Cornell Steamboat Co. v. United States

Background

Cornell, a company that operates tugboats for hire on the Hudson River and New York harbor, tows scows, barges, and other vessels that carry cargo for their owners. The towing service is offered to the public. About 95% of its tows start at one New York port and end at another New York port, but those routes commonly pass through New Jersey waters. The Interstate Commerce Commission found that Part III of the Transportation Act covers Cornell’s business. A three-judge federal district court upheld the Commission’s order, and Cornell appealed to this Court.

Reasoning

The Court addressed whether such towing is a regulated "water carrier," whether Cornell was a common or contract carrier, and whether tows that cross another State’s waters are interstate. The Court read Part III’s definitions and concluded that Congress’ wording covers transportation by towboats and that Congress had exempted some towage but not services like Cornell’s. The Court agreed with the Commission and the district court that Cornell held itself out to the public and therefore was a common carrier. The Court also accepted findings that a substantial portion of Cornell’s movements passed through New Jersey waters and held those movements interstate under the Act, citing the similarity to prior rulings about rail movements that pass through another State.

Real world impact

The ruling means towing companies that move other vessels across state waters can be regulated by the federal agency that oversees interstate carriers. That result narrows the scope for state-level rate and service control when a tow crosses another State’s waters. It also brings towing into competition and regulatory parity with other carriers like railroads and motor carriers under federal law.

Dissents or concurrances

Justice Frankfurter, joined by Justice Roberts, dissented in part, arguing that Congress intended a narrower rule for water carriers and that crossing a boundary stream should not automatically convert a local New York-to-New York tow into federally regulated interstate transportation.