Central Vermont Transportation Co. v. Durning

Background

A Maine steamship company runs boats between New London, Connecticut, and New York City. Its vessels are U.S.-built and documented, but nearly all of its stock is owned by a Vermont railroad whose stock is in turn owned by the Canadian National Railway. The railroad and ship line move freight together on continuous through routes recognized by the Interstate Commerce Commission. Customs seized merchandise carried from Vermont by rail to New London and then by the company’s boats to New York, claiming a violation of §27 of the Merchant Marine Act. A federal district court temporarily barred the seizure, the Court of Appeals reversed, and the Supreme Court agreed to decide the dispute.

Reasoning

The Court asked whether §27, which forbids coastwise carriage by vessels not owned by U.S. citizens, applied to this company and whether a proviso about ICC-recognized through routes exempted the shipments. The Court held the proviso protects merchandise transported “over” a through route that actually uses Canadian rail lines, not cargo moved only along a domestic segment of such a route. It also held the Interstate Commerce Commission’s authority to set joint routes and rates does not override the statute. The Court rejected the company’s due process claim and affirmed that Congress may restrict foreign control over coastwise shipping. The government prevailed and customs seizures were permitted.

Real world impact

The decision allows customs to seize freight carried coastwise by vessels that fail the U.S. ownership test, even when those boats participate in longer rail-and-water routes recognized by the ICC. Shipping companies with foreign ownership interests that operate between U.S. ports risk losing coastwise business. Carriers cannot rely on ICC route recognition alone to avoid the statute’s ownership requirements.