These cities are located on one or another of the terminal ends of the north-south segments proposed for abandonment. However, no abandonment of service to any of the three cities is proposed in this application. Beeville and Edinburg will continue to be served by the Southern Pacific in east-west service, and service by Mo-Pac will be added along with Southern Pacific at Alice. Petitioners argue that since the cities are located on the branches as presently operated, all revenue from traffic originating or terminating at these cities are compelled to be computed as branch revenue.

Bridge traffic data has two functions in an abandonment proceeding. On the one hand, it is used to formally complete a subpart B application. The second function of the information is substantive, and will be given whatever weight deemed appropriate. Illinois Central Gulf R. Co.-Abandonment, 354 I.C.C. 448, 452 (1977).

While revenue derived from overhead traffic is a factor in determining a line's earning capacity, local shippers who are unable to support a railroad cannot demand continued rail transportation simply because the branch is used for movement of through traffic which could be handled as expeditiously over other routes. See Southern Pac. Co. Abandonment, 317 I.C.C. 489, 493 (1962). In analyzing abandonment proceedings which involve overhead movements, the Commission has often expressed its view that carriers should be free to use their facilities in such a manner as they deem necessary for the promotion of efficiency and economy. Baltimore & Ohio R. Co. Abandonment, 354 I.C.C. 240 (1978).

In Missouri Pac. Abandonment Bet. Bismarck and Whitewater, 342 I.C.C. 643 (1972), revenue attributable to two towns outside the segment to be abandoned was specifically excluded from consideration because "*** both stations are outside the segment to be abandoned and revenues therefrom will be retained."

Rail service to Beeville, Alice, and Edinburg will not be substantially affected by this proceeding. In fact, shippers will be able to move traffic in a quicker and more efficient manner. Thus, petitioner's argument carries little weight.

The State of Texas would have us consider the effect of a hypothetical future abandonment between Alice and Falfurrias, TX. It is argued that once the proposed abandonments take place and an interchange is constructed in Robstown, TX, it will become more reasonable for Southern Pacific to justify abandonment of the AliceFalfurrias branch line. Petitioner reasons that interchange revenues

presently credited to the Alice-Falfurrias branch will be credited to the interchange to be constructed at Robstown.

The three disjointed abandonments were properly considered by the Administrative Law Judge. The Commission cannot forecast Southern Pacific's intentions regarding further area abandonments on the basis of the unfounded assumption that an abandonment is in the works. American Trucking Assns., v. U.S., 326 U.S. 77 (1945). The lines of rail to be abandoned in this proceeding, and the AliceFalfurrias branch, involve shippers with interests that are clearly identifiable and distinguishable. We see no necessity to consider this line of reasoning further.

TRACKAGE RIGHTS

The primary route over which trackage rights are proposed is between Harlingen and Placedo, TX, a distance of 196.84 miles. Southern Pacific's present route, traversing approximately the same territory, covers 210.3 miles from Victoria to Edinburg, TX. The Southern Pacific and Mo-Pac's lines are parallel over this route. Both lines proceed in a north-south direction and in many places are less than 20 miles apart.

By terms of an agreement between the two railroads, the main purpose of the proposed trackage rights is to permit Southern Pacific to bridge its trains over Mo-Pac's line. Most of the traffic which moves over the lines to be abandoned is bridge traffic moving to or from the Brownsville, Corpus Christi, and Laredo, TX, areas. This traffic will continue to be moved by Southern Pacific following the abandonment by virtue of the trackage rights which Southern Pacific will have over Mo-Pac between Placedo and Harligen, TX. Southern Pacific will not have rights to originate or terminate freight or transact any business upon any of the joint-line, except it will have the right to interchange traffic at Robstown, TX, with the Tex-Mex.

The trackage rights proposal will enable Southern Pacific to forego the rehabilitation cost it believes is necessary for the three portions of line sought to be abandoned. The avoidable cost of the present operation has been computed by the Administrative Law Judge to exceed $2 million. Although we find certain errors in the approach taken in the initial decision, the economies, when considered with other factors of public convenience and necessity, are sufficient to compel the same conclusions.

In approving a trackage rights application we are compelled to interpret whether a transaction is consistent with the public interest.

This bears a direct relationship to the adequacy of our transportation system, to essential need for economy and efficiency, and to the best utilization of transportation facilities. United States v. Lowden, 308 U.S. 225, 230 (1939).

The facts before us demonstrate the presence of parallel lines of which one carries substantially overhead traffic. This line requires certain rehabilitation and maintenance expenditure.

The retention of parallel lines would require duplicate maintenance of trackage, bridges, roadbeds, rail sidings, and other fixed plant assets adequate to enable the two carriers to transport freight cars at approximately the same speed. To deny the proposed transaction would promote a wasteful distribution of the railroad's limited resources.

These lines were built when railroads were a virtual transportation monopoly. There have been substantial changes in the economy as well as in transportation competition since that time. At the turn of the century when most rail lines were built, 60 percent of the U.S. population was located in rural areas and served by an elaborate network of railroads. Presently three of every four people live in cities or urban areas. (Bureau of the Census, "Statistical Abstract of the United States," 1978 at p. 28). Accompanying the trend to urbanization has been a suburbanization of housing and business, a feature which has been reflected in highway development and has been distinctly favorable to truck service. Competition from air and barge carriers must also be met.

Nonrail modes of transportation have come to dominate American transportation. Where railroads once accounted for nearly all transportation, today more than 70 percent of freight tons and nearly 65 percent of intercity ton-miles move via a nonrail mode. (Transportation Association of American, "Transportation Facts and Trends," July 1978 at p. 8 and 10).

The lines to be abandoned have been in existence for approximately 50 years. During that time no major industrial development adjacent to the lines has taken place. Southern Pacific expects that any future development is likely to be concentrated in areas closer to the Gulf of Mexico along the lines of Mo-Pac.

The cost of maintaining and serving these two parallel lines is unnecessary. With the Mo-Pac's line allowing for train operation in excess of 40 miles per hour the public will benefit from a more economical and rapid transportation service upon implementation

of the proposed trackage rights agreement. The long term proposed trackage rights agreement will promote investment in the one remaining line of rail.

It is axiomatic that economies are present in the combination of parallel track when the line to be abandoned serves primarily overhead traffic. Such savings have been demonstrated in Delaware, L. & W. R. Co. Trackage Rights, 295 I.C.C. 743 (1958); Central of Georgia Ry. Co. Abandonment, 317 I.C.C. 184 (1961); and Atchison, T. & S. F. Ry. Operation, 244 I.C.C. 32 (1940).

Trackage rights agreements such as the one before us represents the efforts of railroads to reallocate the utilization of resources for more intensive use, thereby increasing operating efficiency. As the line to be abandoned is used substantially for overhead traffic the public interest supports such a transaction. The minimal cost for construction of the interchange at Robstown and certain sidings at Placedo, Robstown, and Harlingen, plus the annual rental for the use of Mo-Pac track, does not adversely effect this determination.

REHABILITATION STANDARD

Petitioners argue that the Administrative Law Judge erred in concluding that the cost of rehabilitating the lines to be abandoned to FRA class 4 is an avoidable cost of operation. The Administrative Law Judge was careful to state that such rehabilitation cost was not per se an avoidable cost. However, the alleged inefficient operation of Southern Pacific at less than FRA class 4 was considered as another element of avoidable cost.

An examination of the record does not demonstrate the need of Southern Pacific to upgrade the lines of rail from FRA classes 1 and 2 to FRA class 4. The primary question, here, is the degree of rehabilitation necessary. We are not convinced that the rehabilitation estimated by applicant is proper.

Southern Pacific has mentioned that it would appear obvious that in order to be competitive with other transportation available in the Rio Grande Valley, it must offer service that moves traffic as fast and dependable as the alternative. Therefore, Southern Pacific's line must be able to transport traffic as rapidly as it can be transported over the parallel Mo-Pac's line. However, there is no evidence of shipper complaints with regard to delays in delivery or for that matter inadequacy of speed.

Where a line can be operated successfully at its present standards, abandonment cannot be premised upon the unsubstantiated claims

for upgraded standards. Chicago, M., St. P. & P. R. Co. Abandonment, 348 I.C.C. 749 (1976). Southern Pacific's desire to rehabilitate to a particular level cannot govern where more broadly based considerations of public convenience and necessity are paramount. Baltimore and Ohio R. Co. Abandonment, 354 I.C.C. 67 (1977). The evidence indicates that the three branches currently meet or exceed FRA class 1 standards.

We reject the Administrative Law Judge's use of Chicago & N. W. Transp. Co. et al., v. United States, et al., 582 F. 2d 1043 (Ct. of Ap., 7th Cir. 1978), modified on rehearing on July 31, 1978, 582 F. 2d 1066, in his discussion of this issue.

This discussion, quoted by the Administrative Law Judge, dealt with the calculation of rehabilitation costs vis-a-vis a potential subsidy for a line. It did not pertain to the factors to be considered in abandoning a line. Commission policy dictates that FRA class I standards will be used to compute rehabilitation costs in an abandonment, unless a higher standard can be justified. The applicant has not done so. See, Finance Docket No. 28412, Winnebago Farmers Elevator Company v. Chicago and Northwestern Transportation Company (not printed), served September 1, 1978.

A VOIDABLE COST

As insufficient evidence was presented to justify the rehabilitation of the subject lines to FRA class 4, Southern Pacific's rehabilitation cost of $9,611,032 over 17 years must be rejected. If further evidence in the nature of traffic studies were submitted, some portion of the rehabitation expense may be justified.

We must still consider the role of maintenance and rehabilitation expense and how the necessary increases in those expenses would affect the profitability of a line sought to be abandoned. The Commission is not required to compute the cost of rehabilitation with mathematical exactitude but it is sufficient to determine that the record supports a finding that such expenditures would be substantial. Baltimore & O. R. Co. Abandonment Fairmont Branch, 342 I.C.C. 751, 755 (1973). Although rejecting the rehabilitation expense offered by Southern Pacific, the record supports a finding that the lines involved have not produced and will not produce sufficient revenue to justify continued operation.

We also note that Southern Pacific's computation of opportunity cost must be rejected. Opportunity cost may be a factor in making a