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decided: March 2, 1942.



Stone, Roberts, Black, Reed, Frankfurter, Douglas, Murphy, Byrnes, Jackson

Author: Black

[ 315 U.S. Page 374]

 MR. JUSTICE BLACK delivered the opinion of the Court.

The appellant, Pacific Electric Railway Company, owns and operates electric railroads and motor bus and truck lines in California. It is a wholly owned subsidiary of the Southern Pacific Railroad Company, with whose lines it makes connections at numerous points. It applied to the Interstate Commerce Commission for permission to carry out "a general program of rearrangement of . . . passenger service, involving abandonment of certain rail lines and substitution of motor coach transportation as a means of increasing operating revenues, reducing expenses, and rendering a more adequate service to the public." The Railway Labor Executives' Association and The Brotherhood of Railroad Trainmen appeared before the Commission as representatives of Pacific's employees. They contended that if the Commission were to grant Pacific's application, it should do so only upon conditions designed to protect employees, and proposed that Pacific be required to provide certain specified benefits for employees who would be displaced or otherwise prejudiced by the abandonment. In support of this contention, they argued that many of Pacific's employees had devoted a large part of their lives to the service of the railroad and had acquired valuable rights of seniority in connection with their employment; that the proposed change would cause many of them to lose their jobs, as a result of which they would suffer great hardships and some would become public charges; and that, although the abandonment and rearrangement would give Pacific a net annual savings

[ 315 U.S. Page 375]

     of approximately $378,000, about $302,000 of the saving would be due to a net wage loss suffered by employees. After a hearing, Division 4 of the Commission issued an order permitting abandonment upon the ground that continued operation of the line by Pacific "would impose an undue burden upon the applicant and upon interstate commerce," but held that the Commission was without statutory authority to impose any conditions whatever for the protection of employees in these proceedings. 242 I. C. C. 9. The full Commission denied the brotherhood's request for rehearing. Upon application of the brotherhoods, the Federal District Court of the District of Columbia, composed of three judges, in accordance with 28 U. S. C. § 47, held that the Commission did have authority to impose conditions for the protection of displaced employees. Accordingly, it set aside "That part of the Commission's report which denies consideration of the employees' petition for lack of power . . . with directions to the Commission to consider the petition and take such action thereon as in the discretion of the Commission is proper." 38 F.Supp. 818, 824. Whether it is within the Commission's power in abandonment proceedings to impose conditions for the protection of employees is the single question presented by this appeal.

Section 1 (18) of the Interstate Commerce Act provides that "no carrier by railroad subject to this part 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." And § 1 (20) empowers the Commission to "attach to the issuance of the certificate such terms and conditions as in its judgment the public convenience and necessity may require." 49 U. S. C. § 1 (18)-(20).

[ 315 U.S. Page 376]

     With respect to consolidations, another section of the Act, 5 (4), is controlling. In United States v. Lowden, 308 U.S. 225, this Court held that the Commission has authority under § 5 (4) to impose conditions similar to those sought here in order to protect employees adversely affected by a consolidation. At the time of the Lowden case, § 5 (4) provided: "If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed consolidation . . . will promote the public interest, it may enter an order approving and authorizing such consolidation . . . upon the terms and conditions and with the modifications so found to be just and reasonable." 49 U. S. C. § 5 (4).

The Commission argues that the conditions it is authorized to impose under the consolidation section -- "just and reasonable" conditions, which "will promote the public interest" -- are of much broader scope than the conditions it is authorized to impose under the abandonment section -- conditions which "the public convenience and necessity may require." Although admitting that provisions for the protection of displaced employees may be a condition that "will promote the public interest," the Commission concludes that such provisions cannot be required by "the public convenience and necessity." We need not decide in what respects, if any, the authorization to impose conditions in consolidations is broader than the authorization to impose conditions in abandonments. For even assuming that the language of the abandonment section is narrower, we cannot agree that it excludes all power to impose conditions of the kind sought here.

[ 315 U.S. Page 377]

     The phrase "public convenience and necessity" no less than the phrase "public interest" must be given a scope consistent with the broad purpose of the Transportation Act of 1920: to provide the public with an efficient and nationally integrated railroad system. New England Page 377} Divisions Case, 261 U.S. 184, 189-191. Clear recognition that "public convenience and necessity" includes the consideration of effects on the national transportation system of a proposed abandonment appears in the decision of this Court in Colorado v. United States, 271 U.S. 153. There, Mr. Justice Brandeis, although stating that "public convenience and necessity" was the sole criterion for determining whether or not an abandonment should be allowed, nevertheless considered the effect of the proposed abandonment in a much broader sphere than the immediate locality and population served by the trackage to be abandoned. See also Transit Commission v. United States, 284 U.S. 360. And if national interests are to be considered in connection with an abandonment, there is nothing in the Act to indicate that the national interest in purely financial stability is to be determinative while the national interest in the stability of the labor supply available to the railroads is to be disregarded. On the contrary, the Lowden case recognizes that the unstabilizing effects of displacing labor without protection might be prejudicial to the orderly and efficient operation of the national railroad system. Such possible unstabilizing effects on the national railroad system are no smaller in the case of an abandonment like the one before us than in a consolidation like that involved in the Lowden case. Hence, it is only by excluding considerations of national policy with respect to the transportation system from the scope of "public convenience and necessity," an exclusion inconsistent with the Act as this Court has interpreted it, that the distinction made by the Commission can be maintained.

It was not until 1935, fifteen years after the passage of § 1 (20), that the Commission first decided that it was without power to impose conditions for the protection of workers in an abandonment. Chicago G. W. R. Co. ...

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