US SUPREME COURT DECISIONS

Asserting exclusive and plenary authority under § 5(2)(a) of the Interstate Commerce Act, the Interstate Commerce Commission approved a proposed transaction in which an interstate motor carrier would transfer its operations in the San Francisco Bay area (largely local commuter service) to a non-carrier subsidiary organized for that purpose, in exchange for the capital stock of the subsidiary. The admitted purpose of the transaction was to escape the ratemaking practices and policies of the California Public Utilities Commission, which held that the carrier's applications for increases in rates in these local operations should be determined in the light of total revenues from all of its intrastate operations in California. Appellants sued to set aside the order of the Interstate Commerce Commission.

Held: the proposed transaction is beyond the scope of the power of the Interstate Commerce Commission under § 5(2)(a). Pp. 356 U. S. 413-420.

(a) The congressional purpose in the sweeping revision of § 5 of the Act in 1940, enacting § 5(2)(a) in its present form, was to facilitate mergers and consolidations in the national transportation system. Pp. 356 U. S. 416-418.

(b) The proposed transaction does not involve the "acquisition" of any "carrier" within the meaning of §5(2)(a), because the subsidiary is not a "carrier." P. 356 U. S. 418.

(c) Even if the plan were viewed at its consummation, when the subsidiary would become a "carrier," the proposal contemplates, in reality, a split-up -- something beyond the purpose and language of § 5(2)(a). P. 356 U. S. 418.

(d) This holding does not create a vacuum in regulation, because the Interstate Commerce Commission would have jurisdiction over the transfer of interstate operating rights under § 212(b), and the transfer of intrastate right would be subject to the approval of the State Commission, the body most directly concerned with the local operations. P. 356 U. S. 419. chanrobles.com-red

Page 356 U. S. 413

(e) That it may have been the prior administrative practice of the Interstate Commerce Commission to exercise jurisdiction under § 5(2)(a) in similar cases is insufficient to outweigh the apparent congressional purpose and the clear language of the statute -- especially in this delicate area, where the sustaining of federal jurisdiction leads, by statute, to the complete ouster of state authority. P. 356 U. S. 420.

150 F.Supp. 619 reversed and cause remanded.