Source: http://supreme.nolo.com/us/271/153/case.html
Timestamp: 2019-04-21 06:41:18+00:00

Document:
1. Under § 1, pars. 18-20, of the Interstate Commerce Act, as amended by Transportation Act, 1920, § 402, the Interstate Commerce Commission has power to authorize abandonment, as respects both intrastate and interstate traffic, of a branch line of railroad lying wholly within the the owning company's incorporation upon the ground that local conditions are such that public convenience and necessity do not require continued operation, and that such operation will result in large deficits constituting an undue burden upon interstate commerce. P. 271 U. S. 161.
2. The exercise of federal power in authorizing such abandonment is not an invasion of the field reserved by the Constitution to the state, for the paramount power of Congress over interstate commerce enables it to determine to what extent and in what manner intrastate service must be subordinated in order that interstate service may be adequately rendered. P. 271 U. S. 165.
3. In a suit to enjoin an order of the Interstate Commerce Commission, the court may consider the objections that essential findings were not made and that findings made were not supported by evidence if all the evidence before the Commission was introduced in the court below and is substantially incorporated in the record on appeal. P. 271 U. S. 166.
4. While the constitutional basis of authority to issue the certificate of abandonment is the power of Congress to regulate interstate commerce, the Act does not make issuance of the certificate conditional upon a finding that continued operation will result in discrimination against interstate commerce, or that it will result in a denial of just compensation for the use in intrastate commerce of the property of the carrier within the state, or that it will result in a denial of such compensation for the property within the state used in commerce intrastate and interstate. P. 271 U. S. 167.
5. The sole test prescribed by the Act is that abandonment be consistent with public necessity and convenience; in determining this, the Commission must have regard for the needs of both intrastate and interstate commerce. P. 271 U. S. 168.
Appeal from a decree of the district court which dismissed the bill brought by the State of Colorado against the United States, the Interstate Commerce Commission, and the Colorado & Southern Railway Company seeking to enjoin and in part set aside an order of the Commission -- a certificate permitting the railway to abandon a branch line in Colorado.
This suit was brought by Colorado against The United States, in the federal court for that state, to enjoin and set aside, in part, an order of the Interstate Commerce Commission issued February 11, 1924. The order is a certificate that present and future public convenience and necessity permit the abandonment by the Colorado & Southern Railway Company, six months thereafter, of a branch line located wholly in that state. The certificate was issued under Interstate Commerce Act, § 1, pars. 18-20, as amended by Transportation Act 1920, c. 91, § 402, 41 Stat. 456, 477.
detached from other lines of the company; but it is operated in both intrastate and interstate commerce as a part of the system by means of connections with other railroads. The certificate was granted on the ground that the local conditions are such that public convenience and necessity do not require continued operation, that for years operation of the branch had resulted in large deficits, that future operation would likewise result in large deficits, that the operating results of the branch are reflected in the company's accounts, that it would have to make good the deficits incurred in operating the branch, and that, thus continued, operation would constitute an undue burden upon interstate commerce. Abandonment of Branch Line by Colorado & Southern Ry., 72 I.C.C. 315; 82 I.C.C. 310; 86 I.C.C. 393.
request was granted. On February 11, 1924, the order was affirmed with the modification that the certificate should not take effect until six months from that date. Abandonment of Branch Line by C. & S. Ry., 86 I.C.C. 393. The effective date of the certificate was later extended to September 11, 1924, and finally to October 11, 1924. 94 I.C.C. 657, 661.
Meanwhile, this suit had been begun. The Commission and the company intervened as defendants. On August 19, 1924, a decree dismissing the bill on the merits was entered, upon final hearing, without opinion. A motion for a suspension of the order of the Commission pending an appeal was denied. The case is here on direct appeal under the Act of October 22, 1913, c. 32, 38 Stat. 208, 220. The order is assailed as void insofar as it authorizes abandonment and discontinuance of operation in intrastate traffic. The remedy pursued is the appropriate one. See Texas v. Eastern Texas R. Co., 258 U. S. 204.
charter of the Colorado & Southern is a contract with the state. By accepting the charter, the company assumed the obligation of providing intrastate service on every part of its line within the state. Colorado & Southern Ry. v. Railroad Commission, 54 Colo. 64, 92-93. The extent and character of this service is subject to regulation by the state. The inherent power of a state to regulate intrastate traffic by requiring the railroad to operate every part of its line, like its power to order a particular service, is, of course, subject to the limitation that the order must not be unreasonable. But the fact that operation of the branch will necessarily result in financial loss would in no event be more than an important circumstance bearing upon the reasonableness of the state's order requiring the service. In the case at bar, no question of the reasonableness of the state's action can arise, because the state has not issued any order; it has merely protested against the Commission's releasing this Colorado corporation from the primary duty voluntarily assumed of maintaining some service on the branch. This the Commission cannot do as respects intrastate commerce. Transportation Act 1920 did not purport to take from the state its powers to control intrastate commerce. Nor did it confer upon the Commission power to release a corporation chartered by the state from its primary obligation to furnish service. If paragraph 18 of § 1 should be construed as authorizing the Commission to do so without the consent of the state, the provision would be unconstitutional. Compare Texas v. Eastern Texas R. Co., 258 U. S. 204, 258 U. S. 217. Such is the argument.
which would otherwise prevent the railroad from performing its federal duty. Prejudice to interstate commerce may be effected in many ways. One way is by excessive expenditures from the common fund in the local interest, thereby lessening the ability of the carrier properly to serve interstate commerce. Expenditures in the local interest may be so large as to compel the carrier to raise reasonable interstate rates, or to abstain from making an appropriate reduction of such rates, or to curtail interstate service, or to forego facilities needed in interstate commerce. Likewise, excessive local expenditures may so weaken the financial condition of the carrier as to raise the cost of securing capital required for providing transportation facilities used in the service, and thus compel an increase of rates. Such depletion of the common resources in the local interest may conceivably be effected by continued operation of an intrastate branch in intrastate commerce at a large loss.
state authorities seek to compel the erection of a union station so expensive as unduly to deplete the financial resources of the carriers, Railroad Commission v. Southern Pacific Co., 264 U. S. 331, or when one railroad seeks to construct an intrastate branch line, which will deplete its own financial resources or those of another interstate carrier, Texas & Pacific Ry. Co. v. Gulf, Colorado & Santa Fe Ry. Co., 270, U.S. 266. The jurisdiction exercised by the Commission in these cases is, in essence, that which was invoked in The Shreveport Case, 234 U. S. 342, a power to prevent unjust preference to particular intrastate shippers or localities at the demonstrated expense of interstate commerce. But there is a broader basis for federal control.
This railroad, like most others, was chartered to engage in both intrastate and interstate commerce. The same instrumentality serves both. The two services are inextricably intertwined. The extent and manner in which one is performed necessarily affects the performance of the other. Efficient performance of either is dependent upon the efficient performance of the transportation system as a whole. Congress did not, in the respect here under consideration, assume exclusive regulation of the common instrumentality, as it did in respect to safety coupling devices. Compare Southern Ry. Co. v. United States, 222 U. S. 20; Atlantic Coast Line v. Georgia, 234 U. S. 280, 234 U. S. 293. It expressly excluded from federal control that part of the railroad which consists of "spur, industrial, team, switching or side tracks located . . . wholly within one state." See Texas & Pacific Ry. Co. v. Gulf, Colorado & Santa Fe Ry. Co., 270 U. S. 266. But, as to the rest of every railroad line used in interstate commerce, Congress reserved the full authority to determine whether, and to what extent, public convenience and necessity permit of abandonment.
is manifested also in other provisions of Transportation Act 1920. It is a reason for the exclusive jurisdiction conferred upon the Commission by § 20a over the issuance of securities. Compare Venner v. Michigan Central R. Co. ante, p. 271 U. S. 127. It is the ground upon which the validity of the recapture clause, as applied to surplus profits derived from intrastate operations, was sustained in Dayton-Goose Creek Ry. v. United States, 263 U. S. 456, 263 U. S. 485. It is the justification for those provisions of the Interstate Commerce Act which require carriers engaged in both intrastate and interstate commerce to render accounts of all their business. Interstate Commerce Commission v. Goodrich Transit Co., 224 U. S. 194. And upon it rests likewise the power exerted by this Court in setting aside the state regulations involved in Union Pacific R. Co. v. Public Service Commission, 248 U. S. 67, and St. Louis & San Francisco Ry. Co. v. Public Service Commission, 254 U. S. 535. See also United States v. Ferger, 250 U. S. 199; Stafford v. Wallace, 258 U. S. 495; Chicago Board of Trade v. Olsen, 262 U. S. 1.
commerce is involved. It may determine to what extent and in what manner intrastate service must be subordinated in order that interstate service may be adequately rendered. The power to make the determination inheres in the United States as an incident of its power over interstate commerce. The making of this determination involves an exercise of judgment upon the facts of the particular case. The authority to find the facts and to exercise thereon the judgment whether abandonment is consistent with public convenience and necessity Congress conferred upon the Commission.
Second. The state contends further that the order is void, so far as it relates to intrastate traffic, because essential findings were not made, and also because essential findings made were not supported by evidence. The Chicago Junction Case, 264 U. S. 258. The findings alleged to be essential and lacking are that, by continued operation of the branch, interstate or foreign commerce will be discriminated against, or that the company will be prevented from earning a fair return on the value of its properties as a whole, or that the entire intrastate business in Colorado will not earn such a return upon the property used in conducting that business. The other objections urged are that the evidence of past operating deficits on the branch, which include both interstate and intrastate traffic, does not support the finding that operation in intrastate traffic alone will result in like deficits, and that the decision of the Commission was improperly influenced by an offer to lease the line to the protestants at a nominal rental. All the evidence before the Commission was introduced below, and is, in substance, incorporated in the record on appeal. Both classes of objections must therefore be considered. New England Divisions Case, 261 U. S. 184, 261 U. S. 203.
Before examining the specific objections, the nature of the determination to be made by the Commission upon an application for leave to abandon should be further considered.
"the right to make before the Commission such representations as they may deem just and proper for preserving the rights and interests of their people and the states, respectively, involved in such proceedings."
interstate commerce, or that it will result in a denial of just compensation for the use in intrastate commerce of the property of the carrier within the state, or that it will result in a denial of such compensation for the property within the state used in commerce intrastate and interstate. The sole test prescribed is that abandonment be consistent with public necessity and convenience. In determining whether it is, the Commission must have regard to the needs of both intrastate and interstate commerce, for it was a purpose of Transportation Act 1920 to establish and maintain adequate service for both. Wisconsin Railroad Commission v. Chicago, Burlington & Quincy R. Co., 257 U. S. 563, 257 U. S. 585, 257 U. S. 587-589; New England Divisions Case, 261 U. S. 184; Dayton-Goose Creek Ry. Co. v. United States, 263 U. S. 456, 263 U. S. 485; United States v. Village of Hubbard, 266 U. S. 474. The benefit to one of the abandonment must be weighed against the inconvenience and loss to which the other will thereby be subjected. Conversely, the benefits to particular communities and commerce of continued operation must be weighed against the burden thereby imposed upon other commerce. Compare Proposed Abandonment by Boston & Maine R. Co., 105 I.C.C. 13, 16. The result of this weighing -- the judgment of the Commission- -- s expressed by its order granting or denying the certificate.
of the whole traffic is small, the question is whether abandonment may justly be permitted, in view of the fact that it would subject the communities directly affected to serious injury while continued operation would impose a relatively light burden upon a prosperous carrier. [Footnote 3] The problem and the process are substantially the same in these cases as where the conflict is between the needs of intrastate and of interstate commerce. Whatever the precise nature of these conflicting needs, the determination is made upon a balancing of the respective interests -- the effort being to decide what fairness to all concerned demands. In that balancing, the fact of demonstrated prejudice to interstate commerce and the absence of earnings adequate to afford reasonable compensation are, of course, relevant, and may often be controlling. But the Act does not make issuance of the certificate dependent upon a specific finding to that effect.
An examination of the extensive record and of the three opinions of the Commission convinces us that no relevant fact was ignored, that there was ample evidence to support the facts found, and that the judgment of the Commission was not improperly influenced by the offer to lease the line to the protestants at a nominal rental. The case at bar is unlike Texas v. Eastern Texas R. Co., 258 U. S. 204. There, the railroad was permitted to be relieved only from continuing operations in interstate commerce. It was being operated independently, and not as a branch of any railroad engaged in interstate commerce.
Losses incurred in its operation would not be reflected in the accounts of any interstate carrier, and no interstate carrier would have had to make good deficits so incurred. Its continued operation could not burden or prejudice interstate commerce, for the Commission, in issuing its certificate, had adjudged that public necessity and convenience did not demand the continuance of its interstate services.
From the enactment of Transportation Act, 1920, to February 18, 1926, the number of applications for abandonment acted on was 191. Of these, 9 were dismissed by the Commission for want of jurisdiction; 11 were denied; 170 were granted. Of these 170, only 6 were granted contrary to the recommendation of the state authorities. Of the 47 cases in which state authorities made specific recommendations, the Commission acted in 38 in accordance therewith. In 2 cases in which the state recommended postponement, the Commission denied the application. In one in which the state recommended denial of the application, the Commission postponed decision pending the result of operation during a test period.
See, e.g., Abandonment, etc., by Southern Pacific Co. 72 I.C.C. 404.
Compare Application of Green Bay & Westren R. Co., 70 I.C.C. 251, Abandonment of White Cloud-Big Rapids Branch, etc., 72 I.C.C. 303, and Proposed Abandonment of Lincoln Branch, etc., 94 I.C.C. 624, with Abandonment, etc., Oregon Trunk Ry., 72 I.C.C. 679, Abandonment of Branch Line by Pere Marquette Ry., 90 I.C.C. 100, Abandonment, etc., by Central New England Ry. Co., 94 I.C.C. 405, Abandonment, etc., by Coudersport & Port Albany R. Co., 99 I.C.C. 310, and Abandonment, etc., by Chicago & Northwestern Ry. Co., 105 I.C.C. 273.

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