[Federal Register Volume 60, Number 170 (Friday, September 1, 1995)]
[Notices]
[Pages 45736-45739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21746]



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[[Page 45737]]


INTERSTATE COMMERCE COMMISSION
[Finance Docket No. 32760]


Union Pacific Corporation, Union Pacific Railroad Company and 
Missouri Pacific Railroad Company--Control and Merger--Southern Pacific 
Rail Corporation, Southern Pacific Transportation Company, St. Louis 
Southwestern Railway Company, SPCSL Corp. and the Denver and Rio Grande 
Western Railroad Company

AGENCY: Interstate Commerce Commission.

ACTION: Decision No. 1; Notice of prefiling notification and request 
for comments.

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SUMMARY: Pursuant to 49 CFR 1180.4(b), Union Pacific Corporation (UPC), 
Union Pacific Railroad Company (UPRR), Missouri Pacific Railroad 
Company (MPRR), Southern Pacific Rail Corporation (SPR), Southern 
Pacific Transportation Company (SPT), St. Louis Southwestern Railway 
Company (SSW), SPCSL Corp. (SPCSL), and the Denver and Rio Grande 
Western Railroad Company (DRGW) \1\ have notified the Commission of 
their intent to file an application seeking authority under 49 U.S.C. 
11343-45 for: (1) The acquisition of control of SPR by UP Acquisition 
Corporation (Acquisition), an indirect wholly owned subsidiary of UPC; 
(2) the merger of SPR into UPRR; and (3) the resulting common control 
of UP and SP by UPC. The Commission finds this to be a major 
transaction as defined in 49 CFR Part 1180. The applicants have 
proposed a procedural schedule, on which the Commission invites 
comments by interested persons.

    \1\ UPC, UPRR, and MPRR are referred to collectively as Union 
Pacific. UPRR and MPRR are referred to collectively as UP.
    SPR, SPT, SSW, SPCSL, and DRGW are referred to collectively as 
Southern Pacific. SPT, SSW, SPCSL, and DRGW are referred to 
collectively as SP.
    UPC, UPRR, MPRR, SPR, SPT, SSW, SPCSL, and DRGW are referred to 
collectively as applicants or petitioners.
    Applicants have petitioned for waiver or clarification of the 
definition of applicants so as to exclude Chicago and North Western 
Transportation Company (CNWT), Chicago and North Western Railway 
Company (CNW), and Western Railroad Properties Incorporated (WRPI), 
thus eliminating the necessity of their joining in the filing of the 
application. CNWT and CNW are scheduled to be merged into UPRR on 
October 1, 1995; WRPI was merged into UPRR on August 1, 1995.
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DATES: Written comments on the proposed schedule must be filed with the 
Interstate Commerce Commission no later than September 18, 1995. The 
applicants' reply is due by September 28, 1995.

ADDRESSES: An original and 20 copies of all documents must refer to 
Finance Docket No. 32760 and must be sent to the Office of the 
Secretary, Case Control Branch, Attn: Finance Docket No. 32760, 
Interstate Commerce Commission, 1201 Constitution Avenue, NW., 
Washington, DC 20423.
    In addition, one copy of all documents in this proceeding must be 
sent to each of the applicants' representatives: (1) Arvid E. Roach II, 
Esq., Covington & Burling, 1201 Pennsylvania Avenue, NW., PO Box 7566, 
Washington, DC 20044; and (2) Paul A. Cunningham, Esq., Harkins 
Cunningham, 1300 Nineteenth Street, NW., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT:
Beryl Gordon, (202) 927-5610. [TDD for the hearing impaired: (202) 927-
5721.]

SUPPLEMENTARY INFORMATION: In the notice of intent filed August 4, 
1995, the applicants state that under an Agreement and Plan of Merger 
dated August 3, 1995, UPC, Acquisition, UPRR and SPR have agreed that 
Acquisition will acquire all of the common stock of SPR. Acquisition 
plans first to acquire 25% of the stock of SPR for cash in a tender 
offer and place that stock in a voting trust pending review of the 
merger by the Commission.\2\ Upon the satisfaction of certain 
conditions, including approval of the merger by the Commission, the 
remainder of the SPR stock will then be acquired for a combination of 
UPC stock and cash, and SPR will be merged into UPRR. The UP and SP 
railroads will then be consolidated.

    \2\ On August 4, 1995, the applicants filed a copy of the voting 
trust agreement proposed to be entered into by and between UPC, 
Acquisition, and Southwest Bank of St. Louis, an institutional 
trustee. The applicants state that they believe that Acquisition's 
planned purchase of 25% of the outstanding voting stock of SPR will 
not give UPC and its affiliates the power to exercise control of SPR 
and its affiliates. However, the applicants request that Commission 
staff issue an informal, non-binding opinion stating whether the 
voting trust agreement and the arrangements contained therein will 
effectively insulate UPC and its affiliates from any violation of 
the Interstate Commerce Act and Commission policy against 
unauthorized acquisition of control of SPR's carrier subsidiaries.
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    The applicants state that they will use the year 1993 for purposes 
of their impact analyses to be filed in the application, and that they 
anticipate filing their application on or before December 1, 1995. On 
August 11, 1995, Santa Fe Pacific Corporation and The Atchison, Topeka, 
and Santa Fe Railway Company (collectively, Santa Fe) filed a partial 
objection to the notice of intent, objecting to the use of 1993 data in 
this proceeding (SF-2).\3\ Also on August 11, 1995, the applicants 
filed a modification of their notice of intent (UP/SP-5). The 
applicants state that, if the 1994 ICC Waybill Sample is available by 
September 1, 1995, they will use 1994 as the base year, and that, if it 
is not, they will use 1993. Consultation with the Commission's Office 
of Economics and Environmental Analysis (OEEA) indicates that the 1994 
data will be available by September 5, 1995. That being the case, we 
will require the applicants to use the 1994 data. If, for some reason, 
the data are not available on that date, we will reconsider this issue 
at that time.

    \3\ Santa Fe essentially argues that, for a transaction as 
significant as this one, the Commission should have available the 
most relevant information necessary to assess changes in railroad 
operations and competitive impacts that will result from the 
proposed transaction. It is Santa Fe's position that more recent 
data would provide the Commission with the most relevant 
information, and that 1994 data will be available in ample time for 
use in this proceeding.
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    The Commission finds that this is a major transaction, as defined 
at 49 CFR 1180.2(a), as it is a control and merger transaction 
involving two or more class I railroads. The application must conform 
to the regulations set forth at 49 CFR Part 1180 and must contain all 
information required therein for major transactions, except as modified 
by any advance waiver. The carriers are also required to submit maps 
with overlays that show the existing routes of both carriers and their 
competitors.
    By petition also filed August 4, 1995, the applicants seek a 
protective order to protect confidential, highly confidential, and 
proprietary information, including contract terms, shipper-specific 
traffic data, and other traffic data to be submitted in connection with 
the control application (UP/SP-2). A protective order will be entered 
in a subsequent decision.
    Also on August 4, 1995, the applicants filed a petition to 
establish a proposed procedural schedule (UP/SP-4). The Commission 
seeks comments now on the applicants' proposed procedural schedule, 
which is as follows:
Proposed Procedural Schedule

F  Primary application and related applications filed.
F + 30  Commission notice of acceptance of primary application and 
related applications published.
F + 60  Description of anticipated inconsistent and responsive 
applications due; petitions for waiver or clarification with regard to 
such applications due.
F + 90  Inconsistent and responsive applications due. All comments, 
protests, requests for conditions, and any other opposition evidence 

[[Page 45738]]
and arguments due. DOJ and DOT comments due.
F + 105  Notice of acceptance (if required) of inconsistent and 
responsive applications published in the Federal Register.
F + 120  Response to inconsistent and responsive applications due. 
Response to comments, protests, requested conditions, and other 
opposition due. Rebuttal in support of primary application and related 
applications due.
F + 130  Rebuttal in support of inconsistent and responsive 
applications due.
F + 140  Briefs due, all parties (not to exceed 50 pages).
F + 155  Oral argument.
F + 156  Voting conference.
F + 195  Date for service of final decision.

    Under the applicants' proposal, immediately upon each evidentiary 
filing, the filing party shall place all documents relevant to the 
filing (other than documents that are privileged or otherwise protected 
from discovery) in a depository open to all parties, and shall make its 
witnesses available for discovery depositions. Access to documents 
subject to the protective order shall be appropriately restricted. 
Parties seeking discovery depositions may proceed by agreement. 
Relevant excerpts of transcripts will be received in lieu of cross-
examination at the hearing, unless cross-examination is needed to 
resolve material issues of disputed fact.\4\ Discovery on responsive 
and inconsistent applications, comments, protests, and requests for 
conditions shall begin immediately upon their filing.

    \4\ It is not clear to what hearing the applications are 
referring. Their proposed schedule provides for no evidentiary 
hearing, and we see no need for one at this time.
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    The proposed schedule is substantially similar to that adopted 
recently in Burlington Northern Inc. and Burlington Northern Railroad 
Company--Control and Merger--Santa Fe Pacific Corporation and The 
Atchinson, Topeka and Santa Fe Railway Company, Finance Docket No. 
32549 (ICC served March 7, 1995) (BN/Santa Fe).
    We would also like comments from the public on a variation of the 
proposed procedural schedule.\5\ Based on our recent experience in BN/
Santa Fe, we believe that parties filing inconsistent and responsive 
applications, comments, protests, requests for conditions, and other 
opposition evidence and arguments, may not need 90 days from the date 
the primary application is filed to prepare their submissions. We seek 
comments on the feasibility of parties filing descriptions of 
anticipated inconsistent and responsive applications, and petitions for 
waiver or clarification with regard to such applications, 10 days after 
the publication of the notice accepting the primary application. All 
inconsistent and responsive applications, comments, protests, requested 
conditions, and other opposition evidence and argument would be due 30 
days after the acceptance of the primary application. Comments from the 
United States Department of Justice (DOJ) and the United States 
Department of Transportation (USDOT) would also be due on that day. The 
30 days taken from the segment of time in which protesting parties 
would prepare their submissions would be inserted later in the 
schedule.

    \5\ On August 14, 1995, The Kansas City Southern Railway Company 
(KCS) filed comments on the proposed procedural schedule (KCS-1). 
KCS claims that the applicants have not presented any justification 
for expediting the schedule in this proceeding without first seeking 
public comments on the proposed schedule. KCS alleges that it has 
concerns regarding its ability to conduct discovery and sufficiently 
analyze the competitive concerns within the time frame applicants 
propose. KCS would like time to develop an alternative procedural 
schedule. Because we are, in fact, asking for comments regarding the 
applicants' proposed schedule, KCS will have the opportunity to 
submit further comments on the schedule in response to this notice. 
The applicants filed a reply to KCS's comments on the proposed 
procedural schedule and discovery guidelines on August 18, 1995 (UP/
SP-6).
    The applicants are proposing that any applications for authority 
for, or for exemption of, merger-related abandonments, and any 
supporting verified statements, be filed with the primary application, 
and be treated as related applications. The applicants filed, on August 
4, 1995, a petition for waiver or clarification of the Railroad 
Consolidation Procedures, and for related relief (UP/SP-3), in which 
they ask for a waiver under 49 CFR 1152.24(e)(5) to permit 
modifications to the procedures and timetables prescribed in our rules 
at 49 CFR 1152.25(d) (6) and (7), and other relief, seeking to ensure 
that they are able to make the referenced filings pertaining to merger-
related abandonments with the primary application. Consequently, the 
applicants desire that all opposition evidence, comments, rebuttal, and 
briefing on those applications be submitted under the same schedule as 
the primary application. We will discuss the applicants' request for 
relief with regard to merger-related abandonments in a subsequent 
decision addressing all of the requests in UP/SP-3.
    The applicants also request that the Commission establish certain 
guidelines to govern discovery in this proceeding. The applicants note 
that their proposed guidelines are similar to those developed by the 
parties and the presiding Administrative Law Judge in BN/Santa Fe, and 
assert that the guidelines were central to the progress of that 
proceeding. In the applicants' view, the guidelines provided all of the 
parties in BN/Santa Fe with a fair opportunity to conduct discovery and 
curtailed abusive practices that had caused delays in prior control 
proceedings. The applicants assert that similar early establishment of 
discovery guidelines at the outset of this proceeding will provide 
guidance to all parties and will promote an efficient and orderly 
proceeding. The process of assigning an Administrative Law Judge (ALJ) 
to this proceeding is underway. While we think the BN/Santa Fe 
discovery guidelines worked exceedingly well, we will leave all 
discovery matters, including the adoption of any guidelines governing 
discovery initially, to the discretion of the ALJ.\6\ A decision naming 
that judge will be issued as soon as possible.

    \6\ KCS also raises concerns about the applicants' proposed 
discovery guidelines in KCS-1, stating that the applicants have not 
established any reason why this proceeding cannot be conducted under 
the Commission's normal rules of discovery found at 49 CFR 1114. KCS 
notes that, in BN/Santa Fe, the Commission did not rule on discovery 
guidelines and instead deferred that decision to the ALJ. The ALJ 
conducted a conference where all parties could comment, and then 
issued discovery guidelines. KCS recommends that we follow the same 
procedure here, rather than simply adopting the same guidelines used 
in BN/Santa Fe. Because we are initially turning all discovery 
matters over to an ALJ, nothing more need be said regarding KCS's 
concerns at this time. KCS also filed a pleading in opposition to 
the applicants' proposed protective order (KCS-2). That pleading 
will be addressed in a separate decision entering the protective 
order.
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    We invite interested persons to submit written comments on the 
proposed procedural schedule. Comments must be filed by September 18, 
1995. The applicants may reply by September 28, 1995.\7\

    \7\ In addition to submitting an original and 20 copies of all 
documents filed with the Commission, the parties are encouraged to 
submit all pleadings and attachments as computer data contained on a 
3.5-inch floppy diskette which is formatted for WordPerfect 5.1 (or 
formatted so that it can be converted by WordPerfect 5.1). The 
computer data contained on the computer diskettes submitted will be 
subject to the protective order to be entered shortly in this 
proceeding, and is for the exclusive use of Commission employees 
reviewing substantive matters in this proceeding. The flexibility 
provided by such computer file data will facilitate expedited review 
by the Commission and its staff.
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    This action will not significantly affect either the quality of the 
human 

[[Page 45739]]
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environment or the conservation of energy resources.

    Decided: August 24, 1995.

    By the Commission, Chairman Morgan, Vice Chairman Owen, and 
Commissioners Simmons and McDonald.
Vernon A. Williams,
Secretary.
[FR Doc. 95-21746 Filed 8-31-95; 8:45 am]
BILLING CODE 7035-01-M