1. In ascertaining the public convenience and necessity with
respect to the abandonment of a branch line by a railroad company
engaged in intrastate and interstate commerce, the Interstate
Commerce Commission must weigh the benefit to accrue to interstate
commerce against the injury to intrastate commerce. P. 284 U. S.
2. Where the state has ordered the removal of grade crossings on
a branch line which the company seeks to abandon, the Commission
may properly take into consideration the magnitude of the required
outlay as compared with the value of the branch, and the resulting
effect on the company's revenue. P. 284 U. S.
Page 284 U. S. 361
3. Under § 1(18) of the Interstate Commerce Act, as amended by
the Transportation Act, 1920, the Commission has power to authorize
he abandonment of an unprofitable branch line by a railroad company
engaged in interstate commerce, although its lines lie wholly
within the its state of incorporation, and although the bulk of its
traffic is intrastate and its business as a whole is prosperous,
upon finding that continued operation of the branch would result in
a serious and increasing depletion of revenue due to competition by
municipal rapid transit lines and their probable extension, which
would entail an unreasonable burden on interstate commerce, and
that the losses would be aggravated by expenditures for the removal
of grade crossings as required by the state commission. The
exercise of such power is not an unconstitutional invasion of the
state's sovereignty. P. 284 U. S.
4. Evidence examined and held to support an order of the
Commission authorizing the abandonment of a branch line. Pp.
284 U. S.
Appeal from a decree of the district court of three judges
denying a preliminary injunction and dismissing the bills in suits
against the United States and the railroad company to enjoin the
latter from abandoning a branch line and to set aside an order of
the Interstate Commerce Commission permitting the abandonment. The
suits were brought by the Transit Commission and its members and by
the New York. They were consolidated. The Commission and the
Company intervened. See
162 I.C.C. 363; 166 id.
371; 175 id.
Page 284 U. S. 364
MR. JUSTICE ROBERTS delivered the opinion of the Court.
This appeal involves the validity of a certificate of public
convenience and necessity of the Interstate Commerce Commission
permitting the abandonment by Long Island Railroad Company of a
portion of its Whitestone branch. Separate bills were filed by
appellants to enjoin action by the railroad and to adjudge the
certificate void. They were consolidated and heard by a specially
Page 284 U. S. 365
district court. [Footnote 1
The parties having stipulated that they had offered all the proofs
they desired to present, the court refused an interlocutory
injunction, and dismissed the bills.
The Long Island Railroad Company, chartered under the laws of
New York, whose lines lie wholly within that state, transports
passengers and freight in interstate commerce by the use of steam
and electricity. Its Whitestone branch extends a distance of 4.7
miles from the Port Washington branch to the Flushing River, and
thence to Whitestone Landing. The bulk of its passenger traffic is
intrastate, and only a slight amount interstate, but it carries a
considerable volume of freight, 75 percent of which is interstate.
In these respects, the branch is representative of conditions
throughout the system. There are five passenger stations on the
branch line -- Flushing, which is much the largest, and four others
In January, 1928, the City of New York opened a rapid transit
line connecting Flushing with Manhattan. There ensued a 33 percent
decrease in the passenger revenue of the Whitestone branch, and its
operating deficit of some $18,000 for 1927 increased to over
$125,000 in 1928. There was a further decrease of over 26 percent
in passenger revenue in the first five months of 1929.
On June 2, 1926, the Transit Commission, pursuant to a program
of grade crossing abolition, ordered the elimination of four in and
near Flushing. There are twelve such crossings on the entire
branch, removal of all of which was in contemplation, and it was
estimated that to remove them would cost about $4,000,000, the
company's share being $2,000,000, which it could borrow from the
state at from 4 to 5 percent interest. The elimination of
Page 284 U. S. 366
the crossings would save $37,000 per year now spent for guarding
them. On December 31, 1928, the total value of land and
improvements on the portion of the branch sought to be abandoned
was approximately $933,000.
The company did not appeal from the order, as it might have
done, but formally offered to quitclaim to the City of New York
that portion of the branch which is involved in this proceeding.
The city did not accept the proffer. The effective date of the
grade separation order was postponed to December 31, 1928, and,
upon the Transit Commission's refusal further to extend the time
for compliance, the company, on January 10, 1929, filed with the
Interstate Commerce Commission its application under § 1 (18) of
the Interstate Commerce Act, as amended by the Transportation Act
of 1920, [Footnote 2
] for a
certificate permitting the abandonment of the 4.1 miles of the
branch extending from west of Flushing River to the terminus at
Whitestone Landing. After interventions by the Transit Commission,
the City of New York, and others, the matter was heard by an
examiner, whose proposed report was the subject of argument before
Division 4 of the Commission. It found in favor of the application,
and ordered that a certificate issue. [Footnote 3
During the hearing, the company proposed that it would
substitute truck service for the freight traffic to be affected by
the abandonment, and it would, if a franchise were granted it by
the City of New York, inaugurate a passenger bus service to the
towns on the branch, which would connect them with its station at
Flushing and with the terminus of the city's rapid transit line to
A reargument was granted before the full Commission, which
affirmed [Footnote 4
report of Division 4. Since, however, the interveners expressed
some doubt as to the company's
Page 284 U. S. 367
making satisfactory arrangements for bus service, the Commission
indefinitely suspended the order to afford opportunity for
negotiating the proposed bus franchise. The company promptly
applied to the proper authorities, agreeing to take a grant
terminable at short notice and on terms favorable both to the city
and to the traveling public. No response was made to its offer, and
no action was taken on its application. After waiting five months,
it applied to the Commission to take final action, setting forth
the neglect of the city to act in the matter. Thereupon, the
Commission ordered that its certificate should take effect 120 days
from June 17, 1931. [Footnote
By their bills, the State of New York and the Transit Commission
challenge the power of the Interstate Commerce Commission to issue
a certificate of public convenience and necessity in such a case as
is here presented, and assert that, if it has such power, the
proofs do not warrant its action.
It is claimed that the certificate has as its
sole basis the order of the State Transit Commission for the
removal of grade crossings; that the latter was valid and within
the state's constitutional right, regardless of its effect on
interstate commerce, and that the Interstate Commerce Commission
cannot destroy or impair this right, or hamper its exercise, by
authorizing an abandonment of the railroad's line. We think this
assertion is based upon a misconception of the Commission's action.
In ascertaining the public convenience and necessity, the
Commission was bound to weigh the benefit to accrue to interstate
commerce by the abandonment against the resultant prejudice and
injury to intrastate commerce. Colorado v. United States,
271 U. S. 153
271 U. S. 168
The finding was that continued operation would result in a serious
and increasing depletion of revenue due to the competition
Page 284 U. S. 368
by the city's rapid transit lines and their probable extension
which would entail an unreasonable burden on interstate commerce.
It was found that the expenditure for removal of grade crossings
would, in the circumstances, be a waste of the company's funds, and
that the requirement of the State Transit Commission removed all
doubt of the propriety of abandonment of the branch. The magnitude
of the required outlay as compared with the value of the whole
property, and the resulting effect on the company's revenue, were
facts properly taken into account in passing on the application.
Compare Oregon R. & N. Co. v. Fairchild, 224 U.
, 224 U. S. 529
Lehigh Valley R. Co. v. Board of Commissioners,
278 U. S. 24
278 U. S. 34
New Orleans Public Service v. New Orleans, 281 U.
, 281 U. S.
In reaching these conclusions, the Commission considered the
needs of the communities served, and gave due regard to them. It
was shown that the city authorities had refused to take over the
line, when the company offered to convey it, on the ground that the
territory could be adequately served by bus transportation.
Moreover, the company could not maintain satisfactory schedules on
the branch, because of congestion in the tunnels under the East
River, and, without better schedules, could not hope to increase
use of this line . It was in evidence that the company's offer to
establish an adequate bus system had not been accepted by the city
authorities. There was other proof, which need not be detailed, as
to the intrastate traffic needs. All these matters were given due
consideration by the Commission in reaching its ultimate
conclusion. It followed the course outlined in Colorado v.
United States, supra,
and the claim that its action was beyond
its authority and without warrant of law cannot be sustained. That
decision requires a holding that appellant's assertion of
unconstitutional invasion of the state's sovereignty is without
merit. We need not elaborate what was there said on the subject (
271 U. S. 271
Page 284 U. S. 369
Appellants insist that the Commission's
findings and conclusions, assuming that its order was within its
powers, lack support in the evidence. They say the proofs show the
continued operation of the branch will not prejudice, burden,
obstruct, or interfere with interstate commerce, or lessen the
ability of the carrier to serve that commerce, and, since it is
shown that the abandonment will cause prejudice to several
communities, the certificate should not have been granted. There is
no contradiction of the fact that the branch is operating at a
serious loss, as shown by the carrier's accounts offered in
evidence, and that this will continue and increase from year to
year and be aggravated by expenditures for the removal of grade
crossings. Appellants criticize the allocation of certain rentals
and overheads by the company, and point to evidence produced by
them indicating that the operating losses are in fact much less
than those claimed by the carrier. The Commission, however,
concluded that the railroad's figures came nearer representing the
true situation than those offered by the intervenors. The latter
further assert that the intrastate passenger traffic of the
railroad constitutes by far the greater and more profitable portion
of its business; that the interstate traffic represents only about
sixteen percent of its gross revenue and is unprofitable; that the
system as a whole has large net earnings and is a successful
enterprise, and that the Commission was in error in considering
incidental and dependent interstate traffic as an excuse for
federal interference with a highly remunerative local traffic. They
seek thus to distinguish the present case from Colorado v.
United States, supra,
and assert that the Commission ignored
the test there approved and acted upon the erroneous theory that
proof that the continuance of the Whitestone branch would
constitute a burden on interstate commerce was unnecessary.
We do not so read the Commission's report. That body professed
to follow the decision in the Colorado
Page 284 U. S. 370
we think that it did so. The court there held that, in the
issuance of a certificate of public convenience and necessity, the
Commission need not determine with mathematical exactness the
extent of the burden imposed upon interstate commerce by the
operation of a branch line; that such burden might involve various
elements, and that, if upon the whole proof, the conclusion was
warranted that continued operation would in fact unreasonably
burden the interstate commerce of the carrier, the Commission was
justified in authorizing abandonment. There, as here, the system
lay wholly within the state, and was prosperous, and no claim was
made that immediate abandonment of the local branch was necessary
to enable the carrier to earn a reasonable return on its
investment. Here, as in the Colorado
case, the Commission
had regard for the needs of intrastate, as well as interstate,
commerce. The evidence was ample to give a comprehensive view of
the entire situation, and due weight was accorded all of the proofs
in the light of the conflicting requirements. The contention that
the Commission went upon the theory that it might authorize
abandonment in disregard of the evidence is not supported by the
The judgment must be
^1. Pursuant to U.S.C. Tit 28.
U.S.C. Tit. 49, § 1 (18).
162 I.C.C. 363.
166 I.C.C. 671.
175 I.C.C. 163.