Shreveport Rate Case
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The Shreveport Rate Case, also known as Houston E. & W. Ry. Co. v. United States, 234 U.S. 342 (1914) was a decision of the United States Supreme Court expanding the power of the commerce clause of the Constitution of the United States. Justice Hughes's majority opinion stated that the federal government's power to regulate interstate commerce also allowed it to regulate purely intrastate commerce in cases where control of the former was not possible without control of the latter.
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[edit] The Facts
The Houston Railway Company managed an interstate railway line that ran through Dallas, Texas, Marshall, Texas (on the eastern border of Texas), and Shreveport, Louisiana. The rate from Marshall to Dallas, a distance of 148 miles, was 36.8 cents/mile, and the rate from Marshall to Shreveport, a distance of 42 miles, was 56 cents. Shreveport competed with Dallas for shipments from East Texas. The Interstate Commerce Commission ordered the company to change the rate structure to end discriminatory pricing.
[edit] The Issue
The federal government is one of limited and enumerated powers. The Tenth Amendment reserves for the states or the people all powers not specifically delegated to the federal government.
The Constitution gives Congress the power to regulate interstate commerce. Regulation of commerce completely within a state is not an enumerated power of the federal government. In effect, the Interstate Commerce Commission was attempting to set the rate that the railroad could charge from Dallas to Marshall, a section of rail line completely within the borders of Texas. The railroads argued that "Congress is impotent to control the intrastate charges of an interstate carrier."
[edit] The Holding
Associate Justice Charles Evans Hughes, writing for the majority, rejected that argument, finding that congressional authority "necessarily embraces the right to control... operations in all matters having a close and substantial relation to interstate traffic, to the efficiency of interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms." Regulation of the intrastate line was a means to the end of regulating interstate commerce, and by the majority opinion was thereby allowed. Two justices (Lurton and Pitney) dissented without opinion.
[edit] Legacy
The Interstate Commerce clause has been used to steadily expand the power of the federal government, as almost any aspect of life, especially after the industrial revolution, can in some way be related to interstate commerce. The Shreveport Rate Case was an early example of this expansion.
