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Mr. W. R. Rouse 9* April 2, 1952 Boston Elevated Ry. Co . v . Welch (Dist. Ct., Mass.), 25 3?ed. Supp• 809, which is not very helpful. This case held that an interurban railway, control of which had been turned over to- the state for a period of ten years under'an act by which the state assumed responsibility for dividends on the corporate stock and for deficits resulting from the operations, was not an instrumental­ity of the state or a political subdivision thereof with­in the meaning of the Social Security Act, 42 U.S. Code, Sec. 1011(b)(7) exempting "services performed In the em­ploy of a state or a political subdivision thereof or an in s t r u m e n ta lity of one or more states”. This case was primarily decided on the ground that the state did not have title to the railway, but only a lease thereon. It is interesting to note, however, that the regulations promulgated by the Commissioner of Internal Revenue un­der this Section of the Code provided that the exemption should extend to "every unit or agency of government without distinction between those exercising functions of a governmental nature and those exercising functions of a proprietary nature". This is a much broader def­inition than that promulgated by the Commissioner under Sections 22(b)(4)(A) and 23(q)(l) of the Internal Reve­nue Cod© and leads one to the conclusion that in refer­ring to sovereign powers in the latter regulations "the Commission was referring to governmental rather than proprietary powers. There is no doubt that the weight of authority is to the effect that the supplying of water for domestic and industrial use Is a proprietary activity. In 56 Am* «Jur. 935 it is said; "The creation of a system of waterworks and its operation for the purpose pf protec­tion against fire, flushing sewers, or other uses pertaining to the public health and safe­ty is an exercise of the police powers of a municipality, and therefore of a governmental function. On the other hand, although there