Statement of the Case.

330 U.S.

which were strengthened in 1940 expressly to prevent discrimination against water carriers. P. 577.

(d) The Commission, no more than it could require the barge carriers to raise rates inbound to Chicago which it accepted as reasonable, can not lawfully bring about the same prohibited result by raising the railroad rates charged by eastern roads for ex-barge grain shipments east from Chicago. Pp. 577-578.

(e) The Commission's order is not supported by its conclusion that it is "inequitable" for the barges to charge a much lower rate for the inbound grain haul than the competitive western railroads can afford to charge for the same haul. P. 578.

(f) It is not within the province of the Commission to so adjust rates as to equalize the transportation cost of barge shippers with that of shippers who do not have access to barge service or to protect the traffic of railroads from barge competition. P. 579.

(g) Congress has not granted the Commission discretionary power to approve any type of rates which would reduce the "inherent advantage" of barge transportation in whole or in part. P. 579.

(h) Partial compensation of eastern roads for additional transit costs can not be made in a manner which singles out ex-barge grain for discriminatory treatment in violation of the Interstate Commerce Act. P. 583.

2. To justify the higher proportional rates on ex-barge grain, the Commission would have to make findings supported by evidence to show how much greater is the cost to the eastern roads of reshipping ex-barge grain than of reshipping ex-lake or ex-rail grain moving from the same localities and requiring the same service as does the ex-barge grain. The "unsifted averages" put forward by the Commission in this case do not measure the allegedly greater costs nor show that they exist. P. 583.

3. Since in this case the United States was a necessary party to the proceedings in the district court, the order of that court requiring the Commission to serve notice of appeal on the United States was not prejudicial error. P. 573, n. 6. Affirmed.

In 1939 the eastern railroads filed with the Interstate Commerce Commission schedules which imposed on exbarge grain the local rate from Chicago east, but allowed ex-rail and ex-lake grain the benefit of 812-cent lower "reshipping" rates on the eastern haul. The Commis

sion, after a hearing, made an order which left the railroad-proposed higher rates in effect, but stated that "in a proper proceeding we might prescribe proportional rates on the ex-barge traffic lower than local rates or joint bargerail rates lower than the combinations." 248 I. C. C. 307. A District Court set aside the Commission's order on the ground that fixing higher rates for ex-barge grain than for ex-rail and ex-lake grain "discriminates against water competition by the users of barges." 44 F. Supp. 368. On appeal this Court reversed, but with "no implication of approval of any rates here involved." I. C. C. v. Inland Waterways Corp., 319 U. S. 671. In further proceedings, the Commission authorized ex-barge grain rates east from Chicago 3 cents per hundred pounds higher than rates for ex-rail and ex-lake grain. 262 I. C. C. 7. The appellees then brought this suit in the District Court to set aside the order of the Commission, insofar as it permitted the railroads to put the higher ex-barge grain rates into effect. The District Court set aside and enjoined enforcement of the order. The Commission appealed to this Court. Affirmed, p. 583.

Daniel H. Kunkel argued the cause for appellant. With him on the brief was Daniel W. Knowlton.

David O. Mathews argued the cause for the United States and the Secretary of Agriculture. With him on the brief were Acting Solicitor General Washington, Assistant Attorney General Berge, Edward Dumbauld, W. Carroll Hunter and James K. Knudsen.

Edward B. Hayes argued the cause for Mechling, appellee.

Nuel D. Belnap argued the cause for the Inland Waterways Corporation, appellee. With him on the brief were Luther M. Walter, John S. Burchmore and Robert N. Burchmore.

Opinion of the Court.

330 U.S.

MR. JUSTICE BLACK delivered the opinion of the Court.

A District Court of three judges enjoined in part an order of the Interstate Commerce Commission, and the case is here on appeal under 28 U. S. C. §§ 47, 47a, and 345. The Commission order specifically relates to the railroad rate for grain transported from Chicago, Illinois, to New York and other eastern points,' after that grain has been transported to Chicago from the west by connecting rail or water carriers on through bills of lading. In such through shipments the through rate is a combination of distinctly separate rates charged respectively for shipments from the west to Chicago and from Chicago to the east. The charge fixed for the last leg of the shipment is called, in railroad parlance, a "reshipping" or "proportional" rate. It is lower from Chicago to the east than a "local" rate charged for a shipment from Chicago to the east which originates in Chicago. See Atchison, T. & S. F. R. Co. v. United States, 279 U. S. 768, 771.

For many years eastern railroads have carried grain east from Chicago at reshipping rates 82 cents per hundred pounds lower than local rates. Up to 1939 this Chicago-to-the-east reshipping rate had been identical for grain, whether brought to Chicago by a connecting railroad, connecting lake steamer, or connecting barge. Although barge lines were much slower than railroads, they were less expensive to operate and therefore could afford to transport freight much more cheaply than railroads. The result was that the barge-rail rate from a point in the west to eastern destinations was considerably cheaper

The eastern points are in New York and adjacent states and in New England. It is around shipments from Chicago to this territory that this rate controversy chiefly revolves. The proposed new rate increases also related to grain shipments from Chicago to the so-called central territory. The reasons supporting the conclusion we reach apply equally to the central territory increases, and consequently we need not treat them separately.

567

Opinion of the Court.

2

than the all-rail rate from that point-the difference being measured by the relative cheapness of shipping over the barge leg of the through route. Because of the cheaper barge rates, much of the railroads' grain freight business from localities which could be served by either barge or rail shifted to the barges after 1933 when barge service from western grain localities to Chicago was resumed. This was the barge versus rail competitive situation which existed when in 1939 the eastern railroads filed schedules with the Commission which imposed on ex-barge grain the local rate from Chicago east, but allowed ex-rail and ex-lake grain the benefit of the 82 cent lower "reshipping" rates on the eastern haul. The result of this rate schedule would have been that, although barge lines could still have carried grain from the west to Chicago much more cheaply than the railroads could, by the time the grain had been reshipped to New York or other eastern points, the barge-rail carriage would have been more expensive to the shipper than all-rail carriage. This would have put the barge lines at a competitive disadvantage with railroads in barge-served localities. At the Commission hearing to test the validity of the higher ex-barge grain rates, a railroad representative candidly stated that the purpose of the proposal was to "drive this business. off the water and back onto the rails where it belongs." 248 I. C. C. 307, 321. This purpose would most probably have been accomplished had the high ex-barge reshipping rates gone into effect.

The Commission, after a hearing, made an order which left the railroad-proposed higher rates in effect, but stated that "in a proper proceeding we might prescribe proportional rates on the ex-barge traffic lower than local rates

2 See 246 I. C. C. 353, 361, 364, 383; 262 I. C. C. 7, 41.

3 There was barge service from the grain section west of Chicago to that city from 1886 to 1907 when it was discontinued. Such barge service was resumed in 1933. See 262 I. C. C. 7, 20.

Opinion of the Court.

330 U.S.

or joint barge-rail rates lower than the combinations." 248 I. C. C. 307, 311. A District Court set aside the Commission's order on the ground that fixing higher rates for ex-barge grain than for ex-rail and ex-lake grain "discriminates against water competition by the users of barges." Cargill, Inc. v. United States, 44 F. Supp. 368, 375. On appeal this Court reversed, saying that its decision carried "no implication of approval of any rates here involved." Interstate Commerce Commission v. Inland Waterways Corp., 319 U. S. 671, 691. It reserved for future consideration in a proceeding before the Commission the amount, if any, which the eastern railroads could increase "reshipping" rates for ex-barge over those for ex-lake and ex-rail grain. Id. at 687-688, 691.

The Commission has now considered and decided that question in a proper proceeding. 262 I. C. C. 7. It found the originally proposed 81⁄2 cent higher rates for ex-barge grain to be unlawful and required the eastern roads to cancel the schedules fixing those increased reshipping rates. This part of the Commission's order has not been challenged. But it also concluded that ex-barge grain rates east from Chicago would be reasonable and lawful even though they were 3 cents per hundred pounds higher than rates for ex-rail and ex-lake grain. Consequently, the Commission provided that its order cancelling the scheduled reshipping rate increase was "without prejudice to the filing of new schedules in conformity with the findings herein." Thus, the effect of the whole order was to permit, if not require, the railroads to charge higher reshipment rates for ex-barge than for ex-lake and ex-rail grain. Under these rates, barge-rail grain shipments would be a trifle less expensive than all-rail transportation between the same points. But the through barge-rail transpor

The ex-barge proportionals fixed by the Commission were uniformly 5.5 cents lower than local rates from Chicago to the east and 3 cents higher than ex-barge and ex-lake proportionals.