[Federal Register Volume 60, Number 204 (Monday, October 23, 1995)]
[Notices]
[Pages 54384-54387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26271]



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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. 6; Notice of Issuance of Procedural Schedule.

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SUMMARY: The Commission is issuing a procedural schedule, following the 
receipt of comments from the public on applicants' proposed procedural 
schedule and applicants' reply to those comments. This schedule will 
provide for issuance of a final decision no later than 255 days after 
applicants file the primary application, which is 60 days beyond the 
time proposed by applicants.

EFFECTIVE DATE: The effective date of this decision is October 24, 
1995. Notices of intent to participate in this proceeding will be due 
45 days after the primary application is filed. All comments, protests, 
requests for conditions, inconsistent and responsive applications, and 
any other opposition evidence and argument will be due 120 days after 
the filing of the primary application. For further information, see the 
procedural schedule set forth below.

ADDRESSES: An original and 20 copies of all documents must refer to 
Finance Docket No. 32760 and 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. Parties are encouraged also to submit all pleadings and 
attachments on a 3.5-inch diskette in WordPerfect 5.1 format.
    In addition, one copy of all documents in this proceeding must be 
sent to Administrative Law Judge Jerome Nelson, Federal Energy 
Regulatory Commission, 825 North Capitol Street NE., Washington, DC 
20426 and to each of applicants' representatives: (1) Arvid E. Roach 
II, Esq., Covington & Burling, 1201 Pennsylvania Avenue NW., P.O. Box 
7566, Washington, DC 20044; and (2) Paul A. Cunningham, Esq., Harkins 
Cunningham, 1300 Nineteenth Street NW., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: Julia Farr, (202) 927-5352. [TDD for 
the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: On August 4, 1995, 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) (collectively, applicants) 1 
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. Applicants stated that 
they will file their application by December 1, 1995, and proposed a 
procedural schedule for use in the resulting proceeding. Under that 
schedule, a final decision would be issued 195 days after the filing of 
the application.

    \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.
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    In Decision No. 1, served and published in the Federal Register on 
September 1, 1995, 60 FR 45737, the Commission gave notice of the 
prefiling notification and asked for comments on applicants' proposed 
procedural schedule. The Commission also asked for comments on a 
variation of the applicants' proposed procedural schedule, wherein 
parties filing inconsistent or responsive applications, comments, 
protests, requests for conditions, or any other opposition evidence and 
arguments would submit their pleadings to the Commission 60 days after 
the filing of the primary application (in applicants' proposed 
schedule, these parties would submit their pleadings 90 days after the 
filing of the primary application). Comments were due on September 18, 
1995; most were received on or before that date. Applicants replied to 
the comments on September 28, 1995.2

    \2\ We have received petitions for leave to file additional 
comments on the procedural schedule by the United States Department 
of Justice (DOJ-2) and The Kansas City Southern Railway Company 
(KCS-4), and their respective additional comments (DOJ-3 and KCS-5). 
Applicants replied. We will accept all of these pleadings into the 
record.
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    Approximately 35 public comments were received in response to 
Decision 

[[Page 54385]]
No. 1. Comments were filed by shippers, government parties, railroads, 
electric utility interests, and rail labor unions. Most of the 
commenters opposed the Commission's suggested variation on applicants' 
proposed procedural schedule. Several commenters supported the 
applicants' proposed 195-day schedule or stated that the proposed 
schedule offered them the minimum amount of time in which they could 
prepare their submissions. Several commenters opposed the proposed 195-
day schedule as being too short, and suggested alternative procedural 
schedules extending from 9 months to the full 2\1/2\ years allotted 
under the statute. After reviewing all of the comments we received on 
the proposed procedural schedule, we have determined that a 255-day 
procedural schedule (which is 60 days more than applicants have 
proposed) will ensure that all parties are accorded due process and 
allow us time to consider fully all of the issues in this proceeding.
    We believe that applicants have demonstrated reasons for, and that 
circumstances justify, a departure from standard procedures and 
deadlines in merger proceedings. We have established that it is 
possible to review major merger proceedings in less time than that 
allowed by the Interstate Commerce Act and by our regulations, while 
still considering all parties' concerns. If we set a procedural 
schedule that is longer than is necessary for all parties to present 
concerns and for us to carefully consider those concerns and the 
effects of the proposed transaction on the public interest, it would be 
a step backward in our effort to process applications fairly but 
efficiently.
    Within this expedited schedule, we will consider all issues 
affecting the public interest, and will also address cumulative impacts 
and crossover effects of prior mergers as appropriate. Further, we will 
consider the transaction in light of any settlement agreements the 
applicants have reached or may reach with any parties, regardless of 
the complexity of the agreements.
    We issued an expedited schedule in Burlington Northern Inc. and 
Burlington Northern Railroad Company--Control and Merger--Santa Fe 
Pacific Corporation and The Atchison, Topeka and Santa Fe Railway 
Company, Finance Docket No. 32549, Decision No. 10 (ICC served Mar. 7, 
1995). We do not believe that the fact that the BN/Santa Fe application 
had been filed several months before we adopted the expedited 
procedural schedule justifies an additional 5 months to prepare 
opposition evidence in this proceeding, as some parties suggest. In 
that case, we responded to parties' requests (arguing that they did not 
want to expend resources to analyze an application when they were not 
sure who would be the applicants) by suspending the procedural schedule 
pending Santa Fe Pacific Corp.'s shareholders' vote. Subsequently, the 
feedback we received at the time we sought comments on expediting the 
schedule in BN/Santa Fe indicated that many parties had not begun to 
prepare their submissions in earnest until issuance of the procedural 
schedule. Those parties had ample time to prepare their submissions, 
and their submissions were given serious and substantial consideration. 
The same will be true in this proceeding.
    We also do not believe that the uncertainty of the Commission's 
future justifies a longer procedural schedule; the Commission continues 
to be responsible for performing its functions efficiently and 
effectively. The issue of the agency's future and any effect that it 
might have on the UP/SP proceeding can be addressed if necessary as 
circumstances evolve.
    We are not unmindful of the concerns parties raise regarding the 
amount of time necessary to prepare their cases, and have crafted the 
attached procedural schedule with fairness to all parties in mind. We 
have adjusted applicants' proposed procedural schedule to give more 
time for the filing of comments, protests, requested conditions, and 
inconsistent and responsive applications; for the filing of rebuttals 
in support of inconsistent and responsive applications; for the filing 
of briefs; and for the preparation for oral argument.
    All interested parties, including the United States Department of 
Justice (DOJ) and the United States Department of Transportation 
(USDOT), may file written comments, protests, requests for conditions, 
and inconsistent and responsive applications 120 days (rather than 90 
days) after the filing of the primary application. All descriptions of 
inconsistent and responsive applications, as well as petitions for 
waiver or clarification, will be due 60 days after the filing of the 
primary application.
    We will not allow parties filing comments, protests, and requests 
for conditions to file rebuttal in support of those pleadings. As we 
have mentioned previously, we believe that parties filing inconsistent 
and/or responsive applications have a right to file rebuttal evidence, 
while parties simply commenting, protesting, or requesting conditions 
do not. In the BN/Santa Fe proceeding we stated:

    The relief responsive applicants seek is different from the 
relief that parties simply requesting conditions seek. 
Traditionally, applicants, whether they are primary or responsive 
applicants, have the right to close the evidentiary record on their 
case. Therefore, responsive applicants can answer arguments made in 
opposition to their application in rebuttal filings. Parties seeking 
conditions, on the other hand, come to the Commission as part of and 
in opposition to the primary application, and the primary applicants 
respond to those parties in their rebuttal in support of the primary 
application. Allowing * * * rebuttal evidence would deprive the 
primary applicants of their right to close the evidentiary record on 
their case. We see no necessity for such filings, and believe the 
current procedural schedule will allow the Commission to fully 
comprehend and evaluate all issues that the parties seeking 
conditions will raise in this proceeding.

BN/Santa Fe, Decision No. 16 at 11. Rebuttals in support of 
inconsistent and responsive applications are due 15 days (rather than 
10 days) after the filing of responses to those applications are due.
    In pursuing discovery and in preparing pleadings, we encourage the 
parties (and will instruct the Administrative Law Judge) to focus 
strictly on relevant issues, as identified by the applicable statutory 
standards and our control regulations, including our merger policy 
statement (49 CFR 1180.1). For example, arguments that the transaction 
will cause competitive harm should be accompanied by a clear statement 
of how rates will be raised, service degraded, or both, in some 
identifiable market. Responses countering such competitive arguments 
should explain clearly why those adverse impacts will not occur.
    Briefs are due 20 days (rather than 10 days) after the close of the 
evidentiary record. In spite of arguments that we should not limit 
briefs to 50 pages, we believe that past experience demonstrates that 
it is appropriate to do so. We will impose no page limitations on 
evidentiary submissions. Briefs must be filed in accordance with the 
requirements at 49 CFR 1104.2 (8\1/2\ by 11; double-spaced). Because 
reply briefs appear to be unnecessary to complete our review of a 
merger, we do not anticipate granting any requests to file reply 
briefs. Further, we do not see a necessity at this time to schedule an 
oral hearing to resolve issues of disputed fact. We can schedule such a 
hearing if and when it becomes necessary to do so.
    Oral argument will be scheduled no earlier than 30 days (rather 
than 15 days) after briefs are due. The scheduling of an oral argument 
and a 

[[Page 54386]]
voting conference is at the Commission's discretion. Although we have 
found from our experience in BN/Santa Fe that we had adequate time to 
fully digest and consider the parties' arguments and responses to 
questions at oral argument, and to weigh these arguments in our 
decisionmaking process at a voting conference held the following day, 
we are planning to allow an extra day between an oral argument and a 
voting conference in this proceeding.
    A few other matters require our attention. USDOT raises an issue 
regarding the service list in this proceeding. USDOT contends that 
accelerated review of the merger only can take place if the Commission 
issues a definitive service list early in the case to ensure timely 
receipt of the evolving record. Because in BN/Santa Fe the Commission 
issued its service list after all opposition evidence was filed, USDOT 
argues that it lost time trying to secure copies of evidentiary filings 
from participants, and in turn had trouble meeting subsequent 
deadlines.
    We agree that issuing an accurate service list at an earlier stage 
in this proceeding would help to facilitate parties' participation 
under an accelerated procedural schedule. Therefore, rather than 
adhering to the practice of compiling and issuing a service list after 
parties file comments, we will issue the definitive service list before 
the filing of comments, requests for conditions, inconsistent and 
responsive applications, and other opposition evidence are due in this 
proceeding. To compile and issue timely an accurate service list, we 
are requiring persons to notify the Commission in writing, within 45 
days after the primary application is filed, of their intent to 
participate in this proceeding.
    Another party, Gulf Rice Arkansas (GRA), seeks clarification of 
whether the investigation of abandonment protests will be accomplished 
through an oral hearing. Under 49 U.S.C 10904, which outlines the 
procedures for applications to abandon lines or discontinue service on 
lines, there is no specific provision for an oral hearing to 
investigate protests. The statute states that, if the Commission 
determines that an investigation is necessary, it must be completed 
within 135 days after the date the abandonment application is filed. At 
this time it is not possible to determine whether an oral hearing will 
be necessary, although unlikely, in order to investigate a particular 
proposed abandonment.
    In order for us to fulfill our responsibilities under the National 
Environmental Policy Act and other environmental laws, inconsistent 
applications and responsive applications must contain certain 
environmental information. Anyone desiring to file an inconsistent or a 
responsive application involving significant operational changes or an 
action such as a rail line abandonment or construction under 49 CFR 
1105.6(b)(4) of our environmental rules must include, with its 
application, a preliminary draft environmental assessment (PDEA). 
Generally, these types of actions require an environmental report under 
49 CFR 1105.6(b)(4) which would form the basis of a subsequent 
environmental assessment (or environmental impact statement, if 
warranted). Here, because of the accelerated time frames, a PDEA is 
necessary at the outset.
    The preparation of a PDEA should not be burdensome. Although the 
information would be presented in a somewhat different format, the PDEA 
should address essentially the same environmental issues that would 
have been covered by an environmental report. The PDEA, like the 
environmental report, should be based on consultations with the Section 
of Environmental Analysis (SEA) and the various agencies set forth in 
49 CFR 1105.7(b). SEA will be available to provide assistance as 
needed. SEA will use the PDEA to expedite the environmental review 
process. If a PDEA is not submitted or is insufficient, we will not 
process the inconsistent or responsive application.
    If an inconsistent or responsive application does not involve 
significant operational changes or an action such as an abandonment or 
construction, it generally is exempt from environmental review. The 
applicant must certify, however, that the proposal meets the exemption 
criteria under 49 CFR 1105.6(c)(2). Anyone desiring to file an 
inconsistent application or responsive application should consult with 
SEA as early as possible regarding the appropriate environmental 
documentation.
    If the parties wish to engage in any discovery or establish any 
discovery guidelines (see, e.g., the proposed discovery guidelines in 
UP/SP-4), they are directed to consult with Administrative Law Judge 
Jerome Nelson. Judge Nelson is authorized to convene a discovery 
conference, if necessary and as appropriate, in Washington, DC, and to 
establish such discovery guidelines, if any, as he deems appropriate. 
However, Judge Nelson is not authorized to make adjustments to, or to 
modify, the dates in the procedural schedule. We believe the schedule 
as adopted allows sufficient time for meaningful discovery. Any 
interlocutory appeal to a decision issued by Judge Nelson will be 
governed by the stringent standard of 49 CFR 1115.1(c): ``Such appeals 
are not favored; they will be granted only in exceptional circumstances 
to correct a clear error of judgment or to prevent manifest 
injustice.'' See Union Pacific Corporation, Union Pacific Railroad 
Company and Missouri Pacific Railroad Company--Control--Chicago and 
North Western Transportation Company and Chicago and North Western 
Railway Company, Finance Docket No. 32133, Decision No. 17, at 9 (ICC 
served July 11, 1994) (applying the ``stringent standard'' of 49 CFR 
1115.1(c) to an appeal of an interlocutory decision issued by former 
Chief Administrative Law Judge Paul S. Cross).\3\

    \3\ For the purposes of the present proceeding, we think it 
appropriate to tighten the deadlines provided by 49 CFR 1115.1(c). 
Accordingly, the provisions of the second sentence of 49 CFR 
1115.1(c) to the contrary notwithstanding, an appeal to a decision 
issued by Judge Nelson must be filed within 3 working days of the 
date of his decision, and any response to any such appeal must be 
filed within 3 working days thereafter. Likewise, any reply to any 
procedural motion filed with the Commission itself in the first 
instance must also be filed within 3 working days.
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    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: October 17, 1995.

    By the Commission, Chairman Morgan, Vice Chairman Owen, and 
Commissioner Simmons.
Vernon A. Williams,
Secretary.

Final Procedural Schedule

F--Primary application and related applications filed.
F+30--Commission notice of acceptance of primary application and 
related applications published in the Federal Register.
F+45--Notification of intent to participate in proceeding due.
F+60--Description of anticipated inconsistent and responsive 
applications due; petitions for waiver or clarification due.
F+120--Inconsistent and responsive applications due. All comments, 
protests, requests for conditions, and any other opposition evidence 
and argument due. DOJ and USDOT comments due.
F+135--Notice of acceptance (if required) of inconsistent and 
responsive applications published in the Federal Register. 

[[Page 54387]]

F+150--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+165--Rebuttal in support of inconsistent and responsive applications 
due.
F+185--Briefs due, all parties (not to exceed 50 pages).
F+215--Oral argument (at Commission's discretion).
F+217--Voting Conference (at Commission's discretion).
F+255--Date of service of final decision.

    Notes: Immediately upon each evidentiary filing, the filing 
party will 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 will make its witnesses 
available for discovery depositions. Access to documents subject to 
protective order will be appropriately restricted. Parties seeking 
discovery depositions may proceed by agreement. Relevant excerpts of 
transcripts will be received in lieu of cross-examination, unless 
cross-examination is needed to resolve material issues of disputed 
fact. Discovery on responsive and inconsistent applications will 
begin immediately upon their filing. The Administrative Law Judge 
assigned to this proceeding will have the authority initially to 
resolve any discovery disputes.

[FR Doc. 95-26271 Filed 10-20-95; 8:45 am]
BILLING CODE 7035-01-P