Source: https://supreme.justia.com/cases/federal/us/346/346/
Timestamp: 2019-04-22 18:46:37+00:00

Document:
Atchison, Topeka & Santa Fe Railway Co. v.
The Public Utilities Commission of California entered orders, pursuant to a state statute, authorizing certain grade separation improvements, and requiring in each case that 50% of the costs be borne by the railroad. The improvements were designed to meet local transportation needs and to promote public safety and convenience, and were made necessary by the growth of the communities affected. There was no showing on the record in either case of arbitrariness or unreasonableness in the Commission's orders, and none was claimed except that the Commission refused to allocate costs on the basis of benefits to the railroads.
Held: the orders of the Commission are not arbitrary or unreasonable, and do not deprive the railroads of their property without due process of law, nor do they interfere unreasonably with interstate commerce. Pp. 346 U. S. 347-355.
(a) In sustaining the Commission's orders by denying writs of review, the State Supreme Court upheld the statute as applied by the Commission, and the cases are properly here on appeal under 28 U.S.C. § 1257(2). Pp. 346 U. S. 348-349.
(b) The railroads were not entitled to have the costs of the improvements allocated only on the basis of benefits which will accrue to their property. Pp. 346 U. S. 352-354.
(c) Nashville, C. & St.L. R. Co. v. Walters, 294 U. S. 405, distinguished. Pp. 346 U. S. 353-354.
(d) The allocation of costs against the railroads in excess of benefits received did not constitute an undue burden on interstate commerce. P. 346 U. S. 355.
In each of these cases, the Public Utilities Commission of California entered orders authorizing certain grade separation improvements and allocating a share of the cost to the railroad. 51 Cal. P.U.C. 771, 788. The State Supreme Court denied review. On appeal to this Court, affirmed, p. 346 U. S. 355.
Public Utilities Code of California. [Footnote 2] On petitions to the Supreme Court of California, that court denied review of the Commission's orders, [Footnote 3] and these appeals followed. We postponed jurisdiction until a hearing on the merits.
the Constitution of the United States. In sustaining the Commission's orders by denying writs of review, the Supreme Court of California upheld the statute as applied by the Commission, and the cases are properly here on appeal. Kansas City S. R. Co. v. Road Improvement District, 256 U. S. 658, 256 U. S. 659-660.
The principal question presented by these appeals is whether the allocation of the reasonable cost of grade separation improvements is arbitrary as to the railroads unless imposed on the basis of benefits received, or, since the costs are incurred in the exercise of the police power in the interest of public safety, convenience and necessity, may they be allocated on the basis of fairness and reasonableness.
promote the safety and convenience of the public and to meet vastly increased local transportation needs, made necessary by the rapid growth of the City. In 1910, the City had a population of 102,000, in 1920 of 576,000, and in 1948 of 1,987,000. Los Angeles County's population in 1910 was 504,000, and in 1948 was over four million. Vehicular traffic in the area has increased tremendously since construction of the present underpasses in 1914.
Considering all of these facts and evidence by the railroad that there were no benefits to be derived by the railroad from this improvement, the Commission decided that there "is a need for widening and increasing the height of the existing underpasses," [Footnote 4] and that the preferred plan submitted by the City of Los Angeles "sets out the construction which would be most practicable and best meet the public safety, convenience and necessity in this matter." [Footnote 5] The Commission found that $569,355 of the cost was attributable to the presence of the railroad tracks, and that the railroad should pay 50% of this amount and the City 50%.
to the presence of the tracks. After lengthy hearings and after considering all the evidence and the arguments advanced, the Commission decided that it was not bound to follow any particular theory in apportioning the costs, but may allocate the costs in the exercise of its sound discretion.
We do not understand the appellants to contest the right of the Commission to enter the orders or the reasonableness of the estimated costs. Their principal contention is that, as to them, the cost of the improvements may be distributed only on the basis of benefits which will accrue to their property. In this contention, we think the appellants are in error. These were not improvements whose purpose and end result is to enhance the value of the property involved by reason of the added facilities, such as street, sewer or drainage projects, where the costs assessed must bear some relationship to the benefits received. Chesebro v. Los Angeles County Flood Control Dist., 306 U. S. 459; Valley Farms v. Westchester, 261 U. S. 155; Kansas City S. R. Co. v. Road Improvement District, supra; Gast Realty & Investment Co. v. Schneider Granite Co., 240 U. S. 55.
was not an arbitrary exercise of power by the Commission to refuse to allocate costs on the basis of benefits alone. The railroad tracks are in the streets not as a matter of right, but by permission from the State or its subdivisions. The presence of these tracks in the streets creates the burden of constructing grade separations in the interest of public safety and convenience. Having brought about the problem, the railroads are in no position to complain because their share in the cost of alleviating it is not based solely on the special benefits accruing to them from the improvements.
the effect of such competition on the revenues of the railroads, and the increasing importance of grade separations as a means of assuring rapid movement of motor vehicles, rather than as an exclusively safety measure.
"[t]he main contention is that to impose upon the railway, under these circumstances, one-half of the cost is action so arbitrary and unreasonable as to deprive it of property without due process of law in violation of the Fourteenth Amendment."
"were of such persuasiveness as to have required the state court to hold that the statute and order complained of are arbitrary and unreasonable. That determination should, in the first instance, be made by the Supreme Court of the state."
294 U.S. at 294 U. S. 432-433.
In our cases, not only are the facts distinguishable in many material particulars, but, unlike the Supreme Court of Tennessee, which refused to consider the facts to determine whether the statute's allocation of 50% was arbitrary or unreasonable, the California Commission considered all the evidence offered, including that going to the benefits received, and properly applied the rule of allocation sanctioned by this Court, and the California Supreme Court found no occasion to review the Commission's orders. There is no showing on these records of arbitrariness or unreasonableness in the Commission's orders, and none is claimed except as the Commission refused to allocate costs on the basis of benefits received, which we hold it was not required to do.
It is next contended that the allocation of grade separation costs against the railroads in excess of benefits received constitutes an undue burden on interstate commerce. We have decided that there is no showing that the orders here under attack were arbitrary or unreasonable. Certainly, if the Commission has the right to order these improvements and has not, in allocating the costs, acted so arbitrarily as to deprive the railroads of their property without due process of law, the fact that the improvements may interfere with interstate commerce is incidental. The construction and use of public streets is a matter peculiarly of local concern, and great leeway is allowed local authorities where there is no conflicting federal regulation, even though interstate commerce be subject to material interference. Railway Express Agency v. New York, 336 U. S. 106, 336 U. S. 111; South Carolina v. Barnwell Bros., 303 U. S. 177, 303 U. S. 187. No conflict with federal regulation is involved here. See Lehigh Valley R. Co. v. Board, 278 U. S. 24, 278 U. S. 35.
When the appellants went on the streets in question, they assumed the burden of sharing on a fair and reasonable basis the costs of any changes for the reason of public safety and convenience made necessary by the growth of the communities.
"To engage in interstate commerce, the railroad must get onto the land, and, to get onto it, must comply with the conditions imposed by the State for the safety of its citizens."
Erie R. Co. v. Board, supra, at 254 U. S. 411.
The orders of the Commission are not arbitrary or unreasonable, and do not deprive the appellants of their property without due process of law, nor do they interfere unreasonably with interstate commerce.
* Together with No. 43, Southern Pacific Co. v. Public Utilities Commission of California et al., argued October 14-15, 1953, also on appeal from the same court.
The final orders may be found at 51 Cal.P.U.C. 771 and 51 Cal.P.U.C. 788.
"§ 1202. Exclusive powers of commission. The commission has the exclusive power:"
"(a) To determine and prescribe the manner, including the particular point of crossing, and the terms of installation, operation, maintenance, use, and protection of each crossing of one railroad by another railroad or street railroad, and of a street railroad by a railroad, and of each crossing of a public or publicly used road or highway by a railroad or street railroad, and of a street by a railroad or vice versa, subject to the provisions of Sections 1121 to 1127, inclusive, of the Streets and Highways Code so far as applicable."
"(b) To alter, relocate, or abolish by physical closing any such crossing heretofore or hereafter established."
"(c) To require, where, in its judgment, it would be practicable, a separation of grades at any such crossing heretofore or hereafter established, and to prescribe the terms upon which such separation shall be made and the proportions in which the expense of the construction, alteration, relocation, or abolition of such crossings or the separation of such grades shall be divided between the railroad or street railroad corporations affected or between such corporations and the State, county, city, or other political subdivision affected."
40 Adv.Cal., No. 2, Minutes, 1; 40 Adv.Cal., No. 15, Minutes, 1.

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