The Interstate Commerce Commission, under §§ 13a(2) of the
Interstate Commerce Act, authorized appellant railway company to
discontinue two intrastate passenger trains, which provided the
last remaining railway passenger service between two cities, having
found that the service constituted an undue burden on interstate
commerce and that the present or future public convenience and
necessity permitted discontinuance of the service. A three-judge
District Court set aside the Commission's order on the ground that
the Commission had applied erroneous legal standards by not taking
proper account of the freight profits on the line and the overall
prosperity of the carrier.
Held:
1. Under § 13a(2), the Commission need not give effect to the
prosperity of the intrastate operations of the carrier as a whole
or any particular segment thereof in determining whether the
operation of a specific intrastate train or service imposes an
unjust or undue burden on interstate commerce. P.
376 U. S.
104.
2. The Commission may properly give varying weights to the
overall prosperity of the carrier in different situations,
balancing public convenience and necessity against undue burdens on
interstate commerce.
Colorado v. United States,
271 U. S. 153.
Where the demands of public convenience and necessity are slight,
as in this case, it is proper under § 13a(2) for the Commission, in
determining the existence of a burden on interstate commerce, to
give little weight to the carrier's overall prosperity. Pp.
376 U. S.
104-105.
210 F.
Supp. 675, reversed.
Page 376 U. S. 94
MR. JUSTICE STEWART delivered the opinion of the Court.
In 1959, the appellant Southern Railway Company filed a petition
with the North Carolina Utilities Commission for an order
permitting it to discontinue operation of two intrastate passenger
trains between Greensboro and Goldsboro, North Carolina, a distance
of about 130 miles. The trains in question are No. 16, which
operates eastbound in the morning from Greensboro to Goldsboro, and
No. 13, consisting of the same equipment, which operates westbound
in the late afternoon. Since 1958, these two trains have provided
the last remaining railway passenger service between the two
communities. The State Commission denied the petition, and its
decision was upheld by the North Carolina Supreme Court.
State
of North Carolina ex rel. Utilities Commission v. Southern Railway
Co., 254 N.C. 73,
118 S.E.2d
21 (1961).
Thereafter, the railway company filed a petition with the
Interstate Commerce Commission pursuant to § 13a(2)
Page 376 U. S. 95
of the Interstate Commerce Act, [
Footnote 1] seeking authority to discontinue operation of
the trains. After a hearing at which several protestants, including
the State of North Carolina, appeared, the examiner recommended
that the petition be granted. Division 3 of the Commission agreed
with the examiner, and ordered discontinuance of the trains. The
Division issued a report in which it found,
inter alia,
that the trains, which in 1948 had carried 56,739 passengers,
carried only 14,776 passengers in
Page 376 U. S. 96
1960, the last full year for which figures were available; that
the direct expenses of operating the trains during the latter year
were over three times their total revenue; that discontinuance of
the trains would result in savings of at least $90,589 per year;
that the need shown for these trains was relatively insubstantial
when viewed in light of the density of the population of the area
served; that existing alternate transportation service by rail,
bus, airline, and other means was reasonably adequate; and that the
discontinuance of the passenger train service would not seriously
affect the industrial growth of the area. Against the background of
these findings, the examiner and Commission considered, but gave
"little or no weight" to the overall prosperity of the carrier. The
Commission's basic conclusions were summed up as follows:
"that the public will not be materially inconvenienced by the
discontinuance of the service here involved; that the savings to be
realized by the carrier outweigh the inconvenience to which the
public may be subjected by such discontinuance; that such savings
will enable the carrier more efficiently to provide transportation
service to the public which remains in substantial demand; and that
the continued operation of trains Nos. 13 and 16 would constitute a
wasteful service, and would impose an undue burden on interstate
commerce."
317 I.C.C. 255, 260.
After a petition for reconsideration by the entire Commission
had been denied, the protestants instituted an action in a
three-judge District Court seeking to set aside the order of the
Commission. The court held, first, that it was erroneous as a
matter of law for the Commission to order discontinuance of
passenger trains under the provisions of § 13a(2) without first
determining whether, once the profits from freight operations
on
Page 376 U. S. 97
the same line were taken into account, "the particular segment
of the railway involved is contributing its fair share to the
overall company operations. . . ."
210 F.
Supp. 675, 688. The court also proceeded to find,
inter
alia, that, "[t]aking into account total operation of this
line, there is a profit not a loss, a benefit, not a burden," 210
F. Supp. at 688; that passenger traffic had slightly increased
during the first five months of 1961; that the carrier had done
little to promote the use of the passenger trains; that continued
existence of the alternative of railway passenger service might be
considered a necessity under such circumstances as airline strikes
or bad weather; and that, in light of the overall prosperity of the
Southern Railway Company, "[t]he effect of the losses of the
Greensboro-Goldsboro passenger service on the financial structure
of the railroad is inconsequential." [
Footnote 2] 210 F. Supp. at 688. On this basis, although
it explicitly refused to set aside any of the subsidiary findings
of fact on which the Commission's order was based, 210 F. Supp. at
689, 690, the court held that
"the ultimate conclusions of the Interstate Commerce Commission
that the service in question constitutes an undue burden on
interstate commerce and that the present or future public
convenience and necessity permits such discontinuance . . . are
arbitrary and capricious because . . . not supported by
Page 376 U. S. 98
substantial evidence,"
210 F. Supp. at 689. The court itself then concluded that
discontinuance was not warranted. It therefore set aside the
Commission's order and perpetually enjoined the carrier from
discontinuing the Greensboro-Goldsboro passenger trains. The United
States, the Interstate Commerce Commission, and the carrier all
appealed. We noted probable jurisdiction and consolidated the cases
for argument. 373 U.S. 907.
The District Court's action in setting aside the Commission's
conclusions as to public convenience and necessity and undue burden
on interstate commerce was explicitly based upon the court's view
that the Commission had applied erroneous legal standards in
reaching those conclusions. The court did not question that the
Commission's subsidiary findings of fact were supported by a
substantial evidentiary foundation. It simply disagreed with the
Commission as to the kind of evidence required to support an order
permitting discontinuance of an intrastate passenger train under §
13a(2).
The court reached its conclusion that the Commission had erred
in not taking into account profits from freight operations along
the Greensboro-Goldsboro line primarily in reliance upon this
Court's decisions in
Public Service Comm. of Utah v. United
States, 356 U. S. 421, and
Chicago, Milwaukee, St. P. & P.R. Co. v. Illinois,
355 U. S. 300.
Both those cases dealt with § 13(4), which requires the Commission
to change intrastate rates wherever such rates are found to
discriminate against interstate commerce. This Court held in those
cases that the Commission could not authorize higher intrastate
rates either for passenger or freight operations without first
taking into account the revenues derived by the carrier from the
totality of intrastate operations. In 1958, the year in which §
13a(2) was enacted, § 13(4) was amended to
Page 376 U. S. 99
permit the Commission to act
"without a separation of interstate and intrastate property,
revenues, and expenses, and without considering in totality the
operations or results thereof of any carrier . . . wholly within
any State. [
Footnote 3]"
The District Court's holding that the same kind of data should
be considered in § 13a(2) proceedings was premised upon the fact
that no language similar to that of the 13(4) amendment was
included in § 13a(2), and that proceedings under the latter
provision, which permits discontinuance of given operations, have a
far more serious impact upon intrastate passengers than proceedings
under the former, which provides only for an increase in the rates
to be charged.
But when § 13(4) was amended in 1958 as a result of the two
decisions relied on by the District Court, Congress was simply
reaffirming what it conceived as the original intent of the
section. [
Footnote 4] There is
therefore no reason to
Page 376 U. S. 100
assume that Congress regarded the new language as embodying a
standard which had to be specifically incorporated into every
statutory provision to which it was intended to apply.
The legislative history clearly indicates that Congress, in
enacting § 13a(2), was addressing itself to a problem quite
distinct from that reflected by overall unprofitable operation of
an entire segment of railroad line. The Commission already had
authority prior to 1958, under §§ 1(18)-(20), [
Footnote 5] to authorize discontinuance of all
services on any given intrastate line where continuance of
Page 376 U. S. 101
such services would impose an undue burden on interstate
commerce.
Colorado v. United States, 271 U.
S. 153. However, the Commission totally lacked power to
discontinue particular trains or services while leaving the
remaining services in operation. It was precisely this gap which §
13a(2) was intended to fill.
New Jersey v. New York, S. &
W. R. Co., 372 U. S. 1,
372 U. S. 5-6. As
both the House and Senate Committee Reports on the legislation
which became § 13a(2) make clear, Congress was primarily concerned
with the problems posed by passenger services for which significant
public demand no longer existed and which were consistently
deficit-producing, thus forcing the carriers to subsidize their
operation out of freight profits. [
Footnote 6] Far from permitting the carrier's need for
discontinuance of passenger services to be balanced against profits
from other operations conducted
Page 376 U. S. 102
along the same line, the bill, as originally reported by the
Senate Committee, would have required the Commission to permit
discontinuance, even if there was great public need for the
service, so long as the continued operation of a particular service
would result in a net loss to the carrier. [
Footnote 7] Senator Javits unsuccessfully attempted to
amend the bill on the floor of the Senate to delete the net loss
standard and to substitute a requirement that the Commission
balance the public need for the service against the deficit
resulting from it. [
Footnote 8]
Such an amendment, proposed by Chairman Harris of the House
Interstate and Foreign Commerce Committee, was adopted by the
House, [
Footnote 9] and
accepted by the Senate in conference. The deletion of the net loss
standard, however, by no means implied that freight profits along a
given line could be offset against deficits incurred by passenger
services for purposes of determining whether the latter constituted
an undue burden on interstate operations or commerce. As
Congressman Harris made clear after his amendment had been
accepted, the situation "we are trying to get at" is that in which
"the [freight] shippers of this country are making up a deficit
every year . . . in losses in passenger service." [
Footnote 10]
The bill as originally reported by the Senate Committee would
have applied the net loss standard to both interstate and
intrastate operations, the Committee Report having concluded that
state regulatory bodies required
Page 376 U. S. 103
"the maintenance of uneconomic and unnecessary services and
facilities." [
Footnote 11]
The bill was amended on the Senate floor to limit the Commission's
discontinuance authority to interstate trains, [
Footnote 12] and the House version of the
bill was similarly limited. [
Footnote 13] In conference, however, the Commission's
authority over intrastate trains was restored and, except for
differences in the procedures prerequisite to a hearing in the case
of a wholly intrastate train, [
Footnote 14] the Commission was required to apply the
same standard to interstate and intrastate operations in
determining whether discontinuance of a train or service is
justified. [
Footnote 15]
Contrary to the suggestion of the District Court that its
interpretation of § 13a(2) must be accepted to avoid "requir[ing]
the intrastate operations to bear more than their share," 210 F.
Supp. at 680, the statutory scheme which Congress has embodied in §
13a thus prescribes precisely the same substantive standard to
govern discontinuance of either interstate or intrastate
operations. [
Footnote
16]
Page 376 U. S. 104
All that need properly be considered under this standard, as
both the language and history of § 13a(2) thus make abundantly
clear, is what effect the discontinuance of the specific train or
service in question will have upon the public convenience and
necessity and upon interstate operations or commerce. As the
Commission has correctly summed up the matter in another case:
"The burden [upon the carrier's interstate operations or upon
interstate commerce, as expressed in section 13a(2)] . . . is to be
measured by the injurious effect that the continued operation of
the train proposed for discontinuance would have upon interstate
commerce. As is indicated by its legislative history, the purpose
of section 13a(2) is to permit the discontinuance of the operation
of services that 'no longer pay their way and for which there is no
longer sufficient public need to justify the heavy financial losses
involved.' (S.Rep. 1647, 85th Cong.). Nowhere in section 13a(2) or
elsewhere in the law is there any requirement that the prosperity
of the intrastate operations of the carrier as a whole, or any
particular segment thereof, must be given effect in determining
whether the operation of an individual intrastate train imposes an
unjust and undue burden on interstate commerce. To hold otherwise
would be contrary to the apparent intent of the Congress."
Southern Pac. Co., Partial Discontinuance, 312 I.C.C.
631, 633-634 (1961).
This Court has long recognized that the Commission may properly
give varying weights to the overall prosperity
Page 376 U. S. 105
of the carrier in differing situations. Thus, in
Colorado v.
United States, 271 U. S. 153,
which also involved a situation in which the Commission was
required to balance public convenience and necessity against undue
burdens on interstate commerce, it was specifically noted that,
"In many cases, it is clear that the extent of the whole
traffic, the degree of dependence of the communities directly
affected upon the particular means of transportation, and other
attendant conditions are such that the carrier may not justly be
required to continue to bear the financial loss necessarily
entailed by operation. In some cases . . . 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."
271 U.S. at
271 U. S.
168-169. In cases falling within the latter category,
such as those involving vital commuter services in large
metropolitan areas where the demands of public convenience and
necessity are large, it is, of course, obvious that the Commission
would err if it did not give great weight to the ability of the
carrier to absorb even large deficits resulting from such services.
But where, as here, the Commission's findings make clear that the
demands of public convenience and necessity are slight, and that
the situation is, therefore, one falling within the first category
delineated in
Colorado, it is equally proper for the
Commission, in determining the existence of the burden on
interstate commerce, to give little weight to the factor of the
carrier's overall prosperity.
Whatever room there may be for differing views as to the wisdom
of the policy reflected in § 13a(2), it is the duty of the
Commission to effectuate the statutory scheme. We cannot agree with
the District Court that the Commission departed in any respect from
that duty
Page 376 U. S. 106
here. We therefore reverse the judgment of the District Court,
and remand with instructions to reinstate the report and order of
the Commission.
Reversed.
* Together with No. 93,
United States et al. v. North
Carolina, et al., also on appeal to the same court.
[
Footnote 1]
Section 13a(2) of the Interstate Commerce Act, 49 U.S.C. §
13a(2), provides in pertinent part:
"Where the discontinuance or change, in whole or in part, by a
carrier or carriers subject to this chapter, of the operation or
service of any train or ferry operated wholly within the boundaries
of a single State is prohibited by the constitution or statutes of
any State or where the State authority having jurisdiction thereof
shall have denied an application or petition duly filed with it by
said carrier or carriers for authority to discontinue or change, in
whole or in part, the operation or service of any such train or
ferry or shall not have acted finally on such an application or
petition within one hundred and twenty days from the presentation
thereof, such carrier or carriers may petition the Commission for
authority to effect such discontinuance or change. The Commission
may grant such authority only after full hearing and upon findings
by it that (a) the present or future public convenience and
necessity permit of such discontinuance or change, in whole or in
part, of the operation or service of such train or ferry, and (b)
the continued operation or service of such train or ferry without
discontinuance or change, in whole or in part, will constitute an
unjust and undue burden upon the interstate operations of such
carrier or carriers or upon interstate commerce. When any petition
shall be filed with the Commission under the provisions of this
paragraph, the Commission shall notify the Governor of the State in
which such train or ferry is operated at least thirty days in
advance of the hearing provided for in this paragraph, and such
hearing shall be held by the Commission in the State in which such
train or ferry is operated; and the Commission is authorized to
avail itself of the cooperation, services, records and facilities
of the authorities in such State in the performance of its
functions under this paragraph."
[
Footnote 2]
It should be noted, in connection with the findings made by the
District Court, that the Commission had noted that the increase in
passenger traffic during 1961 was largely due to group movements of
school children; that, as to Southern's failure to seek passengers,
"prospective patrons who must be coaxed to use a service have no
urgent need for it"; and that, after a broad study and
investigation in 1959, the Commission had concluded that "public
convenience and necessity" does not require the maintenance of
deficit passenger services as a standby service for travelers who
customarily travel by highway or by air.
Railroad Passenger
Train Deficit, 306 I.C.C. 417, 482.
[
Footnote 3]
49 U.S.C. § 13(4), as so amended, provides in pertinent
part:
"Whenever in any such investigation the Commission, after full
hearing, finds that any such rate, fare, charge, classification,
regulation, or practice causes any undue or unreasonable advantage,
preference, or prejudice as between persons or localities in
intrastate commerce, on the one hand, and interstate or foreign
commerce, on the other hand, or any undue, unreasonable, or unjust
discrimination against, or undue burden on, interstate or foreign
commerce (which the Commission may find without a separation of
interstate and intrastate property, revenues, and expenses, and
without considering in totality the operations or results thereof
of any carrier, or group or groups of carriers wholly within any
State), which is hereby forbidden and declared to be unlawful, it
shall prescribe the rate, fare, or charge, or the maximum or
minimum, or maximum and minimum, thereafter to be charged, and the
classification, regulation, or practice thereafter to be observed,
in such manner as, in its judgment, will remove such advantage,
preference, prejudice, discrimination, or burden. . . ."
[
Footnote 4]
"[I]t is the possible interpretation of these recent court
decisions that would create a change in the present regulatory
scheme." H.R.Rep. No. 2274, 85th Cong., 2d Sess., 12.
[
Footnote 5]
49 U.S.C. § 1(18) provides in pertinent part:
"No carrier by railroad subject to this chapter shall undertake
the extension of its line of railroad, or the construction of a new
line of railroad, or shall acquire or operate any line of railroad,
or extension thereof, or shall engage in transportation under this
chapter over or by means of such additional or extended line of
railroad, unless and until there shall first have been obtained
from the Commission a certificate that the present or future public
convenience and necessity require or will require the construction,
or operation, or construction and operation, of such additional or
extended line of railroad, and no carrier by railroad subject to
this chapter shall abandon all or any portion of a line of
railroad, or the operation thereof, unless and until there shall
first have been obtained from the Commission a certificate that the
present or future public convenience and necessity permit of such
abandonment."
49 U.S.C. § 1(19) provides in pertinent part:
"The application for and issuance of any such certificate shall
be under such rules and regulations as to hearings and other
matters as the Commission may from time to time prescribe, and the
provisions of this chapter shall apply to all such
proceedings."
49 U.S.C. § 1(20), provides in pertinent part:
"The Commission shall have power to issue such certificate as
prayed for, or to refuse to issue it, or to issue it for a portion
or portions of a line of railroad, or extension thereof, described
in the application, or for the partial exercise only of such right
or privilege, and may attach to the issuance of the certificate
such terms and conditions as in its judgment the public convenience
and necessity may require."
[
Footnote 6]
"A major cause of the worsening railroad situation is the
unsatisfactory passenger situation. Not only is the passenger end
of the business not making money -- it is losing a substantial
portion of that produced by freight operations."
"
* * * *"
"It is obvious that, in very great measure, these passenger
losses are attributable to commuter service. . . . It is
unreasonable to expect that such service should continue to be
subsidized by the freight shippers throughout the country."
"There are substantial losses, however, occurring in passenger
service beyond those attributable solely to commuter service. Where
this passenger service . . . cannot be made to pay its own way
because of lack of patronage at reasonable rates, abandonment seems
called for."
H.R.Rep. No. 1922, 85th Cong., 2d Sess., 11-12.
"A most serious problem for the railroads is the difficulty and
delay they often encounter when they seek to discontinue or change
the operation of services or facilities that no longer pay their
way, and for which there is no longer sufficient public need to
justify the heavy financial losses entailed. The subcommittee
believes that the maintenance and operation of such outmoded
services and facilities constitutes a heavy burden on interstate
commerce."
S.Rep. No. 1647, 85th Cong., 2d Sess., 21.
[
Footnote 7]
S. 3778, 85th Cong., 2d Sess., 6.
See also the remarks
of Senator Smathers, Chairman of the Surface Transportation
Subcommittee, who made it clear that the net loss standard did not
refer to all operations on a line or all operations within a State,
but rather to "the loss from the particular operation the railroad
is rendering." 104 Cong.Rec. 10849.
[
Footnote 8]
See 104 Cong.Rec. 10846-10849.
See also pp.
10838-10839.
[
Footnote 9]
104 Cong.Rec. 12547-12548.
[
Footnote 10]
104 Cong.Rec. 12551.
[
Footnote 11]
S.Rep. No. 1647, 85th Cong., 2d Sess., 22.
[
Footnote 12]
104 Cong.Rec. 10862, 10864.
[
Footnote 13]
H.R. 12832, 85th Cong., 2d Sess., 10.
[
Footnote 14]
Under § 13a(2), which applies solely to intrastate trains, the
Commission may not authorize discontinuance until after the
appropriate state regulatory agency has been given an opportunity
to act and has failed or refused to authorize discontinuance.
See New Jersey v. New York, S. & W. R. Co.,
372 U. S. 1,
372 U. S. 4.
[
Footnote 15]
See 49 U.S.C. § 13a(1), (2).
[
Footnote 16]
The fact that Congress intended the same substantive standards
to be applied both to intrastate and interstate discontinuances
wholly vitiates appellees' argument that the Commission is required
to take into account, wherever presented, the profitability of
intrastate operations as a whole or any segment thereof whenever an
intrastate service is sought to be discontinued. Thus,
consideration of the overall prosperity of the carrier is
necessarily relevant to a determination of the degree to which a
deficit resulting from a given service constitutes an undue burden
on interstate commerce. But neither the profitability of such
freight operations as are fortuitously conducted on the same line
as a given passenger service nor the profitability of all
operations within any given State bears any practical relationship
either to the public's need for the service in question or to the
burden which the deficit imposes on interstate commerce.
MR. JUSTICE GOLDBERG, with whom THE CHIEF JUSTICE joins,
dissenting.
This case involves more than the fate of the 6:10 between
Greensboro and Goldsboro, North Carolina. It is the first
litigation to reach this Court concerning the criteria to be
applied by the Interstate Commerce Commission in proceedings
seeking discontinuance of intrastate passenger trains under §
13a(2) of the Interstate Commerce Act, 72 Stat. 571, 49 U.S.C. §
13a(2). This section provides that, where a State has failed or
refused to allow discontinuance of an intrastate passenger train,
the ICC may authorize the intrastate discontinuance if it finds
"that (a) the present or future public convenience and necessity
permit of such discontinuance . . . and (b) the continued operation
. . . will constitute an unjust and undue burden upon the
interstate operations of such carrier . . . or upon interstate
commerce."
The Court sustains the ICC in interpreting this provision to
mean that, in determining whether an unprofitable intrastate
passenger train shall be discontinued, the Commission need give:
(1) "little or no weight" to the overall prosperity of the carrier,
ante at
376 U. S. 96,
and (2) no consideration whatsoever to the profitability of "the
intrastate operations of the carrier as a whole, or any particular
segment thereof,"
ante at
376 U. S. 104.
[
Footnote 2/1] In my view the
standards employed by the Commission were not the proper ones.
Consequently, without intimating any opinion as to the merits of
the discontinuance application, I would remand the
Page 376 U. S. 107
case to the Commission for further consideration and appropriate
findings.
See, e.g., Interstate Commerce Comm. v. J-T Transport
Co., Inc., 368 U. S. 81,
368 U. S.
93.
Since "[p]assenger deficits have become chronic in the railroad
industry,"
Chicago, M., St. P. & P. R. Co. v.
Illinois, 355 U. S. 300,
355 U. S. 307,
the Court's decision will allow the Commission to authorize the
Nation's railroads to discontinue virtually all intrastate
passenger service -- including most commuter services. It is
difficult to conceive of a situation in this era of widespread bus,
airline and automobile transportation in which the Commission
cannot find that alternative services are more or less available to
handle the diminished railroad passenger traffic. Such a finding,
coupled with a "net loss" on the passenger trains, will meet the
discontinuance standard approved by the Court. The Court concludes
that this result has been mandated by Congress. If this were so,
there would be no basis for dissent, since I agree entirely with
the Court that,
"[w]hatever room there may be for differing views as to the
wisdom of the policy . . . , it is the duty of the Commission [and
the Court] to effectuate the statutory scheme."
Ante at
376 U. S. 105.
I do not believe, however, that it can be fairly concluded from the
statute or from its legislative history that Congress intended,
despite the ruling of a state authority, that intrastate passenger
trains could be discontinued on the basis of the slender showing
required by the ICC and approved by this Court.
The case turns upon the language and purpose of § 13a(2) of the
Interstate Commerce Act. This section was first enacted as part of
the Transportation Act of 1958. It is true, as the Court points
out, that this legislation reflects concern with "the worsening
railroad situation."
Ante at 101,
n 6. But it is far from accurate to conclude that
Congress was oblivious of the needs of the passenger public and of
the primary responsibility of
Page 376 U. S. 108
state commissions for the regulation of purely intrastate
service. Under § 13a(2), a railroad seeking to discontinue an
intrastate passenger train, as distinguished from an interstate
operation, must first apply to the appropriate state commission.
Only after the state commission has been given the opportunity and
has failed or refused to act is the ICC authorized to intervene.
The Commission may reverse the decision of the state agency only
upon findings, supported by substantial evidence, that the service
is not required by public convenience and necessity and that its
continuance will constitute "an unjust and undue burden . . . upon
interstate commerce." Senator Smathers, one of the bill's sponsors,
explained that § 13a(2):
"protected the right of the States, . . . by leaving to the
State regulatory agencies the right to regulate and have a final
decision with respect to the discontinuance of train service which
originated and ended within one particular State, except when it
could be established that intrastate service was a burden on
interstate commerce."
104 Cong.Rec. 15528.
In this case, the State of North Carolina points out that,
between 1951 and 1956, of 44 requests for discontinuance of
intrastate passenger trains, some emanating from appellant Southern
Railway, 42 were approved by the State. Indeed, on the line between
Greensboro and Goldsboro, Southern operated three pairs of
passenger trains until September, 1954. The State, on Southern's
application, authorized discontinuance of one pair of trains in
1954 and another pair in 1958. The two trains in question, No. 13
and No. 16, are the last remaining pair of east-west passenger
trains between the two communities. They are the only
interconnecting service at Greensboro for passengers from Goldsboro
and intermediate points with north-south trains on Southern's main
line. For such passengers, they furnish a convenient overnight
pullman
Page 376 U. S. 109
service to Washington, New York and other east coast cities, and
conserve working time for the traveler having business at the north
or south terminal cities. Trains 13 and 16 run on tracks leased by
Southern from the state-owned North Carolina Railroad Company. The
lease clearly contemplates both passenger and freight service.
Furthermore, as the Court recites in its opinion, while, during the
relevant year, Southern sustained a loss on its passenger service
on the line of approximately $90,000, it made a profit of over
$600,000 on freight on the same leased line, and an overall profit
on its entire system in excess of $36,000,000. While passenger
traffic on this line has declined in recent years, the traffic is
still substantial -- 14,776 passengers used the two trains in 1960,
an increase of more than 500 over the previous year -- and the area
served has been growing in population and industrial importance. On
these facts, the state agency denied Southern's request to
discontinue the two trains. In overruling the decision of the
State, the ICC, as already stated, gave "little or no weight" to
Southern's overall prosperity, and no consideration whatsoever to
its freight profits on the line. In my view, the Commission
wrongfully ignored these factors, and the Court errs in approving
this action of the Commission.
I read the Act and its history to require the Commission to take
into account all material factors established by evidence presented
by the parties and bearing on the issues of public need and burden
on interstate commerce. The three-judge District Court properly
observed that these issues are
"not susceptible of scientific measurement or exact formulae,
but the questions of degree and involve the balancing of
conflicting interests."
210 F.
Supp. 675, 684. I cannot comprehend how the Commission can
achieve a proper balance without fully considering the railroad's
relevant profit data. The issues -- whether the public need will
allow discontinuance of the
Page 376 U. S. 110
passenger service and whether continued operation will unduly
burden interstate commerce -- are interrelated. Under any common
sense view of the statute, the amount of the railroad's financial
loss on the two intrastate passenger trains cannot be considered in
isolation from its freight profits on that line, its intrastate
profits, or its overall prosperity. The words "unjust" and "undue"
clearly indicate that Congress intended that the mere fact that a
particular passenger train is operating at a loss --
i.e.,
is a burden -- would not, in itself, justify discontinuance of that
train. The burden must be "unjust" and "undue," and whether this is
so cannot be determined except in light of the total circumstances.
The final determination must be made by balancing all the relevant
factors -- "the effort being to decide what fairness to all
concerned demands."
Colorado v. United States,
271 U. S. 153,
271 U. S. 169.
As the decisions of this Court plainly indicate, this does not mean
that discontinuance is prohibited unless intrastate passenger and
freight service, considered together, show a net loss, or overall
profits are substantially impaired.
Colorado v. United States,
supra; Transit Comm'n v. United States, 284 U.
S. 360. Rather, freight profits and overall profits are
merely factors to be considered by the Commission in determining
whether the particular passenger loss constitutes an unjust and
undue burden on interstate commerce when balanced against the
public need. [
Footnote 2/2] Such
profits may not be the controlling factors, but, when presented,
they are to be considered.
Page 376 U. S. 111
The Court dealt with an aspect of the intrastate passenger
problem in
Chicago, M., St. P. & P. R. Co. v.
Illinois, 355 U. S. 300, and
Public Service Comm'n of Utah v. United States,
356 U. S. 421.
These cases involved the construction of § 13(4) of the Interstate
Commerce Act, which authorizes the Commission to change intrastate
rates whenever such rates discriminatorily burden interstate
commerce. In the
Chicago case, the Court said:
"[W]e do not think that the deficit from this single commuter
operation can fairly be adjudged to work an undue discrimination
against the Milwaukee Road's interstate operations without findings
which take the deficit into account in the light of the carrier's
other intrastate revenues from Illinois traffic, freight and
passenger. The basic objective of § 13(4), applied in the light of
§ 15a(2) to this case, is to prevent a discrimination against the
carrier's interstate traffic which would result from saddling that
traffic with an undue burden of providing intrastate services. A
fair picture of the intrastate operation, and whether the
intrastate traffic unduly discriminates against interstate traffic,
is not shown in this case by limiting consideration to the
particular commuter service in disregard of the revenue contributed
by the other intrastate services."
355 U.S. at
355 U. S.
307-308
Page 376 U. S. 112
The major premise of the opinion of the Court today, however, is
that Congress expressly overruled the
Chicago and
Public Service Commission cases by amending § 13(4) in the
Transportation Act of 1958. It is, of course, true that § 13(4) was
amended after these decisions to allow the ICC to determine that
intrastate railway rates discriminated against interstate
commerce
"without a separation of interstate and intrastate property,
revenues, and expenses, and without considering in totality the
operations or results thereof of any carrier . . . wholly within
any State."
72 Stat. 570, 49 U.S.C. § 13(4). I cannot agree, however, with
the Court's view that Congress, by so amending § 13(4), which deals
solely with rate cases, intended that there be read into § 13a(2),
which deals solely with discontinuances, language which was not
similarly incorporated. Section 13a(2) was initially enacted at the
same time that § 13(4) was amended. If Congress had intended that
the ICC need not consider all relevant factors in discontinuance
cases, the proposed § 13a(2) could easily have been altered to
include the language that was added to § 13(4) by amendment.
In any event, even if the differing language is to be understood
as importing the same standards, it seems to me that the Court
reads the amendment to § 13(4) too broadly. The legislative history
shows that Congress intended the amendment to allow the ICC to make
a decision under § 13(4) without considering the totality of the
carrier's operations when the parties have not presented these
facts to the Commission. When these data are presented, however,
and put in issue, the amended section would not permit the
Commission to ignore the evidence. The amendment provides that the
Commission may make its determination without a separation of
revenues. The permissive "may," read in light of the legislative
history, reflects the intent of Congress
"that
Page 376 U. S. 113
a decision of the Commission will not be upset simply because it
fails to find specifically these facts where they have not been put
in issue by the evidence before the Commission, but this does not
mean that such facts where relevant and pertinent are not to be
considered."
210 F.
Supp. 675, 682. This interpretation of the amendment is
supported by this Court's affirmance of the decision of the
three-judge District Court in
Utah Citizens Rate Ass'n v.
United States, 192 F. Supp.
12,
aff'd per curiam, 365 U.
S. 649. The District Court there said:
"We believe that a matter of procedure, rather than any
substantive change in the basic transportation policy of the
Congress, is involved. If this were not so, serious conceptual and
constitutional, and further practical, difficulties would be
invited. But there seems no reason why Congress cannot provide or
clarify a procedural factor to render more practical the formula it
has theretofore established, and which was, under existing law,
appropriately considered by the majority in [
Public Service
Comm'n of Utah v. United States, 356 U. S.
421]. In our opinion, the amendment in this area does no
more than to obviate the previously determined necessity of
affirmative findings or evidence showing that the intrastate
passenger deficit is not lower than the interstate or concerning
the profitableness of, or circumstances surrounding, segments of
intrastate operations with which the Commission was not immediately
concerned. The legislative history of the amendment bolsters this
view. There is nothing therein inconsistent with the further
recognition that, to rebut the
prima facie presumption
resulting from the amendment, those who claim intrastate traffic as
a whole is not discriminating against interstate commerce may show
as an affirmative matter favorable aspects of intrastate
operations. The dissenting
Page 376 U. S. 114
opinion to this effect referred to the then-pending bill couched
in the same language as that later adopted in the Transportation
Act of 1958, and the Committee, considering the pending
legislation, cited the dissenting opinion with apparent approval.
[
Footnote 2/3]"
192 F. Supp. at 18-20. The dissenting opinion referred to by the
court had said:
"Of course, those who contend that intrastate traffic as a whole
is not discriminating against interstate traffic may come forward
and show, as they may in respect to any claimed dissimilarity of
conditions surrounding interstate and intrastate traffic, some
favorable aspect of intrastate operations that the Commission
should take into account. In the absence of such a showing,
however, the Commission should be able to assume that
discrimination shown to exist as to the particular segments of
intrastate and interstate traffic with which the § 13(4) proceeding
is concerned is not offset by other conditions that this Court
speculates may affect wholly different segments of intrastate
commerce."
Public Service Comm'n of Utah v. United States, supra,
at
356 U. S.
462-463. It necessarily follows that, if § 13(4), with
its amendatory language, does not permit the Commission to ignore
evidence of all relevant facts actually offered by the parties in a
rate case, such evidence cannot be disregarded in a discontinuance
proceeding under § 13a(2) which lacks even the amending
language.
Finally, the legislative history of § 13a(2) plainly
demonstrates that the Court has mistaken the intent of Congress.
The bill initially considered by the Senate
Page 376 U. S. 115
provided that discontinuance would be denied and the continuance
approved if the Commission found that:
"the operation or service of such train . . . is required by
public convenience and necessity,
and that such operation or
service will not result in a net loss therefrom to the carrier or
carriers, and will not otherwise unduly burden interstate or
foreign commerce. . . ."
S. 3778, 85th Cong., 2d Sess. (Emphasis added.) As the Court
notes in its opinion, Senator Javits opposed this "net loss"
standard.
Ante at
376 U. S. 102. The Court, however, misses the import of
Senator Javits' view, which, since it ultimately prevailed, is
highly significant. The Senator objected on the ground that the net
loss criterion would authorize the discontinuance of any intrastate
commuter train which, considered by itself, showed a net loss. He
noted that, under the proposal, whenever a net loss was shown,
discontinuance could follow regardless of whether that loss unduly
burdened interstate commerce. The Senator analyzed the proposed
bill in a manner most relevant to the present case:
"It is my view, as the bill is now written, that question of law
[as to the meaning of 'net loss therefrom'] will be decided in
terms of a net loss on the particular section of a railroad which
is sought to be discontinued, rather than the net loss on the total
operations of the carrier of which that section of the road is a
part."
104 Cong.Rec. 10847. Senator Javits concluded that the bill
should be amended to insure that the ICC be given a
"balanced authority to deal with the situation
both in
respect to losses
and in respect to the public in the way
of convenience and necessity."
Id. at 10848. (Emphasis added.) Senator Smathers, a sponsor of
the proposed bill, did not deny the accuracy of Senator Javits'
interpretation. Indeed,
Page 376 U. S. 116
Senator Smathers responded: "We construe the words
net loss'
to mean the loss from the particular operation the railroad is
rendering." Id. at 10849. Although Senator Javits was
initially unsuccessful in his efforts to defeat the passage of the
net loss provision, his arguments prevailed, as the Court notes,
both in the House and in the final bill.
On the floor of the House, Representative Harris, Chairman of
the House Interstate and Foreign Commerce Committee, offered an
amendment deleting the net loss clause. It was argued that the bill
would:
"without this amendment, put the public entirely at the mercy of
the railroad by establishing a new standard for the discontinuance
of train service by a mere showing of a loss in the operation of
any train. . . . We cannot go so far afield as to say that, unless
every single item of service shows a profit, the railroad can
discontinue any service regardless of public convenience and
necessity."
Id. at 12547-12548. The deleting amendment prevailed in
the House, and, at Conference, the "net loss" provision of the
Senate bill was abandoned in favor of the House proposal. Congress,
therefore, in acting on the recommendations of Senator Javits and
Congressman Harris, specifically rejected the proposed net loss
standard. The Court today, however, appears to adopt in substantial
measure the rejected standard. [
Footnote 2/4] If, as the Court holds, the Commission
need
Page 376 U. S. 117
give "little or no weight" to the overall prosperity of the
carrier, and no consideration whatever to the profitability of its
total intrastate operations, it would seem that the governing
criterion in determining whether interstate commerce is unduly
burdened is the "net loss" on a particular passenger train.
[
Footnote 2/5] This certainly does
not allow the
Page 376 U. S. 118
ICC
"a balanced authority to deal with the situation
both
in respect to losses
and in respect to the public in the
way of convenience and necessity."
The result intended by Congress certainly cannot be achieved by
allowing the Commission to make a final ruling on a discontinuance
application without considering the question of undue or unjust
burden. [
Footnote 2/6] A "balanced
authority" for the ICC surely means that, before overriding state
action and authorizing the discontinuance of a wholly intrastate
passenger train, the Commission must consider all substantial
evidence presented by the parties and bearing upon whether the
discontinuance is consistent with public necessity
and
whether the continued operation will constitute an unjust and undue
burden upon interstate commerce. In making this determination, the
factors for the Commission to consider necessarily include the
character and population of the territory served; the passenger
traffic or lack of it; the alternative transportation facilities;
the losses on the passenger operation as compared with the revenue
from freight on the particular line and the revenue from intrastate
business, as well as the profitability of the railroad as a whole.
[
Footnote 2/7]
The requirement that the Commission consider such factors
certainly does not mean that it is precluded from
Page 376 U. S. 119
authorizing the abandonment of an uneconomic passenger train
because the remainder of the railroad's intrastate or overall
operations are profitable. [
Footnote
2/8] It means only that, in making its determination, the
Commission shall give appropriate consideration to all relevant
factors. One factor or a combination may prove controlling, but all
must be considered in making the statutory determination. This the
Commission refused to do, and therefore its isolated finding that
public convenience and necessity would permit a discontinuance was
insufficient, absent an appropriate consideration of the burden on
commerce, to sustain its conclusion.
Although I agree, for the reasons stated, with the three-judge
District Court in its interpretation of § 13a(2), I am nevertheless
of the view that that court misconstrued its reviewing role in
finding that the operation of the two trains between Greensboro and
Goldsboro served the public need and constituted no burden on
interstate commerce. The court should not have determined this
issue on the record before it, but should have remanded the case
for further proceedings by the Commission under the correct legal
standard.
See, e.g., Interstate Commerce Comm'n v. J-T
Transport Co., Inc., 368 U. S. 81,
368 U. S.
93.
[
Footnote 2/1]
See the statement of the hearing examiner set forth in
376 U.S.
93fn2/4|>note 4,
infra.
[
Footnote 2/2]
See Colorado v. United States, 271 U.
S. 153,
271 U. S.
168-169 (Brandeis, J.):
"In many cases, it is clear that the extent of the whole
traffic, the degree of dependence of the communities directly
affected upon the particular means of transportation, and other
attendant conditions are such that the carrier may not justly be
required to continue to bear the financial loss necessarily
entailed by operation. In some cases, although the volume 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. 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."
[
Footnote 2/3]
See the Conference Report, H.R.Rep. No. 2274, 85th
Cong., 2d Sess.
[
Footnote 2/4]
The report of the hearing examiner, which was accepted by the
Commission and is now approved by the Court, made it clear that a
net loss standard was utilized:
"At the hearing, protestants emphasized the fact that
petitioner's net railway operating income in 1960 was $36,107,599,
and that its net income alone from freight operations on the line
between Greensboro and Goldsboro averages $630,000, thus contending
that the overall prosperity of the petitioner, as well as its
intrastate freight operations, must be given effect in the
disposition of the issues involved herein. With these contentions
the examiner disagrees. The legislative history of section 13a(2)
indicates that the purpose thereof is to permit the discontinuance
of the operation of services that '
no longer pay their way
and for which there is no longer any public need to justify the
heavy financial losses involved' (S.Rep. 1647, 85th Cong.).
(Emphasis supplied). In considering a somewhat similar contention
in
Southern Pacific Co. -- Partial Discontinuance of Passenger
Trains, Los Angeles, etc. [312 I.C.C. 631], the Commission
made the following pertinent statement:"
"Nowhere in section 13a(2) or elsewhere in the law is there any
requirement that the prosperity of the intrastate operations of the
carrier as a whole, or any particular segment thereof, must be
given effect in determining whether the operation of an individual
intrastate train imposes an unjust and undue burden on interstate
commerce. To hold otherwise would be contrary to the apparent
intent of the Congress."
"In this same connection, the argument that losing passenger
operations must be supported by constantly increasing freight rates
is also untenable. In rejecting this argument, the Commission
stated that such 'theory of regulation would not be consonant with
the national transportation policy, and would be fraught with
disastrous possibilities.'
Great Northern Ry. Co.
Discontinuance of Service, 307 I.C.C. 59, 61. Similarly, the
fact that petitioner's system operations are profitable is entitled
to little or no weight. . . ."
[
Footnote 2/5]
This does not imply that either the Commission or the Court has
failed to acknowledge that a carrier must show that public
convenience and necessity will permit the requested discontinuance.
However, as I have indicated,
supra at
376 U. S. 107,
unless the Commission relates this finding as to public convenience
to an appropriate consideration of the burden issue, the
availability of alternative means of transportation coupled with
the fact of losses on diminished passenger traffic will suffice to
sanction discontinuances in virtually all cases.
[
Footnote 2/6]
Colorado v. United States, 271 U.
S. 153,
271 U. S.
168,
"The benefit . . . of the abandonment must be weighed against
the inconvenience. . . . Conversely, the benefits to particular
communities and commerce of continued operation must be weighed
against the burden thereby imposed upon other commerce."
[
Footnote 2/7]
The conclusion that § 13a(2) contemplates the weighing of such
factors is reinforced by the use of the same balancing approach
under §§ 1(18), 1(20), of the Interstate Commerce Act, 41 Stat.
477, 478, as amended, 49 U.S.C. §§ 1(18), 1(20). These provisions,
enacted in 1920, empower the ICC to permit abandonment of lines (as
distinguished from particular trains), where continued operation of
the entire intrastate line would burden interstate commerce.
See Colorado v. United States, supra; Transit Comm'n v. United
States, 284 U. S. 360.
[
Footnote 2/8]
The ICC has never been precluded from authorizing abandonment of
an uneconomic branch line (as distinguished from the particular
trains) merely because the remainder of the railroad's intrastate
operations were profitable.
See 376 U.S.
93fn2/7|>note 7,
supra.