Our jurisdiction over abandonment of these railroads can only be effectuated by the filing of an application under 49 U.S.C. 10903. The Bankruptcy Court, on the other hand, has no jurisidiction over the Galveston Terminal or Oklahoma City Junction, since neither is bankrupt or a wholly owned subsidiary of Rock Island. The proper course involving these two railroads is for Rock Island to sell its ownership interest.

It is also appropriate here to advise persons interested in acquiring and operating Rock Island lines of the procedures they must follow. There are two types of lines involved which require different procedures to be followed, those abandoned and those not abandoned.

A line that has been abandoned is no longer a line of railroad as that term is used in section 17(b)(1) of the MRRA. Therefore, acquisition of that type of line requires an agreement with the trustee, and approval of the agreement by the Bankruptcy Court. If the buyer wants to operate as a railroad over the acquired line, it must then come to the Commission for a certificate of public convenience and necessity to operate the line. This is governed by 49 U.S.C. 10901. The regulations regarding the application are found at 49 CFR 1120. While an application is pending temporary service may occur under an emergency service order from our Railroad Service Board. The Commission's staff is available to anyone with questions or needing advice in this area.

For Rock Island lines that are not abandoned, their sale is subject to the requirements of section 17(b) of the MRRA. The procedure to be followed requires an agreement with the trustee, approved by the Bankruptcy Court. An application must be filed with us complying with 49 CFR 1111, subpart B, Acquisition Procedures for Lines of Railroads in Reorganization, 45 F.R. 6107 (1980). Upon the filing of this application the Bankruptcy Court may permit the buyer to operate interim service over the line to be purchased. See, section 17(b)(3) of the MRRA. Again the Commission staff is available to provide assistance.

Were this a normal abandonment proceeding, we would find that because of its poor financial condition, deteriorated physical plant, and eroded traffic base that the present and future public convenience and necessity permit the abandonment of Rock Island's entire system as an entity upon the conditions that it: (1) keep in place and attempt to sell, upon reasonable terms, all lines in appendix D for continued rail service; (2) keep in place all other

lines for which offers have been received prior to the hearing before the Bankruptcy Court; and (3) not abandon any lines for which purchase applications are pending. We base our recommendations on this.

COMMISSIONER STAFFORD, concurring in part, dissenting in part: I agree with the majority's conclusions with one exception, that is the failure to include the Denver-Omaha/Kansas City main line in appendix D (see p. 172).

If the court agrees that this line is not worthy of being "kept intact" the practical result means the end of rail service to one of this country's greatest grain producing areas. The economic and social consequences to the communities located on the line were well documented at the public hearing we held at Phillipsburg, KS, last October. They range from increased costs of at least 25 cents per bushel to the farmer to millions of dollars needed to upgrade highways in order to accommodate the increased truck traffic. In short, there is a serious question as to whether the grain can in fact be moved by truck.

RECOMMENDATIONS

We recommend the following to the Bankruptcy Court:

1. The trustee should be authorized to abandon the entire Rock Island system consisting of 10,468 miles including 8,139 miles of main track, 2,329 miles of branch lines, and to discontinue service over 763.20 miles of trackage rights conditioned upon:

(a) keeping in place and attempting to sell, for a reasonable period of time, upon reasonable terms, all portions of the Rock Island in appendix D for continue rail service; and

(b) not permitting abandonment of any line for which a purchase application is pending with the Commission.

2. If, by the scheduled date of commencement of court hearings in this proceeding, a financially responsible person comes before the court and offers to acquire any other of Rock Island's lines sought to be abandoned, the court should postpone authorizing the abandonment of these lines for which offers had been made for a reasonable time to permit negotiations.

3. The court should require the trustee to keep intact the tracks and rail facilities of those lines which are listed in appendix D or are subject to applications or offers to purchase for a reasonable period

of time. The trustee should be authorized to dispose of those lines which are not subject to offers to purchase.

4. The court should permit prospective purchasers to provide interim service over the line until sales are consummated.

By the Commission, Chairman Gaskins, Vice Chairman Gresham, Commissioners Stafford, Clapp, Trantum, Alexis, and Gilliam. Commissioner Stafford concurring in part, dissenting in part with a separate expression. Commissioner Alexis absent and not participating.

363 I.C.C.

CHICAGO ROCK ISLAND AND PACIFIC RAI ROAD COMPANY WILLIAM M. GIBBONS, TRUSTEE

Net income was restated for comparative purposes by excluding provision for deferred taxes and undistributed earnings from affiliated companies. 2As of January 1, 1978, the Uniform System of Accounts was revised. Railway operating expense for 1978 is not comparable to prior years.

cluded.

Equipment obligations and other long-term debt due within 1 year are included in total current liabilities for 1978. Prior to 1978 they were not in