BURDEN ON INTERSTATE COMMERCE

The carrier's avoidable cost figures for the Zephyr are generally unsupported. However, assuming we were to accept the carrier's figures, continued operation of the Zephyr would not constitute an undue burden on interstate commerce insofar as the deficit incurred by the Zephyr would have a minimal effect on the financial health of the Rio Grande and Rio Grande Industries. Both companies are healthy as borne out by a variety of financial measurements discussed earlier in this decision.

The profitable condition of the Rio Grande is important because "the overall financial condition of the carrier is a factor in the determination of whether the burden imposed by continuation of the service would be undue. Southern Pac. Co. Discontinuance of Trains, supra at 556. See Southern Ry. Co.-Discontinuance of Trains, supra at 696.

The relatively minor effect that the claimed deficit incurred by the Zephyr (and the railroad's passenger service as a whole) has on the total operation of Rio Grande is shown by a comparison of operating ratios. There is only a 6/10ths of 1 percent difference in the operating ratio for the railroad as a whole (74.63) compared with the railroad's freight service (74.03). Use of an avoidable cost approach would produce even a lower differential.

In summation, the Rio Grande has made no showing that continued operation of the Zephyr would constitute an undue burden. In fact, Mr. Nance, the Rio Grande's general manager, confirmed that the "economic well-being and vitality" of the railroad was "not being undermined" by the claimed deficit on the Zephyr. In effect Mr. Nance admitted that an undue burden does not exist. We, therefor, find that the continued operation of the Zephyr from Denver to Salt Lake City does not constitute an undue burden on interstate commerce.

ENVIRONMENTAL IMPACT OF THIS ACTION

The Rio Grande's application of November 27, 1978, failed to contain a Detailed Environmental Impact Report (DEIR) as required by 49 C.F.R. 1108. This was brought to our attention on February 21, 1979, when ORPC filed a motion to reject DRGW's application for failure. to comply with our our environmental regulations. While we denied the motion on February 22, 1979, we

ordered the Rio Grande to submit "supplemental information regarding the environmental impact of the proposed discontinuance."

In response to this order, the Rio Grande submitted a DEIR on March 2, 1979. However, the DEIR and subsequent environmental testimony and exhibits provided by the DRGW do not provide the information contemplated by the regulations. Because of these problems, the Section of Energy and Environment was unable to prepare an environmental impact statement (EIS).

In view of our finding that the Rio Grande has failed to meet their burden of proof on the traditional economic and public convenience and necessity grounds, we need not consider the environmental effects of granting the carrier's application to discontinue service. Accordingly, as denial of this application does not constitute as major Federal action affecting the quality of the human environment, no EIS need be prepared.

RIO GRANDE'S RELATIONS WITH AMTRAK

Intervenors raised several issues regarding the relationship between Rio Grande and Amtrak. In particular, protestants raised the question of possible Amtrak takeover of the Zephyr service under the Rail Passenger Service Act of 1970 (45 U.S.C. 501, et seq). Based upon our decision in this case, we need not reach the Amtrak issue.

FINDINGS

We find that continued operation of the Rio Grande Zephyr between Grand Junction, CO and Salt Lake City, UT for a period of 1 year from the date this decision is served, is required by the public convenience and necessity and that continued operation will not constitute an undue burden on interstate commerce. We further find that denial of the Rio Grande application does not significantly affect the quality of the human environment and does not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975.

COMMISSIONER GRESHAM, dissenting:

Unlike the majority, I believe that discontinuance should be permitted.

In spite of all the criticism of respondent's financial evidence, it is quite obvious that the operations proposed for discontinuance are

being conducted at a substantial deficit. Further, it is uncontested that both air and bus service are available as alternative means of public transportation. Under the circumstances, I am unable to find any justification for ordering continuance of this rail service.

What we have here, in my opinion, is another example of unwarranted governmental intrusion upon the good business judgment of a railroad. The scenario reads something like this: A small nonsubsidized railroad seeks to eliminate a money losing passenger operation. Its purpose in doing so is twofold-to eliminate the continual drain on its funds and to enable it to concentrate its efforts on freight service, which it believes is now more basic to it and to the public. Persons who use, or might use, the passenger service have other means of public transportation available to them. The government steps in, tells the railroad how it would run the passenger service if it were in the driver's seat, implying that, of course, the government could turn a deficit operation into a moneymaker. Then, ignoring the realities of the facts as they are, the government tells the railroad to continue the service because, while it may hurt you financially, it will not hurt too much.

If some overriding public purpose would be served by proceeding in the manner followed by the majority, I would certainly want to join its ranks. However, I can find no such purpose on this record. At this point, however, I can ask one question. Is this the same railroad which in five or 10 years may need government subsidization to stay alive, and which will be criticized for failing to exercise innovative belt-tightening, sound business judgment?

It is ordered:

The Denver & Rio Grande Western Railroad Company is directed to continue operating the Rio Grande Zephyr (trains Nos. 17 and 18) for a period of 1 year until May 31, 1980, without prejudice to the filing of a new application thereafter and submitting the type of evidence suggested as a prerequisite herein.

By the Commission, Chairman O'Neal, Vice Chairman Brown, Commissioners Stafford, Gresham, Clapp, and Christian. Commissioner Gresham dissenting. Commissioner Christian absent and not participating.

360 I.C.C.

FINANCE DOCKET NO. 28905 (SUB-NO. 21)'

BOSTON AND MAINE CORPORATION, DEBTOR (ROBERT W. MESERVE AND BENJAMIN H. LACY, TRUSTEES) TRACKAGE RIGHTS OVER CONSOLIDATED RAIL CORPORATION BETWEEN ROTTERDAM JUNCTION, NY, AND BUFFALO, NY

Decided June 20, 1979

Application for trackage rights filed under 49 U.S.C. 11343 and pursuant to Commission's Railroad Acquisition, Control, Merger, Consolidation, Coordination Project, Trackage Rights and Lease Procedures, 49 CFR Part 1111, rejected. Policy declared whereby Commission will refuse to consider applications which seek second-level affirmative relief in rail consolidation proceedings.

Sidney Weinberg for applicant.

DECISION

BY THE COMMISSION:

On May 21, 1979, Boston and Maine Corporation, Debtor, (Robert W. Meserve and Benjamin H. Lacy, trustees) (B&M) filed an application under 49 U.S.C. 11343 seeking trackage rights over the line of railroad of Consolidated Rail Corporation (Conrail) from B&M's connection with Conrail at Rotterdam Junction, NY, to Buffalo, NY, a distance of approximately 274 miles. The application was filed pursuant to the Commission's Railroad Acquisition, Control, Merger, Consolidation, Coordination Project, Trackage Rights and Lease Procedures, 49 CFR Part 1111 (Consolidation Procedures). Under the Consolidation Procedures, the Commission has 30 days from the date the application is filed either to accept the application and publish notice of acceptance in the Federal Register, or to reject the application by order if it is incomplete or otherwise defective. 49 CFR 1111.4(b)(2) and (7).

'This application was filed as related to the proceedings in Finance Docket No. 28905 (Sub-No. 1) et al., CSX Corporation-Control-Chessie System. Inc., and Seaboard Coast Line Industries. Inc.