In County of Mobile v. Kimball, 102 U.S. 691, 702, this court defined interstate commerce in the following language: "Commerce with foreign countries and among the States, strictly considered, consists in intercourse and traffic, including in these terms navigation and the transportation and transit of persons and property as well as the purchase, sale, and exchange of commodities."

Pomeroy in his work on "Constitutional law," Section 378, referring to the signification of the word "commerce" says: "It includes the fact of intercourse and traffic. The fact of intercourse and traffic, again, embraces all the means, instruments, and places by and in which intercourse and traffic are carried on, and, further still, comprehends the act of carrying them on at those places and by and with these means. The subject matter of intercourse or traffic may be either things, goods, chattels, merchandise or persons. All these may, therefore, be regulated." (Emphasis added.)

When we apply this definition of "commerce" to the intent of Congress as enunciated in the national transportation policy "all to the end of developing, coordinating, and preserving a national transportation system *** adequate to meet the needs of the commerce of the United States * * * (emphasis added), we must conclude that it embraces all the means and instruments by and in which traffic is carried on, and that all these may, therefore, be regulated.

The examiner is firmly convinced that the Commission should take an up-to-date and realistic approach to the very serious matter of adequacies of passenger-car and passenger-train service. As far back as 17 years ago in Barton v. Baltimore & O.R. Co., 280 I.C.C. 9, Commissioner Knudson observed:

In view of the important changed conditions in recent years respecting passenger traffic, I am of the opinion that we should reexamine in an appropriate proceeding the question of our jurisdiction to require safe and reasonably adequate service in those instances where passenger fares have been or are sought to be substantially increased.

Although it is difficult to understand why the Commissioner restricted the assumption of jurisdiction to increased fares, it is important to note that the Commissioner in 1950 was of the opinion that the Commission should reexamine the question of jurisdiction "in view of the important changed condition in recent years respecting passenger traffic."

Again, in All Commodities, New England to Chicago and St. Louis, 315 I.C.C. 419, 433, Commissioner Webb in his dissenting opinion stated, in part:

A good argument can always be made for the proposition that the settled policies of the Interstate Commerce Commission, whether the result of action or inertia, should be altered only by the Congress. The better view, in my opinion, is that the Congress, in delegating authority couched in such broad terms as "just and reasonable" intended the Commission to adjust its regulation in the light of changes in the industry and, whenever deemed necessary, to scuttle outmoded theories and practices without regard to their antiquity.

In annulling and setting aside the Commission's order in that proceeding, and thereby sustaining Commissioner Webb's dissenting expression, the Federal District Court, (221 F. Supp. 370), said:

It would appear that the Commission here invokes section 1(6) as a means of preserving a basis for the "value of service" concept in ratemaking referred to above, in a desire to hold to a part which has already slipped away beyond our reach.

In its reply to the petition of the state regulatory agencies, the respondent cites Wisconsin R.R. Comm'n v. Chicago, & N. W. Ry, 87 I.C.C. 195 (1924) in which the Commission concluded:

It is scarcely debatable that the broad provision of the Constitution with respect to commerce among the States rests in the Congress the power to regulate the operation of passenger trains, but as an instrumentality of that body we may exercise jurisdiction only within the limits of the power delegated to us. In the absence of specific language only the most unmistakable evidence of an intention to confer upon us power to act under given circumstances would warrant the assumption of such power through our own construction of the act. We accordingly find that jurisdiction to regulate the operation of passenger trains under the circumstances here presented has not been rested in us. The complaints will be dismissed.

This position taken a half century ago only serves to dramatize the need, under present conditions, for the Commission to carry out its duties and responsibilities in a purposeful and responsive manner. In N.Y., N.H. & Hartford R.R. Co., Et Al., (supra), the Court said: Nor will it do to say that if the past decisions of the Commission are to be changed, the job should be left to Congress. This is an erroneous view.

In Smith v. Interstate Com. Comm., 245 U.S. 33, 45, the Court said: The outlook of the Commission and its powers must be greater than the interest of the railroads or of that which may affect those interests. It must be as comprehensive as the interests of the whole country. If the problems which are presented to it therefore are complex and difficult, the means of solving them are as great and adequate as can be provided. Interstate Commerce Commission v. Chicago, R.I. & Pac. Ry., 218 U.S. 88, 103. And they must necessarily be expressed in generalities. A precise specification of powers might work a limitation and all not enumerated be asserted to be withheld. (Emphasis added.)

The examiner concludes that this Commission does have jurisdiction under section 12(1) of the act to institute this investigation proceeding; that it does have authority to exercise jurisdiction and control over passenger-car and passenger-train service operated in interstate commerce, and that this authority is found in section 1(4) of the act; and that the present general sub-standard condition of the railroad passenger service in the United States requires the exercise of such jurisdiction on its own motion or upon proper complaint by State regulatory bodies or the general public. Motions made by the the Southern Pacific Company at the oral hearing, and renewed on brief, to dismiss the proceeding for lack of jurisdiction is denied.

CONTENTION OF STATE REGULATORY COMMISSIONS

The petitioning States argue that in spite of other forms of transportation available, there is still a useful and necessary place for passenger trains and that the carrier has an obligation to provide good passenger service.

They assert that the S. P. has, over a period of years, consistently downgraded, discouraged the use of, and eroded the quality of its passenger rail service. It is further stated that is appeared that this downgrading of service was part of a systematic plan by the carrier to create intolerable service conditions, thereby discouraging passenger traffic. The resulting revenue loss would support its applications for discontinuances of certain trains.

The petitioners argue that even though the S. P. denies an intention to withdraw completely from the service but would continue to run trains that the public shows it needs and wants, its real reason for its policy on passenger service is that it believes such service is not as profitable as its freight business.

Furthermore, the carrier's lines would never have been constructed in the first instance if it were not for valuable land grants and the power of eminent domain. It is argued that for many years the S. P. was an absolute transportation monopoly. While there are now other forms of transportation in the field, much of the carrier's freight business is effectively "rail-bound" because of the long distance it moves. Competition with other rail carriers does not exist at many points, and where it does, the railroads have identical rates and hence do compete price-wise. In return for this monopolistic position and the public assistance in its construction, the carrier owes a duty to perform some useful services for the public even though it loses money.

SERVICE IN QUESTION

At the time of the oral hearings (November 1967-January 1968), the Southern Pacific Company operated one set of passenger trains each day between Los Angeles, Calif., and New Orleans, La. These trains, known as the Sunset Limited, are numbered train No. 1, westbound, and train No. 2, eastbound. Another set of trains was operated each day between Los Angeles and Chicago, Ill. These trains, commonly known as the Golden State, were numbered train No. 3, westbound, and train No. 4, eastbound. These trains were consolidated between Los Angeles and El Paso, Tex., thereby becoming No. 1-3, westbound, and No. 2-4, eastbound.

The track mileage between Los Angeles and El Paso, the consolidation point, is $56 miles, and from El Paso to New Orleans 1,177 miles, for a total of 2,033 miles. The present scheduled running time eastbound from Los Angeles to El Paso is 19 hours and 45 minutes. From El Paso to New Orleans, the scheduled running time is 26 hours and 5 minutes. The total transit time from Los Angeles to New Orleans is 451⁄2 hours. On the westbound operation, the running time is 18 hours and 15 minutes between El Paso and Los Angeles, and 26 hours and 34 minutes between New Orleans and El Paso, for a total transit time of 454 hours. These are computations taken from the published timetable and, as discussed later, do not reflect the average running times actually experienced by these trains.

5

The eastbound train No. 2-4 serves 15 intermediate stations between Los Angeles and El Paso and eastbound train No. 2 serves 21 intermediate stations, including 9 flag stops, between El Paso and New Orleans. Westbound train No. 1 serves 22 intermediate stations, including 8 flag stops, between New Orleans and El Paso, and train No. 1-3 serves 15 intermediate stations between El Paso and Los Angeles. Of the communities receiving direct service from these trains, 10 are in Louisiana, 14 are in Texas, 2 are in New Mexico, 8 are in Arizona, and 7 are in California.

Prior to August 1950, the running time from Los Angeles to New Orleans was 491⁄2 hours, and from New Orleans to Los Angeles 48 hours. With the inauguration of a new Sunset Limited service on August 29, 1950, these running times were reduced to 42 hours, which resulted in a reduction of 7%1⁄2 hours eastbound, and 6 hours westbound.

Trains Nos. 3 and 4 (Golden State) were permitted to be discontinued effective March 25, 1968 by order of this Commission, dated February 15, 1968 in Finance Docket No. 24746.

5 S. P. Timetable for Sunset trains is set forth in appendix B.

The "new" Sunset Limited service, consisted of 5 complete trains, included 30 new Pullman cars, 18 chair (coach) cars, 11 diners, 6 lounge cars, 11 baggage and mailcars, and 9 diesel passenger locomotives. The cost of this new equipment was approximately $15 million. Each train consisted of 4 chair cars, 6 sleeping cars, 2 baggage cars, a coffee shop-lounge car, a dining car, and a mid-train lounge car. The chair cars were equipped with reclining chairs with leg rests; the picture-size windows were "non-fogging"; beautiful color photo murals were added; individually controlled reading lights were provided; pressurized air conditioning was installed throughout; AM and FM radio equipment was provided in all chair cars; a public address system supplied service announcements and comments of passing interest to passengers; valet, pressing and minor tailoring service was available; showers for sleeping car passengers; beautiful interior decorating was applied to all interiors, and all seats in chair cars were reserved. These trains were undoubtedly among the finest in the world. Because of the "superior service" afforded by these trains a special service charge was levied in tariff circular No. 4259 (I.C.C. No. 7127) effective August 20, 1950. The special service charges, required in addition to proper passage tickets, ranged from $1.25 between New Orleans and Houston to $10.00 between New Orleans and Los Angeles for sleeping cars, and 75 cents to $3.50, respectively, for coach. Although the service on these trains at the present time can no longer be described as "superior", these special service charges are still being assessed under circular No. 4449 (IC.C. No. 7199).

The reason given by the S. P. for continuing to collect "special service charges" on the Sunset Limited is "that the total fare on the Sunset, including the special service charge, is a very reasonable one. It offers transportation on a lower rate per mile basis than many other railroads. In view of the deficit operations of the Sunset, it would be necessary to increase our regular fares to compensate for the loss of any revenue that would result as a discontinuance of this special service charge." The revenue derived in 1966 from these special charges amounted to $421,000. The S. P. feels that it would be faced with difficult problems in securing approval from the various State commissions to increase the regular fares in the normal manner.

One year prior to the institution of the new Sunset Limited service, the S. P. placed in service two brand new Shasta Daylight streamlined. trains serving between Portland, Ore., and San Francisco, Calif. Following the Sunset Limited service, two new trains, known as Cascade, were placed in overnight service on the Portland-San Francisco run.

Between 1949, when the Shasta Daylight was inaugurated, to 1954, the S. P. spent over $1 million each year on passenger advertising and promotions systemwide. These promotional efforts continued, to a somewhat lesser degree, through 1958. The traveling public responded well to these new services from 1949 through 1952, which was the S. P's peak year for number of passengers carried. In that year 4,541,000 people rode these trains. By 1954, however, passengers carried had

Section 5:

(a) Due to the superior service afforded by special service train, passengers using this train will be required to surrender a special service charge ticket at charges authorized in Section 22 between points between which the special service train is used.

(b) The special service charge ticket will be required in addition to proper passage tickets valid on these trains.

decreased 25 percent. Four years later the decline reached 52 percent of the 1951 peak figure, or 2,193,000 passengers.

As 1959 dawned, it seems fair to conclude that the S. P. "had had it". During the preceding 10 years it had invested $50 million in new passenger equipment and passenger locomotives, $16.5 million on the Sunset Limited, including 13 additional chair cars purchased in 1954. Its average annual expenditure for passenger advertising and promotion was more than $930,000. Thus the company invested very large sums of money in equipment, service and advertising during a full decade and saw the patronage on the Sunset Limited decrease by approximately 47 percent. Pullman passenger revenues decreased approximately 75 percent.

Beginning in 1959, the S. P. apparently began a program of passenger-train expense reduction. Advertising expenditures for the Sunset Limited were reduced to $45 thousand in 1959, $13 thousand in 1962, and $531 in 1965. In September 1963, trains Nos. 5 and 6, The Argonaut, were discontinued between Houston and New Orleans. On December 11, 1963 the S. P., together with the Chicago, Rock Island and Pacific Railroad Company, filed notice under section 13a(1) of the act, that effective January 11, 1964, the service of trains Nos. 3 and 4 (Golden State) would be consolidated with trains Nos. 39 and 40 (Imperial) between Chicago and Los Angeles. An investigation was instituted by this Commission's order dated December 27, 1963. Subsequently, by letter dated January 30, 1964, the carriers requested permission to withdraw their notice and the investigation order was vacated on February 6, 1964. Two months later the S. P. consolidated the service of trains Nos. 3 and 4 (Golden State) with trains Nos. 1 and 2 (Sunset Limited) between El Paso and Los Angeles. (See Appendix C.) This latter action was taken without notice to this Commission under section 13a(1) and without authority of the regu latory agencies of the States involved.

PATRONAGE OF THE TRAINS

On September 12, 1964, the sleeping-car consist on the Sunset Limited was reduced from 2 to 1 cars, except during the summer peak season of June, July and August when 2 sleepers were operated Tuesday through Saturday. On January 18, 1966 the diner-lounge car was removed. On February 28, 1966 the last sleeping-car was removed. The capacity of the sleeping cars operated during this time was 10 single roomettes and 6 bedrooms, with a total capacity of 22, if all bedrooms are occupied by 2 persons.

The record shows, for example, that in September 1964, an average of 16 persons per trip occupied the sleeping-car when it left New Orleans, load factor 70 percent. During this same month 16.6 persons per trip detrained from the sleeping-car at Los Angeles. During the course of each trip the maximum occupancy at any one time averaged 20.8 persons. With this as an explanation the following graph reflects the daily average maximum sleeping-car patronage from September 1964 to February 1966. By "average maximum" is meant the largest number of passengers occupying the sleeping-cars at any one time.