you show differences, it should be shown with reference to what is intrastate as distinguished from interstate rather than just on what moves within the State is distinguished from what moves somewhere else.

Now, the — it has been mentioned that this — this density figures were based solely on main-line traffic.

It’s perfectly true that branch line traffic was excluded in both sides.

That is on the system-wide figures and the state figure.

But without the total trackage certainly, the figures are uncertain as to whether they really reflect operations.

Charles H. Weston:

But I think a more important consideration is that, what is called interstate density represents all movements within the State of Utah.

It includes the Utah league of shipments which start in Utah going to an out of state destination.

The Utah league of shipments coming in the Utah from outside the State and the movement through Utah what is called bridge traffic which goes across the State and doesn’t have either an origin of destination in Utah.

Now, would this —

Felix Frankfurter:

I don’t understand that [Laughter] —

Charles H. Weston:

Well —

Felix Frankfurter:

I mean I — I think I know the meaning of all the word you brought it but I don’t understand that in this whole table between intrastate and interstate.

There’s no meaning at all.

Charles H. Weston:

That’s what I think, that’s our position.

Felix Frankfurter:

Well, I mean is that — is that what you’re saying?

Charles H. Weston:

Yes, precisely.

You’ll find the record support for the statements in our brief.

In fact —

Felix Frankfurter:

What are the — from you point of view perhaps, on what artificial assumption was this table made?

Charles H. Weston:

Well, I don’t know that we can call it entirely artificial.

I wouldn’t go as far as that.

It was made on the basis of whatever move within Utah.

In other words —

Felix Frankfurter:

Well, but — but then the interstate was not based on whatever move interstate, is that right? Intrastate maybe descriptive for a portion of an interstate road —

Charles H. Weston:

Yes.

Felix Frankfurter:

— but interstate is not descriptive if it excludes a shipment that takes place not wholly within Utah, is that right?

Charles H. Weston:

The systemize figures covered their entire traffic but the intrastate figures covered not what was really interstate commerce but interstate commerce plus this mingled — well, plus what was interstate commerce because as I say, came in the Utah from another State.

Felix Frankfurter:

But the other way around.Interstate on the right hand column of that table, is not descriptive or what we usually call interstate namely, something beginning in one State and not ending there —

Charles H. Weston:

That’s right.

Felix Frankfurter:

— without going outside of it.

Charles H. Weston:

It was the — it was the entire system figures that would include the interstate commerce in other States —

Felix Frankfurter:

All right.

Charles H. Weston:

— in which the railroads operated.

Now —

Felix Frankfurter:

Where is — where is the — where is the record confirmation of what you’ve said — you’ve just said and since Mr. Rampton relied heavily on that density factor, it becomes very important.

Charles H. Weston:

If you’ll turn to page 21 of our brief, the first paragraph, first paragraph in that page.

Felix Frankfurter:

Now, what you’re saying — let’s see if I understand.

What you’re saying is that which is labeled intrastate which until you spoke.

I assume it was traffic originating and concluding and terminating in Utah and not travelling outside even that — those exceptional cases and coming back that — that label intrastate — intrastate is not descriptive of such Utah containing traffic.

That is correct,is it?

Charles H. Weston:

Yes.

Felix Frankfurter:

All right.

Charles H. Weston:

If you’ve turn to those we — we cite record 293, I think —

Felix Frankfurter:

293 —

Charles H. Weston:

— of the record —

Calvin L. Rampton:

We agree to that is so.

Charles H. Weston:

Mr. Rampton said that he agrees that that is so.

Calvin L. Rampton:

I — I so stated in my argument Mr.–

Felix Frankfurter:

Well, I’m very sorry.

It is the first time I didn’t hear an argument that sure.

Charles H. Weston:

Well —

Harold Burton:

But when you’re providing intrastate state rate, is that intrastate rate apply only to shipment with (Inaudible)

Charles H. Weston:

Oh, yes, yes.

Harold Burton:

— on interstate?

Charles H. Weston:

Yes.

Harold Burton:

(Inaudible)

Charles H. Weston:

That’s right.

Intrastate —

Harold Burton:

Intrastate applies only to those who (Inaudible) within the State.

Charles H. Weston:

I thought, you said intrastate rate.

Harold Burton:

No.

Charles H. Weston:

The intrastate rates which the Commission imposed of course apply only to those movements but the intrastate —

Felix Frankfurter:

Intrastate is not confined physically to Utah.

That’s what you’re saying.

Is that what you’re saying?

Charles H. Weston:

We are now talking about this density figures?

Felix Frankfurter:

Yes.

Charles H. Weston:

The density figures include the Utah part of the movement.

Felix Frankfurter:

Yes.

I understand that but I — I like to put it my way not out of vanity but because it lies at in my head.

When I say intrastate as against interstate, I mean traffic that begins in the State and ends in that same State.

Charles H. Weston:

I think that the correct definition should be —

Felix Frankfurter:

No.

That is not what is covered by intrastate on this exhibit.

Charles H. Weston:

That is exactly right.

Felix Frankfurter:

And that includes any portion of traffic no matter where originating so long as it’s physically transpires within Utah.

Charles H. Weston:

Some of it.

Felix Frankfurter:

Some of it?

Charles H. Weston:

Yes.

Felix Frankfurter:

And we don’t know what portion of (Voice Overlap) of the Southern Pacific may have originated in California or where not.

Charles H. Weston:

I think that that is the real explanation for that extraordinary difference is to the Southern Pacific in the density figures which you know that when you question Mr. Rampton.

Now, there’s one other thing on density, it does not necessarily mean lower operating cost, is the number ton miles transported per mile of track.

Now, take a case where — where two trains, each of 50 cars operating within a giving time over a certain track and at the same time over another track, one train of 75 cars.

The first track would have greater density, track density — traffic density, there would be hundred cars in the same time as there were 75 cars in the other line but would have higher operating cost because it would be two train movements instead one.

Now, the same point that I’ve made, the same basis for computing the intrastate density figures was the basis for computing the so-called interstate operating ratios.

They also include the Utah leg of every movement coming or passing through the State or going out of it.

William J. Brennan, Jr.:

Well, but Mr. Weston as I understood Mr. Rampton, he isn’t offering this to prove any beyond that indicates that there was a reason for a railroad to the law of any factor which was not develop and which the Commission didn’t require them to develop.

And as I understand you now all that you feel that is required within the definition of operating condition is that to use the same tracks, the same train crews, the same billing methods and same billing procedure, if you established that and at the same — those procedures apply both to intrastate and interstate, thereby, there is a established in identity operating conditions from which in the absence of anything from the State Commission in our position, there must follow an increase to the interstate level of the intrastate rate.

Is that right?

Felix Frankfurter:

That was made.

Charles H. Weston:

Yes, the Commission —

William J. Brennan, Jr.:

I’m asking, must?

Charles H. Weston:

No, I don’t think it must.

It — it necessarily has to take in to consideration —

William J. Brennan, Jr.:

Well, this is a railroad application for increase of the level of the intrastate rates to the interstate rate, is in it?

Charles H. Weston:

The test is not just discrimination and I think that the Commission (Voice Overlap) —

William J. Brennan, Jr.:

Let me get back to my question again, Mr. Weston.

Do I — do I correctly understand you that operating conditions in your view or what I define them to be the same rails, the same cars —

Charles H. Weston:

Yes.

William J. Brennan, Jr.:

— the same crews and so forth.

Charles H. Weston:

That at least is the initial step and when that has been taken then I think the burden the proof shifts.

William J. Brennan, Jr.:

Well now, supposed that all appeared in this whole case were the statements of the two officers which you referred us to, in which they said and they could say it in five minutes, we used the same crews, the same rails, the same cars, the same tracks.

No cross examination when they sat down.

On the basis of that evidence, could the Commission have increased these rates up to the level of the interstate rate?

Charles H. Weston:

No, it would have to show that — for one thing, it would have to show that in fact the increase would bring a return an income and additional revenue and it would have to —

William J. Brennan, Jr.:

I think (Voice Overlap).

Well, how do they establish that?

Through statistics or what or just an officer say so?

Charles H. Weston:

No, no, no.

The definite statistics are put in.

They made a study, a four months study taking one month in each (Voice Overlap) —

William J. Brennan, Jr.:

Showing that there would be an increase —

Charles H. Weston:

So that —

William J. Brennan, Jr.:

— what else do they have to prove?

Charles H. Weston:

They have to prove that the rates will be reasonable and the —

William J. Brennan, Jr.:

Well, what goes into that?

Charles H. Weston:

— rate is raised.

William J. Brennan, Jr.:

What goes into that?

Reasonable in what —

Charles H. Weston:

Well, I think that all the elements that are there for reasonable rates must be considered by the Commission in the 13 (4) proceeding just as in any other.

William J. Brennan, Jr.:

Well, all the elements doesn’t help me.

What elements?

Charles H. Weston:

The comparison with other rates on the same kind of commodity, something about the volume of movement and all — I don’t pretend to be a rate expert —

William J. Brennan, Jr.:

Yes.

Charles H. Weston:

— but the various factors that would be considered in determining reasonable rates.

William J. Brennan, Jr.:

Now, what else goes into the railroad case?

Charles H. Weston:

Well, I think that — I think that discrimination would probably be the — the ultimate conclusion that would be drawn from those —

William J. Brennan, Jr.:

From — from that — that would —

Charles H. Weston:

Yes.

William J. Brennan, Jr.:

— make a case then.

Charles H. Weston:

Yes, I think it would.

William J. Brennan, Jr.:

On places of which there could be an interest.

Charles H. Weston:

Yes.

William J. Brennan, Jr.:

Well, why doesn’t that come down merely to saying the reasonableness of rates and increase of revenues is really all they have to establish?

Because everybody knows, that in fact the traffic moves on the same rails, and the same cars, build with the same procedure.

Felix Frankfurter:

Do we know that?

Charles H. Weston:

I — I think that there may be many circumstances in which there would be special operating conditions.

I think that it probably could have been established here in — what I see in the evidence, a case could have been made as particular traffic for a lower intrastate rate than for interstate.

Hugo L. Black:

Well now how is that possible?

The same railroad tracks (Inaudible) —

Charles H. Weston:

Because if — if the flow is much more fast and even and if — if its — will say true from origin to destination so then that cost stops that — that means that there is an actual — actually a greater return at a given rate doesn’t — on some other traffic which —

Hugo L. Black:

But you — the operating conditions of tracks and rails that the people is doing, how is it possible for you that that not to be the same with reference to both interstate and intrastate?

Charles H. Weston:

That — that means that when — when that is established then you have to show your special conditions which take it —

Hugo L. Black:

Well, I mean that —

Charles H. Weston:

— take it out of that.

Hugo L. Black:

Does that have to prove?

Charles H. Weston:

I —

Hugo L. Black:

How?

Why is that necessary to prove?

Maybe they are but I would suppose as all railroad where they’re operate in interstate and intrastate.

Can interstate or intrastate have right on the same rate?

Felix Frankfurter:

Can we take judicial notice of that, if that so?

Hugo L. Black:

Well, I’m at —

Charles H. Weston:

At least we — at least the Court isn’t face with that in — in this case because there was a testimony by officials who had experience who had been in charge of Utah operations for their railroads.

Felix Frankfurter:

But suppose —

Charles H. Weston:

They knew the conditions at first hand.

Felix Frankfurter:

I don’t know.

Certainly, whatever I didn’t know is very rusty but I suppose in some of the industrial states there’s not an inconsiderable volume of wholly local traffic carried on wholly local trains.

Charles H. Weston:

I think —

Felix Frankfurter:

Is that true?

Charles H. Weston:

I think that — that maybe true and I will think (Voice Overlap) —

Hugo L. Black:

Well, I have no doubt about that but when it gives rates that are going to interstate — things that are going interstate is carried on the same rate, doesn’t it?

Charles H. Weston:

Yes.

Hugo L. Black:

To the same track.

Charles H. Weston:

Yes.

Hugo L. Black:

That’s done in Birmingham, Alabama every hour of the day.

Charles H. Weston:

That would be certainly.

Normally the normal type of railroad operation and I think that it show variance should be — there should be affirmative proof of that.

Felix Frankfurter:

That’s in this case.

That is that they carry those kinds of traffic on the same train.

But I suggest that if I should be greatly surprised if there is a vast amount of traffic of a various State that it carried on separate train for intrastate and interstate traffic.

Charles H. Weston:

I —

Felix Frankfurter:

That isn’t this case.

Charles H. Weston:

No.

There is — the facts were established as to that.

Potter Stewart:

Well, Mr. Weston (Voice Overlap) you’re here as I recall it on Milwaukee-Chicago suburban case, aren’t you?

Charles H. Weston:

No, I wasn’t.

I didn’t (Voice Overlap) —

Potter Stewart:

Are you familiar with that at all?

Charles H. Weston:

I wasn’t in the court either.

Potter Stewart:

As I remember that one the — all of the evidence went to a breakdown of revenues and expenses on the suburban traffic as suppose to interstate.

And I supposed there that’s because they don’t carry this.

Charles H. Weston:

Well, I’m not familiar with the details of that case.

Well, I just —

Earl Warren:

Mr. Weston, may ask you this question in — in longer line that Justice Frankfurter was asking you about.

Earl Warren:

Do you contend that this testimony that the railroad officials gave to the effect that — that the traffic, intrastate and interstate, both went over the same lines and the same trains meant that there were no such conditions as Justice Frankfurter mentioned.

Namely, that on some — on some branch lines that there might be transportation of cattle only on — on a branch line to the main lines and so forth maybe — maybe minerals carried that way.

Charles H. Weston:

I think that — that — that should be affirmatively show that that’s case —

Earl Warren:

I beg your pardon.

Charles H. Weston:

That that should be affirmatively shown where that is the case and that — where that was affirmatively shown, it would might establish conditions from a lower interstate rate.

Earl Warren:

But do you — do you contend that the testimony of these — these officials excludes any such consideration in the State unless, unless it is rebutted by the State of Utah?

Charles H. Weston:

I think that that is enough if this — if there is no rebuttal evidence.

Earl Warren:

So the burden is on them?

Charles H. Weston:

Oh, yes.

Earl Warren:

Yes.

Yes, Mr. Weston.

Mr. Collins.

Elmer B. Collins:

May it please the Court.

I would like to say first to this Court that this case follows a pattern that has been followed since this Court decided the Wisconsin Commission case on February 27th, 1922.

The first case decided after the Interstate Commerce Commission or rather after it declared the 13th Section powers and exercise them in that case.

No two cases are identical.

There’ll be variations between this one today and another one tomorrow.

This Court in that case sustained the constitutionality of the grant of power and rejected the contention that the federal government was encroaching upon the States and laid down the law to be that whatever encroachment there might be, I mean it was not an unconstitutional encroachment and that whatever encroachment there were was in — was essential to the maintenance of an adequate national railroad system.

Now, from that day until this, this Court has upheld and ordered the Interstate Commerce Commission which followed that pattern.

I’m constrained to suggest these things to you because the State of Utah, in an effort to try to frustrate the Commission’s powers under Section 13 of the Act is resorted to all sorts of free arguments like this density of traffic thing and we — they’re much pleased with themselves to try to break up the pattern that this Court has followed for 35 years within — within the last few months or certainly since your decision in the King case, the Florida case.

This Court has adopted or has — I’m not sure over the mechanics of it, granted motions to affirm decisions of three-judge lower courts which decisions sustain or is of the Interstate Commerce Commission in the Louisiana Public Service case, the North Carolina Commission case, the Arkansas Commission case.

Now all those three had been affirmed by this Court without listening to argument, without taking them for argument, without citing a single decision as the Court in way back when I was young did cite some decisions in a per curiam affirmance.

Now —

Earl Warren:

In this case, is it necessary for the railroads to prove discrimination so far as intrastate rates are concerned or is it the duty of the appellants to show that there is no discrimination?

Elmer B. Collins:

Mr. Chief Justice —

Earl Warren:

It must be one of the other?

Elmer B. Collins:

In this case, I was sorry to notice so many questions from the bench employing the use of the term burden of proof.

In this case, the railroads petition the Interstate Commerce Commission to please conduct an investigation into the question whether or not the Utah intrastate rates do as claimed by the railroads, discriminate against interstate commerce.

Then the Commission sets a hearing, the railroads come in and submit what they think is proof of the discrimination by the intrastate rates against interstate commerce.

And the in this case as in all the previous ones they showed.I might interrupt myself Mr. Justice Frankfurter to — to express my appreciation for your observation a while ago that the jurisdiction under this Section 13 is far in the way then extension over the old Shreveport jurisdiction.

Elmer B. Collins:

The thing we are prone to call discrimination against interstate commerce in these cases under Section 13 of the Interstate Commerce Act is not just that alone, it’s a — it is a matter of providing revenues sufficient to enable the railroads to maintain an adequate national railroad transportation system which was a matter of such concern to Congress that they decided that they put a stop to the state commissions from forcing undue preference of its state traffic and that’s the history of the 1920 Transportation Act.

We prove the discrimination, if anybody wants to read the record, will show that the intrastate rates in Utah were lower, except of few rare instances and those who will be save for the saving clause in the Commission’s order and report.

Earl Warren:

You haven’t answered my question yet and I would like to know if you have to prove undue discrimination.

Elmer B. Collins:

Against interstate commerce and —

Earl Warren:

Yes.

Elmer B. Collins:

— that’s what was proved here, yes.

Earl Warren:

Now, will you tell us in your records what proof you rely on to that effect.

Elmer B. Collins:

I — all of the — the oral testimony in the first volume until you get to that testimony which identifies itself as being testimony of protesting parties those who protest against the —

Earl Warren:

Could you tell us in — in a few a words what the nature of that testimony was?

Elmer B. Collins:

Well, would you allow me to refer you to the — to a better statement than I have time to make of it which has been made in the Interstate Commerce Commission’s report and nobody — are opponents don’t dispute —

Earl Warren:

All right.

Elmer B. Collins:

— that the Commission has properly characterized the testimony that was introduced in the Commission’s reports begins at page 94, volume one of this record.

You’ll see that the Commission there dealt with some 20 commodities in detail as to volume and revenues and all of that sort of thing.

Now, the needs of the revenues were going into the fact that we derive from intrastate traffic in Utah, a lower ton mile reward or earning from hauling the traffic of that State then we do for holding traffic in the western district generally, the interstate traffic I mean.

The shipper of interstate traffic pays more to get this traffic across the State of Utah mile from mile in all but a few isolated distances then the intrastate shipper pays for a holding having his traffic hold from inside the eastern border to just inside the western border of the State.

Now, our lower ton mile earnings that is a lower compensation for the word that we do in hauling this intrastate traffic has been referred to by this Court as one of the reasons for exercising the power given the Commission under Section 13 of the Act.

They said that this Section 13 was intended to make states traffic pay for states work by railroads in hauling that traffic.

Now, I want to call your attention, if you please, to the fact that a fair return as such so that the investors can have better dividends is not the purpose of the Section 13 power.

It is that I said to make state traffic pay for states work in transportation but the fundamental purpose has been stated over and over by this Court since the original decision to maintain or to produce revenues sufficient to unable the carriers to maintain a transportation system.

And now, since 1933, when Section 15 (a) (2) — 15 (a) paragraph two was amended, Congress struck out or rather repealed, remember the old recapture section and language there that enable the Commission to give the railroads rates which as nearly as maybe might earn five-and-a-half or five-and-three quarters percent return.

Well, that wasn’t workable.

In 1933, they amended that to in — in this present language to require the Commission to give the railroads or rather to take into consideration in its exercising its power to provide just and reasonable rates.

To take into consideration among other factors, the effect of rates on the movement of traffic and to the need and the public interest of adequate and efficient railway transportation service at the lowest cost system with the furnishing of such service to the neither revenue sufficient to enable the carriers under honest, efficient and economical management.

Now, the Commission has been delegated to duty by Congress to the make the determination as to when the carrier’s revenue for national purposes and for all purposes is inadequate.

The Commission makes that determination and they’ve not let any of that power as such to the Utah Commission which seems determined to try to usurp the Interstate Commerce Commission’s jurisdiction to make the determination as to whether or not trans — more revenues are needed for national purposes.

I did want to say to you.

I don’t know whether this light means me or not.

Earl Warren:

You have five minutes.

Elmer B. Collins:

Five minutes.

Thank you.

Elmer B. Collins:

Mr. Rampton with his ingenuity has picked on density of traffic.

I wish would look at page 84 of the railroads brief which has a slightly lighter great cover than the Government’s brief.

And you will see why the Interstate Commerce Commission would not accept any conclusions drawn in the — I’m referring to the quoted language on top of page 84 and —

William O. Douglas:

84?

Elmer B. Collins:

84, yes.

The discussion that follows that two to three pages in that brief.

The Commission in treating the testimony introduced by the Utah Commission, patiently explained in each instance and with respect to each item of testimony why the testimony was so undependable.

It had a — it had a freak or phony I can’t think of a defective basis because of the annual reports and the method of reporting that the Utah Commission forces the railroads to submit to it.

In other words, they forced defective and misleading and erroneous breakdowns, they want to credit to the State of Utah the — the revenues allocated on a mileage basis and then credit that states into intrastate traffic for a — with the revenue that interstate traffic pays for crossing the State.

You can’t — I don’t see how it could be hoped that this Court could sustain a doctrine to the effect that the Utah intrastate shipper is entitled to have lower rates just because we have a lot of (Inaudible) little traffic moving at higher interstate rates across that State of Utah.

The density of traffic question are cited at page — well I forget what page in the railroads brief, will show there by reference to the Interstate Commerce Act annotated the publication of official status.

If you’ll look at the decision you will find over 600 back doors or elements that have been considered by the Interstate Commerce Commission to have a relevance in the determination of the — of the reasonableness of interstate rates.

The Commission is though in its exercise of the Section 13 power determining reasonableness of rates as such in Utah.

It is already laid down the guide as this Court said in the King case, its action in Ex Parte 14 — 175 became the natural basis for the action in the State to determine whether the State rates in Utah bore a proper relation to income.

If you look on pages 52 and 53 of the railroads brief, you’ll see illustrations there just examples of the rate relationship.

They’re put in juxtaposition to each other to show you what was before the Commission in this record and then if you’ll look at further — or at page — I can’t locate the sentence.

It’s in some place in the railroads brief where they — I quote from a Commission report as far back as 1935 in which they said prior to that date, the rail — the intrastate rates in Utah and the interstate rates in traffic to through and from the state and in adjoining areas was generally on — on approximately equal level.

Now, Utah Commission and none of the opposing shippers have cited you to anything that has brought about the change in the rates or any reason why if — as the Commission made the finding there then and nobody is the position now to challenge it, there’s no evidence to the contrary in the proceeding before you now.

And nothing has happened following the constant increases since 1946 when they went into this inflationary spiral.

Nothing — the only thing that has happened to bring the two sets of rates intrastate and interstate out of the line and to each other is the refusal of the Utah Commission to go along with the Interstate Commerce Commissions finding that such and such revenue is needed for the maintenance of the (Inaudible).

You’ll find no law that says that the Commission must have a — have evidence of density of traffic in order to render a decision at all.

I thank you.

Calvin L. Rampton:

Mr. Chief Justice, Mr. Sohm is going to handle our rebuttal but I would like the permission of the Court to break our argument once more to take just a moment to try and get myself out of trouble, Mr. Justice Frankfurter —

Felix Frankfurter:

You’re not in trouble with me.I can assure you quite the contrary.

Calvin L. Rampton:

I think I’ll try to explain that exhibit.

Felix Frankfurter:

Well, I — I — except to that without another word.

Calvin L. Rampton:

And it’s — it’s in my brief how it was figured so —

Felix Frankfurter:

I’m trying to call — being troubled of my remissness?

Earl Warren:

Mr. Sohm.

Keith Sohm:

I’m glad to say that we have no difficulty on the density problem.

Felix Frankfurter:

Well, the difficulty that — you may have the difficulty as to what it means.

Keith Sohm:

Thank you, Your Honor.

The — Mr. Weston I think mentioned in great detail and the first part of this testimony, I mean the argument of Mr. Calvin, excuse me, mentioned in great detail on the fist part of his argument and it seemed to infer all of it that the only thing they think is necessary is to show that there is substantial conditions that are the same in interstate and intrastate commerce.

We submit that they did not so do and came far from it is a matter of fact because much of the Utah evidence introduced shows that the rates, in a lot of instances in intrastate commerce was higher than rates on in — interstate commerce in similar conditions and similar situations.

This was observed by the Honorable Judge Christensen in the Circuit Court of Appeal when he dissented from the majority decision — Circuit Court and District Court excuse me, when he stated this.

Other evidential matters mentioned in the prevailing opinion as a foundation for the Commission’s conclusion are belief insufficient to permit possible inferences to that effect in view of the record as a whole.

Such disparity of rates as were shown are in both directions and it is well established that a mere disparity of rates establishes no sufficient basis for such an order.

We recognize the fact that there may have been a disparity rates but the disparity was of course in both directions, some of them in favor of the Interstate Commerce Commission and some otherwise.

Now, an argument, Mr. Collins mentioned that there was a saving clause which was suppose to protect the State Commission in case any rates where slightly higher in intrastate commerce than in interstate commerce and we submit that that saving clause has no effect and gives us no advantage because the principal number of rates and the principal structure of rates within the State of course.

It is impossible to identify similar circumstances and similar instances under which we can take advantage of that saving clause so that with the exception of very few instances that saving clause has no effect or no advantage to the Public Service Commission of Utah and the rates within the State of Utah.

Now, we have no argument with the railroads and we’re not attempting to frustrate the Court nor the Interstate Commerce Commission though I may admit we probably frustrated the railroads to a short degree because we haven’t fallen in line with all of the States that have been asking for increases, all of the States that have denied or granted these increases for instance.

On November or October the 10th, 1957, the — Alabama Commission granted an increase in rates that was petitioned before them by the railroads and this is the — in granting it, they state this.

“It is with reluctance and a definite misgiving that we authorize the sought increase.”

Nevertheless, we cannot ignore the strong compelling consideration of the ever threatening mess to our power in jurisdiction and existence of the federal statute books of the 13th Section of the Interstate Commerce Act.

The rights of the State of Alabama as well as other individual states to regulate the intrastate general rate level according to its best judgment has been all but negated by federal encroachment under the strained and continue — continually broadening construction of the provision of federal law.

We just haven’t been quite as remiss in allowing railroads to take over our rates had the Interstate Commerce Commission as the Alabama and other Commission’s have.

Now, we haven’t then unfair with the railroads.

In this last case in which they’re appealing from now, we held a hearing, asked them for evidence to prove that they needed this increase and they failed to produce it so we left the record open.

They left the record open as they stated for 60 days but instead ended up by living record open for three years.

They’re asking the railroads to comeback and give us some evidence and show us where you need these rates in the State of Utah and they did not so do.

There’s lots of — lots of problems suggested that are complicated and involved by the arguments and the briefs on both sides in this case but it’s fundamental.

And I think Your Honors can appreciate that, that this railroad whether it’s in an Interstate Commerce Commission proceeding where the Interstate Commerce Commission initiates the proceeding upon petition by the railroads or whether it’s a railroad case before the State Commission that they’ve got to make a case and they’ve got to carry the burden of proof to show that they need these rates in the State of Utah and that the State of Utah is not bearing its fair share of the interstate and the overall revenues of the railroads.

They did not so make a prima facie case and carry that burden of proof and as counsel for the appellants have argued the first instance, stated, the Utah Commission, when he state further — step further and did introduced evidence to show that in many instances the rates in the State of Utah are already higher that the — the density was higher and therefore of a greater benefit to the railroads that the — and I refer to the brief of counsel in this matter that the ton mile figures as a matter of fact.

In the record, page 116, an analysis of the revenue for ton mile produced by the Utah Commission statistical expert show — break — brought down the products into manufactured and miscellaneous agriculture, animals, and mines.

And showed that the total of these products in intrastate was produced a revenue for ton mile of $1.21.

In interstate it produced a revenue of $1.06.

The railroads have produced a ton mile study of their own and introduced it in the record in page 99.

And that they have taken the overall of the whole United States to show what the revenue for ton mile was.

They have taken the Western District and they have taken the figure in connection with Utah to show what the ton mile figures are.

We submit that the — that the railroads not only have failed to carry their burden of proof but they have — but we have already actually taken the burden and shown that they should not have the increases within the State of Utah and that if they did so have them, they would be discriminating against the intrastate commerce.

Keith Sohm:

In the railroads position that they should have automatically an increase the same as and identical to that increase granted on Interstate Commerce Commission is an absurdity to presume that the conditions within the State of Utah are identical to the conditions in Alabama for instance or the conditions in New York.

And that they — the exact amount of increase should be imposed upon Utah as in those areas.

For instance in the original case of the Interstate Commerce Commission’s investigation in which time they actually imposed this 15% increase, their order called Ex Parte 175.

Three of the Interstate Commerce Commission commissioners joined in a dissent and they stated this, it was written by Atchison.

“I cannot agree that the revenue needs of the petitioning railroads and all three great territories are so equal as to warrant a uniform nationwide increase in rates.

And that same Commissioner, I’m sure would look at this thing and say, “No.

I can’t understand and I can’t agree that the needs of all of the railroads throughout the United States is equal and exact than all of the States of the union that Utah has to be exactly the same as these others that the uniform rate increase on other states is not necessarily the particular rate increase that should be imposed upon the State of Utah.

It’s time to say that our little Tulare Valley Railroad in Salt Lake, in Utah or the Bamberger Railroad in Utah has to have and has the exact revenue needs that New York Central has that that obviously is not true.

The railroads gave us no evidence upon which we could really determine what the revenue needs were of the railroads in Utah as distinguished from the railroads that are out of the United States.

The railroads gave no evidence of their cost of operation in Utah as compared to the revenues in Utah.

They did state that we need $1,860,000 in order to — to make the operations in Utah and bring us a fair return but that’s like an employees saying to his employer that last year if you had given me 15% increase, I will donate 1000 more dollars.

And therefore I’m losing $1000.

Therefore this year given 15% increase in my wages so that I won’t lose $1000 this year.

It’s not evidence.

It’s a conclusion and a finding.

The carriers in the west by evidence is shown in the exhibits are in a more favorable position than the carriers in the east.

The illustration given by the counsel in the first argument, Mr. Rampton showed that the D & R.G.had a 6.06 rate of return, whose operations are 50% within the State of Utah.

The Bamberger Railroad which is all commodity railroad operating with its line solely within the State of Utah has a very high rate of return 15.98%.

It has never been adequately explained by the railroads nor the Interstate Commerce Commission why that high rate of return exists within the State of Utah on an all commodity road.

Hugo L. Black:

Is its rates could be raised?

Keith Sohm:

It — its rate would be raised 15% along with the others.

That is the reason that we feel that they can’t have a flat overall uniform rate increase without showing something distinguishing about the State of Utah from the other conditions in the Interstate Commerce.

The —

Felix Frankfurter:

The Bamberger road is part of what system?

Keith Sohm:

No, the Bamberger road is an individual railroad which operates over a distance of about 35 miles.

Felix Frankfurter:

Within Utah?

Keith Sohm:

Within Utah entirely.

Felix Frankfurter:

Well how does it —

Keith Sohm:

Now it does carry and we will admit that it does carry interstate commerce traffic as well as intrastate commerce traffic.

Felix Frankfurter:

But does it connect with some road?

Keith Sohm:

It connects, I think all of the principal railroads, both the Southern Pacific, the Western Pacific and the Union Pacific and I believe the D & R.G.also.

But that its — its level of rates on interstate commerce is held down to its intrastate level of rates which still holds it at the intrastate level on its — on its return.

Felix Frankfurter:

Why should its rates be raised?

It’s not part of an interstate (Voice Overlap) —

Keith Sohm:

Well, we — we have —

Felix Frankfurter:

Is it — well, I don’t mean economically but I mean legally.

Keith Sohm:

Now —

Felix Frankfurter:

It can’t discriminate against any interstate road.

Keith Sohm:

No.

We — we feel that — that it is just an exemplary railroad of the — of the railroads that’s operating within the State of Utah and that be in a representative railroad all in all commodities as much as the Denver and Rio Grande and the Western Pacific and the Southern Pacific and Union Pacific that it is represented with the type of returns that are being gained from those railroads in the State of Utah.

And that the railroads have not carried the burden of proof to show that’s not true.

Felix Frankfurter:

In these — in these orders, am I wrong in being under the impression that Interstate Commerce Commission in making these certain full orders, usually, has a saving clause in the line —

Keith Sohm:

I have — I don’t know of the —

Felix Frankfurter:

(Voice Overlap) they can come in and make exceptions to it.

Keith Sohm:

I don’t know —

Felix Frankfurter:

Is that right?

Keith Sohm:

— if they usually do it or not but we — we surprise them —

Felix Frankfurter:

Did they do appeal?

Keith Sohm:

They did here.

Felix Frankfurter:

Yes.

Keith Sohm:

We surprise them —

Felix Frankfurter:

It’s a conventional form of the order I think.

Keith Sohm:

Yes, maybe so.

I know that the pattern they used in lighting up the order imposing the increase is up on the State of Utah is almost identical than you can put it page for page —

Felix Frankfurter:

Yes.

Keith Sohm:

— on the patterns used by the other orders of the Interstate Commerce Commission against to other states.

Felix Frankfurter:

But in — they didn’t discriminate against Utah.

Keith Sohm:

No.

[Laughs] To that degree, they did not.

So I believe that the fact that the railroads have argued that all conditions are the same in Utah as in Interstate Commission as stated by counsel is — is not the same, not only because the density figures we introduced to show were not the same whether they’re or for against us, they show that they’re not the same but because the railroads in their own exhibit stated that the revenue needs of the railroads were for $1,860,000 as $60,000 and that most of that is actually products of mines $1,500,000 so that that alone shows that the movements are considerably different.

Keith Sohm:

Thank you, Your Honors.