[Federal Register Volume 60, Number 170 (Friday, September 1, 1995)]
[Notices]
[Pages 45736-45739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21746]
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[[Page 45737]]
INTERSTATE COMMERCE COMMISSION
[Finance Docket No. 32760]
Union Pacific Corporation, Union Pacific Railroad Company and
Missouri Pacific Railroad Company--Control and Merger--Southern Pacific
Rail Corporation, Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, SPCSL Corp. and the Denver and Rio Grande
Western Railroad Company
AGENCY: Interstate Commerce Commission.
ACTION: Decision No. 1; Notice of prefiling notification and request
for comments.
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SUMMARY: Pursuant to 49 CFR 1180.4(b), Union Pacific Corporation (UPC),
Union Pacific Railroad Company (UPRR), Missouri Pacific Railroad
Company (MPRR), Southern Pacific Rail Corporation (SPR), Southern
Pacific Transportation Company (SPT), St. Louis Southwestern Railway
Company (SSW), SPCSL Corp. (SPCSL), and the Denver and Rio Grande
Western Railroad Company (DRGW) \1\ have notified the Commission of
their intent to file an application seeking authority under 49 U.S.C.
11343-45 for: (1) The acquisition of control of SPR by UP Acquisition
Corporation (Acquisition), an indirect wholly owned subsidiary of UPC;
(2) the merger of SPR into UPRR; and (3) the resulting common control
of UP and SP by UPC. The Commission finds this to be a major
transaction as defined in 49 CFR Part 1180. The applicants have
proposed a procedural schedule, on which the Commission invites
comments by interested persons.
\1\ UPC, UPRR, and MPRR are referred to collectively as Union
Pacific. UPRR and MPRR are referred to collectively as UP.
SPR, SPT, SSW, SPCSL, and DRGW are referred to collectively as
Southern Pacific. SPT, SSW, SPCSL, and DRGW are referred to
collectively as SP.
UPC, UPRR, MPRR, SPR, SPT, SSW, SPCSL, and DRGW are referred to
collectively as applicants or petitioners.
Applicants have petitioned for waiver or clarification of the
definition of applicants so as to exclude Chicago and North Western
Transportation Company (CNWT), Chicago and North Western Railway
Company (CNW), and Western Railroad Properties Incorporated (WRPI),
thus eliminating the necessity of their joining in the filing of the
application. CNWT and CNW are scheduled to be merged into UPRR on
October 1, 1995; WRPI was merged into UPRR on August 1, 1995.
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DATES: Written comments on the proposed schedule must be filed with the
Interstate Commerce Commission no later than September 18, 1995. The
applicants' reply is due by September 28, 1995.
ADDRESSES: An original and 20 copies of all documents must refer to
Finance Docket No. 32760 and must be sent to the Office of the
Secretary, Case Control Branch, Attn: Finance Docket No. 32760,
Interstate Commerce Commission, 1201 Constitution Avenue, NW.,
Washington, DC 20423.
In addition, one copy of all documents in this proceeding must be
sent to each of the applicants' representatives: (1) Arvid E. Roach II,
Esq., Covington & Burling, 1201 Pennsylvania Avenue, NW., PO Box 7566,
Washington, DC 20044; and (2) Paul A. Cunningham, Esq., Harkins
Cunningham, 1300 Nineteenth Street, NW., Washington, DC 20036.
FOR FURTHER INFORMATION CONTACT:
Beryl Gordon, (202) 927-5610. [TDD for the hearing impaired: (202) 927-
5721.]
SUPPLEMENTARY INFORMATION: In the notice of intent filed August 4,
1995, the applicants state that under an Agreement and Plan of Merger
dated August 3, 1995, UPC, Acquisition, UPRR and SPR have agreed that
Acquisition will acquire all of the common stock of SPR. Acquisition
plans first to acquire 25% of the stock of SPR for cash in a tender
offer and place that stock in a voting trust pending review of the
merger by the Commission.\2\ Upon the satisfaction of certain
conditions, including approval of the merger by the Commission, the
remainder of the SPR stock will then be acquired for a combination of
UPC stock and cash, and SPR will be merged into UPRR. The UP and SP
railroads will then be consolidated.
\2\ On August 4, 1995, the applicants filed a copy of the voting
trust agreement proposed to be entered into by and between UPC,
Acquisition, and Southwest Bank of St. Louis, an institutional
trustee. The applicants state that they believe that Acquisition's
planned purchase of 25% of the outstanding voting stock of SPR will
not give UPC and its affiliates the power to exercise control of SPR
and its affiliates. However, the applicants request that Commission
staff issue an informal, non-binding opinion stating whether the
voting trust agreement and the arrangements contained therein will
effectively insulate UPC and its affiliates from any violation of
the Interstate Commerce Act and Commission policy against
unauthorized acquisition of control of SPR's carrier subsidiaries.
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The applicants state that they will use the year 1993 for purposes
of their impact analyses to be filed in the application, and that they
anticipate filing their application on or before December 1, 1995. On
August 11, 1995, Santa Fe Pacific Corporation and The Atchison, Topeka,
and Santa Fe Railway Company (collectively, Santa Fe) filed a partial
objection to the notice of intent, objecting to the use of 1993 data in
this proceeding (SF-2).\3\ Also on August 11, 1995, the applicants
filed a modification of their notice of intent (UP/SP-5). The
applicants state that, if the 1994 ICC Waybill Sample is available by
September 1, 1995, they will use 1994 as the base year, and that, if it
is not, they will use 1993. Consultation with the Commission's Office
of Economics and Environmental Analysis (OEEA) indicates that the 1994
data will be available by September 5, 1995. That being the case, we
will require the applicants to use the 1994 data. If, for some reason,
the data are not available on that date, we will reconsider this issue
at that time.
\3\ Santa Fe essentially argues that, for a transaction as
significant as this one, the Commission should have available the
most relevant information necessary to assess changes in railroad
operations and competitive impacts that will result from the
proposed transaction. It is Santa Fe's position that more recent
data would provide the Commission with the most relevant
information, and that 1994 data will be available in ample time for
use in this proceeding.
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The Commission finds that this is a major transaction, as defined
at 49 CFR 1180.2(a), as it is a control and merger transaction
involving two or more class I railroads. The application must conform
to the regulations set forth at 49 CFR Part 1180 and must contain all
information required therein for major transactions, except as modified
by any advance waiver. The carriers are also required to submit maps
with overlays that show the existing routes of both carriers and their
competitors.
By petition also filed August 4, 1995, the applicants seek a
protective order to protect confidential, highly confidential, and
proprietary information, including contract terms, shipper-specific
traffic data, and other traffic data to be submitted in connection with
the control application (UP/SP-2). A protective order will be entered
in a subsequent decision.
Also on August 4, 1995, the applicants filed a petition to
establish a proposed procedural schedule (UP/SP-4). The Commission
seeks comments now on the applicants' proposed procedural schedule,
which is as follows:
Proposed Procedural Schedule
F Primary application and related applications filed.
F + 30 Commission notice of acceptance of primary application and
related applications published.
F + 60 Description of anticipated inconsistent and responsive
applications due; petitions for waiver or clarification with regard to
such applications due.
F + 90 Inconsistent and responsive applications due. All comments,
protests, requests for conditions, and any other opposition evidence
[[Page 45738]]
and arguments due. DOJ and DOT comments due.
F + 105 Notice of acceptance (if required) of inconsistent and
responsive applications published in the Federal Register.
F + 120 Response to inconsistent and responsive applications due.
Response to comments, protests, requested conditions, and other
opposition due. Rebuttal in support of primary application and related
applications due.
F + 130 Rebuttal in support of inconsistent and responsive
applications due.
F + 140 Briefs due, all parties (not to exceed 50 pages).
F + 155 Oral argument.
F + 156 Voting conference.
F + 195 Date for service of final decision.
Under the applicants' proposal, immediately upon each evidentiary
filing, the filing party shall place all documents relevant to the
filing (other than documents that are privileged or otherwise protected
from discovery) in a depository open to all parties, and shall make its
witnesses available for discovery depositions. Access to documents
subject to the protective order shall be appropriately restricted.
Parties seeking discovery depositions may proceed by agreement.
Relevant excerpts of transcripts will be received in lieu of cross-
examination at the hearing, unless cross-examination is needed to
resolve material issues of disputed fact.\4\ Discovery on responsive
and inconsistent applications, comments, protests, and requests for
conditions shall begin immediately upon their filing.
\4\ It is not clear to what hearing the applications are
referring. Their proposed schedule provides for no evidentiary
hearing, and we see no need for one at this time.
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The proposed schedule is substantially similar to that adopted
recently in Burlington Northern Inc. and Burlington Northern Railroad
Company--Control and Merger--Santa Fe Pacific Corporation and The
Atchinson, Topeka and Santa Fe Railway Company, Finance Docket No.
32549 (ICC served March 7, 1995) (BN/Santa Fe).
We would also like comments from the public on a variation of the
proposed procedural schedule.\5\ Based on our recent experience in BN/
Santa Fe, we believe that parties filing inconsistent and responsive
applications, comments, protests, requests for conditions, and other
opposition evidence and arguments, may not need 90 days from the date
the primary application is filed to prepare their submissions. We seek
comments on the feasibility of parties filing descriptions of
anticipated inconsistent and responsive applications, and petitions for
waiver or clarification with regard to such applications, 10 days after
the publication of the notice accepting the primary application. All
inconsistent and responsive applications, comments, protests, requested
conditions, and other opposition evidence and argument would be due 30
days after the acceptance of the primary application. Comments from the
United States Department of Justice (DOJ) and the United States
Department of Transportation (USDOT) would also be due on that day. The
30 days taken from the segment of time in which protesting parties
would prepare their submissions would be inserted later in the
schedule.
\5\ On August 14, 1995, The Kansas City Southern Railway Company
(KCS) filed comments on the proposed procedural schedule (KCS-1).
KCS claims that the applicants have not presented any justification
for expediting the schedule in this proceeding without first seeking
public comments on the proposed schedule. KCS alleges that it has
concerns regarding its ability to conduct discovery and sufficiently
analyze the competitive concerns within the time frame applicants
propose. KCS would like time to develop an alternative procedural
schedule. Because we are, in fact, asking for comments regarding the
applicants' proposed schedule, KCS will have the opportunity to
submit further comments on the schedule in response to this notice.
The applicants filed a reply to KCS's comments on the proposed
procedural schedule and discovery guidelines on August 18, 1995 (UP/
SP-6).
The applicants are proposing that any applications for authority
for, or for exemption of, merger-related abandonments, and any
supporting verified statements, be filed with the primary application,
and be treated as related applications. The applicants filed, on August
4, 1995, a petition for waiver or clarification of the Railroad
Consolidation Procedures, and for related relief (UP/SP-3), in which
they ask for a waiver under 49 CFR 1152.24(e)(5) to permit
modifications to the procedures and timetables prescribed in our rules
at 49 CFR 1152.25(d) (6) and (7), and other relief, seeking to ensure
that they are able to make the referenced filings pertaining to merger-
related abandonments with the primary application. Consequently, the
applicants desire that all opposition evidence, comments, rebuttal, and
briefing on those applications be submitted under the same schedule as
the primary application. We will discuss the applicants' request for
relief with regard to merger-related abandonments in a subsequent
decision addressing all of the requests in UP/SP-3.
The applicants also request that the Commission establish certain
guidelines to govern discovery in this proceeding. The applicants note
that their proposed guidelines are similar to those developed by the
parties and the presiding Administrative Law Judge in BN/Santa Fe, and
assert that the guidelines were central to the progress of that
proceeding. In the applicants' view, the guidelines provided all of the
parties in BN/Santa Fe with a fair opportunity to conduct discovery and
curtailed abusive practices that had caused delays in prior control
proceedings. The applicants assert that similar early establishment of
discovery guidelines at the outset of this proceeding will provide
guidance to all parties and will promote an efficient and orderly
proceeding. The process of assigning an Administrative Law Judge (ALJ)
to this proceeding is underway. While we think the BN/Santa Fe
discovery guidelines worked exceedingly well, we will leave all
discovery matters, including the adoption of any guidelines governing
discovery initially, to the discretion of the ALJ.\6\ A decision naming
that judge will be issued as soon as possible.
\6\ KCS also raises concerns about the applicants' proposed
discovery guidelines in KCS-1, stating that the applicants have not
established any reason why this proceeding cannot be conducted under
the Commission's normal rules of discovery found at 49 CFR 1114. KCS
notes that, in BN/Santa Fe, the Commission did not rule on discovery
guidelines and instead deferred that decision to the ALJ. The ALJ
conducted a conference where all parties could comment, and then
issued discovery guidelines. KCS recommends that we follow the same
procedure here, rather than simply adopting the same guidelines used
in BN/Santa Fe. Because we are initially turning all discovery
matters over to an ALJ, nothing more need be said regarding KCS's
concerns at this time. KCS also filed a pleading in opposition to
the applicants' proposed protective order (KCS-2). That pleading
will be addressed in a separate decision entering the protective
order.
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We invite interested persons to submit written comments on the
proposed procedural schedule. Comments must be filed by September 18,
1995. The applicants may reply by September 28, 1995.\7\
\7\ In addition to submitting an original and 20 copies of all
documents filed with the Commission, the parties are encouraged to
submit all pleadings and attachments as computer data contained on a
3.5-inch floppy diskette which is formatted for WordPerfect 5.1 (or
formatted so that it can be converted by WordPerfect 5.1). The
computer data contained on the computer diskettes submitted will be
subject to the protective order to be entered shortly in this
proceeding, and is for the exclusive use of Commission employees
reviewing substantive matters in this proceeding. The flexibility
provided by such computer file data will facilitate expedited review
by the Commission and its staff.
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This action will not significantly affect either the quality of the
human
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environment or the conservation of energy resources.
Decided: August 24, 1995.
By the Commission, Chairman Morgan, Vice Chairman Owen, and
Commissioners Simmons and McDonald.
Vernon A. Williams,
Secretary.
[FR Doc. 95-21746 Filed 8-31-95; 8:45 am]
BILLING CODE 7035-01-M
