Houston, East & West Texas Railway Co. v. United States

Supreme Court of the United States · 1914 · Constitutional Law

234 U.S. 342

Updated July 9, 2026

conlawCommerce Clauseinterstate commercefederal preemptionICCinterstate carriersintrastate ratesrate discrimination

Facts

The Interstate Commerce Commission found that carriers charged substantially higher rates from Shreveport, Louisiana, to points in Texas than they charged from Dallas and Houston to the same or comparable Texas points for equal distances. The Commission found that this rate structure injured Shreveport's commerce and gave Texas cities an unlawful and undue preference under substantially similar conditions and circumstances. It prescribed maximum reasonable class rates from Shreveport and also ordered the carriers not to charge higher rates from Shreveport into Texas than the contemporaneous rates charged from Dallas and Houston toward Shreveport for equal distances. The carriers ultimately challenged only the part of the order addressing the discriminatory relationship between interstate Shreveport rates and lower Texas intrastate commodity rates.

Issue

Whether Congress has power to reach intrastate rates of an interstate carrier when those rates create unjust discrimination against interstate traffic, and if so, whether Congress had conferred that power on the Interstate Commerce Commission through the Act to Regulate Commerce. More specifically, the question was whether the Commission could require carriers to eliminate discrimination caused by the relation between intrastate Texas rates and interstate rates from Shreveport.

Rule

Congress's power over interstate commerce is complete and paramount and extends to controlling intrastate operations of interstate carriers in matters having such a close and substantial relation to interstate traffic that such control is essential or appropriate to protect interstate commerce and maintain fair conditions for it. Under section 3 of the Act to Regulate Commerce, the prohibition on undue or unreasonable preference or prejudice reaches unjust discrimination against interstate traffic caused by the relation between intrastate and interstate rates, and the Interstate Commerce Commission may require carriers to remove that discrimination without being compelled to lower interstate rates below the reasonable standard it has found.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Prairie Gulf Rail runs lines from Tulsa, Oklahoma into western Arkansas and also carries freight wholly within Arkansas. The Interstate Commerce Commission finds that Prairie Gulf charges substantially more to ship farm tools from Tulsa to several Arkansas towns than it charges from Little Rock to the same towns for equal distances, and that this disparity gives Little Rock an undue advantage and harms interstate traffic from Tulsa.

Which is the strongest argument that the Commission may order Prairie Gulf to eliminate the disparity?

Explanation. The majority held that Congress's power over interstate commerce is complete and may extend to intrastate operations of interstate carriers when control of those intrastate operations is essential or appropriate to protect interstate traffic and maintain fair conditions for it. The key is the close and substantial relation between the intrastate rates and the injury to interstate commerce, not a general power over all intrastate commerce. (Derived from Houston, East & West Texas Railway Co. v. United States (n.d.).)