FINANCE DOCKET NO. 27819 AMTRAK AND THE TEXAS & PACIFIC RAILWAY CO., USE OF TRACKS AND FACILITIES AND ESTABLISHMENT OF JUST COMPENSATION Decided December 14, 1979 The force majeure provision in the contract between Amtrak and the Texas and Pacific Railway Co. covering the period March 1975 through April 1978 vacated as moot. Eugene T. Liipfert, Frederick C. Ohly, and Stuart F. Pierson for the National Railroad Passenger Corporation. William R. McDowell, Robert W. Yost, and R. H. Stahlheber for the Texas and Pacific Railway Company and Missouri Pacific Railroad Company. SUPPLEMENTARY DECISION BY THE COMMISSION: On September 15, 1979 we reopened the above proceeding based on the partial remand of July 16, 1979, from the United States Court of Appeals. We allowed all parties to submit further comments upon the appropriatness of including a force majeure provision in measuring on-time performance, in light of our refusal to include such a provision in National R. Pass. Corp. and UP Tracks & Facilities, 348 I.C.C. 926, 951 (1977) (Union Pacific case). Amtrak and the successor in interest to the Texas and Pacific Railway Company (T&P), the Missouri Pacific Railroad Company (MoPac), filed comments following the reopening. In Finance Docket No. 27819, Amtrak and Tex. and P. Ry. Co., Just Compensation, 348 I.C.C. 645 (1976), the Commission established scheduled running times and specified an 80-percent baseline for measurement of on-time performance for purposes of allowing the T&P to earn amounts in excess of its incremental costs. This decision would excuse performance which was "hindered by force majeure such as strikes, riots, floods, accidents, acts of God, et cetera," in measuring on-time performance. Such an exception was not provided for in the Union Pacific case. Preliminariliy, we note that this decision covers retroactively a 38-month period prior to May of 1978 (March 1975 through April 1978). Since May 1, 1978, Amtrak's operations over the rail lines of MoPac (formerly T&P) have been governed exclusively by a negotiated agreement. MoPac in its comments pointed out that it reviewed the dispatchers train sheets for the 38-month period and stated: "In none of the 38 months in which Amtrak trains were operated under the compulsion of the Commission's order (from March 1975 through April 1978) was a force majeure circumstance a factor either in meeting the 80-percent on-time performance standard or in failing to meet such a standard." MoPac suggested that the question has been mooted by these circumstances. We agree that the issue is now moot and need not be decided. It is ordered: The force majeure provision in the contract between Amtrak and the Texas and Pacific Railway Co. covering the period March 1975 through April 1978 is hereby vacated as moot. By the Commission, Chairman O'Neal, Vice Chairman Stafford, Commissioners Gresham, Clapp, Christian, Trantum, Gaskins, and Alexis. 360 I.C.C. FINANCE DOCKET NO. 21215 (SUB-NO. 2)' SEABOARD COAST LINE RAILROAD COMPANY, ET AL.-INVESTIGATION OF CONTROL AND MODIFICATION OF TRAFFIC CONDITIONS Decided December 27, 1979 On appeal, the finding by the Administrative Law Judge that Seaboard Coast Line Railroad Company was authorized to control the Louisville and Nashville Railroad Company in the 1963 merger proceeding, and therefore, no section 5 or Clayton Act violation resulted from later stock purchases, affirmed. The finding of no section 3(4) violation affirmed. The findings on violations of the merger conditions modified, and the merger conditions amended. The holding company subjected to limited reporting, recordkeeping, and securities jurisdiction. Alfred W. Cortese, Jr., Peter S. Craig, James Stovall III, James L. Tapley, and Paul C. Warnke for complainants. Leonard H. Becker, Philip C. Beverly, Fred R. Birkholz, Charles H. Cochran, Richard H. Hollander, Hadrian R. Katz, David R. Kentoff, Dennis G. Lyons, Barry S. Sandals, Lawrence A. Schneider, and S. Mark Tuller for defendants. Richard S. M. Emrich III, Gordon MacDougall, and Harold E. Spencer for intervenors. John W. Giorgio and James H. Walsh for the Commission's Bureau of Investigations and Enforcement. DECISION BY THE COMMISSION: These proceedings are before us on appeal from an initial decision of the Administrative Law Judge. A complete discussion of the background and evidence is in the initial decision and will not be repeated except as necessary to present a brief overview and for discussion of a particular issue. 'This decision also embraces Finance Docket No. 25309 (Sub-No. 1). Louisville & Nashville Railroad Company, et al.-Investigation of Control and Modification of Traffic Conditions, and Finance Docket No. 28480, Southern Railway Company v. Seaboard Coast Line Railroad Company, et al. In 1977, the Florida East Coast Railway Company (FEC) and Southern Railway Company (Southern) filed complaints against the Seaboard Coast Line Railroad Company (SCL), the Louisville and Nashville Railroad Company (L&N), and Seaboard Coast Line Industries, Inc. (SCLI).2 The complaints alleged generally that SCL acquired and exercised control over the L&N in violation of section 5 and section 7 of the Clayton Act' by increasing stock ownership in the L&N from 33 to 100 percent and consolidating the SCL and L&N systems, without prior Commission approval. Southern has alleged that these actions have foreclosed it and other carriers from effectively competing in key markets in the Southeast and have entrenched defendants as the dominant rail carrier in these markets. Southern sought reopening of two merger proceedings and divestiture of two of defendants' rail lines, assertedly to restore competition. The complaints also alleged that defendants violated the conditions imposed in these proceedings (the SAL/ACL and the L&N/Monon proceedings). The Commission instituted investigations and ordered the Bureau of Investigations and Enforcement (the Bureau) to participate for the purpose of developing the record." Hearings were held during February to August 1978, an initial decision was rendered on February 8, 1979. BACKGROUND SCL was formed by the merger of the Seaboard Air Line Railroad Company (SAL) and the Atlantic Coast Line Railroad Company (ACL), approved by the Commission in 1963 and consummated in In April 1978, the Administrative Law Judge granted FEC's motion to dismiss its complaint. based upon a settlement agreement between FEC and SCL (initial decision, appendix C). 'Now 49 U.S.C. 11343. Sections of the Interstate Commerce Act are referred to by their former section numbers to comport with the evidence and the initial decision. The first reference to the act will include a citation to the new code section. 'Section 7 of the Clayton Antitrust Act. 15 U.S.C. 18, prohibits a corporation engaged in commerce from acquiring, directly or indirectly, the whole or any part of the stock of another corporation also engaged in commerce where the effect of such acquisition may be substantially to lessen competition or tend to create a monopoly in any line of commerce in any section of the country. Seaboard Air Line R. Co.-Merger-Atlantic Coast Line, 320 I.C.C. 122 (1963) (the SAL/ACL report) and Louisville & N. R. Co.-Merger-Monon Railroad. 338 1.C.C. 134 (1970) (the L&N/Monon report). "The Administrative Law Judge granted petitions to intervene by (1) International Minerals & Chemical Corporation (IMC) and CF Industries, Inc. (CFI), (2) John W. McGinness, the Illinois Legislative Director and George B. Lee the Indiana Legislative Director for the United Transportation Union (UTU), and (3) the Wabash Valley Industrial Development Council (Wabash Valley). 1967. In approving the merger, the Commission authorized SCL to control all carriers controlled by ACL (320 I.C.C. at 213). ACL then owned 33 percent of the stock of L&N and an issue in the SAL/ACL merger hearings was whether the Commission should order divestiture of the L&N. In September 1968, L&N filed an application to merge with the Monon Railroad. This application was granted in 1970 (the L&N/Monon report) and consummated in 1971. In December 1970, SCL's board of directors agreed to acquire the remaining 67 percent of L&N's stock. In March 1971, the vice president-law of SCL visited the General Counsel of the Commission and explained SCL's planned stock purchase. SCL later suggested that it "had advised the Commission of this and that no action was taken." (Exhibit SCL-501, appendix 2.) By December 31, 1971, SCL owned 98.19 percent of the L&N common stock outstanding and 98 percent of the L&N preferred stock. In January 1971, a Commissioner raised the issue of the legality of the further L&N stock purchases. In a memorandum dated February 4, 1971, the General Counsel gave his opinion that SCL's acquisition of 100 percent of L&N's stock would not require Commission approval because control of L&N had been authorized in the 1963 SAL/ACL report, and no authorization was needed for further stock purchases." The record shows that as early as September 1969, the presidents of L&N and SCL were discussing operating the two railroads under one management." During the 1970's there were extensive coordinations and consolidations of departments and operations of SCL and L&N." In 1972, the marketing logo "Family Lines" was adopted and includes SCL, L&N, the Clinchfield and Ohio Railway, and Georgia West Point Railroad and their affiliates. In March 1976, the Family Lines began a sales effort known as GRIP, Greater Revenue Improvement Plan. Family Lines officials studied all traffic which their member lines handled and for each move they established a preferred route and sales people were told to sell the preferred routes. In 1902. ACL had acquired 51 percent of the stock of L&N. In 1945, it reduced its stock ownership, but always retained at least 33 percent. "Exhibit SCL-531. This was an internal memorandum and there is no record of consideration it was given or action taken on it. "Exhibit SOU—7, p. 40. "The consolidations included traffic departments, advertising departments, and general offices. |