United States v. Atlantic Refining Company

PETITIONER: United States
RESPONDENT: Atlantic Refining Company
LOCATION: Union Station

DECIDED BY: Warren Court (1958-1962)

CITATION: 360 US 19 (1959)
ARGUED: Apr 22, 1959
DECIDED: Jun 08, 1959

Facts of the case


Media for United States v. Atlantic Refining Company

Audio Transcription for Oral Argument - April 22, 1959 (Part 2) in United States v. Atlantic Refining Company

Audio Transcription for Oral Argument - April 22, 1959 (Part 1) in United States v. Atlantic Refining Company

Earl Warren:

Number 210, United States of America, Appellant, versus the Atlantic Refining Company et al.

Robert A. Bicks:

Mr. Chief Justice, may it please the Court.

The United States appeals for an order -- from an order entered by the District Court over the District of Columbia.

That order first denied the United States' motion directed against the Arapahoe Pipeline Company to carry out an Elkins Act judgment provision.

And at the same time, the Circuit granted the motion made by two other pipeline companies to construe that same provision.

Both motions post essentially the same issue and as a perhaps, helpful preliminary focus for the statement of the case to come.

That issue maybe simply put at the outset.

The issue involved interpretation of an Elkins Act judgment provision limiting to 7%, dividends payable by the bulk of this country's oil pipeline to the shipper-owners, that is to the major oil company that owned oil pipelines and shipped oil over.

On the one hand, the United States urges that the judgment permits each shipper-owner only a fair return on his investment outlay of his share in the pipeline's total capitalization.

On the other hand, defendant's urge and the court below agreed, the judgment permits each shipper-owner not only a return on his investment outlay, but an equal return on investment outlays made by others.

That is on loans to the pipeline not by the shipper-owner but by third parties.

The defendant's construction applied to the facts of Arapahoe would permit each of Arapahoe's two shipper-owners a more than 70% return on their less than three-year old investment.

This construction issue takes on the meaning in light of a brief, very brief march of those events that preceded entry of the Elkins Act judgment at issue.

The Elkins Act recall made oil pipelines common carriers and sought to ensure equal access for all oil shippers to oil pipelines at equal cost.

To this end, the Elkins Act barred the granting or receipt by or through any means or device, whatsoever, of rebates, offsets or concessions from published tariff rate.

The chief purpose of the Elkins Act that this Court put it in the Union Pacific case at pages 461 and 462 was to eliminate rebates, concessions and discrimination from the handling of commerce to the end that all persons and places might carry on their activities on an equal basis.

In fact, favoritism which destroys equality between shippers, however brought about it, is at an end.

It was with this purpose uppermost, that the United States proceeded under the Elkins Act on December 21, 1941.

That complaint named as defendant from 52 oil common carrier pipelines and their shipper-owner parents that is the major oil companies that own the pipelines and the 27 shipper-owner parents, that is the major oil companies that own the pipelines and shipped oil.

The complaint alleged that although the oil company parents were normally paying published tariff rates, they were in fact receiving rebates, offsets or concessions in the guise of dividends and earnings from their pipelines.

On the same day, that complaint was filed.

The judgment here at issue was added.

That judgment in its crucial portion which, may I suggest, is found on page 10, the middle of page 10 of volume 1 of the record before you.

That judgment, in its crucial portion, limits payments by a pipeline in any year to its shipper-owner to its share of 7% evaluation.

Felix Frankfurter:

Is it at all -- is it all relevant or is it disclosed who drew this decree or just a joint effort between the Government and the party?

Robert A. Bicks:

That matter is not in the record.

Felix Frankfurter:

Not in the record, all right.

Robert A. Bicks:

And the provision goes on to specify that dividends paid in accord with that limitation formula shall be deemed permitted insofar as the Interstate Commerce and Elkins Act is concerned.

Evaluation, of course, is defined by -- by precisely as the latest final evaluation made by the Interstate Commerce Commission of property owned and used for common carrier purposes by the oil pipeline.

The word, "seven percent" need no definition.