Opinion ID: 1829127
Heading Depth: 1
Heading Rank: 3

Heading: Facilities Remaining

Text: Freight service along these lines will remain unchanged. Express service will be altered only in the respects heretofore described. However, if appellee discontinues its passenger trains, all of the intermediate parts between Birmingham and Mobile will be left without passenger train service. Evidence relative to transportation by air in the record is negligible, and the air traffic factor in this case is minuscule. Of the seventy-eight stations presently served by these trains between Birmingham and Mobile, forty-six are located on or immediately adjacent to good highways, with competing common carrier bus service. Approximately 540,000 people live in the 46 communities adequately served by the competing bus service. As already pointed out, only about 4,000 persons who live in the remaining 32 communities will not have bus service readily available. The highways in this area served by these trains are good. Appellee has adduced testimony showing that the ratio of persons per registered passenger automobile in the eleven counties through which these trains run is 3.6, as compared to the state average of 4. On the other hand, the ratio of total registered motor vehicles to persons in the eleven counties is 3, which is the same as the state of Alabama. For the period 1941 through 1955, the state showed the fourth highest percentage increase in passenger car registrations of the nation, although during the same period, the state had only a 6.7 percent increase in population. Many of the protestants who testified revealed that they came to the Commission hearing by automobile or other type of conveyance, and not by train. Such testimony was interspersed by references to the witnesses' use of means of transportation other than the appellee's passenger trains within the area. Comparison of Operation Expense with Revenue Total revenues for the twelve month period November, 1955 through October, 1956 were $105,956.46, broken down as follows: Passenger, $32,416.42; Mail, $60,302.41; Express, $13,165.92; and Miscellaneous, $71.71. There was no disagreement between the parties to this dispute as to the revenue figures. Great difficulty, however, was experienced in agreeing upon amounts allocable to expense in the operation of passenger trains 19 and 20. Appellee's petition filed with the Commission showed direct expenses for the operation of said trains from March 1, 1955 through February 29, 1956, at $308,899.44. In its original computation, at the hearing, appellee showed these expenses at $321,660.70. However, realizing that due to the terrain, the train fuel expense included seemed high, appellee conducted an actual test on the route, the results of which caused appellee to adjust the train fuel cost by taking only about one-half of the original figure included, thereby reducing the total direct expenses assigned to passenger trains 19 and 20 to the amount of $298,005.30. Since appellee proposed at the hearing to render express service along the route of trains 19 and 20 by operating express cars on freight trains, it then submitted another computation showing direct expenses, giving effect to the continuance of express connection with the operation of express service, and this resulted in another slight reduction in the cost figure. According to the latter computation, which results in the smallest figure arrived at by the appellee, direct expenses were in excess of revenues in the amount of $186,564.59. On the other hand, the Commission found, as shown in the order, from its calculation of revenues received and direct expenses rendered that the excess of total expenses over revenue would be in the amount of $138,631.83. The Commission went further and asserted that the net income which would have resulted to appellee as a result of their discontinuance would only be $66,543.28, after deduction of federal taxes (petitioner was shown to be in the 52% corporate income tax bracket) on the immediate savings thus realized. The gist of the disagreement between the Commission and the company as to the method of computation of direct expenses lies in the Commission's refusal to accept the formula recommended by a committee of the National Association of Railroad and Utilities Commissioners (often referred to as NARUC), of which the Commission is a member. The Commission did not feel bound to follow the NARUC formula in classifying expense items between those accepted as wholly unavoidable and those not definitely so established, viz., those determined on an average unit cost basis. We can see no point in discussing the NARUC formula in extenso or render a decision either accepting or rejecting it. It would serve no useful purpose here to act as arbiter between the Commission and the circuit court, which did expressly accept the formula. We would observe, however, as did the court in Illinois Central R. Co. v. Illinois Commerce Commission, 410 Ill. 77, 101 N.E.2d 588, 591, that the cost, therefore, should properly include a just proportion of the expenses incurred for all facilities of which that in question forms a part, and that in determining the true cost, all the outlays which pertain to the service in question should be considered. It suffices to say that the figure derived from either of the computations is quite unreasonable, unjust, and burdensome on the appellee and such loss should not be allowed to continue, unless the particular line is required for public need and convenience.