United States & Interstate Commerce Commission v. New River Co.

Background

A group of coal operators that run mines served by two railroads (called joint mines) sued two railroads, the United States, and the Interstate Commerce Commission to stop application of Rule 4, which limits a joint mine’s combined daily car orders to its gross daily rating. Operators of single-carrier mines (local mines) supported Rule 4. The Commission’s Division 5 first favored a different “150 percent” rule, carriers applied that rule, but the full Commission later reversed on December 11, 1922, finding Rule 4 reasonable. The district court set aside the Commission’s order and enjoined the rule; the Government and Commission appealed.

Reasoning

The Court asked whether the district court could review the Commission’s order and whether the order was lawful. It held that review was allowed, but on the merits the Commission’s decision that Rule 4 was not arbitrary or unreasonable was within the Commission’s statutory power to regulate car distribution. The Court concluded Rule 4 allows joint mines to choose among carriers but limits combined orders to the mine’s gross daily rating, and that this limit did not unlawfully deprive joint mine owners of property or due process. The Court therefore reversed the lower court’s decree.

Real world impact

Railroads may apply Rule 4: joint mine operators cannot receive in the aggregate more cars than their gross daily rating, and local mines retain their pro rata share from their carrier. The decision settles this dispute over car-allocation rules between joint and local mines for the carriers and mines involved.

Dissents or concurrances

Justice McKenna dissented, arguing the rule forces joint mine owners to surrender a valuable positional advantage and amounts to a taking of property without compensation.