REPORT AND RECOMMENDED ORDER BY HEARING EXAMINER JOHN S. MESSER

By order dated June 21, 1966, the Interstate Commerce Commission instituted an investigation of the passenger service of the Southern Pacific Company under section 12(1) of the Interstate Commerce Act. The investigation was ordered upon consideration of petitions filed with this Commission by the Public Service Commission of the State of Louisiana (L.P.S.C.), the Public Utilities Commission of the State of California (C.P.U.C.), and the Corporation Commission of the State of Arizona (A.C.C.), filed April 11, 15, and 24, 1966, respectively; reply thereto by Southern Pacific Company (S.P.) filed May 2, 1966; and resolutions supporting petitioners filed by the State Corporation Commission of New Mexico (N. Mex. S.C.C.) and the Railroad Commission of Texas (Tex. R.R.C.). Subsequently petitions of intervention filed on behalf of Railway Labor Executives Association and the City of Tucson, Ariz., were granted.

The petitions for investigation allege that the S. P. has, over a period of years, consistently downgraded, discouraged the use of, and eroded the quality of its common carrier passenger train service. A number of Commission proceedings are cited which purport to show "flagrant abuses employed by S. P. to downgrade service and discourage passenger traffic. They further allege that there is a systematic plan by S. P., the ultimate purpose of which is to create intolerable service conditions to discourage passenger traffic, and then to be able to use low traffic figures and declining passenger revenues to support its "petitions" to this Commission to discontinue various passenger trains, and ultimately all its passenger service.

The causa proxima of the petitions is that in February 1966 the S. P. discontinued sleeping cars on Trains Nos. 1 and 2 between New Orleans, La., and El Paso, Tex., and discontinued accepting reservations on those trains between New Orleans and Los Angeles, Calif., and intermediate points.

In its reply the S.P. argues that this Commission lacks jurisdiction to institute this investigation under section 12(1) since the subject matter is not "cognate and germane to its regulatory powers."; that in the absence of a filing under section 13a(1), matters pertaining to passenger-car service and passenger-train service do not fall within the regulatory jurisdiction of the Commission; that sleeping-car service is not now and has never been a necessary part of land transportation; that previous decisions of the Commission support the contention that sleeping-car services do not come within the Commission's jurisdiction under section 1(4); and a general denial that the Commission's decisions cited in the petitions (footnote 1) finds a pattern of discouraging, downgrading, and eroding service.

By order dated August 4, 1966, rules of special procedure were adopted because of the nature of the instant investigation. That order provided that: (1) Petitioners and all interested parties in support thereof would file with the Commission, with copies to all parties, on or before September 26, 1966, prepared testimony, in

1 F.D. No. 23800, Discont. of Trains, etc., in N. Mex. and Ariz.; F.D. No. 23272, S. P. Co.-Discont. of Pass. Trains Nos. 39 and 40 Bet. La., and Pheonix, Ariz.; F.D. No. 23117, S.P. Co.-Discont. Trains Nos. 126 & 141 Bet. San Jose & Monterey, Calif.; F.D. No. 23756, S. P. Co. Discont. Trains Nos. 9 and 10 Bet. Portland, Oreg. and Oakland, Calif.

writing, including all exhibit thereto; (2) respondents and all interested parties in support thereof would file with the Commission, with copies to all parties, on or before October 24, 1966, their prepared rebuttal testimony, in writing, including exhibits thereto; (3) parties desiring cross-examination must have given notice on or before November 7, 1966; and (4) notice of desire to become a party of record and participant in the proceeding would be filed on or before September 19, 1966. These various action dates were subsequently extended an additional 8 months by order dated September 8, 1966, January 3, 1967, March 9, 1967 and April 13, 1967. A petition of the C.P.Ú.C. for leave to file rebuttal testimony to certain testimony and exhibits of the Southern Pacific Company was granted by order dated September 13, 1968.

Hearings were held before the examiner beginning November 27, 1967, at New Orleans, La., Houston and El Paso, Tex., Tucson, Ariz., and Los Angeles, Calif., for the purpose of cross-examination, evidence in rebuttal thereto, and for such other pertinent evidence which the examiner deemed necessary to complete the record. Briefs were filed by Southern Pacific Company, California Public Utilities Commission and Railway Labor Executives Association.

JURISDICTION

As to the carrier's contention that this Commission lacks jurisdiction under section 12(1) of the act to institute this investigation, the examiner can think of no better reply than that of the Supreme Court in Smith v. Interstate Com. Comm., 245 U.S. 33, 43, where it said

It would seem to be an idle work to point out the complete comprehensiveness of the language of these sections (sections 12, 13 and 20), and we are not disposed to spend any time to argue * * *.

The respondent contends that this Commission lacks the authority to require sleeping-car accommodations and dining facilities on interstate passenger trains under section 1(4) of the Interstate Commerce Act. It further argues that "in the absence of a filing under section 13a(1) of the act, it is clear from the unbroken line of historical precedents that such matters as passenger-car service and passengertrain service do not fall within the regulatory jurisdiction of this Commission," and "these are service details over which the Commission has, from its inception, declined to assert jurisdiction."

Section 1(4) reads, in part, as follows:

It shall be the duty of every common carrier subject to this part to provide and furnish transportation upon reasonable request therefor * * *

The same section then continues to set forth further duties of such carriers: to establish reasonable through routes and just and reasonable rates, fares, charges, and classifications applicable thereto; to provide reasonable facilities for operating such routes; and to establish reasonable and equitable divisions of joint rates, fares, or charges. Thus, section 1(4) imposes four distinct lawful obligations on the rail carriers subject to the Act, with each separated from the other by use of the conjunction "and". It should also be noted that the word "fares," which denotes charges assessed on passenger transportation, is used three times throughout this section of the act, and indicates

2 Appendix A.

that the duties of the rail carriers imposed therein are applicable to passenger traffic as well as freight traffic.

This Commission was established by the Congress to administer the Interstate Commerce Act, together with supplementary acts and related sections of various other acts. The national transportation policy enunciated by the Congress in 1940 required, in part, that "all of the provisions of this Act shall be administered and enforced ***." (Emphasis added.)

Section 1(3) (a) of the act, defines various terms used in the act as intended by the Congress. Among these definitions is the meaning of the term "transportation," which we find used in the first requirement set forth in section 1(4):

Section 1(3) (a) (in part)

The term "transportation" as used in this part shall include locomotives, cars, and other vehicles, vessels, and all instrumentalities and facilities, of shipment or carriage, irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and hauling of property transported (Emphasis added.)

In Ft. Worth & D.C. Ry. Co. v. Strickland, reported in 203 S. W. 410, the Court of Civil Appeals of Texas, held, in part:

Congress has defined "transportation" to include all cars, instrumentalities, and facilities of shipment, or carriage, etc. . . . Congress evidentally recognized that the duty to the public included a variety of services that, according to the theory of the common law, were separable from the servies of carriers as carriers, so that by the act of Congress the entire body of the services to be performed falls under the general head of transportation, among which is furnishing cars. So it is made the duty of the carrier to furnish suitable' cars as part of the transportation.

and again:

Railroads are quasi public corporations, and acquire thereby an exclusive privilege to carry on their business over their highways. These powers are granted with the express view of their rendering to the public adequate service.

Over the past 48 years, this Commission has held that a reduction or partial discontinuance of rail service does not constitute abandonment within the meaning of the act, and that the Commission is without jurisdiction to consider the matter. Palmer v. Massachusetts, 308 U.S. 79, has been cited as authority for this view. In the Palmer case the Supreme Court stated, in part:

The dependence of local communities on local railroad services has for decades placed control over this curtailment within the regulatory authorities of the States. Even when the Transportation Act of 1920 gave the Interstate Commerce Commission power to permit abandonment of local lines when the overriding interests of interstate commerce required it, Colorado v. United States, 271 U.S. 153, this was not deemed to confer upon the Commission jurisidction over curtailments of service and partial discontinuances.

The old principle that the state had the right to regulate the railroads because of "the dependence of local communities on local railroad services," had its beginning to a considerable degree in the celebrated long-and-short haul controversy before the turn of the century. At that time many railroads had a virtual monopoly on service through the countryside and could charge any rate they choose. At the large terminus areas, where competition was encountered with other railroads, the rates were lowered. Thus, in many instances a short haul rate between small communities or from a rural community to a terminal area, were much higher than the rate between two terminal areas over a much longer route. Many states enacted laws and assumed jurisdic

tion to correct this inequity even when the traffic was moving in interstate commerce.

The language used by Mr. Justice Frankfurter, who wrote the opinion of the Court in the Palmer case, makes it abundantly clear that the Court at that time (1939) was principally concerned with an instance which was, in its opinion, "one of the recurring phases of our federalism and involves striking a balance between national and state authority in one of the most sensitive areas of government." In that case the State of Massachusetts was resisting what it considered an incursion of its rights by Federal authority.

In the instant proceeding, three decades after the Palmer opinion, we find the exact opposite situation. Five sovereign states have petitioned the intervention of this Federal agency in a situation where it is alleged that the respondent has deliberately downgraded its passenger service in total disregard of the needs of the people and in defiance of an order of a state regulatory body. The court's position in the l'almer case is analogous to its position in Smith v. Townsend, 148 U.S. 490, 494, where it said: "It is well settled that where the language of a statute is in any manner ambiguous, or the meaning doubtful. resort may be had to the surrounding circumstances, the history of the times, and the defect or mischief which the statute was intended to remedy."

The Interstate Commerce Act, like the Constitution of the United States, is a vibrant organ which must readily respond to the stimulus of current need.

Admittedly part I of the Act addresses itself principally, though not entirely, to "do's" and "dont's" affecting property. This is readily understood when we recognize that in years past, when the act was written and amended, passengers were wooed and sought after, with great effort being made to improve many passenger trains to the point of luxuriousness. In this connection the following brief extract from the inaugural brochure 3 of the new Sunset Limited service published by the S. P. in August 1950, is interesting:

The history of the first "Sunset Limited" was preceded, of course, by the building of the original Sunset Route between San Francisco, Calif., and New Orleans. La., which was opened to through traffic on February 5, 1883. (Four years prior to the establishment of the I.C.C.)

This original Sunset Route was started out of San Francisco in late 1869 down the San Joaquin Valley, reaching Los Angeles, then a sleepy little city of nearly 10,000 persons, in 1876. During the following years, construction was completed across Southern California into Southern Arizona, New Mexico and finally into Texas to connect with rails coming west from New Orleans. Thus Southern Pacific's Sunset Route became, in 1883, a new avenue of travel and commerce across the continent.

It was over this route that the "Sunset Limited", heralded as the first solid vestibule train to operate from the Pacific Coast, made its initial journey from Saa Francisco on the morning of November 1, 1894.

The "Palatial" four-car train with its tiny locomotive and diminutive wooden cars made the first trip from New Orleans twenty-five days later. It reached El Paso in 35 hours and 50 minutes. At the completion of its return to San Francisco, 75 hours away from New Orleans, a full day's running time had been cut between the two terminals and jubilant passengers told Southern Pacific officials that the railroad not only had placed in service one of the finest trains in the country, but had pioneered a new era in rail transportation.

These passengers of 55 years ago were talking about the Sunset Limited's "Composite Car" with its large parlor and wicker chairs, separate smoking rooms, and a buffet for light lunches. About the "Ladies Compartment Car" with its

Appendix RMJ-3, to exhibit 141.

parlor and library, seven nicely furnished sleeping rooms and the maid in attendance. And of the "Dining Car" which was very grand with wicker chairs and potted plants. Of course, in the very early days the passenger equipment was quite primitive by today's standards, but they were a wonderful improvement over the stage coach, which they supplanted.

A study of the practices of the railroad industry from the Civil War to World War II, indicates relatively few allegations of malfeasance or nonfeasance directed at passenger operations. The practices of preference and prejudice, and unjust and unreasonable acts were connected with the receiving, handling, transporting, storing, and delivery of property. It was to these latter inequities that the Congress directed its attention and with which this Commission was most concerned.

In response to this situation through routes and joint rates were established, equitable divisions were required, and unjust and unreasonable freight classifications were prohibited. Section 15(5) of the Act concerned itself with the furnishing of suitable facilities for the handling of livestock, and the Federal 28-hour law was enacted in 1921 to assure that dumb animals would not be made to suffer because of thirst, hunger or exhaustion. Humans were certainly not excluded from such humanitarian considerations out of callousness or indifference, but rather because the human creature was being treated with deference and accorded every consideration. There was no present need to set forth with specificity the duties of the rail carriers as contained in section 1(4) with regard to passenger service. Today, we are confronted with an entirely different situation. While we still have laws to protect the treatment of dumb animals, the human beings riding the involved passenger trains are provided marginal eating and no sleeping facilities on a 2,033 mile run which takes 45 hours and 15 minutes to complete, if the train is on schedule. The respondent contends that the commission has no authority to protect the welfare of these passengers unless and until the carrier itself creates such jurisdiction by filing under section 13a (1) of the act. The examiner cannot accept such contentions. Under consideration is the service of passenger trains operating over 2,000 miles in each direction between New Orleans, La., and Los Angeles, Calif. This line of railroad operates in or through 5 states. It is evident from the record that the interest of the state regulatory agencies varies from casual to intense. The various requirements that might well emanate from the several state regulatory agencies affecting these trains. engaged in interstate commerce could be chaotic to both the public and the carrier.

In the Colorado case (supra), the Supreme Court said in part:

This railroad, like most others, was chartered to engage in both intrastate and interstate commerce. The same instrumentality serves both. The two services are inextricably intertwined. The extent and manner in which one is performed, necessarily affects the performance of the other. Efficient performance of either is dependent upon the efficient performance of the transportation system as a whole. Congress did not, in the respect here under consideration (abandonment of a narrow gauge branch line located wholly in one State), assume exclusive regulation of the common instrumentality as it did in respect to safety coupling devices. *** Congress has power to assume not only some control, but paramount control, insofar as interstate commerce is involved. (Emphasis added.)

At this point it might be well to define "commerce". In McCall v. California, 136 U.S. 104, the Supreme Court stated: