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.
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.
(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.
(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.
(c) Nashville, C. & St.L. R. Co. v. Walters,
294 U. S. 405
distinguished. Pp. 346 U. S.
(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.
Page 346 U. S. 347
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.
MR. JUSTICE MINTON delivered the opinion of the Court.
These cases present the same questions of law, and will be
disposed of together. The Public Utilities Commission of California
entered orders [Footnote 1
authorizing the construction of certain grade separation
improvements and allocating the costs therefor, pursuant to § 1202
Page 346 U. S. 348
Public Utilities Code of California. [Footnote 2
] On petitions to the Supreme Court of
California, that court denied review of the Commission's orders,
] and these appeals
followed. We postponed jurisdiction until a hearing on the
We think the Commission's orders must be treated as an act of
the legislature for purposes of determining our jurisdiction under
28 U.S.C. § 1257(2). Live Oak Water Users' Assn. v. Railroad
Commission, 269 U. S. 354
269 U. S. 356
Lake Erie & Western R. Co. v. Public Utilities
Commission, 249 U. S. 422
249 U. S. 424
The Commission has construed § 1202 as authorizing these orders.
The appellants presented squarely to the Supreme Court of
California their contention that, in the allocation of costs, these
orders take their property without due process of law and are so
arbitrary and burdensome as to constitute an interference with
interstate commerce, in violation of
Page 346 U. S. 349
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.
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
In this case, the Commission authorized the enlarging of two
existing railroad underpasses where the Santa Fe tracks cross
Washington Boulevard in Los Angeles. These underpasses were
constructed in 1914 under an agreement between the railroad and the
City providing that each party was to pay one-half of the cost. The
Commission found the structures to be 75% depreciated. When
constructed, their chief utility was to facilitate access to a
garbage reduction plant. Washington Boulevard is now one of the
main east and west thoroughfares of Los Angeles, and other streets
and highways feed into it. It is not a part of the State highway
system nor is it a freeway. The grade separations concerned here
are in one of the principal industrial districts of the City, and
are a traffic bottleneck. For most of its length, Washington
Boulevard is 60 feet wide, but at the site in question, the roadway
narrows to 20 feet, with a vertical clearance of less than 14 feet.
The City's easement at this point is 90 feet. As improved, two
33-foot roadways and two 7-foot sidewalks will be provided, and the
underpasses will be heightened. The improvement is being made
Page 346 U. S. 350
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,"
] 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%.
This case does not differ materially from Case No. 22 except
that, here, a grade crossing will be replaced by an underpass. Los
Feliz Boulevard runs in a northeast-southwest direction, crossing
at grade five Southern Pacific tracks approximately at the boundary
of the cities of Los Angeles and Glendale. The street becomes known
as Los Feliz Road in Glendale. Los Feliz is not a part of the State
highway system, nor is it a freeway, but, like Washington
Boulevard, is an access street for adjacent properties and for
other streets feeding into it in this congested area and as a
through street has reached capacity. When the crossing is blocked
by trains, 38 or more
Page 346 U. S. 351
vehicles may back up in each of three lanes, causing a
"backlash" on San Fernando Road, 820 feet distant. The crossing now
has manually operated crossing gates, and several relatively minor
accidents have occurred there during the last 25 years. The plan
approved by the Commission passes the street under the railroad
tracks, with two 40-foot roadways, separated by a median strip and
with 5-foot sidewalks on each side. The structure when completed
will be 105 feet wide. The total cost necessitated by the presence
of the tracks was estimated at $1,493,200. The Commission ordered
that 50% be borne by the railroad, 25% by Los Angeles County, and
12 1/2% each by the cities of Los Angeles and Glendale.
Construction of the grade separation was found by the Commission to
be "in the interest of public safety, convenience and necessity. .
. ." [Footnote 6
In each of these cases, the railroads introduced evidence
intended to show that their share of the costs should be based on
benefits received, and that they would receive little or no benefit
from the construction. For the most part, this evidence related to
the nature of the traffic on the boulevards, the fact that the
improvements are required primarily to facilitate traffic flow on
the streets, the "revolution" in transportation that has occurred
since the early part of this century and its effect on the reasons
for constructing grade separations and on the financial position of
railroads, the competition afforded railroads by motor vehicles
utilizing the public streets and highways, and the effect of the
proposed construction on operation of the railroads. The appellants
contended that the costs should be distributed on the basis of
benefits, and, since the railroads would receive little or no
benefits, they should be required to pay only a small part of the
costs or nothing, as the case may be. The cities contended in both
cases that the railroads should bear all the costs attributable
Page 346 U. S. 352
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.
; 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
Rather, in the cases at bar, the improvements were instituted by
the State or its subdivisions to meet local transportation needs
and further safety and convenience, made necessary by the rapid
growth of the communities. In such circumstances, this Court has
consistently held that, in the exercise of the police power, the
cost of such improvements may be allocated all to the railroads.
Erie R. Co. v. Board, 254 U. S. 394
254 U. S.
-411; Missouri Pacific R. Co. v. Omaha,
235 U. S. 121
235 U. S. 127
Chicago, M. & St. P. R. Co. v. Minneapolis,
232 U. S. 430
232 U. S. 441
Cincinnati, I. & W. R. Co. v. Connersville,
218 U. S. 336
218 U. S. 344
There is the proper limitation that such allocation of costs mush
be fair and reasonable. Nashville, C. & St.L. Ry. v.
Walters, 294 U. S. 405
294 U. S. 415
and the cases there cited. This was the standard applied by the
Page 346 U. S. 353
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
The appellants rely heavily on the Nashville
but that decision is in accord with the long
established rule which we here follow and which the Commission
applied. As this Court said in the Nashville
claim of unconstitutionality rests wholly upon the special facts
here shown." 294 U.S. at 294 U. S. 413
In that case, the railroad's share of the cost was fixed at 50% by
a Tennessee statute, and no consideration was given by the Supreme
Court of Tennessee as to whether the application of the statutory
amount was unreasonable under the special facts advanced. The grade
separation ordered in the Nashville case was located in the rural
community of Lexington, Tennessee, which had a population in 1910
of 1,497, in 1920 of 1,792, and in 1930 of 1,823. The improvement
was not required to meet the transportation needs of Lexington, and
was being constructed without regard to that community's growth or
to considerations of public safety and convenience resulting from
such growth. The highway there under improvement was part of the
State highway system, and the grade was to be removed primarily as
part of economic and engineering planning and to qualify the
improvement of the highway for federal aid. Other facts offered
pointed principally to the state and nationwide nature of the
highway system and the particular highway there involved, the
competition afforded railroads by the users of such highways
Page 346 U. S. 354
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.
As stated by this Court,
"[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."
294 U.S. at 294 U. S. 413
Thus, the contention of the railroad and the rule recognized by
this Court in the Nashville opinion was that there could be an
allocation of costs subject to the limitation that they be
allocated always with regard to the rule against unreasonableness
and arbitrariness. The judgment of the Supreme Court of Tennessee
was reversed, and the case remanded thereto because that court had
refused to consider whether the special facts shown
"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.
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.
Page 346 U. S. 355
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.
, 303 U. S. 187
No conflict with federal regulation is involved here. See
Lehigh Valley R. Co. v. Board, 278 U. S.
, 278 U. S.
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.
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
The judgments of the Supreme Court of California are
THE CHIEF JUSTICE took no part in the consideration or decision
of these cases.
* Together with No. 43, Southern Pacific Co. v. Public
Utilities Commission of California et al.,
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
"§ 1202. Exclusive powers of commission. The commission has the
"(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."
Deering's Cal.Pub.U.C.A., 1951.
40 Adv.Cal., No. 2, Minutes, 1; 40 Adv.Cal., No. 15, Minutes,
51 Cal.P.U.C. 771, 779.
51 Cal.P.U.C. 788, 795.