[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