Citations
- 207 F. Supp. 483
Full opinion text
FRIENDLY, Circuit Judge.
In these two actions, brought under 28 U.S.C. §§ 1336, 2321-2325, plaintiffs (sometimes hereafter referred to as “the New York interests”) seek to enjoin the enforcement of an order of the .Interstate Commerce Commission, made on June 15, 1961, in I. & S. Docket No. 6074, Iron Ore from Eastern Ports to Central Freight Association Points, 314 I.C.C. 149, insofar as the order directed the New York Central and the Erie-Lackawanna (hereafter the Erie) to cancel tariffs that would have reduced the rates on import iron from New York to steel producing points in the Youngstown, Ohio, area, from $5.33 to $3.92 per ton, the rate then charged from Baltimore and Philadelphia. Railroads serving Baltimore and other Maryland parties (hereafter the Baltimore interests) and the City of Philadelphia and the Delaware River Port Authority (hereafter the Philadelphia interests) have intervened as defendants in support of the validity of the order.
It will be necessary, as we proceed, to refer to earlier phases of this case, going back to 1953. However, we shall not narrate this history at length since it can all be found in 291 I.C.C. 527 (1954), 299 I.C.C. 195 (1956), 151 F.Supp. 258 (D.Md.1957), 355 U.S. 175, 78 S.Ct. 189, 2 L.Ed.2d 183 (1957), and our own opinion on a motion for transfer under 28 U.S.C. § 1404(a), 200 F.Supp. 944 (1961).
The controversy stems from the increase in the dependence of the United States on imports of iron ore, — these having grown from 2,500,000 tons annually before World War II to 33,500,000 tons in 1957. More than two-thirds of these imports have moved through Baltimore and Philadelphia, although about half of the movement through these ports seems to proceed no further than the Bethlehem Steel plant at Sparrows Point, Md. and the United States Steel plant at Fair-less, Pa. The ore comes from widely scattered foreign areas — Labrador, Venezuela, Liberia, and others. The traffic through New York has been negligible; the port has no modem ore piers. The Port of New York Authority has made studies of sites on the New Jersey side of the Hudson at which a modern ore pier could be constructed. However, the Commission’s report states, 314 I.C.C. at 161, and the Port Authority’s brief confirms, that construction of a modern ore-unloading facility at New York must be preceded by rate parity with Baltimore and Philadelphia.
According to the Commission’s report, 314 I.C.C. at 163, the distances to Youngstown over the rail routes by which the traffic would move are as follows:
Port Miles
Baltimore 391.9
Philadelphia 427.4
New York
via Erie 588.
via New York Central 620.
The New York interests assert, and no one seriously questions, that a low-grade commodity such as iron ore will not normally move through a port whose aggregate transportation costs to the consignee are higher than those of another that is equally available. They say that the historic differentials in import and export rail rates against New York and in favor of Philadelphia and Baltimore, originating more than eighty years ago, were established against a background wherein “the ocean rates for freights to and from foreign markets were less from and to New York than from and to the other ports, and the effort was to equalize the entire through charge via the several ports,” Chamber of Commerce of the State of New York v. N. Y. C. & H. R. R. Co., 24 I.C.C. 55, 69 (1912). See In the Matter of Differential Freight Rates, to and from North Atlantic Ports, 11 I.C.C. 13 (1905). The New York interests have contended in another case, relating to general cargo, Equalization of Rates at North Atlantic Ports, 311 I.C.C. 689 (1960),314 I.C.C. 185 (1961), order enjoined, Boston & Maine R. R. v. United States, 202 F.Supp. 830 (D.Mass. 1962), now on appeal to the Supreme Court, as they did here, that the reason for the export and import rail differentials ceased when the water differentials ceased, and, indeed, that the very principle of rate equalization between interior United States points and foreign ports which was the basis of the port differentials now requires their abolition. See New York Cent. R. Co. v. United States, 99 F.Supp. 394 (D.Mass.), aff’d, 342 U.S. 890, 72 S.Ct. 201, 96 L.Ed. 667 (1951).
The factual contentions of the New York interests as to ocean freight rates on import iron ore are not seriously disputed. We take the basic factors to be as stated in the earlier report of the Commission, 299 I.C.C. at 198:
“Iron ore now moves in both chartered vessels and vessels owned by the steel companies. Some of the traffic moves under voyage charters, which are charter agreements covering a single voyage at a specified price, and a part moves under time charters, which are charter arrangements whereby the operator puts the vessel fully manned, equipped, and supplied, except for fuel, at the disposal of the shipper for a specified period. Since 1920, ocean rates generally have been equalized with respect to voyage charters to all the North Atlantic ports. In some circumstances, however, there is a saving of cost to the shipper in routing ore to the North Atlantic port nearest to the port of origin. This might be true on a time charter arrangement or for an integrated shipper.”
A tabulation on the same page shows that, save as to Labrador, there are no significant differences in the ocean distances from major iron producing areas abroad and New York, Philadelphia and Baltimore. Although the portion of the instant report dealing with the New York rates makes no findings on the subject of ocean freight costs, the portion dealing with the Phildelphia rates states that “from countries other than Canada” ocean costs are the same “on movements of iron ore to any port within the North Atlantic range, which includes all ports north of Cape Hatteras, N. C.”, 314, I.C.C. at 158-159. Hence it would appear that, except for Labrador ore, the bulk of which is expected to move in the future via the St. Lawrence Seaway, opened in April, 1959, the ocean charges to the three ports are substantially the same, and that continuation of any appreciable rail rate differential to interior steel producing points will effectively prevent New York from participating in this important movement. In this respect the case differs significantly from the companion proceeding relating to general cargo, mentioned above, where the record showed a preponderant movement through the northern ports despite the differentially higher rail rates and correspondingly higher over-all freight rates to and from interior points.
Initially the contention that the New York carriers should be allowed to equalize the rates on import iron ore proved persuasive to a majority of the Commission, 299 I.C.C. 195. Although the order permitting the reduced rates for New York was enjoined by the District Court for Maryland, 151 F.Supp. 258 (1957), the Supreme Court’s per curiam opinion, 355 U.S. 175, 78 S.Ct. 189, 2 L.Ed.2d 183 (1957), on the appeals of the New York and Philadelphia interests, seems to have relieved the Commission of any mandate in that regard. However, the Commission, after the remand, although adhering to its former conclusion with respect to Philadelphia, altered that with respect to New York and directed cancellation of the reduced New York rate.
The Commission concluded, 314 I.C.C. at 168, (1) “that a rate on import iron ore from New York to the Youngstown area the same as that from Baltimore or Philadelphia to the same area would unduly prefer New York and unduly prejudice Baltimore and Philadelphia”; and (2) “that the proposed rate from New York is not shown to be just and reasonable.” To us this means that the Commission, being empowered in this suspension proceeding under § 15(7), 49 U.S.C.A. § 15(7) to “make such order with reference” to a proposed rate “as would be proper in a proceeding initiated after it had become effective”, § 15(1), found the proposed rates discriminatory under § 3 and unreasonably low under § 1 (5) of the Interstate Commerce Act. One would have supposed that, particularly in view of the long history and importance of the case, a remand directed by the nation’s highest tribunal, and a reversal of the result previously reached on the issue here in question, the Commission would have supported these conclusory statements by detailed findings and considered explication of the path from findings to conclusion. Instead the conclusions are supported only by an analysis of the costs of the New York Central and the Erie which we discuss below and by three paragraphs of the report which, for convenient reference, we quote in full in the margin.
Section 3.
Neither the New York Central nor the Erie serves Baltimore or Philadelphia by its own rails. If they did not serve these ports in any other manner, no conclusion of violation of § 3 would be warranted. It has been recognized for seventy years that Carrier A does not violate § 3 simply by offering a lower rate than Carrier B’s to a common point for the same distance, or the same or a lower rate for a longer distance, so long as Carrier A has no single-line rate and is not a party to a joint rate to the common point from the point served by Carrier B. As was said in Eau Claire Board of Trade v. Chicago, M. & St. P. R. Co., 5 I.C.C. 264, 295 (1892), “It would be quite absurd to charge a railroad with giving preference or advantage to a community which it does not serve, and it is equally illogical to say that it can prejudice or discriminate against such a community.” We do not read the Supreme Court decisions cited below as altering this venerable principle.
However, inquiry elicited that the New York Central and the Erie are parties to joint rates between Baltimore and differential territory. Many cases, beginning with the Commission’s decision in Ashland Fire Brick Co. v. Southern Ry. Co., 22 I.C.C. 115, 119-120 (1911), and culminating with the Supreme Court’s in Texas & Pacific Ry. Co. v. United States, 239 U.S. 627, 649-650, 53 S.Ct. 768, 77 L.Ed. 1410 (1933), held that even under such circumstances no order could be made under § 3 unless the carrier against which the order was directed “controlled” the joint rate. But we are satisfied that the combined effect of New York v. United States, 331'U.S. 284, 340-343, 67 S.Ct. 1207, 91 L.Ed. 1492 (1947), and Ayrshire Collieries Corp. v. United States, 335 U.S. 573, 593-594, 69 S.Ct. 278, 93 L.Ed. 243 (1949), is to validate Mr. Justice Stone’s statement, dissenting for the Chief Justice, Mr. Justice Brandéis, Mr. Justice Car