[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Notices]
[Pages 3877-3879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1395]
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INTERSTATE COMMERCE COMMISSION
[Finance Docket No. 32640]
Canadian National Railway Company; Contract to Operate; Grand
Trunk Western Railroad Inc. and Duluth, Winnipeg & Pacific Railway Co.
AGENCY: Interstate Commerce Commission.
ACTION: Notice of decision accepting application for consideration.
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SUMMARY: The Commission is accepting for consideration the application
filed December 19, 1994, by Canadian National Railway Company (CN), the
Grand Trunk Western Railroad Inc. (GTW), and the Duluth, Winnipeg and
Pacific Railway Co. (DWP) (collectively, applicants), for approval of
an agreement among the applicants under which CN will contract to
operate the properties of GTW and DWP. Under 49 CFR part 1180, the
Commission finds this to be a minor transaction.
DATES: Written comments must be filed with the Commission no later than
February 17, 1995, and concurrently served on applicants'
representatives, the United States Secretary of Transportation
(Secretary of Transportation), and the Attorney General of the United
States (Attorney General). Comments from the Secretary of
Transportation and the Attorney General must be filed by March 6, 1995.
The Commission will issue a service list shortly thereafter. Comments
must be served on all parties of record within 5 days of the issuance
of the service list and confirmed by certificate of service filed with
the Commission indicating that all designated individuals and
organizations on the service list have been properly served.
Applicants' reply is due by March 20, 1995.
ADDRESSES: Send an original and 10 copies of all documents to: Office
of the Secretary, Case Control Branch, Attn: Finance Docket No. 32640,
Interstate Commerce Commission, Washington, DC 20423. In addition,
concurrently send one copy of all documents to the Secretary of
Transportation, the Attorney General, and applicants' representatives:
(1) Docket Clerk, Office of Chief Counsel, Federal Railroad
Administration, Room 8201, 400 Seventh St., SW, Washington, DC 20590;
(2) Attorney General of the United States, United States Department of
Justice, 10th St. & Constitution Ave., NW, Washington, DC 20530; and
(3) John Will Ongman, John F. DePodesta, and George A. Lehner, Pepper,
Hamilton & Scheetz, 1300 19th Street, NW, Washington, DC 20036.
FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-5610. [TDD for
hearing impaired: (202) 927-5721.]
SUPPLEMENTARY INFORMATION: By application filed December 19, 1994,
Commission approval is being sought under 49 U.S.C. 11343-45 for CN to
contract to operate the properties of two wholly owned subsidiaries,
GTW and DWP.\1\
\1\Applicants simultaneously filed a petition for a finding of
cause for a supplemental order under 49 U.S.C. 11351 and for
procedural relief. In this petition, applicants alternatively
request that we make a generic finding of cause under 49 U.S.C.
11351 to enable us to exercise our power under that section to issue
any order dealing with the matters raised by the contract to operate
as pertains to Grand Trunk W.R. Co. Unification of Securities, 158
I.C.C. 117 (1929) [Acquisition of Control By Canadian National
Railway), Finance Docket No. 7320 (Sub-No. 1)]; and Norfolk & W. Ry.
Co.--Control--Detroit, T.I.R. Co., 360 I.C.C. 498 (1979) [Grand
Trunk Western Railroad--Control--Detroit, Toledo & Ironton Railroad
Co. and Detroit, Toledo Shore Line Railroad Co., Finance Docket No.
28676 (Sub-No. 1)]. They also request that a protective order be
entered in a form which they provide, that their proposed procedural
schedule be approved, and that clarification or waiver of the
regulations requiring certain information be granted. We will deny
the request for a generic finding of cause because applicants have
not established a need for such a finding, and we will grant the
remaining requests. The requested protective order will be issued
simultaneously with or shortly after issuance of this notice.
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CN is a Canadian Crown Corporation incorporated under a special act
of the Parliament of Canada.\2\ GTW is a Delaware corporation and a
class I railroad. DWP is a Minnesota corporation and a class II
railroad. Grand Trunk Corporation (GTC) is a noncarrier holding company
of CN's American rail properties, including GTW and DWP. CN connects
with GTW at the St. Clair River Tunnel at Sarnia, Ontario and Port
Huron, Michigan, and at the Detroit Tunnel at Windsor, Ontario and
Detroit, Michigan. CN connects with DWP at Fort Francis/Rainy River,
Ontario. Included in the application as an applicant carrier is the St.
Clair Tunnel Co. (SCTC), a class III carrier. SCTC is 97% owned by the
noncarrier, St. Clair Tunnel Construction Co. (SCTCC) and 3% owned by
three of its directors. SCTCC is in turn 75% owned by GTC and 25% owned
by CN.
\2\CN does not generate sufficient revenues from its operations
in the United States to achieve class I status. See Canadian
National Railway Company--Trackage Rights Exemption--Grand Trunk
Western Railroad Inc., Finance Docket No. 32499 (ICC served July 25,
1994).
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Applicants state that the purpose of the application is to seek
Commission approval for the contract to operate the properties of GTW
and DWP and the operating plan developed to implement the contract to
operate. According to applicants, GTW and DWP currently operate as
independent entities. The contract to operate and the operating plan
will coordinate and integrate service and operations among GTW, DWP and
CN under the trade name CN North America. It is intended to permit the
applicants to provide the seamless, single-line service that shippers
[[Page 3878]]
assertedly are seeking. Applicants state that this coordination and
integration will enhance competition in the surface transportation
industry; make GTW, in particular, a more efficient and viable
property;\3\ and provide substantial transportation benefits to the
shipping public.
\3\Applicants predict that the transaction will result in a
dramatic improvement in GTW's financial performance. They
characterize GTW's current financial status as ``suffering massive
losses, which prevent it from making much needed capital
improvements and which--unless reversed--threaten its ability to
provide transportation services in the future.''
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Applicants characterize the proposed transaction as ``akin to an
end-to-end merger in which connecting railroads whose routes do not
overlap, but rather complement each other, join forces to create a
stronger competitor in a highly competitive transportation market.''
They view the resulting change in the competitive balance as a positive
one because ``CN North America will be able to offer greatly improved
service that will make it a viable transportation alternative for many
shippers.'' According to applicants, the proposed transaction ``will
produce no results which suggest an adverse effect on competition, such
as significantly higher rail rates to shippers or poorer rail service
levels.'' To the contrary, applicants contend that the integration of
CN and GTW and DWP will reduce costs and improve service.\4\
\4\Applicants predict reduced transit times, improved service
reliability, and economies of scale flowing from the consolidation
of shops and administrative functions.
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Applicants project that some traffic currently moving by other
carriers will shift to CN North America as a result of the transaction,
but that this does not signal harm to competition.\5\ Applicants state
that the impact on its competitors will be limited and will certainly
not affect their ability to provide essential transportation services.
They also assert that no U.S. port will suffer a significant diversion
of traffic to Canadian ports. Lastly, applicants argue that even if the
transaction were to produce some anticompetitive effects, the public
benefits would dramatically outweigh such effects.
\5\Applicants' projections of volume growth in intermodal
traffic include 101,000 units of traffic currently moving by truck
and 67,000 units currently moving by rail. This projected growth in
carload traffic includes 22,800 carloads diverted from other
railroads.
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Applicants state that the transaction will affect certain agreement
and nonagreement employees. According to applicants, it is not possible
for them to state precisely the ultimate impact of the integration
transaction on labor, because in some instances this impact will occur
only after fully integrated train service has been implemented.
Applicants submit that if this transaction were among U.S. railroads
and dealt with predominantly U.S. domestic traffic, the appropriate
labor protection would be as prescribed in New York Dock Railway--
Control--Brooklyn Eastern District Terminal, 360 I.C.C. 60 (1979) (New
York Dock).
Applicants argue that to reflect the extraordinary circumstances
involved in the integration of two U.S. railroads with a predominantly
Canadian railroad, some adjustments to the standard New York Dock
conditions should be made. This is because, according to applicants,
Canadian immigration law will not permit most GTW and DWP employees to
follow work transferred to Canada. Therefore, applicants propose the
following modifications to the New York Dock conditions. First, modify
Article I, section 6(d) to require dismissed employees to accept
comparable positions in another craft or class at any location on the
GTW and DWP. Such employees will receive the protective benefits of
Article I, sections 5, 9, and 12 and Article II, regarding displacement
allowances, moving expenses, reimbursement for losses on home removal,
and, if necessary, retraining. Second, modify Article I, section 6(d)
to require dismissed employees to make reasonable efforts to obtain
employment with an employer in another industry, so long as such
outside employment does not require a change in residence. (Applicants
expand on what reasonable efforts include.) Third, impose on employees
who may elect benefits of existing protection agreements under Article
I, section 3, the same modified obligations to accept comparable
employment described under the second modification. Fourth, clarify
Article I, section 1 to provide for a 6-year protective period, with
total labor protection costs capped at the cost of 4 years' protection
multiplied by 1.19.
On December 28, 1994, the Transportation Communications Union and
the United Transportation Union (collectively, Unions) filed a protest
to applicants' proposed procedural schedule and to their
characterization of the transaction as minor. The Unions argue that
this is a major transaction and, as such, that the prefiling
notification under 49 CFR 1180.4(b) must be 3 to 6 months, with an
additional 3 months added to make up for applicants' failure to comply
with the allegedly applicable prefiling notification requirements.
Also, on January 9, 1995, the Brotherhood of Locomotive Engineers (BLE)
moved to dismiss or reject the application and replied to applicants'
petition for a finding of cause. BLE submits that the application must
be rejected or dismissed because there is no basis for the exercise of
the Commission's authority under 49 U.S.C. 11343. According to BLE, CN
already controls the GTW and DWP, and this control authority includes
the authority to engage in the various marketing and operating
coordinations proposed in the operating plan accompanying the operating
agreement. BLE argues that the only other purpose stated in the
application is to abrogate or modify the provisions in the existing
labor agreements, which raises the question of whether this is a sham
transaction. Applicants replied on January 12, 1995.
At the outset, we note that under 49 U.S.C. 11347 the Commission is
required to impose at least New York Dock conditions in 49 U.S.C. 11343
transactions. While we may impose enchanced protection, applicants have
not demonstrated why negotiations and dispute resolution procedures
(including arbitration) under the provisions of New York Dock cannot
effectively accommodate implementation of the transaction.
Under 49 CFR 1180.4(b)(2)(iv), we must determine whether a proposed
transaction is major, significant, minor or exempt. The proposal here
does not involve the control or merger of two or more class I railroads
and has no national significance. While the proposed transaction may
have regional significance because it should increase the level of
competition in the affected areas, it nevertheless concerns carriers
that already are under common control and that arguably may accomplish
much of what is sought here without need for our approval. The greatest
impact of the transaction may well be on rail labor and management, but
these concerns can be adequately addressed under New York Dock.
Accordingly, we find the proposal to be a minor transaction as defined
in 49 CFR 1180.2(c). See RR. Consolidation Proced. of Significant
Transactions, 9 I.C.C. 2d 1198 (1993). Because the application complies
with our regulations governing minor transactions, we are accepting it
for consideration. We will deny the Union's request to amend the
procedural schedule to conform it to a major transaction under 49
U.S.C. 1180.2 et al. with an additional 60 days to address labor
protective conditions. We will also deny BLE's motion to reject the
application. The arguments raised by BLE in its alternative motion to
dismiss are also denied but can be considered in
[[Page 3879]]
the subsequent decision on the merits of the transaction based upon
supplemental or further legal argument.
The application and exhibits are available for inspection in the
Public Docket Room at the Offices of the Interstate Commerce Commission
in Washington, DC. In addition, copies may be obtained upon request
from applicants' representatives named above.
Any interested person, including government entities, may
participate in the proceeding by submitting written comments. Any
person who filed timely written comments shall be considered a party of
record if the person's comments so request. In this event, no petition
for leave to intervene need be filed.
Consistent with 49 CFR 1180.4(d)(1)(iii), written comments must
contain:
(a) The docket number and title of the proceeding;
(b) The name, address, and telephone number of the commenting party
and its representative upon whom service shall be made;
(c) The commenting party's position, i.e., whether it supports or
opposes the proposed transaction;
(d) A statement of whether the commenting party intends to
participate formally in the proceeding or merely comment upon the
proposal;
(e) If desired, a request for oral hearing with reasons supporting
this request; the request must indicate the disputed material facts
that can only be resolved at a hearing; and
(f) A list of all information sought to be discovered from
applicant carriers.
Because we have determined that this constitutes a minor
transaction, no responsive applications will be permitted. We are
adopting applicants' proposed schedule for processing this transaction.
The proposed schedule cuts 60 days from the usual 180-day schedule set
forth at 49 U.S.C. 11345(d) for processing minor transactions. See 49
CFR 1180.4.
Discovery may begin immediately. We admonish parties to resolve all
discovery matters expeditiously and amicably.
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
It is ordered:
1. This application is accepted for consideration as a minor
transaction under 49 CFR 1180.2(c). Applicants' alternative petition
for a generic finding of cause for a supplemental order under 49 U.S.C.
11351 is denied.
2. The petition of the Unions for handling as a major transaction
is denied, and the petition of BLE for rejection and its alternative
motion to dismiss are denied except that supplemental or further
argument may be submitted as to the latter.
3. Applicants' request to waive the information requirements of 49
CFR 1180.6 (a)(2)(v) and (a)(5), (6), and (7)(v) is granted with
respect to the other specified carriers not directly related to the
proposed transaction.
4. The parties shall comply with all provisions stated above.
Decided: January 13, 1995.
By the Commission, Chairman McDonald, Vice Chairman Morgan, and
Commissioners Simmons and Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 95-1395 Filed 1-18-95; 8:45 am]
BILLING CODE 7035-01-P