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STATE OF ILLINOIS v. UNITED STATES

June 14, 1956

STATE OF ILLINOIS, ILLINOIS COMMERCE COMMISSION, AND MILWAUKEE ROAD COMMUTERS' ASSOCIATION, PLAINTIFFS,
v.
UNITED STATES OF AMERICA, INTERSTATE COMMERCE COMMISSION, AND CHICAGO, MILWAUKEE, ST. PAUL & PACIFIC RAILROAD COMPANY, DEFENDANTS.



Before Schnackenberg, Circuit Judge, and Sullivan and LA Buy, District Judges.

The opinion of the court was delivered by: Schnackenberg, Circuit Judge.

This is an action to set aside and enjoin the enforcement of an order*fn1 of the Interstate Commerce Commission*fn2 authorizing the Chicago, Milwaukee, St. Paul and Pacific Railroad Company*fn3 to put into effect intrastate rates or fares for Chicago area suburban service higher than those authorized by the Illinois Commerce Commission.*fn4

This report states that "on an out-of-pocket basis respondent shows a deficit of $724,511, while protestant shows an income of $9,701. For expenses other than the Union Station, protestant's lower figures are accounted for by the elimination of any allowance for depreciation and of certain accounts for maintenance of way not included in respondent's study before the Illinois commission." The report quotes the dollar amounts of depreciation which the interstate commission considers proper direct charges to the service and hence are out-of-pocket costs. It similarly considers certain maintenance of way expenses. The report points out that these depreciation and maintenance of way charges were not included in respondent's showing before the Illinois commission, but were included in its showing before the interstate commission. The report states that respondent's explanation for the prior omission was "its impression that, even without them, it had shown a considerable deficit from this service." The report adds: "This explains but does not excuse its incomplete showing before the Illinois commission."

The report finds:

    "Summarizing, the total revenues from the
  passenger-carrying portion of the suburban
  service were $1,799,140, the out-of-pocket cost,
  not including non-payroll taxes or return, was
  $2,269,404, and the credit for nonrevenue
  passengers $164,226, resulting in a total
  out-of-pocket deficit of $306,038.
    "If the fares were increased an average of 20
  percent as in Commutation and Multiple Fares,
  Illinois and Wisconsin,"*fn6 "supra, plus the
  additional increase to a minimum of 25 cents per
  trip, the increased revenue based on the 1954
  movement would be about $383,000, which would
  eliminate the out-of-pocket deficit and result in
  a contribution to indirect costs and taxes, of
  approximately $77,000 annually."

The report also sets forth as follows:

    "Protestant shows that the proposed fares are
  somewhat higher than certain of the fares of the
  die-selized lines of the Burlington and the
  Chicago, Rock Island and Pacific Railroad Company
  in the Chicago area, while respondent shows that
  they are somewhat lower than certain fares which
  the commissions have approved for the electric
  lines of the Illinois Central Railroad Company
  and the Chicago South Shore and South Bend
  Railroad in the Chicago area. However, we think
  that the comparison with the fares of the North
  Western is more persuasive, as, in the words of
  respondent's traffic witness, there is `a strong
  similarity' between the suburban territory served
  by it and that served by the North Western, the
  two sets of fares, as approved by this and the
  Illinois commission, having formerly been on a
  parity."

The report also makes the following findings:

    "1. That respondent's present suburban fares do
  not produce sufficient revenue to cover the
  out-of-pocket cost of the service and thus make
  no contribution toward its indirect costs nor to
  a return on investment.
    "2. That respondent's present intrastate
  suburban fares, made or imposed by authority of
  the State of Illinois, cause and, unless
  increased to the extent herein set forth, will
  continue to cause undue, unreasonable, and unjust
  discrimination against interstate commerce, in
  violation of section 13(4) of the Interstate
  Commerce Act.
    "3. That such undue, unreasonable, and unjust
  discrimination can and should be removed by
  establishing for such intrastate travel fares no
  lower than the bases set ...

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