applicants also take exception to a number of elements in the draft conditions submitted by BLE. They aver that the conditions adopted in the T&P-C&EI proceeding" would provide proper protection for employees.

46

Recently, in three separate decisions, we prescribed the appropriate labor protective conditions for rail carrier transactions. In Oregon Short Line R. Co.-Abandonment-Goshen, we set forth the labor conditions applicable to abandonments filed under section la(4) of the act and certain abandonments filed under section 1(18)-(20). In Norfolk and Western Ry. Co.-Trackage Rights-BN, we applied the Oregon Short Line conditions to trackage rights proceedings filed under section 5(2)(a)(ii) of the act. And in New York Dock Ry.-Control-Brooklyn Eastern Dist.," we adopted conditions for the protection of employees affected by rail carrier transactions under section 5(2)(a)(i) of the act, such as the instant merger proposal. In the latter proceeding, we found that the appendix C-1 conditions developed pursuant to section 405 of the Rail Passenger Service Act of 1970,8 combined with sections 4 and 5 of the Washington Job Protection Agreement, provided appropriate protection.

We shall impose the labor protective conditions prescribed in New York Dock.49 Since that proceeding is presently pending administrative appeal, we shall reserve jurisdiction in the instant proceedings to reconsider labor protection in light of our ultimate decision in New York Dock.

Section 5(4) considerations. In earlier proceedings"" the Commission has held MPC to be a carrier under section 5(4) of the act to the limited extent of filing annual reports on Form R-1 and filing such other periodic and special reports as the Commission may require under section 20(1) and (2). Except for facilitating combinations with other carriers, the merger contemplated by the instant proceedings would not materially alter the holding company's posture in the transportation filed. The corporate

"We imposed the conditions set forth in New Orleans Union Passenger Terminal Case, 282 I.C.C. 271 (1952), as modified by the arbitration conditions set forth in St. Louis Southwestern Ry. Pur.-Alton and Southern R., 342 I.C.C. 498 (1972), and by the provisions of section 405 of the Rail Passengers Service Act of 1970, 45 U.S.C. 565. 348 I.C.C. 414, 430.

354 I.C.C. 76 (1977), modified, 354 I.C.C. 584 (1978).

"354 I.C.C. 605 (1978).

354 I.C.C. 399 (1978).

45 U.S.C. 565.

9354 I.C.C. 399, 415-21.

"The Texas & Pac. Ry. Co.-Control-Kansas, O.&G. Ry. Co., 324 1.C.C. 309 (1964) and Missouri Pac. R. Co.-Control-Chicago & E.I.R. Co., 327 I.C.C. 279 (1965), affirmed sub nom. Illinois C. R. Co. v. United States, 263 F. Supp. 421 (N.D. III. 1966), affirmed 385 U.S. 457 (1967).

rearrangement under consideration triggers examination of MPC under section 5(4),51 however, and we must decide whether and to what extent we should now consider the holding company as a carrier.

Neither the size nor the complexity of the transaction initiating the determination under section 5(4) has a bearing on the depth of that inquiry. The primary question is whether the noncarrier would be in control of carriers which by the size and nature of their operations would have a substantial influence upon the national transportation system. After consummation of merger, MPC would control a major class I railroad which in turn would control about 30 carrier and transportation-related noncarrier subsidiaries, not including the seven other operating railroads involved in these proceedings. We note that in 1976 the operations of MoPac and its subsidiaries accounted for about 78 percent of MPC's revenues, and that the railroads in the MoPac system produced approximately 5.8 percent of the rail industry's revenue ton miles.

53

The transportation activities of the companies under MPC's control have a substantial impact and influence on, and constitute an integral part of, the national transportation system. Express Commission policy anticipates somewhat greater jurisdiction over major carrier holding companies than we have previously exercised over MPC. Consistent with those pronouncements, as a condition of consummation of the transaction proposed in the instant proceedings, we shall consider MPC a carrier within the meaning of section 5(4) to the extent of (a) filing annual reports on Form R-1 and filing such other periodic and special reports as the Commission may require under section 20(1) and (2) of the act, (b) complying with section 20(5) of the act, and (c) filing applications under sections 20a and 214 of the act only for those issuances of securities and assumptions of liabilities which may relate to or affect the activities of carrier subsidiaries.

FINDINGS

In reaching our decision in these proceedings, we have considered all of the issues involved. Although some matters argued in the

"See Louisville & J. B. & R. Co. Merger, 295 I.C.C. 11, 17-18 (1955), revised sub nom. Breswick & Co. v. United States, 138 F. Supp. 123 (S.D.N.Y. 1956), revised sub nom. Alleghany Corp. v. Breswick & Co., 353 U.S. 151 (1957).

See Chicago & N. W. Ry. Co.-Control, 347 1.C.C. 557, 647 (1974); and Illinois Cent. Gulf R.-Acquisition-G.M.&O., 338 I.C.C. 805, 856 (1971).

Compare Chicago & N. W. Ry. Co.-Control, 347 1.C.C. 557, 647-48 (1974); and Illinois Cent. Gulf R.-Acquisition-G.M.&O., 338 I.C.C. 805, 856-57 (1971).

pleadings have not been specifically discussed, they have

nonetheless been considered and found to be without merit. To the extent that those arguments include requests for relief not specifically granted in this decision, they are denied.

In Finance Docket No. 28586 (Sub-No. 1), we find that the transaction would not result in any increase in fixed charges and that the proposed or prescribed terms, conditions, and modifications are just and reasonable. We further find that, subject to the terms, conditions, and modifications, discussed above, (a) the merger of the properties and franchises of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company, the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company with and into the Missouri Pacific Railroad Company, a Delaware corporation, for ownership, management, and operation; (b) the acquisition by the Missouri Pacific Railroad Company, a Delaware corporation, through ownership of stock or lease, of sole or joint control of the carrier subsidiaries or affiliates of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company; and (c)(1) the acquisition by the Missouri Pacific Corporation of control of the Missouri Pacific Railroad Company, a Delaware corporation, through the receipt of capital stock and (2) the retention by the Missouri Pacific Corporation of indirect control of the carrier subsidiaries or affiliates of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company, constitute a transaction within the scope of section 5(2)(a) of the Interstate Commerce Act, and will be consistent with the public interest.

In Finance Docket No. 28637, we find that, under the proposed terms and conditions, (1) the issuance by the Missouri Pacific Railroad Company, a Delaware corporation, of 1,000 shares of

common stock, and (2) the assumption by the Missouri Pacific Railroad Company, a Delaware corporation, of obligation and liability in respect to securities issued or guaranteed by the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company, (a) are for a lawful object within the corporate purposes of the Missouri Pacific Railroad Company, a Delaware corporation; are compatible with the public interest; are necessary and appropriate for and consistent with the proper performance by the Missouri Pacific Railroad Company, a Delaware corporation, of service to the public as a common carrier; and will not impair the ability of the Missouri Pacific Railroad Company, a Delaware corporation, to perform that service, and (b) are reasonably necessary and appropriate for such purposes.

We further find that the reply filed by Napolean C. Gabriel to the applicants' reply verified statements should be stricken.

We further find that this decision is not a major Federal action significantly affecting the quality of the human environment. It is ordered:

In Finance Docket No. 28586 (Sub-No. 1), subject to the terms, conditions, and modifications discussed above, (a) the merger of the properties and franchises of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company with and into the Missouri Pacific Railroad Company, a Delaware corporation, for ownership, management, and operation; (b) the acquisition by the Missouri Pacific Railroad Company, a Delaware corporation, through ownership of stock or lease, of sole or joint control of the carrier subsidiaries or affiliates of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and (c)(1) the acquisition by the Missouri Pacific Corporation of control of the Missouri Pacific Railroad Company, a Delaware corporation,

through the receipt of capital stock and (2) the retention by the Missouri Pacific Corporation of indirect control of the carrier subsidiaries or affiliates of the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company, are approved and authorized.

In Finance Docket No. 28637, (1) the issuance by the Missouri Pacific Railroad Company, a Delaware corporation, of an amount not exceeding 1,000 shares of common stock, and (2) the assumption by the Missouri Pacific Railroad Company, a Delaware corporation, of obligation and liability in respect to securities issued or guaranteed by the Missouri Pacific Railroad Company, a Missouri corporation; the Abilene & Southern Railway Company; the Fort Worth Belt Railway Company; the Missouri-Illinois Railroad Company; the New Orleans and Lower Coast Railroad Company; the St. Joseph Belt Railway Company; the Texas-New Mexico Railway Company; and the Union Terminal Railway Company, are approved and authorized.

The reply filed by Napolean C. Gabriel to the applicants' reply verified statements is stricken.

If the authority granted by this decision is exercised, the Missouri Pacific Railroad Company, a Delaware corporation, shall, within 60 days, submit three copies of a sworn statement showing all journal entries required to record the transaction.

Except as set forth in this decision, the stock authorized for issuance shall not be sold, pledged, or otherwise disposed of by the Missouri Pacific Railroad Company, a Delaware corporation, unless or until so ordered or approved by the Commission.

The Missouri Pacific Railroad Company, a Delaware corporation, shall submit the report required by the regulations appearing in 49 CFR 1115.6 (1977).

Jurisdiction is expressly reserved to receive such petitions, institute such investigations, and issue such decisions as necessary to accomplish the objectives and purposes of the conditions prescribed in this decision. This reservation of jurisdiction is in addition to those decisions which may be issued under the provisions of sections 5(10) and 20a(3) of the Interstate Commerce Act as deemed necessary or appropriate to supplement this decision.