[Longtime LHB readers will recall that for the exam in my legal history course at Georgetown Law I write an essay about some regulatory regime I did not cover in class and ask students to draw comparisons with those we did. (Last year's, on meat inspection, is
here, and earlier one on the US Commerce Court is
here) This year's essay, on the regulation of motor carriers, follows. Dan Ernst.]
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| “Motor carriers unit gets underway” (LC) |
“The story of transportation in the United States,” wrote David Lilienthal, who had studied with Felix Frankfurter at the Harvard Law School in the early 1920s, “has been marked by constant and almost bewildering changes in the facilities by which the movement of men and goods has been effected.” In the early twentieth century, one of the most bewildering changes was the transformation of motor vehicles from a rich person’s plaything to a major competitor of railroads for the nation’s freight. Already in 1920, the states had registered 1 million trucks; by 1929, the number was 3.7 million. Railroads considered such motor carriers pests that threatened to consume their revenue, and they looked to government to bottle them up.
Until 1935, motor carrier regulation was the province of the states. By the 1920s, most already had “public utility commissions” that regulated railroads; water, gas, and electric companies; and other “businesses affected with a public interest.” Perhaps for that reason, as a scholar wrote, it was ‘but natural” that these commissions would regulate motor carriers as well. Still, motor transport companies differed from railroads in important respects, including especially their much lower fixed costs. Trucks operated on publicly owned roads; railroads had to pay for their rights of way and lay their own tracks. Also, trucks were much less expensive than locomotives and train cars. Thus, barriers to entering the motor carrier industry were far lower than the railroad industry. If the core mission of railroad regulation had been to ensure that railroads allocated their fixed costs to shippers fairly; the core mission of motor carrier regulation was to limit competition, thereby making, it was said, the transportation industry more stable and safe.
The foundation for motor carrier regulation was the “certificate of convenience and necessity,” issued by a commission not as a property interest but a revocable license to serve the public for a fixed period of time. Commercial motor carriers could not operate without one. To get one they had to show that the public needed their services and that they had the financial wherewithal to meet that need. Motor carriers also had to abide by “tariffs” set by the commission. These schedules fixed minimum, maximum or actual charges for the transport various classes of goods. The commissions also issued a host of safety regulations and oversaw the mergers, issuance of securities, and other financial actions of regulated companies. Disputes could arise when commissions denied applicants certificates or revoked them for malfeasance, which were quasi-adjudicative acts. They could also arise in rate-setting, a quasi-legislative act.