United States v. Capital Transit Co.

Background

At the request of the Secretaries of War and Navy, the Interstate Commerce Commission investigated fares on four bus lines carrying passengers between points in the District of Columbia and nearby Virginia where military and naval offices employ over 40,000 people. More than half of those workers live in the District, producing over 31,000 passenger trips a day. One company, Capital Transit, ran an integrated system of local buses and streetcars and granted its own passengers transfer privileges that lowered total fares to Virginia work sites. After hearings the Commission found some rates unreasonable, ordered some reductions and some increases, and required joint fare and transfer arrangements among the carriers.

Reasoning

The central question was whether the Commission could regulate these travel fares even though much travel occurred within a single commercial zone. The Court looked to the Motor Carrier Act’s rules and accepted the Commission’s finding that applying the law was necessary to carry out national transportation policy, especially because unreasonable rates were shown to harm morale and national defense. The Commission also found that Transit’s transfer practices functioned like through routes, and under its authority it could prescribe joint or through rates for interstate travel. The Supreme Court held the Commission’s findings were supported by evidence and within its statutory powers, and reversed the district court’s injunction.

Real world impact

The decision allows federal regulators to require combined fares and transfer privileges for interstate commuter trips in the D.C.-Virginia area. Thousands of government commuters are directly affected, and the ruling shows national-defense concerns can justify federal action on interstate fares.

Dissents or concurrances

Justice Roberts thought the Commission lacked jurisdiction. Justices Reed and Douglas dissented from part of the Court’s reasoning about through rates.