United States v. Champlin Refining Company/Dissent Black
Mr. Justice BLACK (dissenting).

From whatever angle this case is approached, it seems to me that the holding of the Court is wrong. The decision rides roughshod over clear statutory language making the Hepburn Act  applicable to interstate oil-carrying pipe lines, and makes impossible enforcement of the Act as Congress intended. The decision undercuts and I think overrules several prior cases without mentioning this fact. And this appellant, Champlin, is even given a second trial and victorious relitigation of the same issues we had previously determined against it. Finally, the opinion suggests to me that the Court accepts what I deem to be a frivolous constitutional challenge to the Act, namely that Congress is without power to force oil-carrying interstate pipe lines to serve as common carriers for hire.

The Court's holding that Champlin must comply with § 20 of the Hepburn Act, but need not comply with § 6, cannot be reconciled with clear language in those sections or with our previous decisions construing the same language. Section 20 authorizes the Interstate Commerce Commission to require that 'all common carriers subject to the provisions of this Act'  file, among other things, certain annual reports; § 6 commands that 'Every common carrier subject to the provisions of this Act'  shall file schedules of rates with the Commission. I do not understand why it should be necessary to labor the obvious-this language requires Champlin (if it is a 'common carrier subject to the * * * Act') to comply with § 6 if it is required to comply with § 20, or to comply with § 20 if it is required to comply with § 6. The Court holds that Champlin is a 'common carrier subject to' the Act, and accordingly sustains the Commission's order to file reports under § 20. Paradoxically, however, it then proceeds to hold that the same Champlin, though 'subject to' the Act, need not comply with § 6. How the Court gives the identical language in the two sections such different meanings is left a mystery. 

The Court may be saying that § 6 is something sui generis, that no pipe-line company need comply with that section unless it is something more than a 'common carrier subject to the * * * Act'.  While the meaning of this 'something more' is not made clear, the Court, in overturning the Commission order does suggest in passing that it might possibly sustain an order requiring Champlin to comply with § 6 upon Commission findings that the company exploited 'a competitive advantage simply by refusing to deal with independent producers having no comparably cheap method of reaching consuming markets' or that Champlin enjoyed a 'monopoly' position in its area. Certainly nothing in the Hepburn Act should encourage such judicial creativeness for § 6 applies to 'Every common carrier subject to the * * * Act' in language which does not logically admit of limiting the section's coverage to carriers that have refused 'to deal with independent producers' or achieved 'monopoly' status. That § 6 would or could be thus restricted was not hinted at in the Pipe Line Cases, (U.S. v. Ohio Oil Co.), 234 U.S. 548, 34 S.Ct. 956, 58 L.Ed. 1459 (where this section was involved), nor in Valvoline Oil Co. v. United States, 308 U.S. 141, 60 S.Ct. 160, 84 L.Ed. 151,  nor in our decision in the first Champlin case, Champlin Rfg. Co. v. United States, 329 U.S. 29, 67 S.Ct. 1, 91 L.Ed. 22.  It should be noted that the dissenting justices in Champlin I thought that an additional 'something' was necessary before the Hepburn Act was applicable; they believed that none of the Act's provisions should apply to pipe-line companies unless they were 'common carriers in substance.' But neither those justices nor anyone else, so far as I know, have ever before suggested that the Court can pick and choose sections into which additional requirements can be imported. This possibility remained for today's majority to discover, 46 years after passage of the Hepburn Act. 

Far more important than the judicial exemption of Champlin from filing papers under § 6, however, is the Court's holding that pipe-line companies engaged in interstate transportation of their own petroleum products need not act as public carriers for hire unless they have already voluntarily become 'something more' than interstate oil-carrying pipe lines. The proper answer to this basic question in the case turns on § 1 of the Hepburn Act: '(T)his Act shall apply to any corporation or any person or persons engaged in the transportation of oil or other commodity * * * by means of pipe lines * * * who shall be considered and held to be common carriers within the meaning and purpose of this Act * * *.' 

That Champlin is a common carrier within the literal language of this provision is shown by the unchallenged findings of fact made by the I.C.C.: Champlin, a fully integrated company, produces, refines, transports and markets petroleum products. Through a wholly owned subsidiary it also buys, gathers and transports to its refinery oil produced from the wells of others.  Its trunk pipe line extends 516 miles across five states from its refinery at Enid, Oklahoma, to its terminal at Rock Rapids, Iowa. Although application of the Act does not depend on a pipe-line company's size, Champlin is by no means a small company; rather, it occupies an important position in the area it serves.  But for the Court's holding, I should have thought that § 1 of the Act on the admitted facts obviously required Champlin to serve as a common carrier for the products of others.

That the Hepburn Act did convert Champlin into a public carrier for hire is made even clearer by the legislative history. The pipe-line provision was sponsored in 1906 by Senator Henry Cabot Lodge of Massachusetts who offered to amend a pending railroad bill in a manner which would convert interstate oil-carrying pipe lines into common carriers subject to regulation by the I.C.C.  The Lodge Amendment reflected dissatisfaction with monopoly conditions in the petroleum industry. Such conditions, it was thought, had been brought about in the main through control of oil-carrying pipe lines by large integrated companies (especially the Standard Oil Company) which were using their control to exclude independent producers and refiners from this cheap transportation facility.  But the ensuing debate left no room for doubt that the purpose of the Amendment, as its language clearly showed, was to deprive any oil company, not merely Standard,  of power to utilize pipe-line control to crush competition. To this end, as is shown by an Appendix following this opinion, the Amendment was designed to make public or common carriers for hire out of every private pipe-line company transporting petroleum products in interstate commerce. Senators who were opposed charged that the passage of the Amendment would do exactly this against the will of 'private' carriers. Lodge and other proponents freely admitted it, explaining that anything less would be ineffective. All congressional efforts to narrow the Amendment to cover only companies already acting like common carriers were defeated. Therefore it is strange to say, as the Court does, that applying the pipe-line provisions so as to make Champlin a common carrier for hire would 'subvert the chief purpose of the Act.' Stranger still is the Court's unexplained apprehension that requiring all interstate pipe-line companies to serve as public carriers for hire would somehow 'foster' monopoly.

The Court, without mentioning it, necessarily overrules one or more of our previous decisions construing the Hepburn Act. In the Pipe Line Cases, supra, it was held that the Hepburn Act converted into common carriers for hire all private pipe-line companies 'engaged in the transportation of oil or other commodity' across state lines, a decision which meant that all such companies are by law required to offer their services to the public.  In the first Champlin case, supra, we determined that this appellant was so 'engaged.'  Consequently, today's decision allowing Champlin to refrain from filing tariffs under § 6 necessarily overrules either the Pipe Line Cases or Champlin I, or both. If they are to be overruled, the Court should say so. I would not overrule either.

Nor do I understand how today's holding can be reconciled with Valvoline Oil Co. v. United States, supra, where we held that Valvoline was a 'common carrier subject to' (308 U.S. 141, 60 S.Ct. 161) the Act. The pattern of operations of Valvoline and Champlin are identical with two minor exceptions: (1) Valvoline's interstate pipe lines transported crude oil while Champlin's trunk line transports gasoline. This difference is immaterial; even assuming that 'gasoline' is not 'oil' within the meaning of § 1, that section makes the Act apply not merely to any pipe-line company carrying 'oil' but to pipe-line companies carrying any 'other commodity.' (2) Valvoline chose to operate its gathering lines and purchase oil from independent producers in its own corporate name while Champlin chooses to operate its gathering lines and purchase oil in the name of a wholly owned subsidiary. The Court, however, had no difficulty in the Pipe Line Cases in treating as a single unit the Standard Oil Company and its wholly owned or even partly owned subsidiaries. 

The Court nevertheless seeks to distinguish the Valvoline case on the ground that Valvoline 'carried the products of over 3,800 independent owners and operators'. The quoted language correctly states a fact only if it is understood to mean that Valvoline made purchases from 3,800 independents and then carried the purchased oil in its pipe line. This fact, however, certainly does not distinguish the two cases. Like Valvoline, Champlin carries the 'oil of others' all the way from the well to the market area: over half of the oil and gasoline carried by Champlin is originally purchased as crude oil from independent producers in the field before transportation begins.  As noted above, Champlin does make these purchases through a wholly owned subsidiary, rather than in its own corporate name, but this fact is unimportant. 

Since there is no substantial difference between the operations of Champlin and Valvoline, and between the legal arguments made in the two cases, I conclude that, verbalisms aside, the effect of today's decision is to undermine the Valvoline holding. In this situation I think Valvoline should be expressly overruled. Why, in fairness, should Valvoline and others similarly situated be required to serve as common carriers for hire while Champlin is left free to conduct its pipe lines as it chooses?

In the first Champlin case (308 U.S. 141, 60 S.Ct. 161) we upheld findings of fact made by the I.C.C., 49 Val.Rep.(I.C.C.) 463, 470, that appellant was 'engaged in the transportation' and was 'a common carrier subject to the provisions of' the Act. Since these questions were 'distinctly put in issue and directly determined,' Champlin may not dispute them in this second proceeding between the same parties unless there is a departure from the principles most recently announced in United States v. Munsingwear, 340 U.S. 36, 38, 71 S.Ct. 104, 106. Yet three concurring justices today appear to take the position that Champlin is not 'engaged in transportation,' and is therefore not a common carrier subject to the Act, a position which this Court emphatically rejected in Champlin I. I also believe that the majority's position is unjustified under the Munsingwear principle when the effect (as distinguished from the language) of their decision is considered.

Why should the Court interpret the Hepburn Act in a way which nullifies its purpose? I am forced by process of elimination to consider whether the decision reflects either a hostility to the policy of the Act or an unarticulated belief that it is unconstitutional, if enforced as written. Neither this Court nor any other should strangle an Act because of judicial disagreement with congressional policy. If destruction of the Act results from a feeling that the Constitution forbids Congress to convert private companies into public servants, I think that this view should be announced here, as it was by a majority of the court below. Pipe-line companies, administrators of the law, the bench, the bar, and the Congress are entitled to no less. Of course, the same constitutional contention was expressly rejected in 1914 in the Pipe Line Cases, supra: As to companies which, like Champlin, built their lines after passage of the Act, Justice Holmes, speaking for the Court, dismissed the challenge brusquely with less than a sentence, stating merely that 'there can be no doubt that it (the pipe line provision) is valid.' 234 U.S. at page 561, 34 S.Ct. at page 958. Again, in 1922, the Court, relying on the Pipe Line Cases, supra, rejected a somewhat similar constitutional agrument as 'futile to the point almost of being frivolous.' Pierce Oil Corp. v. Phoenix Rfg. Co., 259 U.S. 125, 128, 42 S.Ct. 440, 441, 66 L.Ed. 855. Surely a contention deemed 'almost frivolous' twenty-nine years ago should not now be reinvigorated by implication.

No one can be sure that under the Act as now rewritten by the Court the Commission can or should succeed in forcing any oil company-even those now complying with the Act-to carry gasoline or oil for others as a common carrier. Even without the newly engrafted, Court-created hurdles, the pipe-line provisions, for one reason or another, have never been enforced as effectively as might be desired.  Perhaps, therefore, no great harm will result from the Court's polite but sure frustration of the Hepburn Act's purpose. Some people in and familiar with the oil industry, however, believe that this Act should be strengthened, not weakened.  Be that as it may, I deem it my duty to vote to enforce the Act as Congress has passed it.

I would reverse.

On May 4, 1906, President Theodore Roosevelt transmitted to the Congress a report describing and condemning various monopolistic practices in the petroleum industry. 40 Cong.Rec. 6358. Senator Lodge of Massachusetts on the same day introduced an amendment to § 1 of the Hepburn Act making pipe-line companies engaged in the interstate transportation of oil and other commodities common carriers: '(That the provisions of this act shall apply to) Any corporation or any person or persons engaged in the transportation of oil or other commodity, except natural gas or water for municipal purposes, by means of pipe lines, or partly by pipe lines and partly by railroad, or partly by pipe lines and partly by water, who shall be considered and held to be common carriers within the meaning and purpose of this act * * *.' Id. at 6361.

Senator Foraker of Ohio immediately objected to the broad scope of the Lodge proposal: 'I do not want to make any opposition to the Senator's amendment, but it occurs to me that the amendment ought to be further amended, so as to provide that it shall apply only to pipe lines operated for the public. I do not understand how you could compel a man who has a private pipe line of his own to become a common carrier * * *. I think such a limitation ought to be put in the Senator's amendment by an amendment to the amendment that it shall apply to all pipe lines that are carrying for the public, and not to private lines that an individual or a single corporation may have laid down and put into operation for its own benefit.' Id. at 6361.

Senator Nelson in reply stated that Foraker's suggestion would 'practically nullify the provision, because every one of these pipe lines cay say 'we refuse to do business for the public.' Practically the (Lodge) amendment would be of no use at all.' Id. at 6365. And Senator Lodge added: '(T)he amendment suggested by (Senator Foraker) to the effect that no pipe line, unless it carries for the public, shall come under this rule, will, as (Senator Nelson) says, absolutely destroy the value of my amendment.' Id. at 6365.

During the course of the debate an attempt was made to make the Lodge amendment applicable only to carriers 'for the public' or to 'transportation for hire' or 'for compensation,' but it was unsuccessful. Id. at 7000. Senator Lodge again stated that such an amendment would 'absolutely destroy' his proposal 'so far as its effectiveness is concerned.' Id. at 7000.

There can be no doubt but that the proponents knew and stated their purpose. Senator Lodge declared: '(T)he purpose of this amendment is to bring the transportation of oil and other commodities within the interstate-commerce law. Oil is one of the greatest articles of interstate commerce carried in this country, and it is now absolutely outside and beyond any Government regulation whatsoever.' Id. at 6365. Later he added: 'All pipe lines owned by any company within the United States * * * are made common carriers.' Id. at 7001. Senator Clay, speaking about the pipe-line provision, observed: 'This bill makes every corporation engaged in the transmission of oil a common carrier. Every private corporation transmitting its own oil * * * is made a common carrier by the (Lodge) amendment * * *.' Id. at 7009. And Senator Culberson said: 'Nothing is left to the courts for construction, but the statute itself declares that any corporation, or any person or persons engaged in transporting oil by pipe lines-of course, as interstate commerce-are common carriers, and are declared to be such in this act of Congress, subject to the authority of this act * * *.' Id. at 7005. Senator Bailey, in the final debate on the measure, described the Lodge proposal as the "pipe-line amendment' by which we mean the amendment that makes the pipe lines common carriers.' Id. at 9647.

The 'commodities clause' of the Hepburn Act was designed to prevent railroads from owning businesses whose shipments they carried. When that clause was first considered in the Senate, it applied to 'common carriers subject to' the Act. Some senators realized that the 'commodities clause'-read together with the Lodge Amendment making every pipe-line company subject to the Act would force a divorcement of pipe lines from refineries. To avoid this, they again suggested that the Lodge proposal be amended so as to apply only to pipe lines operating for the public. Senator Lodge said: 'What I want to suggest to the Senator is that this (original Lodge) amendment makes the pipe lines and the oil companies subject to all the provisions of the bill. If the Senator thinks there is an injustice, the place to remedy it is on page 5, at that amendment (the commodities clause), and not at this one (the Lodge amendment).' Id. at 7009. Accordingly, the 'commodities clause' finally passed by Congress referred specifically to railroads. 34 Stat. 585. 

Notes

'But the master minds that controlled the old Standard Oil Co. coordinated these thirty and odd companies into one vast company-a great single, integrated, coordinated 'unit' that, as a corporate entity, did all of these things (producing, transporting, refining, and marketing)-and all of them within the corporate inclusiveness of 'one' company.

'Therein rested the terrific, the overpowering strength of the old Standard Oil Co.

'To-day, from a corporate standpoint, we have the 'equivalent,' many times over, of the old Standard Oil Co. * * *

'It is inevitable that the only escape from monopolistic domination in the oil industry-and it is being rapidly accomplished through mergers and integration-is to clearly, definitely, and effectively segregate, first, the entire pipe line transportation system of the oil industry from the rest of the industry. The first effect of this segregation would be the substitution of competition in the transportation of crude oil for the present practice which, in each individual case, is, to all practical purposes, a monopoly.' Hearings before House Committee on Interstate and Foreign Commerce on H.R. 16695, 71st Cong., 3d Sess. 60, 61. For views against the proposed strengthening of the Hepburn Act see House Report on Pipe Lines, 72d Cong., 2d Sess. (1933), especially Special Counsel Splawn's conclusions, p. lxxviii. See also Kemnitzer, Rebirth of Monopoly (1938), 87-90; F. R. Black, Oil Pipe Line Divorcement by Litigation and Legislation, 25 Cornell L.Q. 510.