[Federal Register Volume 60, Number 248 (Wednesday, December 27, 1995)]
[Notices]
[Pages 66988-66994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31333]
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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. 9; Notice of Acceptance of Application.1
\1\ This designation embraces the following: (1) Finance Docket
No. 32760 (Sub-No. 1), Union Pacific Railroad Company, Missouri
Pacific Railroad Company, Southern Pacific Transportation Company,
St. Louis Southwestern Railway Company, SPCSL Corp., and The Denver
and Rio Grande Western Railroad Company--Trackage Rights Exemption--
Burlington Northern Railroad Company and The Atchison, Topeka and
Santa Fe Railway Company; (2) Finance Docket No. 32760 (Sub-No. 2),
Burlington Northern Railroad Company and The Atchison, Topeka and
Santa Fe Railway Company--Petition for Exemption--Acquisition and
Operation of Trackage in California, Texas, and Louisiana; (3)
Finance Docket No. 32760 (Sub-No. 3), Union Pacific Corporation,
Union Pacific Railroad Company, Missouri Pacific Railroad Company,
Southern Pacific Rail Corporation, Southern Pacific Transportation
Company, St. Louis Southwestern Railway Company, SPCSL Corp., and
The Denver and Rio Grande Western Railroad Company--Control
Exemption--The Alton & Southern Railway Company; (4) Finance Docket
No. 32760 (Sub-No. 4), Union Pacific Corporation, Union Pacific
Railroad Company, Missouri Pacific Railroad Company, Southern
Pacific Rail Corporation, Southern Pacific Transportation Company,
St. Louis Southwestern Railway Company, SPCSL Corp., and The Denver
and Rio Grande Western Railroad Company--Control Exemption--Central
California Traction Company; (5) Finance Docket No. 32760 (Sub-No.
5), Union Pacific Corporation, Union Pacific Railroad Company,
Missouri Pacific Railroad Company, Southern Pacific Rail
Corporation, Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, SPCSL Corp., and The Denver and Rio
Grande Western Railroad Company--Control Exemption--The Ogden Union
Railway & Depot Company; (6) Finance Docket No. 32760 (Sub-No. 6),
Union Pacific Corporation, Union Pacific Railroad Company, Missouri
Pacific Railroad Company, Southern Pacific Rail Corporation,
Southern Pacific Transportation Company, St. Louis Southwestern
Railway Company, SPCSL Corp., and The Denver and Rio Grande Western
Railroad Company--Control Exemption--Portland Terminal Railroad
Company; (7) Finance Docket No. 32760 (Sub-No. 7), Union Pacific
Corporation, Union Pacific Railroad Company, Missouri Pacific
Railroad Company, Southern Pacific Rail Corporation, Southern
Pacific Transportation Company, St. Louis Southwestern Railway
Company, SPCSL Corp., and The Denver and Rio Grande Western Railroad
Company--Control Exemption--Portland Traction Company; (8) Finance
Docket No. 32760 (Sub-No. 8), Union Pacific Corporation, Union
Pacific Railroad Company, Missouri Pacific Railroad Company,
Southern Pacific Rail Corporation, Southern Pacific Transportation
Company, St. Louis Southwestern Railway Company, SPCSL Corp., and
The Denver and Rio Grande Western Railroad Company--Control
Exemption--Overnite Transportation Company, Southern Pacific Motor
Trucking Company, and Pacific Motor Transport Company; (9) Finance
Docket No. 32760 (Sub-No. 9), Burlington Northern Railroad Company
and The Atchison, Topeka and Santa Fe Railway Company--Terminal
Trackage Rights--Kansas City Southern Railway Company; (10) Docket
No. AB-3 (Sub-No. 129X), Missouri Pacific Railroad Company--
Abandonment Exemption--Gurdon-Camden Line In Clark, Nevada, and
Ouachita Counties, AR; (11) Docket No. AB-3 (Sub-No. 130), Missouri
Pacific Railroad Company--Abandonment--Towner-NA Junction Line In
Kiowa, Crowley, and Pueblo Counties, CO, and Docket No. AB-8 (Sub-
No. 38), The Denver and Rio Grande Western Railroad Company--
Discontinuance of Trackage Rights--Towner-NA Junction Line In Kiowa,
Crowley, and Pueblo Counties, CO; (12) Docket No. AB-3 (Sub-No.
131), Missouri Pacific Railroad Company--Abandonment--Hope-
Bridgeport Line In Dickinson and Saline Counties, KS, and Docket No.
AB-8 (Sub-No. 37), The Denver and Rio Grande Western Railroad
Company--Discontinuance of Trackage Rights--Hope-Bridgeport Line In
Dickinson and Saline Counties, KS; (13) Docket No. AB-3 (Sub-No.
132X), Missouri Pacific Railroad Company--Abandonment Exemption--
Whitewater-Newton Line In Butler and Harvey Counties, KS; (14)
Docket No. AB-3 (Sub-No. 133X), Missouri Pacific Railroad Company--
Abandonment Exemption--Iowa Junction-Manchester Line In Jefferson
Davis and Calcasieu Parishes, LA; (15) Docket No. AB-3 (Sub-No.
134X), Missouri Pacific Railroad Company--Abandonment Exemption--
Troup-Whitehouse Line In Smith County, TX; (16) Docket No. AB-8
(Sub-No. 36X), The Denver and Rio Grande Western Railroad Company--
Discontinuance Exemption--Sage-Leadville Line In Eagle and Lake
Counties, CO, and Docket No. AB-12 (Sub-No. 189X), Southern Pacific
Transportation Company--Abandonment Exemption--Sage-Leadville Line
In Eagle and Lake Counties, CO; (17) Docket No. AB-8 (Sub-No. 39),
The Denver and Rio Grande Western Railroad Company--Discontinuance--
Malta-Canon City Line In Lake, Chaffee and Fremont Counties, CO, and
Docket No. AB-12 (Sub-No. 188), Southern Pacific Transportation
Company--Abandonment--Malta-CaNon City Line In Lake, Chafee, and
Fremont Counties, CO; (18) Docket No. AB-12 (Sub-No. 184X), Southern
Pacific Transportation Company--Abandonment Exemption--Wendel-
Alturas Line In Modoc and Lassen Counties, CA; (19) Docket No. AB-12
(Sub-No. 185X), Southern Pacific Transportation Company--Abandonment
Exemption--Suman-Bryan Line In Brazos and Robertson Counties, TX;
(20) Docket No. AB-12 (Sub-No. 187X), Southern Pacific
Transportation Company--Abandonment Exemption--Seabrook-San Leon
Line In Galveston and Harris Counties, TX; (21) Docket No. AB-33
(Sub-No. 93X), Union Pacific Railroad Company--Abandonment
Exemption--Whittier Junction-Colima Junction Line In Los Angeles
County, CA; (22) Docket No. AB-33 (Sub-No. 94X), Union Pacific
Railroad Company--Abandonment Exemption--Magnolia Tower-Melrose Line
In Alameda County, CA; (23) Docket No. AB-33 (Sub-No. 96), Union
Pacific Railroad Company--Abandonment--Barr-Girard Line In Menard,
Sangamon, and Macoupin Counties, IL; (24) Docket No. AB-33 (Sub-No.
97X), Union Pacific Railroad Company--Abandonment Exemption--DeCamp-
Edwardsville Line In Madison County, IL; (25) Docket No. AB-33 (Sub-
No. 98X), Union Pacific Railroad Company--Abandonment Exemption--
Edwardsville-Madison Line In Madison County, IL; (26) Docket No. AB-
33 (Sub-No. 99X), Union Pacific Railroad Company--Abandonment
Exemption--Little Mountain Jct.-Little Mountain Line In Box Elder
and Weber Counties, UT.
[[Page 66989]]
SUMMARY: The Commission is accepting for consideration the application
filed November 30, 1995,2 by 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) 3 (collectively applicants),
seeking Commission approval and authorization 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.4 Applicants are directed to provide certain
additional information.
\2\ We are also accepting for consideration applicants'
supplement to the primary application, filed on or about December
21, 1995.
\3\ 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.
\4\ SPT is a wholly owned subsidiary of SPR. SPCSL and DRGW are
wholly owned subsidiaries of SPT. SPT owns 99.9% of SSW.
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DATES: The effective date of this decision is December 27, 1995.
Parties must file notification of intent to participate in this
proceeding by January 16, 1996. Descriptions of inconsistent and
responsive applications, and petitions for waiver or clarification
regarding those applications, must be filed by January 29, 1996.
Inconsistent and responsive applications, written comments, including
comments of the United States Department of Justice (DOJ) and the
United States Department of Transportation (USDOT), protests, requests
for conditions, and any other opposition evidence and argument must be
filed by March 29, 1996. For further information, see the attached
procedural schedule.5
\5\ WWe adopted the procedural schedule set forth below in
Decision No. 6, served October 19, 1995. There have been minor
adjustments to dates falling on Saturdays, Sundays, or legal
holidays.
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, N.W., Washington, DC
20423.6
\6\ Legislation to sunset the Commission on December 31, 1995,
and to transfer remaining functions is now under consideration in
Congress. Until further notice, parties submitting pleadings should
continue to use the current name and address.
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In addition, one copy of all documents in this proceeding must be
sent to each of applicants' representatives: (1) Arvid E. Roach II,
Esq., Covington & Burling, 1201 Pennsylvania Avenue, N.W., P.O. Box
7566, Washington, DC 20044; and (2) Paul A. Cunningham, Esq., Harkins
Cunningham, 1300 Nineteenth Street, N.W., Washington, DC 20036.
FOR FURTHER INFORMATION CONTACT: Julia Farr, (202) 927-5352. [TDD for
the hearing impaired: (202) 927-5721.]
SUPPLEMENTARY INFORMATION: On November 30, 1995, pursuant to 49 U.S.C.
11343-45 and our rules at 49 CFR 1180.4, applicants filed an
application for approval of: (1) The acquisition of control of SPR by
Acquisition; (2) the merger of SPR into UPRR; and (3) the resulting
common control of UP and SP by UPC. Applicants also filed several
related applications, petitions for exemption, and notices of
exemption.7
\7\ Under 49 CFR 1180.4(c)(2)(vi), all directly related
applications, petitions, and notices of exemption must be filed
concurrently with the primary control and merger application.
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Applicants filed a notice of exemption for settlement-related
trackage rights pursuant to an agreement they reached with Burlington
Northern Railroad Company and The Atchison, Topeka, and Santa Fe
Railway Company (collectively, BN/Santa Fe) [Finance Docket No. 32760
(Sub-No. 1)].8 The trackage rights are to be effective when and if
applicants receive and exercise
[[Page 66990]]
the control authority requested in Finance Docket No. 32760.
\8\ Applicants originally reached an agreement with BN/Santa Fe
on September 25, 1995. They reached a supplemental agreement on
November 18, 1995, which governs the grants of trackage rights.
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Applicants and BN/Santa Fe filed a petition for exemption from
regulation under 49 U.S.C. 10505 for the acquisition and operation of
trackage in the states of California, Texas, and Louisiana [Finance
Docket No. 32760 (Sub-No. 2)]. This petition is also filed pursuant to
the settlement agreements applicants reached with BN/Santa Fe.
Applicants seek exemption from regulation under 49 U.S.C. 10505 for
the merged entity to control the Alton & Southern Railway Company
[Finance Docket No. 32760 (Sub-No. 3)], Central California Traction
Company [Finance Docket No. 32760 (Sub-No. 4)], The Ogden Union Railway
& Depot Company [Finance Docket No. 32760 (Sub-No. 5)], Portland
Terminal Railroad Company [Finance Docket No. 32760 (Sub-No. 6)], and
Portland Traction Company [Finance Docket No. 32760 (Sub-No. 7)].
Applicants also seek exemption from regulation under section 10505 for
the merged entity to control the following motor carriers: Overnite
Transportation Company, Southern Pacific Motor Trucking Company, and
Pacific Motor Transport Company [Finance Docket No. 32760 (Sub-No. 8)].
Applicants and BN/Santa Fe also filed an application for terminal
rights requesting that we enter an order under 49 U.S.C. 11103
permitting BN/Santa Fe to use two segments of Kansas City Southern
Railway Company terminal trackage in Shreveport, LA, and Beaumont, TX
[Finance Docket No. 32760 (Sub-No. 9)]. Applicants and BN/Santa Fe
allege that BN/Santa Fe's use of these tracks is necessary for BN/Santa
Fe to promote stronger rail competition to a merged UP/SP system in the
Houston-Memphis and Houston-New Orleans corridors, pursuant to the
settlement agreements.
Various applicants seek exemption from regulation under 49 U.S.C.
10505 for abandonments related to the primary application. MPRR seeks
exemption for two related abandonments [Docket No. AB-3 (Sub-Nos. 129X
and 133X); SPT for two related abandonments [Docket No. AB-12 (Sub-Nos.
184X and 185X)], and UPRR for one related abandonment [Docket No. AB-33
(Sub-No. 98X)]. DRGW and SPT filed a merger-related petition for
exemption from regulation under section 10505 to abandon and
discontinue service on another line [Docket No. AB-8 (Sub-No. 36X) and
Docket No. AB-12 (Sub-No. 189X)].
MPRR filed notices of exemption pursuant to 49 CFR 1152, Subpart F,
for two abandonments related to the primary application [Docket No. AB-
3 (Sub-Nos. 132X and 134X); SPT filed a notice for one related
abandonment [Docket No. AB-12 (Sub-No. 187X)]; and UPRR filed notices
for four related abandonments [Docket No. AB-33 (Sub-Nos. 93X, 94X,
97X, and 99X)].
MPRR and DRGW filed two applications for abandonment and
discontinuance of trackage rights pursuant to 49 CFR 1152.22 [Docket
No. AB-3 (Sub-No. 130) and Docket No. AB-8 (Sub-No. 38)], [Docket No.
AB-3 (Sub-No. 131) and Docket No. AB-8 (Sub-No. 37)].
DRGW and SPT filed an application pursuant to 49 CFR 1152.22 to
permit discontinuance of operations on and abandonment of a portion of
railroad [Docket No. AB-8 (Sub-No. 39) and Docket No. AB-12 (Sub-No.
188)]. UPRR filed an application pursuant to 49 CFR 1152.22 to permit
abandonment of and discontinuance of service on a railroad line [Docket
No. AB-33 (Sub-No. 96)].
According to applicants, the proposed transaction involves the
acquisition and exercise of control of SPR and its subsidiaries,
including those which are carriers by rail, by UPC and its wholly owned
subsidiaries, UPRR and MPRR.9 Applicants submitted an operating
plan detailing how they will consolidate UP and SP rail operations upon
consummation of the transaction. UPC, Acquisition, UPRR, and SPR are
parties to an Agreement and Plan of Merger dated August 3, 1995 (the
Merger Agreement).10 Applicants state that the Merger Agreement
calls for Acquisition to acquire all of the common stock of SPR, and
for SPR to be merged with and into UPRR. The separate corporate
existence of SPR will cease and UPRR will be the surviving
corporation.11
\9\ SPT, and its majority owned railroad subsidiaries-- SPCSL,
DRGW, and SSW--are an integrated, single system railroad. As such,
the acquisition of control of SPR by UPRR involves the control of a
single carrier within the meaning of 49 U.S.C. 11343. See Robert W.
Bethge & Raymond K. Wilson--Control Exemption--Canal Cartage Co.,
Finance Docket No. MC-F-19525 (ICC served Nov. 29, 1989); Burlington
Northern, Inc.--Control and Merger--St. Louis-San Francisco Ry., 366
I.C.C. 862, aff'd sub nom. Brotherhood of Ry. & Airline Clerks v.
Burlington Northern Inc., 722 F.2d 380 (8th Cir. 1983); Katy Indus.,
Inc.--Control--Missouri-Kansas-Texas R.R., 331 I.C.C. 405, 410-411
(1967); Kansas City Southern Indus. Inc.--Control--Kansas City S.
Ry., 317 I.C.C. 1, 4 (1962); Woods Indus., Inc.--Control--United
Transports, Inc., 85 M.C.C. 672, 675 (1960); Louisville &
Jeffersonville B. & R. Co. Merger, 295 I.C.C. 11, 17-18 (1955),
aff'd sub nom. Alleghany Corp. v. Breswick & Co., 353 U.S. 151
(1957).
\10\ Applicants state that, at a special meeting of stockholders
expected to be held in December 1995, SPR stockholders will consider
the merger pursuant to the Merger Agreement.
\11\ As noted, applicants intend to consolidate the railroad
operations of UP and SP through the merger of SPR into UPRR.
However, they state that, depending upon tax, financial and other
circumstances, they may effect the consolidation by other means,
including, for example, the merger of SPR into MPRR or the lease of
all of SP's properties to UPRR and/or MPRR. Applicants also maintain
that they intend to merge SPT, SSW, SPCSL and DRGW into UPRR,
although these SPR subsidiaries may retain their separate existence
for some time. Further, applicants state that it is possible that,
instead of the expected mergers, some or all of the entities will be
merged into, or their assets leased to, MPRR, or applicants may use
other means to accomplish their consolidation into the merged
system.
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Pursuant to the Merger Agreement, Acquisition made a tender offer
on August 9, 1995, for up to 25% of SPR common stock at $25.00 per
share in cash. On September 7, 1995, the tender offer was completed for
39,034,471 shares. On September 15, 1995, Acquisition purchased the
shares accepted for payment under the tender offer for approximately
$976 million.12 These shares are being held in a voting trust
pending approval of the merger.
\12\ In Union Pacific Corp.--Securities Exemption (Tender
Offer), Finance Docket No. 32761 (ICC served Aug. 21, 1995), we
granted an exemption for the issuance of debt securities to finance
the purchase price of these shares.
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According to applicants, upon satisfaction of all conditions to the
merger, SPR's stockholders will have the right to submit a request
specifying the number of shares that they desire to have converted into
(a) .4065 shares of the common stock of UPC per share, and (b) the
right to receive $25.00 per share in cash, without interest. The
aggregate number of shares to be converted into cash consideration at
the time of the merger, together with shares tendered in the tender
offer, will be equal as nearly as possible to 40% of all shares
outstanding as of the date immediately prior to the date on which the
merger becomes effective, applicants state. To the extent that SPR
stockholders elect in the aggregate to receive either cash
consideration or stock consideration in excess of such proportions, the
Merger Agreement requires the cash or stock component to be prorated in
order to achieve the specified proportions. Applicants request that,
pursuant to Schwabacher v. United States, 334 U.S. 192 (1948), we
determine that the agreed-upon terms for the purchase of the common
stock of SPR by Acquisition are fair to both the stockholders of UPC
and the stockholders of SPR.13
\13\ According to applicants, SSW has a small number of minority
equity holders, and the Federal Railroad Administration also holds
certain SSW redeemable preference shares. At this time, applicants
state, they are not requesting a fairness determination pursuant to
Schwabacher with respect to the compensation that might be paid to
SSW security holders in connection with a merger of SSW into UPRR or
MPRR because tax and other considerations need to be resolved before
applicants can determine whether such a merger will occur, and if
so, on what terms. Applicants state that, if they determine to carry
out such a merger, they will request a finding from us regarding the
fairness of the terms or a declaratory order that no such finding is
required.
[[Page 66991]]
Applicants allege that borrowings in connection with the purchase
by Acquisition of the remaining common stock of SPR will add
``modestly'' to UPC's fixed charges, and state that UPC will be able to
absorb these additional charges.
According to applicants, UPC will pay approximately $600 million in
additional cash consideration to complete the Merger. UPC intends
initially to finance such amount through (a) the issuance of public or
private long-term or short-term borrowings, which may be evidenced by
securities (the Debt Securities), (b) the issuance of preferred stock
or UPC common stock (the Equity Securities) or, (c) the issuance of a
combination of Debt Securities and Equity Securities. Applicants state
that these security issuances may require authorization under 49 U.S.C.
11301. Alternatively, UPC may initially finance the additional cash
consideration under the Merger with borrowings under one or more new
credit or other facilities to be established with various banks or
other parties and/or certain existing credit facilities (the Credit
Facilities) under which the indebtedness borrowed will not be evidenced
by notes or other securities subject to 49 U.S.C. 11301. If the Credit
Facilities are used initially to finance such amount, borrowings
thereunder will be refinanced through the issuance of Debt Securities
or Equity Securities or a combination thereof, applicants state. The
proceeds from the Debt Securities and/or Equity Securities may also be
used to finance interest accrued on the Credit Facilities or the Debt
Securities. In applicants' view, based on the amount of SPR common
stock outstanding on September 30, 1995, UPC will also be required to
issue approximately 38 million shares of UPC common stock 14 in
order to pay the stock consideration required to complete the Merger
(together with the Debt Securities and Equity Securities, the
Securities).
\14\ In the Merger Agreement, SPR agrees that no more than
158,316,398 shares of SPR common stock will be outstanding at the
time of the Merger. If the maximum were outstanding, this would
result in the issuance of approximately 39 million shares of UPC
common stock.
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Applicants state that, in the event of the merger of SPR, SPT, SSW,
SPCSL, or DRGW into UPRR or MPRR, UPRR or MPRR will assume obligations
associated with certain debt securities or obligations related to
securities then outstanding of the entities, to the extent permitted or
required by applicable agreements and instruments and provided such
obligations are not redeemed or retired at that time.
Applicants note that, although not a carrier, UPC must ``file
applications under 49 U.S.C. 11301 and 11302 for those issuances of
securities and assumptions of obligations which may relate to or affect
the activities of carrier subsidiaries.'' 15 UPRR, as a carrier,
is also subject to such provisions with respect to the issuance of
securities and assumption of debt obligations, applicants state. To the
extent Commission authorization may be required under 49 U.S.C. 11301,
applicants request an exemption from such requirements for the issuance
of the Securities in order to complete the merger and for the
assumption of or succession to any assumed obligations pursuant to
subsidiary mergers or similar transactions, pursuant to 49 U.S.C.
10505. Alternatively, applicants request that we approve such issuance
of the Securities and assumption of or succession to any assumed
obligations pursuant to 49 U.S.C. 11301.
\15\ Union Pacific--Control--Missouri Pacific; Western Pacific,
366 I.C.C. 459, 640 (1982), aff'd in part & remanded in part sub
nom. Southern Pacific Transportation Co. v. ICC, 736 F.2d 708 (D.C.
Cir. 1984), cert. denied, 469 U.S. 1208 (1985).
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According to applicants, UPRR operates approximately 13,646 miles
of railroad in the Western United States, consisting of approximately
9,820 miles of main line and approximately 3,826 miles of branch line.
The main lines run from the Pacific Coast ports and terminals of
Seattle, WA, Portland, OR, and Oakland and Los Angeles, CA, to Chicago,
IL, and Missouri River gateways including Kansas City and Omaha/Council
Bluffs. Routes over main lines extend from the Pacific Northwest
through the States of Washington, Oregon, Idaho, and Utah to Ogden/Salt
Lake City, UT, from Northern California through Nevada and Utah to
Ogden/Salt Lake City, and from Southern California through Nevada and
Utah to Ogden/Salt Lake City. UPRR's double-track main line connects
Omaha/Council Bluffs at the East with Ogden/Salt Lake City at the West,
and runs through Nebraska, Colorado, Wyoming, and Utah.
With the recent merger of Chicago and North Western Railway Company
(CNW) into UPRR, state applicants, UPRR's lines also run from Chicago,
IL, to Milwaukee, WI, and then to Winona, MN, and (via trackage rights
over Wisconsin Central Ltd.) Duluth/Superior, and from Duluth/Superior
to Minneapolis/St. Paul (via trackage rights over BN) and then to Des
Moines, IA, and Kansas City. In addition, applicants note, UPRR
transports low-sulfur coal from the Southern Powder River Basin in
Wyoming in unit trains. These are principally destined for electric
generating plants, the majority of which are located in the Southwest
and Midwest. UPRR also provides commuter service in the Chicago area
under a purchase-of-service contract with Metra. A UPRR line extends
from a point near Green Bay, WI, to Ishpeming and Escanaba, MI, while
UPRR's Milwaukee-to-St. Louis line passes through Chicago. UPRR has a
network of branch lines in Iowa and Southern Minnesota, and a line
extending from Northwestern Nebraska into South Dakota and Wyoming.
MPRR operates approximately 8,361 miles of railroad in the
Midwestern and the Southwestern United States, consisting of
approximately 7,508 miles of main line and approximately 853 miles of
branch line. MPRR's lines connect the major midwest gateways of
Chicago, Omaha, St. Louis, Memphis, and Kansas City with the principal
ports and the terminals of New Orleans and Lake Charles, LA, and
Galveston, Houston, Beaumont, Corpus Christi, Brownsville, and Laredo,
TX. MPRR also serves interior Texas points including Dallas, Fort
Worth, San Antonio, Austin, Midland/Odessa, and El Paso. Its lines
extend into the grain producing regions of Kansas and Nebraska and as
far west as Pueblo, CO.
SPT operates approximately 11,000 miles of railroad in the Western
United States, consisting of approximately 8,700 miles of main line and
approximately 2,300 miles of branch line in eight states. The main
lines run from Portland, to Oakland, to Los Angeles, and thence to San
Antonio, Houston and New Orleans, including physical interchanges at
five principal gateways to Mexico. SPT lines extend from San Antonio
and Houston to Fort Worth, with operations over trackage rights from
Fort Worth to Pueblo and Kansas City. The Fort Worth-Pueblo line
connects with SSW at Stratford and Dalhart, TX, and to DRGW at Pueblo.
The Fort Worth-Kansas City line connects with SSW at Kansas City and
Hutchinson, KS. SPT's Central Corridor main line runs from Northern
California to Ogden, UT, where it connects with DRGW. SPT's principal
facilities are located at Eugene, OR, Roseville, Oakland, Los Angeles,
Long Beach and West Colton, CA, Tucson, AZ, and El Paso, San Antonio
and Houston, TX.
SSW operates approximately 2,200 miles of railroad in the Central
United States, consisting of approximately 1,700 miles of main line and
[[Page 66992]]
approximately 500 miles of branch line in nine states. SSW's main line
runs from Santa Rosa, NM, to Kansas City and St. Louis, MO. Operations
between Topeka and St. Louis are over trackage rights on UP. SSW main
lines extend from St. Louis south to Shreveport, LA, and Corsicana, TX.
SSW's lines connect with SPT in Corsicana, Dalhart and Stratford, TX,
Hutchinson and Kansas City, KS, Shreveport, LA, and Santa Rosa, NM,
with DRGW at Herington, KS, and with SPCSL at Kansas City, MO and East
St. Louis, IL. At East St. Louis, IL, Memphis, TN, and Kansas City, KS,
SSW connects with major eastern rail carriers. SSW's principal
facilities are located in Kansas City, KS, and Pine Bluff, AR.
SPCSL operates approximately 1,200 miles of main line railroad in
the states of Illinois, Iowa, and Missouri, between St. Louis, Chicago,
and Kansas City, KS. This mileage includes trackage rights between
Kansas City and Chicago on BN/Santa Fe. SPCSL is the link to the
Chicago gateway for the SP system.
DRGW operates approximately 2,300 miles of railroad in the states
of Colorado, Utah, and Kansas, consisting of approximately 1,900 miles
of main line and approximately 400 miles of branch line. The main line
runs from Ogden, UT, in the West, where it connects with SPT, through
Denver, CO, to Herington, KS, where it connects with SSW. DRGW has
rights to operate from Herington to Kansas City over SSW and UP.
Operations between Pueblo and Herington are over trackage rights on UP.
DRGW also connects with SPT at Pueblo. DRGW's principal facilities are
located at Salt Lake City, UT, and Denver, Pueblo, and Grand Junction,
CO.
Applicants assert that the proposed transaction is clearly in the
public interest, and that quantified public benefits will be in excess
of $750 million per year. The rail mode will become more competitive
against truck and water carriers, applicants state, and rail customers
will penetrate new markets, economic activity will increase, and
resources will be used more efficiently. The public benefits will
include new and improved routes, reductions in terminal delay, more
reliable service, improved equipment utilization and availability,
savings from facility consolidations and lower overheads, and increased
capital investments. It is applicants' position that the UP/SP merger,
together with the settlement agreement with BN/Santa Fe, will intensify
rail competition in the West, and will increase source competition.
We are accepting the application for consideration because it
complies with the applicable regulations, waivers, and requirements.
See 49 U.S.C. 11343-45; 49 CFR Part 1180. We reserve the right to
require the filing of supplemental information from applicants or any
other party or individual, as necessary to complete the record in this
matter. We are also accepting all related applications. We note that we
will process the abandonment applications in accordance with the
overall merger procedural schedule, rather than applying the deadlines
found at 49 U.S.C. 10904; it would be premature to process the
abandonment applications without having ruled on the merits of the
merger application, when applicants state that the abandonments are
related to, and contingent upon, the proposed UP/SP
consolidation.16 Similarly, we will not publish the notices of
exemption in the 20-day period called for by our regulations at 49 CFR
1152.50(d)(3). Those abandonments are likewise contingent on approval
of the overall merger transaction; we will not publish the notices and
they will not become effective unless and until we approve the overall
merger transaction.
\16\ Parties commenting on or protesting an abandonment may file
their submissions on March 29, 1996. The applicants may respond to
those comments and protests on April 29, 1996. We will not allow
parties objecting to an abandonment to file rebuttal submissions;
however, all parties may file briefs in support of their positions
on June 3, 1996. In the past, we have deviated from the section
10904 deadlines when circumstances have justified doing so. See
Union Pacific Corporation, Union Pacific Railroad Company and
Missouri Pacific Railroad Company--Control--Missouri-Kansas-Texas
Railroad Company, Finance Docket No. 30800 (ICC served Mar. 30,
1987). See, e.g., Chelsea Property Owners--Abandonment--Portion of
the Consolidated Rail Corporation's West 30th Street Secondary Track
in New York, NY, Docket No. AB-167 (Sub-No. 1094) (ICC served Nov.
24, 1989) at p.2, n.6.
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We are requesting additional information regarding Docket No. AB-12
(Sub-No. 185X). The description of the line at issue (milepost 117.6 to
milepost 101.4 of the Suman-Bryan Line in Brazos and Robertson
Counties, TX) indicates that it is used primarily for through train
service. The sole shipper on the line is located at milepost 104.5. If
the line can be served from either end, and the 3.1-mile segment from
milepost 101.4 to milepost 104.5 maintained, the shipper could still be
served. It is possible that bifurcation of the line segment may be
appropriate.
We request that, within 20 days from the effective date of this
decision, applicants provide traffic data and pro forma operating
results for the bifurcated section (milepost 101.4 to 104.5) for the
most recent 12-month period, preferably through November 1995. The data
submitted should include the following: (1) Traffic (carloads)
transported; (2) crew consist needed; (3) number of train trips
required; (4) service time required per trip; (5) number of locomotives
needed to move the traffic; and (6) the opportunity costs for the
segment.
We also request that applicants submit a complete set of operating
timetables for each applicant carrier's operations to facilitate our
review of the operating plan submitted with the application.
In Decision No. 6, served October 19, 1995, we adopted an expedited
procedural schedule, and we have attached it here to give notice to all
interested persons. All of the filing deadlines are in accordance with
the statute and governing regulations, as modified by that
schedule.17 We advise applicants and all other parties to this
proceeding that, for purposes of this proceeding, they must strictly
comply with all requirements. If questions arise concerning an
interpretation of a requirement, they may contact the Commission's
Office of Proceedings at (202) 927-7513 for assistance. See 49 CFR
1180.4(c)(6)(iii).
\17\ On November 27, 1995, Mr. Scott Manatt filed a petition to
reopen and reconsider the procedural schedule (Decision No. 6) and
the protective order, which we entered in Decision No. 2, served
September 1, 1995. Mr. Manatt also filed a ``demand for notice''
requesting that he receive notice of all hearings, communications,
orders, and motions filed in this proceeding. He requests that
copies of all pleadings filed with the Commission be delivered to
his office in Corning, AR. He further seeks an opportunity to engage
in meaningful discovery, and to appear live before the Commission to
testify in opposition to the merger. He demands that he be placed on
the mailing list of all parties opposing the merger and that he
receive copies of their communications and filings. On December 1,
1995, applicants replied to Mr. Manatt's petition to reopen and
reconsider the protective order and the procedural schedule, noting
that he raises arguments that we have already considered and
rejected. On December 14, 1995, Mr. Manatt filed a response to
applicants' reply. We will not consider Mr. Manatt's reply; under
our regulations, replies to replies are not permitted. 49 CFR
1104.13(c). We are denying Mr. Manatt's requests for relief, but
will place his name on the service list in this proceeding, so that
he will receive copies of all pleadings, Commission decisions, and
decisions of the Administrative Law Judge (ALJ) governing discovery.
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The application and accompanying exhibits are available for
inspection in the Public Docket Room, Room 1221, at the offices of the
Interstate Commerce Commission in Washington, DC.
Any interested persons, including DOJ and USDOT, may file written
comments, protests, requests for conditions, and inconsistent and
responsive applications no later than March 29, 1996. This deadline
applies to all replies, comments, and protests
[[Page 66993]]
addressing all related petitions, notices, and applications filed with
the primary application.18 An original and 20 copies must be filed
with the Secretary, Interstate Commerce Commission, Washington, DC
20423.19
\18\ On December 14, 1995, the International Brotherhood of
Teamsters (IBT) filed a motion for an extension of time in which to
file its reply to applicants' petition for exemption contained in
Finance Docket No. 32760 (Sub-No. 8). Because we are allowing all
parties until March 29, 1996, to file such replies, IBT's request is
moot.
\19\ 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 are
subject to the protective order attached to the Commission's
Decision No. 2 served September 1, 1995, and are for the exclusive
use of Commission employees working directly with review of
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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Written comments must be concurrently served by first class mail on
the United States Secretary of Transportation (USDOT), the Attorney
General of the United States (DOJ), and applicants' representatives.
Written comments must also be served upon all parties of record within
10 days of service of the service list by the Commission. We plan to
issue the service list shortly after parties file their notices of
intent to participate.
Written comments shall include:
1. The docket number and title of the proceeding;
2. The name, address, and telephone number of the commenting party
and its representative upon whom service shall be made;
3. The commenting party's position, i.e., whether it supports or
opposes the proposed transaction;
4. A list of any specific protective conditions sought;
5. An analysis of the issues with particular attention to our
general policy statement for the merger or control of at least two
class I railroads, 49 CFR 1180.1, the statutory criteria, and antitrust
policy.
Because we have determined that this proceeding constitutes a major
transaction within the meaning of our rail consolidation rules, 49 CFR
Part 1180, railroads intending to file inconsistent or responsive
applications must submit descriptions of those applications on January
29, 1996. The description must state whether the commenting railroad
intends to file an inconsistent or responsive application, petitions
for inclusion, trackage rights, or any other affirmative relief
requiring an application to be filed with the Commission and a general
statement of what that application is expected to include. THIS WILL BE
CONSIDERED A PREFILING NOTICE WITHOUT WHICH THE COMMISSION WILL NOT
ENTERTAIN APPLICATIONS FOR THIS TYPE OF RELIEF.
Petitions for waiver or clarification by responsive applicants
shall be filed no later than January 29, 1996. Each responsive
application filed and accepted will be consolidated with the primary
application in this proceeding. Responsive applications include
inconsistent applications, petitions for inclusion, or any other
affirmative relief that requires an application to be filed with the
Commission (such as trackage rights, purchase, purchase of a portion,
acquisition, extension, construction, operation, pooling, terminal
operations, abandonment, etc.). Parties should contact the Office of
the Secretary at 927-7428 to obtain docket numbers for their responsive
applications.
Parties wishing to engage in discovery are directed to consult with
Administrative Law Judge Jerome Nelson.20 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 ALJ 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.
\20\ ALJ Nelson held a discovery conference in this proceeding
on December 1, 1995. At that conference the ALJ adopted discovery
guidelines, as reflected in his order served on December 7, 1995.
Parties may contact the Office of the Secretary to obtain a copy of
the discovery guidelines.
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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)(3) which would form the basis of a subsequent
environmental assessment (or environmental impact statement, if
warranted). Here, for purposes of this proceeding, 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. Parties should contact Elaine K. Kaiser or Phillis Johnson-Ball
of SEA at (202) 927-6248 if they have any questions regarding the
environmental review process or preparation of a PDEA. 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. We further note that, for purposes of this proceeding,
persons will have 20 days to comment on the Environmental Assessment,
which SEA expects to issue in April.
We plan to conclude the evidentiary phase of this proceeding by May
14, 1996. Briefs are due on June 3, 1996, and will be limited to 50
pages. Briefs must be filed in accordance with the requirements of 49
CFR 1104.2. The initial decision will be waived, and the determination
of the merits of the application(s) will be made in the first instance
by the entire Commission under 49 U.S.C. 11345.
We advise protestants that, if they seek to have the primary
application denied, or seek conditions if it is approved, because they
contend their ability to provide essential service and/or competition
will be harmed, they must present substantial evidence in support of
their positions. See Lamoille Valley R.R. Co. v. ICC, 711 F.2d 295
(D.C. Cir. 1983).
[[Page 66994]]
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
It is ordered:
1. The applications, petitions, and notices in Finance Docket No.
32760, and in all related proceedings, are accepted for consideration.
2. The parties shall comply with all provisions as stated above.
3. Applicants shall submit additional information as set forth
above regarding Docket No. AB-12 (Sub-No. 185X) within 20 days of the
effective date of this decision.
4. Applicants are directed to provide the Commission with a current
complete set of operating timetables for both UP and SP within 20 days
of the effective date of this decision.
5. Any appeal to a decision issued by the ALJ in this proceeding
must be filed within 3 working days of the date of the decision, and
any response to such an appeal must be filed within 3 working days of
the date of filing of the appeal.
6. Replies to any procedural motion filed with the Commission must
be filed within 3 working days.
7. This decision is effective on the date of service.
Decided: December 21, 1995.
By the Commission, Chairman Morgan, Vice Chairman Owen, and
Commissioner Simmons.
Vernon A. Williams,
Secretary.
Procedural Schedule
November 30, 1995: Primary application filed
December 29, 1995: Commission notice of acceptance of primary
application and related applications published in the Federal Register
on or before this date
January 16, 1996: Notice of intent to participate in proceeding due
January 29, 1996: Description of anticipated inconsistent and
responsive applications due; petitions for waiver or clarification due
March 29, 1996: Inconsistent and responsive applications due. All
comments, protests, requests for conditions, and any other opposition
evidence and argument due. DOJ and USDOT comments due
April 12, 1996: Notice of acceptance (if required) of inconsistent and
responsive applications published in the Federal Register
April 29, 1996: 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.
May 14, 1996: Rebuttal in support of inconsistent and responsive
applications due
June 3, 1996: Briefs due, all parties (not to exceed 50 pages)
July 2, 1996: Oral argument (at Commission's discretion)
July 3, 1996: Voting Conference (at Commission's discretion)
August 12, 1996: Date of service of final decision
[FR Doc. 95-31333 Filed 12-26-95; 8:45 am]
BILLING CODE 7035-01-P