Atlantic Coast Line Railroad v. Standard Oil of Kentucky
In Atlantic Coast Line Railroad v. Standard Oil of Kentucky, 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270 (1927), Standard Oil of Kentucky operated a hub-and-spoke distribution system to sell gasoline in Florida. Standard Oil of Kentucky purchased the gas from Standard Oil of Louisiana. The Louisiana company shipped the gas to Port Tampa and Jacksonville in Florida, where the Kentucky company took delivery.
The Louisiana company pumped the gas into large storage facilities maintained by the Kentucky company at Port Tampa and Jacksonville. The Kentucky company would then deliver gas from the storage facilities to bulk stations throughout Florida, and from those stations to retailers and consumers.
The Atlantic Coast Line, which carried gas from the Port Tampa and Jacksonville facilities to the bulk stations, sought to charge intrastate rates for those shipments. Standard Oil of Kentucky sued in district court to force the railroad to accept interstate rates.
The Supreme Court held that the contested shipments from the hub to the bulk stations were intrastate in character. The Louisiana company, which shipped the gas to Florida, delivered the gas when it reached the ports.
The Louisiana company had no intent to ship the gasoline beyond the Port Tampa and Jacksonville facilities; the subsequent shipments were the business of the Kentucky company. Moreover, the gasoline did not travel pursuant to any transit provision. Because there was no transit privilege, and because the shipper sold the gas when it reached the hub, the Supreme Court's holding is consistent with the two-factor test outlined above.