State ex rel. Utilities Commission v. North Carolina Motor Carriers Ass'n

HiggiNS, J. The Commission ordered the inquiry entirely, on its own motion, without any complaint that rates in effect were unfair, unjust, discriminatory, or should be changed. The respondents and interveners, therefore, argue the Commission was without authority to wipe out the rates and tariffs filed by the carriers, approved by the Commission, and accepted by the shippers and all customers after all parties for years had geared their operations, made their investments, relying on those rates. Apparently Judge Mintz was impressed by the logic of the argument. [439] Whether, under the circumstances here disclosed, it was wise to strike down an old and established rate structure and to supplant it with one entirely new and founded on so narrow a base as mileage, is probably a question of policy rather than one of law. Policy decisions are for the Legislature, some of which are left to the Commission. The Legislature, by G.S. 62-72, G.S. 62-121.29, has given the Commission authority to inquire into intrastate rates for the transportation by common carriers of petroleum products by truck or rail, or both. The Commission initiated this inquiry into a rate structure which had been in effect with Commission approval for years without objection either from the public, any carrier, shipper, or customer. The long acquiescence of the Commission in the existing tariff rate offered at least some assurance of stability to this type of transportation business. However, purporting to act under G.S. 62-26, the Commission pointed its finger at all truck and rail carriers and said, You must here and now justify these rates or we shall reverse our former holding that they are just and reasonable and shall hold they are unjust and unreasonable and supplant them with new rates. Whether the Legislature intended to give such plenary authority over the whole rate structure may be open to question. The Act says when any rate, schedule, practice, act, etc., is under investigation, the burden of proof shall be on the carrier or public utility whose rate, etc., is under investigation to show that the same is just and reasonable. The statute uses the word “carrier” or “utility” in the singular. See Utilities Commission v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E. 2d 253; Scull v. R. R., 144 N.C. 180, 56 S.E. 876. Here, the Commission makes the rule applicable to all carriers and all rates. The Commission is the complainant, the prosecutor and the judge. The policy of courts, under such circumstances, is to review administrative decisions to see that rights are protected. Russ v. Board of Education, 232 N.C. 128, 59 S.E. 2d 589. The question here discussed is raised by the record — a direct answer is not now required. The main controversy may be resolved on other grounds. Two critical questions arise on the record. First, does the evidence aided by any proper presumption show the rates in effect at the time the investigation started to be unjust, unreasonable, and discriminatory? Second, does the evidence show the proposed rates ,to be just, reasonable, and lawful? The evidence of the Commission’s rate expert as depicted by his charts, shows the rates on file in certain instances are lower for long [440] er haul than for a shorter haul; the same for different length hauls; and different for the same length hauls. The tariffs cover hauls from all terminals. However, the evidence shows that a large percentage of the points and rates listed are paper rates. In view of this fact, Mr. Noah’s admission severely dilutes, if it does not destroy, probative value of his charts. He said: “Let me point out again that these exhibits show only an analysis of rates as published in the tariffs. We have not undertaken to develop by any investigation volume of tonnage or any other operational question.” The Commission contends the mere fact that tariffs show different rates for different distances is in itself a showing of discrimination, and cites as authority, Hines v. R. R., 95 N.C. 434; Lumber Co. v. R. R., 141 N.C. 171, 53 S.E. 823. In these cases the plaintiff sued to recover for freight overcharges on the ground the carrier charged other shippers a lesser rate for similar services. In the Lumber Co. case the Court said: “So dependent are all commercial activities upon adequate service by the great companies which conduct these public employments, that the general situation demands the stern code that all who apply shall be served with adequate facilities for reasonable compensation, and without discrimination.” These cases interpret shippers’ rights to equal rates with others under existing statutes. The fundamentals of ratemaking were not involved. It appears even from Mr. Noah’s evidence that rate-making involves more than mileage. The Commission’s order itself makes an exception and states the order is not applicable to movements from Wilmington to Fayetteville and River Terminal. This exception leaves the old rate in effect. There are factors involved in rate-making which justify lower per-mile rates from some points than from others. The evidence indicates that business of some carriers and from some distribution points will be taken away unless a competitive rate lower than the Commission’s schedule is permitted. The law does not contemplate that all rates shall be equal for like distances. Room is left for a rate structure which takes all factors of rate-making into account. G.S. 62-121.28 makes unlawful a rate that creates an unjust discrimination or undue or unreasonable advantage. Many factors give Wilmington, for example, advantages over Thrift. These arise from location, accessibility to sea lanes, volume of business and cost of movement. For example, the cost of operation over steep and crooked mountain roads where snow and ice are not infrequent handicaps is more than in the coastal area. Wilmington, therefore, has a natural advantage over Thrift. Recognizing these advantages by provision for a lower per-mile rate is not unjust discrimination. [441] Failure to recognize them may be unjust discrimination. Notwithstanding the Commission’s declaration to the contrary in its order denying the rehearing, the effect of the Commission’s order is to make new rates. Mileage alone is not a sufficient base for rates. 13 C.J.S., Carriers, § 291, p. 668; Texas & Pacific Railway Co. v. United States, 289 U.S. 627. Notwithstanding the Commission’s order that the investigation shall embrace “charges for the transportation of petroleum and petroleum products ... by common and contract carriers,” actually the evidence and new rates ordered into effect apply only to common and not to contract carriers. The reasons for this limitation are set forth by Justice Parker in Utilities Commission v. Towing Corp., 251 N.C. 105, 110 S.E. 2d 886. The evidence before the Commission was sufficient to show some inequities in rates listed in the tariffs. It was insufficient to support an order that the entire rate structure was unjust and unreasonable. For the same reasons, the evidence was insufficient to show the schedule of rates ordered into effect by the Commission, based entirely on mileage, are just and reasonable. The judgment of the Superior Court to the extent it reversed the order of the Utilities Commission, is affirmed. So much thereof as directs the Commission to dismiss the proceeding, is reversed. The Superior Court will remand the proceeding to the Utilities Commission for such further hearing and disposition as may be appropriate with respect to the rates of any common carrier of the products here contemplated as may be found to be unjust, unreasonable, or unlawfully discriminatory. Affirmed in part and reversed in part.