HOUSTON, EAST AND WEST TEXAS RAILWAY CO. v. UNITED STATES

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Case Basics
Docket No. 
567
Appellant 
Houston, East and West Texas Railway Company et al.
Appellee 
United States
Consolidation 
No. 568, Texas and Pacific Railway Co. v. United States
Advocates
(argued the cause for the appellants)
(Assistant Attorney General, Department of Justice, argued the cause for the United States)
(argued the cause for the Interstate Commerce Commission)
(Attorney General of the State of Louisiana, argued the ause for the Railroad Commission of Louisiana)
(argued the cause for the Railroad Commission of Louisiana, Intervenor)
Term:
Facts of the Case 

The Houston, East and West Texas Railroad and the Texas and Pacific Railway were railroad companies operating rail lines between Shreveport, Louisiana and points in Texas. The Texas Railroad Commission mandated that they charge higher rates on freight travelling between Louisiana and Texas than on freight travelling solely within Texas. The Interstate Commerce Commission (ICC) found that the interstate rates were unreasonable and illegally discriminated against freight traffic originating in Shreveport. The ICC established maximum rates and ordered the railroads to fix their intrastate rate schedules. The railroads challenged the order in United States Commerce Court, alleging that the ICC did not have the power to regulate intrastate commerce. The Commerce Court upheld the ICC order. The railroads then appealed to the Supreme Court.

Question 

Did the ICC have the power to regulate the railroads' intrastate rates?

Conclusion 

Yes. In a 7-2 decision, the Court affirmed the Commerce Court and upheld the ICC order. Congress was granted the power to regulate interstate commerce, which it chose to do through the ICC. This power extended to "matters having such a close and substantial relation to interstate traffic," Justice Charles Evans Hughes wrote for the majority. Since the price discrimination adversely affected interstate commerce, "it is immaterial…that the discrimination arises from intrastate rates as compared with interstate rates." Therefore, the railroads' intrastate rates were subject to regulation and the ICC order was valid.

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HOUSTON, EAST AND WEST TEXAS RAILWAY CO. v. UNITED STATES. The Oyez Project at IIT Chicago-Kent College of Law. 23 November 2014. <http://www.oyez.org/cases/1901-1939/1913/1913_567>.
HOUSTON, EAST AND WEST TEXAS RAILWAY CO. v. UNITED STATES, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1901-1939/1913/1913_567 (last visited November 23, 2014).
"HOUSTON, EAST AND WEST TEXAS RAILWAY CO. v. UNITED STATES," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 23, 2014, http://www.oyez.org/cases/1901-1939/1913/1913_567.