[Federal Register Volume 62, Number 88 (Wednesday, May 7, 1997)]
[Notices]
[Pages 25014-25015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11876]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 32760 (Sub-No. 21)\1\]


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 [oversight]

AGENCY: Surface Transportation Board.

    \1\ This decision embraces the proceeding in Finance Docket No 
3270, 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.
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ACTION: Decision No. 1; Notice of Oversight Proceeding, and Request for 
Comments from Interested Persons on any Effects of the Merger on 
Competition and Implementation of the Conditions Imposed to Address 
Competitive Harms.

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SUMMARY: The Board is instituting a proceeding to implement the 
oversight condition imposed in 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 (UP/SP), 
Finance Docket No. 32760, Decision No. 44 (STB served Aug. 12, 1996), 
and is seeking comments from interested persons on any effects of the 
merger on competition and the implementation of the conditions imposed 
to address competitive harms. The Board is also requesting that persons 
intending to participate in the oversight proceeding notify the Board 
of their intent to participate. A separate service list will be issued 
based on the notices of intent to participate that the Board receives.

DATES: Notices of intent to participate in the oversight proceeding are 
due on May 27, 1997. Comments on any competitive effects of the merger 
and the implementation of the conditions imposed to address competitive 
harms are due on August 1, 1997; replies are due on August 20, 1997.

ADDRESSES: An original plus 25 copies \2\ of all documents, referring 
to STB Finance Docket No. 32760 (Sub-No. 21), must be sent to the 
Office of the Secretary, Case Control Unit, ATTN: STB Finance Docket 
No. 32760 (Sub-No. 21), Surface Transportation Board, 1925 K Street, 
NW., Washington, DC 20423-0001. Parties are requested also, if 
possible, to submit all pleadings, and any attachments, on a 3.5-inch 
diskette which is formatted for WordPerfect 7.0 (or formatted so that 
it can be converted into WordPerfect 7.0).

    \2\ In order for a document to be considered a formal filing, 
the Board must receive an original plus 25 copies of the document, 
which must show that it has been properly served. As in the past, 
documents transmitted by facsimile (FAX) will not be considered 
formal filings and thus are not acceptable.
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FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD 
for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: In UP/SP, Decision No. 44, served August 12, 
1996, the Board approved the common control and merger of the rail 
carriers controlled by Union Pacific Corporation (Union Pacific 
Railroad Company and Missouri Pacific Railroad Company) and the rail 
carriers controlled by Southern Pacific Rail Corporation (Southern 
Pacific Transportation Company, St. Louis Southwestern Railway Company, 
SPCSL Corp., and The Denver and Rio Grande Western Railroad Company) 
(collectively, applicants), subject to various conditions. Common 
control was consummated on September 11, 1996. The Board imposed a 5-
year oversight condition to examine whether the conditions imposed 
effectively addressed the competitive harms they were intended to 
remedy, and retained jurisdiction to impose additional remedial 
conditions if, and to the extent, the Board determines that the 
conditions already imposed have not effectively addressed the 
competitive harms caused by the merger. The Board now proposes to 
initiate an oversight proceeding to take comments from interested 
persons on the effectiveness and implementation of those conditions.\3\
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    \3\ Under old 49 U.S.C. 11351 and new 11327, the Interstate 
Commerce Commission, and now the Board, has continuing jurisdiction 
to enter supplemental orders and to modify decisions entered in 
proceedings under old 49 U.S.C. 11343 and new 11323. In addition, 
applicants volunteered to be subject to a 5-year oversight condition 
that would authorize the Board to enter such orders as it might deem 
necessary.
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Applicants' Progress Reports

    On April 1, 1997, applicants submitted their first quarter 1997 
progress report. This report follows applicants' January 2, 1997 
progress report and their October 1, 1996 progress report and 
implementing plan with respect to the conditions imposed on the Board's 
approval of the UP/SP merger. In a preliminary note to the April 1, 
1997 progress report, applicants briefly addressed the general status 
of the merger and implementation of conditions stating that ``at the 6-
month point following the consummation of UP-SP control, it may be too 
early to see the full effects of the merger or the conditions.''
    Applicants note that most merger benefits cannot be realized until 
labor implementing agreements are in place and UP's Transportation 
Control System (TCS) and other major systems are installed on SP--
processes that will not be completed for some time. Applicants add that 
many benefits depend on capital investments that will extend over a 4-
year period, and the competition-preserving conditions also necessarily 
take time to implement, although their full effects will actually be 
felt well before the full benefits of the merger will be realized. 
Applicants further state that phasing in trackage rights operations, 
resolving complex systems issues, and sorting out legal disputes as to 
the scope of various conditions have greatly occupied the parties for 
the past 6 months and may continue to do so in the near future. 
Applicants add, nonetheless, that there is already extensive evidence 
of the benefits of the merger and of the effectiveness of the 
competition-preserving conditions.

The Burlington Northern and Santa Fe Railway Company (BNSF) Progress 
Reports

    BNSF submitted its first quarter 1997 progress report on April 1, 
1997. This is the third quarterly progress report as it follows BNSF's 
January 3, 1997 progress report and its October 1, 1996 submission of a 
progress report and operating plan. In the April 1, 1997 report, BNSF 
summarized the progress it has made since its last report to the Board 
on its operations and provision of services to shippers using merger-
related rights.
    It states that total BNSF traffic, as a result of the trackage 
rights and other rights granted by Decision No. 44, has continued to 
grow. BNSF indicated that trackage rights volumes in terms of units 
handled increased by 225% for the first quarter of 1997 compared to the 
last

[[Page 25015]]

quarter of 1996, and this growth is attributed to the increased 
customer awareness of the BNSF competitive option to the new UP/SP 
franchise, as well as its transition, begun in the fourth quarter of 
1996 but accelerating in the first quarter of 1997, from haulage to 
trackage rights operations as volumes in key lanes continue to grow. 
BNSF states that it expects to see these volumes continue to grow 
through the second quarter of 1997 and beyond, and that, in a number of 
its UP/SP lanes, it has seen volumes grow to permit daily train service 
in each direction, which is an important milestone to providing 
effective competitive rail service.
    BNSF notes that capital improvements have already been made to 
support these new operations and other improvements are planned as part 
of the 1997 capital budget, and that BNSF has continued its significant 
efforts to inform existing and potential customers of the available 
BNSF services, including marketing efforts to attract new customers 
over its new routes and offers of competitive service to or from 
customers at two-to-one points. BNSF further adds that, in spite of its 
continued vigorous efforts to implement operations and market services 
to shippers to which BNSF has gained access pursuant to Decision No. 
44, there are still challenges to the prompt accomplishment of the 
Board's intention to preserve vigorous competition.

Oversight Proceeding

    The oversight effort is intended to allow us to determine whether 
any problems have developed, with respect to implementation of the 
merger conditions addressing competitive harms, that require us to take 
further action. Our oversight effort will not exclude, related to those 
conditions, any aspect of the transaction or the existence of any type 
of anticompetitive effect. In the progress report filed on April 1, 
1997, applicants state that they propose to submit with their next 
quarterly progress report on July 1, 1997, a more in-depth analysis of 
the effects of the merger and condition implementation. Therefore, we 
fully expect that the information presented by applicants in their July 
1 progress report will be more extensive, including specific details of 
how each condition has been met, and we will hold them to that 
commitment. Regarding BNSF's July 1 progress report, we expect that 
BNSF will provide more detailed information regarding its efforts to be 
an effective competitor to the applicants. Parties may submit comments 
on any effects of the merger on competition and implementation of the 
conditions imposed to address competitive harms by August 1, 1997. 
Replies are due on August 20, 1997. We will review the comments and 
replies, and will then determine what further action is appropriate.

Protective Order

    Parties may submit filings, as appropriate, under seal marked 
Confidential or Highly Confidential pursuant to the Protective Order 
granted in UP/SP, Decision No. 2 (ICC served Sept. 1, 1995). Parties 
will be required to file redacted versions to be placed in the public 
docket.

Service List

    Any person who intends to participate actively in the oversight 
proceeding as a ``party of record'' (POR) must notify us of this intent 
by May 27, 1997. In order to be designated a POR, a person must satisfy 
the filing requirements discussed above in the ADDRESSES section. We 
will then compile and issue a final service list for this oversight 
proceeding as soon as practicable. Copies of decisions, orders, and 
notices will be served only on those persons who are designated as POR, 
MOC (Members of the United States Congress), and GOV (Governors), on 
the official service list. Copies of filings must be served on all 
persons who are designated as POR. We note that Members of the United 
States Congress and Governors, who are designated MOC and GOV, are not 
parties of record and they need not be served with copies of filings; 
however, those who are designated as a POR must be served with copies 
of filings. All other interested persons are encouraged to make advance 
arrangements with the Board's copy contractor, DC News & Data, Inc. (DC 
News), to receive copies of Board decisions, orders, and notices served 
in this proceeding. DC News will handle the collection of charges and 
the mailing and/or faxing of decisions to persons who request this 
service. The telephone number for DC News is: (202) 289-4357.
    A copy of this decision is being served on all persons designated 
as POR, MOC, or GOV on the service list in Finance Docket No. 32760. 
This decision will serve as notice that persons who were parties of 
record in Finance Docket No. 32760 will not automatically be placed on 
the service list as parties of record for this oversight proceeding 
unless they notify us of their intent to participate further. 
Applicants and BNSF will be required to serve their July 1, 1997 
Progress Report on all PORs on the new service list, and any other 
interested person who submits a written request to applicants and/or 
BNSF.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: May 1, 1997.

    By the Board, Chairman Morgan and Vice Chairman Owen. Chairman 
Morgan commented with a separate expression.
Vernon A. Williams,
Secretary.
[FR Doc. 97-11876 Filed 5-6-97; 8:45 am]
BILLING CODE 4915-00-P