Sulphur mined near Galveston, Texas, can be shipped to Danville, Illinois, either by rail or by barge and rail. If the sulphur goes by barge and rail, it is transported up the Mississippi via New Orleans to East St. Louis and then by rail to Danville. The total charge for that movement is $9.77 per ton. The total of the various local rates for all-rail shipments from the mines to Danville is $11.68. But the railroads have established a joint all-rail rate of $9.184 which is lower than both the combination all-rail rate and the combination rail-barge rate.
Appellants, who are water carriers, requested the competing railroads to establish a joint rail-barge rate of $7.67 on sulphur from Galveston to Danville. The railroads refused. Appellants thereupon filed a complaint with the Interstate Commerce Commission alleging that the existing rail-barge rates on sulphur were excessive and unreasonable, that through rail-barge routes and joint rates with reasonable differentials below the all-rail rates should be established, and that the refusal of the railroads to establish such joint rates discriminated against the barges as connecting carriers in violation of the Interstate Commerce Act, as amended by the Transportation Act of 1940. Appellants requested the Commission to establish a through rail-barge route and a joint rate and suggested that the joint rate be fixed at $7.67. Appellants proposed that the Danville railroads receive $2.26 as a division of that rate, calculated to be the same as they receive from the all-rail rate from Galveston to Danville. Under the proposed rate, the cost of rail-barge shipments from the mines to Danville would be $9.17 as compared with the all-rail rate of $9.184.
A Division of the Commission dismissed the complaint, one Commissioner dissenting. 287 I.C.C. 403. The Commission affirmed the Division, three Commissioners dissenting. 291 I.C.C. 422. A three-judge District Court sustained the Commission. 129 F.Supp. 28. The case is here on appeal, 28 U.S.C. §§ 1253, 2101(b), 2325, 28 U.S.C.A. §§ 1253, 2101(b), 2325.
Section 3(4) of the Act provides that 'All carriers subject to the provisions of this part * * * shall not discriminate in their rates, fares, and charges between connecting lines * * *.' Section 3(4) defines 'connecting line' as including 'any common carrier by water subject to Part III.' Appellants are common carriers by water within that definition. They maintain that it is unlawful under § 3(4) of the Act for a railroad to refuse to join in through routes and joint rates with a water carrier when it has already joined in such routes and rates with a connecting rail line. They further maintain that the power of the Commission under § 307(d) to establish through routes and joint rates should have been exercised here.
We had a closely related question before us in Interstate Commerce Commission v. Mechling, 330 U.S. 567, 67 S.Ct. 894, 91 L.Ed. 1102. In that case we invalidated an order of the Commission which approved higher rail rates for the transportation of grain east of Chicago if it had arrived in Chicago by barge, rather than by rail. We reviewed the history of the Transportation Act of 1940 and concluded that that Act 'unequivocally required the Commission to fix rates which would preserve for shippers the inherent advantages of barge transportation: lower cost of equipment, operation, and therefore service.' Id., 330 U.S. at page 575, 67 S.Ct. at page 898. We held that the discrimination which was outlawed applied to through rates as well as to ordinary rates.