Icc v. New York, N.H. & Hartford R. Co., 372 U.S. 744 (1963)

Interstate Commerce Commission v.

New York, New Haven & Hartford R. Co.
No. 108

Argued February 28, 1963
Decided April 22, 1963 *
372 U.S. 744

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

Syllabus

Appellee railroads proposed reduced rates for trailer-on-flatcar service between certain points also served by coastal water carriers. The reduced rates, with certain exceptions not relevant here, equaled or exceeded the railroads’ out-of-pocket costs; in many instances, they equaled or exceeded the railroads’ fully distributed costs; they were substantially on a parity with the water carriers’ rates for the same traffic, but they were below the level maintained by the railroads for similar traffic between points not served by the water carriers. The Interstate Commerce Commission cancelled the reductions on the grounds that the water carriers could not compete with railroads at equal rates; that the reductions were an initial step in a general rate-cutting program which threatened the water carriers’ continued existence; and that the water carriers were essential to national defense and an integral part of the national transportation system. The District Court reversed.

Held: The judgment is vacated; the order of the Commission is set aside to the extent that it disallowed certain railroad trailer-on-flatcar rates, and the cause is remanded to the Commission for further proceedings consistent with this opinion. Pp. 746-764.

1. In the light of the legislative history of §15a(3), added to the Interstate Commerce Act by the Transportation Act of 1958, there can be no doubt that its purpose was to permit the railroads to respond to competition by asserting whatever inherent advantages of cost and service they possessed, and that Congress did not consciously or inadvertently defeat this purpose when it included in §15a(3) a reference to the National Transportation Policy. Pp. 753-758.

2. On the present record, the disallowance of the rates in question was not adequately supported. Pp. 758-764.

(a) In the light of the legislative history of §15a(3), it is clear that Congress did not regard the setting of a rate at a particular level as constituting an unfair or destructive competitive practice simply because that rate would divert some or all of the traffic from a competing mode. Pp. 759-761.

(b) This Court disagrees with the conclusion of the District Court that the needs of the national defense are not an operative part of the National Transportation Policy; but this Court concludes that the Commission’s reliance on the factor of "national defense," and perhaps of "commerce," in disallowing the rates in question was not supported by adequate findings or substantial evidence. Pp. 761-764.

199 F. Supp. 635, judgment vacated and cause remanded.