# Appendix — Crounse Corp. v. Interstate Commerce Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2115%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1986 - **Citation:** 479 U.S. 890 ## Text 85-2138 Supreme Court, U.S. a i & DD In the JUN Se TER JOSEPH F SPANIOL, Jk CLERK na Supreme Court of the United States OctoBer TERM, 1985 CROUNSE CORPORATION, er Au., PETITIONERS v. INTERSTATE COMMERCE COMMISSION, er Atv. RESPONDENTS APPENDIX TO PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH C IRCUIT RicHarD A. ZFLLNER Mark E. StTais SMITH R. BrittincHaM, III HauHN Loeser & Parks 800 National City E. 6th Bldg. Cleveland, Ohio 44114 A. DUNCAN WHITAKER, P.C. ALAN M. WISEMAN Rosert M. Bruskin Howrey & SIMON 1730 Pennsylvania Ave., N.W. Washington, D.C. 20006 James F. BROMLEY BROMLEY, Brown & WALSH 1625 Eye St., N.W. Washington, D.C. 20006 Counsel for Petitio WivuraM L. Patron Counsel of Record Tuomas H. Hannican, Jr. Ropes & Gray 225 Franklin Street Boston, MA 02110 (617) 423-6100 WituaM E. Hynan Perer A. GABAUER 1130 17th St., N.W. Washington, D.C. 20036 NicHowas J. SPAETH LYNN L. SCHLOESSER Mary ANN JOHNSON State Capital Bismark, N. Dakota 58505 ners Blanchard Press, Inc., Boston, Mass. — Law Printers [617] 426-6690 TABLE OF CONTENTS Page APPENDIX A January 23, 1986 Opinion of the United States Court of Appeals for the Sixth Circuit...................... la APPENDIX B January 23, 1986 Judgment of the United States Court of Aappeens COr Tee TE CCU... 5 cence. 42a APPENDIX C March 28, 1986 Order of the United States Court of Ap- peals for the Sixth Circuit Denying Rehearing En ae OO a Ee ee eater Rane ee deste omen ae 43a APPENDIX D April 11, 1986 Dissenting Opinions of Judges Merritt and Jones from Order of Sixth Circuit Denying Rehearing eT eee re Te ee ee re eer 44a APPENDIX E August 27, 1984 Decision of Interstate Commerce Com- (BRS IE, reg ak oF iyi ieg Sch PENS eI an Oe Rata a Rede 47a APPENDIX F UN IE Sg bh a cree ed egy 2lla 1. Chapter 390, § 11, 37 Stat. 566-68 (1912)........ 2lla Be a We, SCR IPL ETD COTTE: vo wk ck oe eet eee bi 215a pe Ge Whe, UU COGS Ghee Gus esae ness 217a APPENDIX G Information on Petitioners Required by Supreme Court | sD rota rior errr ee eG ere 219a la APPENDIX A UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Nos. 84-3743 THROUGH 84-3753, 84-3842, 84-3865 \ CROUNSE CORPORATION, Et AL., PETITIONERS, v. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS. ON PETITION FOR REVIEW OF A DECISION OF THE INTERSTATE COMMERCE COMMISSION DecIDED AND Fitep January 23, 1986 Before: KENNEDY and Krupansky, Circuit Judges: and TimBers,* Senior Circuit Judge. KeNNepy, Circuit Judge, delivered the opinion of the Court in which Krupansky, Circuit Judge, joined. Timbers, Senior Circuit Judge (pp. 33-42) delivered a separate dissenting opinion. * The Honorable William H. Timbers, Senior Circuit Judge, United States Court of Appeals for the Second Circuit, sitting by designation 2a KeNNepy, Circuit Judge. In this appeal, petitioners! contest the August 27, 1984 decision of the Interstate Commerce Com- mission (Commission or ICC) approving the acquisition by CSX Corporation, the nation’s second largest railroad, of American Commercial Lines, Inc. (ACL), which owns the nation’s largest bargeline, American Commercial Barge Lines (ACBL). Peti- tioners and intervenors claim that the ICC erred in holding that the transaction violates neither the Panama Canal Act, 49 U.S.C. § 11321, nor section 11344 of the Interstate Commerce Act, 49 U.S.C. § 11344. We find that neither statute prohibits the transaction and, therefore, we uphold the ICC’s interpreta- tion and application of the statutes. We also find that the ICC took the requisite “hard look” at the potential consequences of the merger in its Environmental Assessment of the proposed transaction. We therefore affirm the Commission's order. Liquid chemicals, farm products and coal are the three prin- cipal commodities served by railroads and bargelines. Over its 27,000 route miles, CSX—the largest railroad east of the Mississippi River—transports 47.9% of chemicals, 31.6% of farm products and 48.3% of the coal moved by all Class I railroads in the East. ACBL, the nation’s largest bargeline, covers 7,500 water route miles and is the only for-hire water carrier which is among the top three for-hire bargelines in each of the three principal commodity markets. In some areas, CSX and ACBL routes parallel each other to a significant degree. On November 4, 1983, CSX and ACL jointly filed with the ICC an application for CSX to acquire control of ACL and ACBL. In support of the application, the companies asserted that the transaction would achieve substantial public benefits in the form of reduced costs, innovative joint marketing and ratemaking opportunities and other benefits of integrated operations. The companies claim they would be able to offer ' Petitioners are eleven water transport companies, the Tennessee Valley Authority, and the Iilinois Legislative Director for the United Transportation Union. They are joined by numerous intervenors. 3a shippers more efficient, better coordinated, intermodal ser- vices, which would expand shippers’ marketing options. In this way, the consolidation would allegedly make CSX and ACL more competitive, thereby enhancing the overall com- petitiveness of the market. Various parties participated in the public hearings held before an Administrative Law Judge between February 22 and May 11, 1984. Numerous shippers, states, utilities, water car- riers and labor organizations opposed the application on various grounds. Some shippers and states supported the application. The ALJ made no findings of fact, nor did he prepare a recom- mended decision. He simply oversaw the hearings. With the benefit of the record generated by the hearings, the ICC heard oral argument on June 21, 1984. On August 27, 1984, in a lengthy written decision, the ICC approved the acquisition sub- ject to certain oversight and reporting conditions which the ICC imposed as a precaution, to enable it to take corrective action against unforeseen anticompetitive effects. Essentially, petitioners object to the Commission's decision on the ground that it eviscerates the Panama Canal Act, 49 U.S.C. § 11321, which prohibits railroad ownership of bargelines except under certain specified conditions. Petitioners do, however, suggest various other grounds for reversal: that the Commission arbitrarily and capriciously concluded that the merger would not result in any reduction of competition pro- hibited by the Interstate Commerce Act, 49 U.S.C. § 11344; that the Commission denied the public a full and fair hearing by deciding the case without the benefit of an initial ALJ deci- sion; that the Commission has no authority to impose oversight conditions in a Panama Canal Act case; that the Commission failed to impose protective conditions for the benefit of employees or other railroads; and that the Commission failed to assess the potential environmental effects as thoroughly as is re- quired by the National Environmental Policy Act of 1969, 42 U.S.C. § 4321. We address each of these issues in turn. 4a Yielding to public concern over the anticompetitive effects of some rail-barge consolidations, Congress passed the Panama Canal Act (the Act) in 1912. The Act generally proscribes railroad ownership of or interest in a water carrier on a water route with which the railroad does or may compete for traffic. The proscription, however, is not absolute. The Commission may authorize the acquisition of such an interest when the Commission finds that ownership, operation, control, or interest will still allow that water common car- rier or vessel to be operated in the public interest advan- tageously to interstate commerce and that it will still allow competition, without reduction, on the water route in question. 49 U.S.C. § 11321(b). Only a finding of competition between the acquiring railroad and the acquired bargeline triggers the statutory prohibition and necessitates inquiry into the applicability of the exception. 49 U.S.C. § 11321(a). If the Commission finds no such com- petition, the Act does not preclude the merger. See generally American Waterways Operators, Inc. v. United States, 386 F.Supp. 799 (D.D.C. 1974). Upon examination, the Commission determined that CSX and ACL do compete, within the meaning of the Act. The Commission then analyzed the merger in terms of the above exception’s two prongs—the public interest prong and the com- petition prong. Viewing the two prongs as closely related, the Commission found that the public interest prong was satisfied by a showing that the CSX-ACL combination would not be able to flout the public interest by engaging in anticompetitive behavior ultimately allowing it to charge supracompetitive prices. In the Commission’s view, a finding that that particular harm would not ensue sufficiently ensured the continued opera- tion in the public interest contemplated by the statute. Nonetheless, the Commission also pointed out that anticipated improvements in operating efficiency and quality of service also indicated that the water carrier would continue to be operated in the public interest. \ 5a Leaving the public interest prong and turning to competi- tion, the Commission analyzed the competitive nature of the barge industry and concluded that the merger would not be harmful to competition on the waterways. The Commission conceded that the merger could harm individual competitors but, rejecting its own precedent in Jllinois Central Railroad Co. —Control—John 1. Hay Co., 317 1.C.C. 39 (1962), ruled that harm to competitors is not harm to competition within the meaning of the statute. The commission also rejected Hay’s holding that the exception required not only a finding that com- petition would not be reduced among water carriers, but also a finding that competition would not be reduced between water carriers and railroads, including competition between the acquired carrier and the acquiring railroad. The Commission therefore looked only at the effect the merger would have on competition among water carriers, and ignored the effect on rail-barge competition. The Commission found that the com- petitive structure of the barge market is such that the merger does not threaten to harm competition between water carriers. In petitioners’ view, the Commission has misinterpreted the Act. According to petitioners, the Act reflects Congress’ desire to implement a policy of strict rail-barge separation, subject to only the narrowest exceptions. Petitioners argue that nothing could be further from the narrow exception contemplated by Congress than this merger of giants in their respective modes of > The Commission also suggested that a finding of no harm to competition could be made if competition between CSX and ACL was so minimal that the merger could not have a substantial anticompetitive impact. Petitioners argue strenuously that finding competition between CSX and ACL to be minimal is arbitrary and capricious. We would agree that such a finding might very well! be arbitrary and capricious, but our reading of the ICC decision indicates that, if such a finding was in fact made (the Commission did refer to CSX-ACL competition as “modest”), it did not form the basis for the Commission's con- clusions about harm to competition. Rather, the Commission's analysis of the competition prong relies on its view that only barge competition and not rail- barge competition, is relevant under the statute. Da transportation. Petitioners also argue that the exception pro- vided for in the Act requires consideration of the effect on rail- barge competition, not just barge-barge competition. Zealously as petitioners contest the Commission’s interpreta- tion of the Act, they nevertheless also argue that even if that interpretation is correct, the Commission has misapplied the Act. Petitioners submit that the Commission’s application of the Act is flawed because it is based upon factual determinations regarding the barge industry which petitioners contend are arbitrary and capricious. Specifically, petitioners object to the Commission’s findings that the barge industry is highly com- petitive and relatively unconcentrated, and that barriers to entry in the industry are not high. Although substantially intertwined, our review of the Com- mission’s interpretation of the statute naturally differs somewhat from our review of the Commission’s application of the statute. While an agency’s interpretation of a statute is entitled to deference, “federal courts bear the ultimate respon- sibility for interpreting federal statutes.” Meade Township v. Andrus, 695 F.2d 1006 (6th Cir. 1982). Our task, however, is not to determine whether we think the Commission’s construc- tion is the best construction, but only to determine whether the Commission's construction was “sufficiently reasonable.” Train v. Natural Resources Defense Council, 421 U.S. 60, 75 (1975). “To satisfy this standard it is not necessary for’ a court to find that the agency’s construction was the only reasonable one or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Federal Election Commission v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 39 (1981). The characterization of the Panama Canal Act as a strict pro- hibition against railroad ownership of bargelines runs through all of petitioners’ arguments, and petitioners would have us consider all of their arguments against the imposing back- ground of this characterization. Such characterization, if accu- 7a rate, would make it difficult to interpret a narrow statutory exception to encompass a merger between companies the size of CSX and ACL. Our reading of the statute, the legislative history of its initial passage in 1912, and the legislative history of its reenactment in 1940, convinces us, however, that Congress did not intend to mandate absolute rail-barge separation, but, rather, meant to remedy a particular evil which frequently accompanied railroad acquisition of bargelines. The “evil” which spurred Congress to action in 1912 was the distasteful propensity of railroads to buy up a bargeline with which they actively competed, lower barge rates on that line sufficiently to drive other barge competitors out of business, then close the acquired bargeline or raise its rates to the level of rail rates, leaving shippers no genuine alternative to rail transport. The large financial resources of the railroads allowed them to weather the short-term loss associated with the reduced barge rates, while forcing the smaller, independent barge comi- panies from the water. The legislative history is replete with references to this prac- tice. For example, Senator Chamberline remarked: The people of Portland, Oregon, are practically at the mercy of the same Southern Pacific Co. That company operates a line of railroad from Portland, Oreg., to San Francisco, and at the same time they operate the only line of steam ships between Portland and San Francisco. What is the effect? If they charge a rate which is unfair or too high, an independent line of steamers is out on the river and ocean route. Immediately the railroad-controlled steamers and the railroad itself reduce the rate to a figure which will not afford a reasonable or any compensation to the independent line of steamers. These must then operate at a loss. Then what happens? The independent line of necessity withdraws from competition to avoid bank- ruptcy, and immediately the railroad company and the railroad-controlled line of steamships raise the rate to more — 8a than a remunerative basis. Experience has proven that railroad-controlled stearners can afford to create large deficiencies, which are paid by the railroad company in order to enable the latter to maintain a higher level of rates. 48 Cong. Rec. 10,373 (1912). Petitioners contend that Congress’ solution to that problem was a strict prohibition against railroad ownership of bargelines. Doubtless some, perhaps many, of the legislators who supported the Act favored strict rail-barge separation. See, e.g., 48 Cong. Rec. 9238 (1912) (“So far as our internal affairs are concerned it would be well to confine our common carriers strictly and exclusively to transportation—the railroads on the land, the boats on the water.”) (Remarks of Senator Townsend). Other supporters of the Act favored the least restrictive legislation necessary to combat the “evil.” Not sur- prisingly, the legislative history does not conclusively reveal which attitude prevailed. We therefore think it appropriate to heed the oft-cited “canon of construction of the wag who said, when the legislative history is doubtful, go to the statute.” Greenwood v. United States, 350 U.S. 366, 374 (1956). The Act does not absolutely proscribe railroad ownership of bargelines. Rather, in recognition that the railroads’ motives in such acquisitions were frequently anticompetitive, the Act promulgates the general rule that railroads shall not own barge- lines. The Act includes the exception, however, and that excep- tion must be read in light of the evil with which the Act con- cerns itself. The Commission may allow railroad ownership of a bargeline if such ownership “will still allow that water common carrier or vessel to be operated in the public interest advan- tageously to interstate commerce,” (as opposed to the water car- rier eventually being shut down) and such ownership “will still allow competition, without reduction, on the water route in question” (as opposed to reducing competition on the water route by driving other water carriers out of business). The final Ya form of the Act, with its general prohibition and its exception, indicates to us that Congress intended only to end the specific anticompetitive practice which prompted it to act. Congress declined to go further and enact the strict prohibition which some called for and which petitioners now ask us to read into the Act. This view of the Act finds support both in contemporaneous ICC decisions and in events surrounding the Act’s reenactment in 1940. Among the very first ICC applications of the Act were Lake Line Applications Under Panama Canal Act, 33 1.C.C. 790 (1915), and Ocean Steamship Company of Savannah, 37 1.C.C, 422 (1915). In Lake Line, the Commission considered the applications of several railroads seeking permission for con- tinued ownership of the bargelines which they had owned prior to passage of the Act. The Commission discussed the problem which the statute had addressed, see 33 1.C.C. at 712-13, and, rather than rely on a perceived strict mandate of rail-barge separation, made a searching inquiry into whether the excep- tion should apply. Because the joint operations at issue in Lake Line had attempted “by an artificial rate structure to deprive the public of the natural benefits that would flow from a free use of this waterway” and had caused rates to be “steadily advanced,” 33 1.C.C. at 713-14, the Commission found that the exception did not apply and denied the applications. Only seven months later, in Ocean Steamship, the Commis- sion applied the exception and granted a railroad permission to continue its ownership of a steamship line with which it com- peted within the meaning of the Act. The Commission con- cluded that: Upon all the facts of record we are of opinion and find that the present operation of the steamship company as a whole is in the interest of the public; that it is of advantage to the convenience and commerce of the people; and that its con- tinued ownership and operation by the Central of Georgia, as at present conducted, will neither exclude, 10a prevent, nor reduce competition on the routes by water under consideration, and that the application should be granted, subject to such further order or orders as may hereafter be entered by the Commission. 37 I.C.C. at 429. From the beginning, then, the exception has been given weight. In 1940, Congress reenacted the Act. Vigorous debate arose, focusing on a change in wording intended to clarify that the exception could be applied not only to applications for continu- ing joint operation, but also to application for new joint opera- tions. The ICC had held precisely this in Southern Pacific Com- pany’s Ownership of Atlantic Steamship Lines, 77 1.C.C. 124 (1923). Again, the debates reveal some sentiment for stricter rail-barge separation, see 86 Cong. Rec. 11537-11544 (1940), but that sentiment did not find its way into the statute as reenacted. As stated by the only other court to consider the question since the 1940 reenactment, “Congress clearly ex- pected rail carriers to be able, with ICC approval, to acquire competing water carriers.” Water Transport Association v. I.C.C., 715 F.2d 581, 590 (D.C. Cir. 1983). Petitioners argue that the ICC’s reading of the Act renders the Act’s prohibition meaningless. If the exception can be read so broadly as to apply to this merger, so the argument goes, it is inconceivable that any other merger could fail to fall within the exception; in effect, the Act no longer prohibits anything. This, say petitioners, amounts to administrative repeal of a statute. While this argument has some merit, it is flawed in that it is subtly wedded to the notion that Congress intended the Act to do more than just address the particular evil discussed above. Assuming for the moment that it is true, as it may well be, that the Commission’s interpretation of the statute would allow almost any rail-barge merger, the Commission is not necessarily guilty of repealing the Act. Rather, that a merger of this magnitude could, upon analysis, fall within the Act’s exception suggests that the evil which the statute was carefully designed to lla curtail in 1912 and 1940 is not likely to occur in the transporta- tion industry of 1985. Nor does this amount to administrative or judicial redetermination of a legislatively determined fact. The Act’s flexibility is deliberate. Congress did not determine that all rail-barge mergers worked the same evil. If it had, it would have enacted an absolute prohibition. Rather, Congress con- templated that some mergers might not pose a threat, and those mergers could be allowed. The notion that the day might come when the economics of the transportation industry would preclude many rail-barge mergers from posing a threat to com- petition is not contrary to any legislative determination. While the findings in the instant case strongly suggest that the Com- mission believes that day has come, we need not expressly deter- mine that. The Act remains in full force, and the Commission, of course, will continue to analyze acquisitions under the Act on a case-by-case basis. Petitioners challenge the Commission’s interpretation of the Act in another respect. Petitioners contend that in determining whether the merger “will still allow competition, without reduction, on the water route in question,” the Commission is required to consider the effect of the merger on rail-barge com- petition, rather than just the effect on barge-barge competition. Under petitioners’ analysis, the elimination of the substantial (or “modest”) competition between CSX and ACL constitutes a reduction in competition under the Act. The Commission itself previously adhered to that interpreta- tion. In Illinois Central Railroad Co. - Control - John I. Hay Co., 317 1.C.C. 39 (1962), the Commission refused to allow an acquisition because it found that a reduction in competition would follow: The question is whether the transaction would eliminate, diminish, forestall, hinder, or frustrate competition on the route by water in any manner and to any material degree; as, for example: between Hay and the controlling rail car- riers; between Hay and the competing water carriers; or 12a between the competitive water carriers. To decide this question in applicants’ favor it would be necessary to con- clude that Hay’s competitive status under the control of the railroads would compare favorably with its present status as an independently operated water carrier. However, such a finding cannot be made on this record and would be improbable in any event in view of the directly competitive nature of the water carrier operations of Hay and the rail operations of the railroad appli- cants.... The transaction would reduce competition bet- ween Hay and the railroads. 317 I.C.C. at 54 (emphasis added) (citations omitted). In its decision in the instant case, however, the Commission an- nounced that it was changing course: Finally, in evaluating whether competition will be re- duced, we note that preservation of competition in a par- ticular transportation market is not synonymous with the preservation of the position of each competitor.... We must consider whether market forces would preserve the level of competition on the water route generally even though the competitive relationship between the railroad, the acquired water carrier, and other water carriers would be altered. Harm to competitors does not imply harm to competition. Consequently, the holding in John I. Hay, to the extent inconsistent with this decision, that a finding of no reduction of competition on the involved water route requires a supporting conclusion that the involved water carrier's competitive status in relation to other carriers (in- cluding the acquiring railroad) would compare favorably with its competitive status as an independent carrier, is rejected and will no longer be followed. Commission Decision at 19. Administrative agencies are not bound by their own prior construction of a statute. They are free to reject prior construc- tions which have not been endorsed by the courts. See NLRB v. 13a Local Union No. 103, International Association of Bridge, Struc- tural ¢¢ Ornamental Iron Workers, 434 U.S. 335, 351 (1978) (“An administrative agency is not disqualified from changing its mind; and when it does, the courts still sit in review of the administrative decision and should not approach the statutory construction issue de novo and without regard to the ad- ministrative understanding of the statutes.”) We therefore review the Commission’s construction of the statute without regard to the shift it represents from the construction in Hay. Petitioners point out that the Act’s prohibition is only trig- gered by a finding that the acquiring railroad and the acquired bargeline compete. They would argue that it is not reasonable to focus on rail-barge competition in triggering the prohibition, and then to ignore rail-barge competition in construing the exception. We disagree. For one thing, the language of the Act reads, “will still allow competition, without reduction, on the water route in question.” Barges, not trains, operate on water routes. Further, the Commission’s construction is faithful to the Act’s purpose. To prevent the disreputable practice that prompted the Act, it was sensible to use rail-barge competition as a triggering mechanism. No railroad would be tempted to eliminate barge service against which the railroad did not com- pete for traffic. Thus triggered, however, no apparent necessity exists for con- tinuing to focus on rail-barge competition. Congress intended to prevent railroads from running their barge competitors ashore. A reduction in competition, even a significant one, between a railroad and a bargeline does not automatically portend a reduc- tion in competition among the various bargelines. If the Com- mission concludes that no reduction in competition will occur among bargelines, it is irrelevant that some reduction in rail- barge competition may ensue. We therefore hold that it was reasonable for the Commission to construe the competition prong of the Act’s exception as requiring only an analysis of the harm to competition between bargelines. l4a Even allowing that the Commission was correct to look only at competition between bargelines, petitioners argue that the Commission employed a “destruction of the industry” standard, rather than a mere reduction in competition standard. Peti- tioners contend that the Commission would not find any reduc- tion in competition unless it determined that all bargelines would be put out of business. Again, petitioners misapprehend the objective of the Act. The Act was not intended to protect bargelines from the threat of having to compete with a rail- backed bargeline. Had that been the goal, Congress would have enacted a flat prohibition on railroad ownership of barges. Rather, Congress intended the Act to protect the shipping public from the artificially high rates a railroad could charge after eliminating barge competition. See Steamer Lines on the Chesapeake Bay, 35 1.C.C. 692, 696 (1915) (legislative purpose to insure that “under railroad ownership the lines render service as good as they would render if independently owned and operated, and that railroad ownership does not deprive the public of substantial benefits of competition, either in service or in rates”); Lake Line Applications under Panama Canal Act, 33 I.C.C. 700, 712 (1915) (legislative purpose to insure that “[t]he rates charged fluctuate according to economic principles, and the shipper enjoys invariably, as a result, lower charges for the transportation routed over such waterways and thereby reaps a return from the ‘nation’s highway’ ”). In the instant case, the Commission construed the Act to require an actual reduction in competition as opposed to simply harm to particular bargelines due to intensified competition. As long as the Commission finds that competition will not be so intensified as to drive other bargelines completely out of the market, the interests of the shipping public are protected. We therefore hold that in this respect as well the Commission reasonably construed the Act. We now turn from petitioners’ objections regarding the Com- mission’s interpretation of the Act to petitioners’ objections regarding the Commission’s application of the Act. The factual l5a determinations which an agency makes in the course of apply- ing a statute, while subject to “searching and careful” review of the whole record, including “the body of evidence which opposes the [agency's] decision,” Unien Carbide Corp. v. NLRB, 714 F.2d 657 (6th Cir. 1983), can be rejected only if we find no substantial evidence supporting the conclusion or if we find the conclusion to be so out of touch with the reality revealed by the whole record as to be arbitrary and capricious. See 5 U.S.C. § 706(2). Petitioners contend that the Commission erred in concluding that both prongs of the Act’s exception were satisfied by the facts in the present case. Petitioners object to the Commission's treatment of the public interest prong, claiming that the Com- mission reduced it to mere surplusage by failing to make a specific finding that the merger is essential to the public good. The Act requires no such finding, however. The Commission must find that the acquisition “will still allow that water com- mon carrier or vessel to be operated in the public interest advantageously to interstate commerce.” This is merely a re- quirement that the public interest not be adversely affected. In- creased benefits to the public are not required. The Commission found that there would be no damage to the public interest, since ACL would continue to operate as an active competitor on the waterways, rather than be shut down by CSX. This finding sufficiently satisfies the public interest prong. Ample evidence supports the finding, and we cannot say that it is arbitrary or capricious. We now come to the most vigorously debated aspect of the Commission’s decision. In ruling that a CSX-ACL merger “will still allow competition, without reduction, on the water route in question,” the Commission necessarily probed the current nature of the water transportation industry. The Commission was forced to determine facts with respect to various hotly con- tested questions. The voluminous record generated below con- tains evidence upon which the Commission might have based conclusions more favorable to petitioners. But other evidence supports the Commission’s findings. l6a It is with respect to these questions, questions intimately entwined with the nature of the industry, that we owe the Commission the greatest deference. Resolving these considerations is a complex task which re- quires extensive facilities, expert judgment and con- siderable knowledge of the transportation industry. Con- gress left that task to the Commission “to the end that the wisdom and experience of that Commission may be used not only in connection with this form of transportation, but in its coordination of all other forms.” 79 Cong. Rec. 12207... . If the Commission did not exceed the statutory limits within which Congress confined its discretion and its findings are adequate and supported by evidence, it is not our function to upset its order. McLean Trucking Co. v. United States, 321 U.S. 67, 87-88 (1943). See also Cleveland Electric Illuminating Co. v. ICC, 685 F.2d 170, 173 (6th Cir. 1982). The first question is whether, in its competitive analysis of the barge industry, the Commission erred in its market defini- tion. Applying the Department of Justice Guidelines it found the product to be water carrier transportation. It found that although rail transportation afforded some competition to water carriage, that competition was limited because barge rates and costs were so much lower than rail rates and costs and gave only limited consideration to competition from rail and other modes of transportation and only to the extent that they effectively disciplined barge rates on the routes in question. Thus the Commission, rather than distinguishing the three main commodity markets—liquid chemicals, farms products, and coal—initially lumped them all into a single market. Defin- ing the market this way has obvious consequences. The barge industry as a whole appears far less concentrated than, for example, that segment of the barge industry devoted solely to coal transportation. The Commission’s broad market definition reflected an industry in which the leader hauled slightly over l7a five percent of all barge traffic, and the top twelve companies hauled only twenty percent of all traffic. Petitioners point out if the barge transportation of coal is treated as a separate market, three bargelines haul fifty percent of all coal moving on the Ohio River System, which is where the vast majority of coal moves, and the top six bargelines account for seventy percent of that coal movement. Petitioners also object to including private barge fleets in the relevant markets. The Commission found that barge equipment was suffi- ciently interchangeable to permit carriers to switch from one commodity to another and that therefore water carriers specializing in the transport of one commodity can and do switch to other commodities when to their advantage. It also found that the private carriers were competition in the market. With respect to a geographic market, the Commission in- cluded the Mississippi River System and the Gulf International Waterway since equipment was generally interchangeable, and there was no physical barrier to movement throughout those systems. The selection of the relevant market seems to us to be the very type of “complex task which requires. . . expert judg- ment and considerable knowledge of the transportation in- dustry” where the reviewing court should defer to the Commission. Intervenors challenge the Commission’s findings with respect to interchangeability of barge equipment. They argue that some barges are specialized; those for coal hauling, for example, sometimes have greater inner bottom steel thickness so they will not wear out as soon. The Commission found this to be a car- rier’s operational choice but not one that significantly affected the interchangeability. It reached a similar conclusion with respect to problems of covers interfering with the unloading of coal from barges. The evidence that many barges are used inter- changeably even with these differences is substantial evidence to support the Commission’s findings. 18a Intervenors also argue that the Commission’s finding that there is ease of interchangeability of a coal barge to a grain barge by the addition of a cover is arbitrary since a cover for a typical $225,000 barge costs approximately $50,000, or almost twenty-two percent of the cost of the barge. The $50,000 cost is a substantial sum. The significance of this sum, however, as an obstacle to transferring barges from coal hauling to grain hauling depends upon numerous factors, such as the profit margin, capital costs, long-term contracts, shipper backing of capital needs, etc. All of these matters are within the special competence of the Commission. Further, even if we were to hold that the Commission’s find- ing of interchangeability was arbitrary and capricious the remedy would be remand for analyses of separate commodity markets. Even though the Commission thought such analysis was unnecessary, the Commission did perform the analysis noting that “[b]ecause of the importance of coal and agricultural commodities in the traffic bases of the applicants, we will look at those movements separately and determine whether the transaction would have any adverse impacts on the transportation of those commodities.’”” Commission Decision at 25, The Commission analyzed competition for coal hauls and grain hauls in depth. See Commission Decision at 49-58. We see no need to repeat the Commission’s analysis. The data employed all find support in the record. Petitioners’ objection amounts to simple disagreement with the Commission on a matter of judgment. Petitioners contend that CSX will channel all of the coal shipments originating with it to ACBL and away from other bargelines. Petitioners fear that ultimately they would experience higher unit costs due to lower traffic density, driving them out of business and leaving CSK— ACL to prac- tice monopoly pricing. 19a The Commission envisioned the ultimate consequences dif- ferently. Even looking at a worst-case scenario, where most CSX traffic would eventually be diverted to ACBL from other bargelines, the Commission still concluded that although this would mean diminished traffic for some of ACBL’s com- petitors, those competitors could still continue to maintain viable operations. The Commission conceded that “any carriers which experience loss of CSX-originated traffic would have to adjust their fleet sizes and operating schedules to the traffic remaining.” Commission Decision at 52. This, however, represents only harm to competitors, not harm to competition, and as the Commission concluded, we do not think that the assumed “worst case” traffic diversion would harm barge lines competing with ACBL beyond the loss of revenue attributable directly to CSX- originated traffic and associated backhauls. Since these carriers would remain viable competitors, ACBL would face no fewer competitive constraints in its pricing of coal movements after the consolidation than it faces today. Commission Decision at 52-53. Petitioners urge upon us that harm to competitors would, in this case, translate into harm to competition by creating an atmosphere in which competitors could not survive. But this is precisely the type of judgment call on which we must defer to the Commission’s expertise in the transportation industry, so long as the judgment is a reasonable one. If competitors will survive, then competition, as contemplated by the Act, will continue unabated. That some competitors may suffer a reduc- tion in traffic does not mean that the competition which benefits shippers will be diminished to any degree. We therefore must decide whether the Commission’s determination that competitors will survive was reasonable. Petitioners suggest two possible ways in which a CSX-ACL combination could eliminate bargeline competitors: predatory pricing, which prompted passage of the Act; and “rate scissors,” 20a a sophisticated form of predatory pricing by which a rail-barge combination lowers barge rates and recoups the loss by raising rail rates. The Commission found that neither practice could be successfully implemented by CSX-ACL. Predatory pricing in these situations was a serious threat in 1912, when a well-financed railroad could absorb a short-term loss while driving less well-financed competitors off the water. The Commission found that predatory pricing would not suc- ceed today, since the barge industry is now “comprised of a large number of firms, many owned or controlled by large and well- financed corporate parents.” These large corporate parents, such as United States Steel and Archer Daniels Midland, are capable of absorbing some losses themselves without throwing in the towel. Further, the Commission reasoned that if predatory pricing could potentially succeed, one of these large corporate parents might already have attempted to eliminate their com- petitors. Because this has not occurred, the Commission inferred that market forces prevent it. In the “rate scissors” scenario, a railroad theoretically may engage in predatory pricing without having to absorb any loss; it could, therefore, continue the practice long enough to discourage even the most well-financed competitor. “Rate scissors” is simply a scheme whereby the company sets its barge rates below what its competitors can bear, and makes up the difference in the rail rates it charges customers who have no alternative rail service. The Commission dismissed the “rate scissors” threat as well, noting that many rail rates are constrained by competition or regulation. If the CSX rail rates rose, many shippers could turn to alternate non-rail options, such as trucks. There was evidence in the record suggesting that the rate scissors approach could actually cause CSX-ACL to lose business. Further, the Commission concluded that CSX-ACL would be likely to employ competing water carriers themselves, in instances where an ACL carrier did not provide the most efficient move- 2la ment. There was evidence in the record that ACL and other water carriers in fact already do contract outside their own companies when more efficient services are available. The above factors alone indicate that the Commission's con- clusion that neither predatory pricing nor rate scissors pose a genuine threat to competition is based on a reasoned appraisal of the evidence of record. But the Commission made additional findings that reinforce the conclusion that these threats are illusory. Most significantly, the Commission determined that there are no significant barriers to entry into the barge industry. This ease of entry would tend to discourage predatory practices, since any subsequent attempt to charge supracompetitive rates would likely be met by an influx of competitors undercutting that rate. Petitioners object that the finding on ease of entry ignores overwhelming evidence to the contrary. They point to the testimony of several large bargeline executives who attempted to break into the market for coal hauls and incurred substantial losses before giving up. This, however, only shows that it is difficult to enter the market at present, when rates and service are presumably optimal, due to competition. The Commission only made the point that because there are no significant regulatory barriers to entry, and because economies of scale may be realized at a relatively low level, a bargeline may enter the market at a reasonable cost, and would be likely to do so should the prevailing rates become artificially high. We reiterate that the record contains conflicting evidence on all of these points. But, again, our review is limited. When evidence exists to support more than one conclusion, it is best to leave the determination with the Commission, in deference to its familiarity with the industry. We conclude that the Commission’s interpretation of the Panama Canal Act was reasonable, and its application of the Act’s exception was based on a reasoned and justifiable view of the evidence of record. We affirm the Commission’s decision that the CSX-ACL merger does not violate the Act. 22a 49 U.S.C. §§ 11343-11344 also apply to this transaction. Sec- tion 11343 provides that various transactions, including “con- solidation or merger of the properties or franchises of at least 2 carriers into one corporation for the ownership, management, and operation of the previously separately owned properties,” may take place only with the Commission’s approval and authorization. Section 11344(d) provides that, except in the case of the merger of two class I railroads, the Commission shall approve the transaction unless (1) as a result of the transaction, there is likely to be substantial lessening of competition, creation of a monopoly, or restraint of trade in freight surface transportation in any region of the United States; and (2) the anticompetitive effects of the transaction outweigh the public interest in meeting significant transporta- tion needs. The inquiry under section 11344 is broader than the previous inquiry, in that the Commission must consider the effect on competition in the industry generally, rather than just among bargelines. The Commission did this, and concluded that the transaction will have no adverse effects on either horizontal or vertical competition in the industry. The Commission’s analysis is thorough and rooted in the record. See Commission Decision at 45-49. It is not our function to reconsider the issue de novo as petitioners would have us do. Intervenor National Coal Association argues that the Com- mission failed to expressly weigh the anticompetitive effects against the public interest. This argument overlooks the Com- mission’s conclusions that no anticompetitive effects would ensue and that the public interest would not be diminished. Given those findings, an explicit balancing of these two factors would be supererogatory. We affirm the Commission’s ruling that the transaction is permissible under 49 U.S.C. § 11344. We are also presented with a question regarding the Com- mission's authority to impose oversight conditions. Petitioners 23a argue that the Panama Canal Act grants no such authority to the Commission. As noted above, however, this transaction also falls within the compass of 49 U.S.C. § 11344. Section 11344(c) expressly provides that the Commission may impose conditions on any transaction approved under that section. Petitioners’ argument to the contrary is without merit. We also reject petitioners’ contention that the Commission erred in deciding on the contested application without the benefit of an initial or recommended decision by an Adminis- trative Law Judge. While an ALJ oversaw the hearings which generated the record, the Commission waived the requirement of a separate initial decision by the ALJ. Petitioners argue that this contravenes the Administrative Procedure Act, 5 U.S.C. § 557(b), which requires an initial decision by the person who presides at the hearings. Section 557(b)(2), however, provides that, in rulemaking procedures or initial licensing applications, an agency may waive this requirement if the “due and timely execution of its functions imperatively and unavoidably” so require. The Com- mission waived the requirement on this ground.’ Petitioners object that this case involved neither a rule- making nor an initial licensing and therefore no waiver is per- mitted. However, both 49 U.S.C. § 10327(c) and 49 U.S.C. § 11345(f) expressly provide that, in proceedings such as the instant one, the Commission may waive the initial ALJ decision if such waiver is required “for the timely execution of its func- tions.” It is true, as petitioners point out, that statutes may not be interpreted to modify the hearing provisions of the Ad- ministrative Procedure Act except to the extent that thev do so expressly. See 5 U.S.C. § 559. We find, however, that sections > “Timely execution” of the Commission's functions in this instance meant adherence to 49 U.S.C. § 11345(c)(3)’s requirement that the Commission issue a final decision “by the 90th day after the date on which it concludes the evidentiary proceedings.” 24a 10327(c) and 11345(f) constitute express modifications. It was therefore within the Commission’s discretion to waive an initial decision in attempting to conply with statutorily imposed time limits.* Petitioner Simmons, the Illinois Legislative Director for the United Transportation Union, takes issue with the Commission’s failure to consider the impact upon and impose protective con- ditions for employees of non-CSX railroads. He points out that 49 U.S.C. 11344(b)(1)(B) specifically provides that the Com- mission shall consider “the interest of carrier employees affected by the proposed transaction.” He cites our decision in Detroit, Toledo & Ironton R. Co. v. United States, 725 F.2d 47 (6th Cir. 1984), in support of his argument that we ought to apply this provision in the instant case. See id. at 50 n.2. Section 11344(b), however, is expressly restricted to mergers involving at least two class I railroads. Detroit, Toledo & Iron- ton involved such a merger. The instant case does not. The instant case is subject to the provisions of section 11344(d), covering mergers other than of class I railroads. Section 11344(d) does not contain a requirement similar to section 11344(b)’s requirement to consider the impact on all carrier employees. Section 11344(d) requires only that the Commission consider the public interest. Since section 11344(b) also specifically requires consideration of the public interest, in addition to consideration of the effect on employees, we con- clude that Congress did not contemplate that the general notion of “public interest” included the concern about effect on employees. * Petitioners’ primary concern over the waiver of an ALJ decision is that they were denied the potential benefit of conclusions the ALJ] would have made regarding witness credibility. In this respect, however, it does not appear that petitioners suffered any real harm. Witness credibility would bear only on a limited range of issues in the instant case. The major issues are tied less to the question of whose purported facts to believe than to the question of how to analyze economic data and presage market behavior. Witness credibility plays little or no role in answering this question. 25a Simmons argues that I1.C.C. v. Railway Labor Association, 315 U.S. 373 (1942), and United States v. Lowden, 308 U.S. 225 (1939), hold that, as a matter of law, the general term “public interest,” in railroad transactions, includes the interest of railroad employees. We find that Railway Labor and Lowden are inapposite. Each case basically held that because the Commission had authority to impose conditions in fur- therance of the public interest, it could impose restrictions designed to protect the employees of railroads directly involved in transactions requiring Commission approval. Neither case goes on to hold that “public interest” necessarily includes the interest of employees not directly affected. We hold that the Commission was not required to consider the interests of such employees in the instant transaction. Simmons also argues that 49 U.S.C. § 11347 requires the Commission to impose protective conditions for the benefit of non-CSX rail employees. Section 11347 provides that in trans- actions under sections 11344 and 11345, the Commission “shall require the carrier to provide a fair arrangement. . . protective of the interest of employees who are affected by the trans- action... .” Simmons acknowledges that there is a “split” as to whether this provision applies to employees of carriers not directly in- volved in the transaction. It is not a very serious split, however. Every court of appeals that has considered the question has con- cluded that section 11347 does not apply to employees not directly involved in the transaction. See Southern Pacific Transportation Co. v. I.C.C., 736 F.2d 708, 725 (D.C. Cir. 1984); Lamoille Valley Railroad v. 1.C.C., 711 F.2d 295, 323-34 (D.C. Cir. 1983); Brotherhood of Maintenance of Way Employees v. 1.C.C., 698 F.2d 315, 316-18 (7th Cir. 1983), cert. denied, 105 S.Ct. 1172 (1985). Simmons cites two district court opinions to the contrary, Soo Line Railroad Co. v. United States, 280 F.Supp. 907 (D. Minn. 1968), and Railway Labor Executives’ Association v. United States, 216 F.Supp. 101 (E.D. Va. 1963). 26a In Railway Labor, the court interpreted the statute to require protection of employees whom the Commission conceded would be affected even though they were not employed by the railroad involved in the transaction. The court found that although the Chesapeake & Ohio Railway Company was not actually a party to the Commission proceeding, it was “in actuality deeply and unavoidably involved,” and that, due to overlapping interests in a particular train station, many Chesapeake employees “were in reality, though not in contract, as much the employees of Seaboard [the acquiring party before the ICC] as of Chesapeake.” 216 F.Supp. at 103. The court therefore looked only at employees so intimately connected with the transaction as to be “affected” in a meaningful sense. Railway Labor, therefore, does not stand for the broad proposi- tion Simmons urges. Only Soo Lines stands for the broad proposition that protec- tion must be afforded to all rail employees. See 280 F.Supp. 907, 923-26. We reject the reasoning employed in Soo Lines because it fails to give any meaning to the statute’s use of the word “affected.” Had Congress intended such broad protec- tion, it would not have limited its grant of protection to carrier employees “affected by the transaction.” We hold that section 11347 did not require the Commission to impose protective con- ditions for the benefit of non-CSX rail employees. Led by TVA, petitioners contend that the Commission’s environmental review of the proposed merger is inadequate under the National Environmental Protection Act, 42 U.S.C. § 4321-4347 (NEPA). NEPA requires that an agency prepare an Environmenta! Impact Statement (EIS) before approving any major action that will significantly affect the quality of the human environment. 42 U.S.C. § 4332(2)(C). To determine whether the effect on the environment will be significant enough to warrant an EIS, agencies prepare an environmental assessment (EA). 40 C.F.R. § 1501.4(b)-(c). 27a An agency decision, based on an EA, that no EIS is required, can be overturned only if it is arbitrary, capricious, or an abuse of discretion. See Sierra Club v. Peterson, 717 F.2d 1409, 1413 (D.C. Cir. 1983); Cabinet Mountains Wilderness v. Peterson, 685 F.2d 678, 681 (D.C. Cir. 1982). It is not for us to substitute our judgment of the environmental impact for the judgment of the agency, once the agency has adequately studied the issue. It is our role, however, to determine whether the agency has, in fact, adequately studied the issue and taken a “hard look” at the environmental consequences of its decision. See Kleppe v. Sierra Club, 427 U.S. 390, 410 n.21 (1976); Sierra Club v. Peterson, supra. In the instant case, the Commission, pursuant to its regula- tions, directed its Section of Energy and Environment (SEE) to prepare an EA. The EA concluded that the consolidation would have no significant impact warranting preparation of an EIS. The EA purported to examine two sources of potential environ- mental impact: impacts arising from market extensions of car- rier operations and impacts arising from capital improvements projects, such as the three intermodal transfer structures that CSX proposed to construct following approval of the merger.°® The Commission concedes that the scope of its analysis was limited with respect to the contemplated intermodal transfer facilities. The Commission justifies the limited scope on two grounds: first, that the lack of final design and engineering plans made it impossible to conduct an in-depth analysis; and, second, that before the facilities could actually be constructed, in-depth environmental review would be conducted by other authorities.® * CSX indicated that, subsequent to the merger, it would seek approval to build new rail-barge transloading facilities at Decatur, Alabama and Philadelphia, Pennsylvania, and to upgrade and add to an existing facility at Louisville, Kentucky. * The Commission notes that construction at the Louisville site would re- quire some form of approval by the United States Army Corps of Engineers, the Federal Railway Administration, the Kentucky Department of Transpor- tation, the Kentucky Department of Environmental Protection and the Jeffer- 28a Petitioners argue that NEPA requires some degree of speculative forecasting and that, therefore, the lack of definite design information does not justify the Commission’s limited analysis. See, e.g., Scientists’ Institute for Public Information, Inc. v. Atomic Energy Commission, 481 F.2d 1079, 1092 (D.C. Cir. 1973). We would agree that the lack of final design plans does not excuse an agency from conducting the most thorough analysis possible of a proposed action. In the instant case, however, the Commission did not have before it a proposal to construct intermodal transfer facilities. Rather, the Commis- sion was addressing a proposal that two companies merge. The merger does not inherently require construction of new facilities. When construction of the new facilities is proposed, the Commission will not be the authority charged with responsi- bility for deciding on the proposal or preparing any en- vironmental analyses with respect to it. These contemplated facilities are significantly removed from the proposal the Com- mission was approving. Petitioners argue that CSX and ACL would not desire the merger if they could not build the new facilities. That, however, is a risk that CSX and ACL choose to take. The Commission’s decision in no way permits, nor could it permit, CSX-ACL to construct the contemplated facilities.’ son County Air Pollution Control Office; construction at the Decatur site ‘ould require approval by the Army Corps of Engineers, TVA and the Alabama Department of Environmental Management; construction at the Philadelphia site would require approval at least by the Philadelphia Water Department and the Philadelphia Department of Licenses and Permits. ’ Petitioners also contend that it is arbitrary for the Commission to view these projects as too speculative for environmental analysis on the one hand, but definite enough to amount to public benefits of the merger on the other hand. We agree that the Commission’s dual approach to the projects is troubling on the surface, but our analysis of the public benefits issue renders this concern moot. The Commission's discussion of the public benefits of the merger included reference to the efficiencies to be gained from projects such as these. As we said in our earlier discussion of the Panama Canal Act, however, the Commission did not need to go so far as to find increased public benefits, but only that there would be no diminution of public benefits. This conclusion 29a We believe this is precisely the type of situation to which the Supreme Court spoke in Kleppe v. Sierra Club, 427 U.S. 390, 410 n.20 (1976), where it wrote that NEPA speaks solely in terms of proposed actions; it does not require an agency to consider the possible environmental impacts of less imminent actions when preparing the im- pact statement on proposed actions. Should contemplated actions later reach the stage of actual proposals, impact statements on them will take into account the effect of their approach upon the existing environment; and the condition of that environment presumably will reflect earlier proposed actions and their effects. We do not believe that, in assessing the environmental impact of the merger, the Commission was obligated to assess the impact of contemplated projects which the Commission has no power to approve, which are not an inherent component of the proposed merger, and which will be subject to environmental review should they ever reach the actual proposal stage. The Commission's assessment of the environmental impact of traffic increases which may potentially flow from CSX-ACL’s operational changes presents a more difficult problem. 49 C.F.R. § 1105.7 requires merger applicants to file an Environ- mental Report (ER) answering, among other things, the follow- ing question: Will the proposed action result in (i) a minimum increase in rail traffic of 50 percent or three trains per day on an affected rail line, (ii) an increase in rail yard activity of 20 percent as measured in carload activity or (iii) an increase in motor carrier traffic of either 50 vehicles per day or an increase in truck traffic exceeding 10 percent of the average daily traffic on a given highway segment? would have been reached by the Commission even without the slightest sugges- tion that such plants might someday be built. In any event, that the Commis- sion believed construction of the facilities to be probable enough to merit con- sideration as a peripheral public benefit of the merger did not in itself place the facilities within the scope of issues calling for an environmental analysis by the Commission. 30a 49 C.F.R. § 1105.7(c)(5). If any of those three thresholds will be exceeded, the applicant is required to address, in the ER, the issues of increased air emissions and increased noise levels. The EA expressly dealt with thresholds (i) and (ii), but did not directly address threshold (iii). When TVA pointed this out in its comments on the EA, the Commission responded, in its Supplemental EA, by stating that, “It is difficult to respond to these arguments except to point out that TVA is simply speculating as to what the actual highway traffic increase might be.” Supplemental EA at 18. It is unclear whether the Commission’s statement in the EA meant that it was speculative whether CSX-ACL would obtain certain Texas utilities as customers and what percentage of their coal needs it would supply or whether it overlooked CSX-ACL’s comments in which it conceded, that based on certain assump- tions “an increase of more than 50 vehicles per day would be experienced for the entire route from each barge unloading site to [certain utilities].”* Comments of CSX and ACL at 14. In light of the opening paragraph of the Supplemental EA which states, We do not believe that CSX-ACL’s proposals for capital improvement and operation change have been developed to a point where more meaningful environmental analysis of these proposals is possible, it is reasonable to infer that the Commission took the hard look and concluded that this was not a proposed action. This is con- firmed by the Commission’s opinion. Several commenting parties argue that the environmen- tal consequences of Commission approval of the consolida- tion warrant preparation of an environmental impact statement (EIS). They contend that NEPA requires that ’ Presumably, this increase in traffic would result from CSX-ACL’s suc- cessful diversion of traffic from competitors which currently ship point to point by rail only, to CSX-ACL, which would make the same point to point ship- ment by rail-barge-truck, thus adding truck traffic where none had previously existed. 3la we assess in detail the impacts of the ten potential opera- tional changes and three contemplated capital improve- ment projects. We disagree. Applicants’ proposals for capital improvement and operational changes have not been developed to a point where more meaningful envir- onmental analysis of these proposals is possible. Ap- plicants’ proposed operating plan considers potential changes and improvements illustrative of what would or might occur as a result of the consolidation. The exact nature or form of the changes and improvements with respect to environmental analysis is at this point still speculative. The proposed action before us is our approval of the consolidation. We must consider the environmental im- pacts of that approval. We are not required, however, to consider the possible environmental! impacts of less immi- nent actions. Kleppe v. Sierra Club, 427 U.S. 390, 410 n.20 (1976). Applicants’ contemplated intermodal plans are less imminent actions. TVA argues that we are the only agency in a position to look at the cumulative impacts of our approval of the consolidation. In respect to such cumulative impacts, however, we are not required to con- sider actions that are merely contemplated. Hart and Miller, Etc. v. Corps of Engineers, Etc., 505 F.Supp. 732, 752 (1980). Furthermore, because applicants have alter- nate location, for their contemplated facilities on the Ten- nessee and Ohio Rivers, their plans are not proposed actions. South La. Environmental Council, Inc. v. Sand, 629 F.2d 1005, 1015-16 (1980). Commission Decision at 64 & 65. The Commission has taken the requisite hard look. Accordingly, the decision of the Commission is affirmed. 32a Timbers, Circuit Judge, dissenting. I regret that I am unable to join in Judge Kennedy’s thoughtful, comprehensive majority opinion. I am unable to do so because in my view the ICC has erroneously interpreted and applied the Panama Canal Act, 49 U.S.C. § 11321 (1982) (the “Act”), so as to approve for the first time during the seventy-three year history of the Act the acquisition by a railroad of a bargeline.' Today’s decision by our Court is one of first impression among the courts of the United States, for no court has ever approved such an acquisi- tion. The acquisition in question is one of enormous impor- tance: it concerns the acquisition by the nation’s second largest railroad (CSX Corporation) of American Commercial Lines, Inc. (ACL), which owns the nation’s largest bargeline. In approving the acquisition, the ICC rejected and overruled its own prior controlling decisions. While the independent regulatory agencies, such as the ICC, have broad discretionary power when acting pursuant to their statutory mandates, that discretion is not unbridled. It is the responsibility of the reviewing courts to see to it that the law has been properly interpreted and applied, and that the decision in question has been based on substantial evidence.? Northern Lines Merger Cases, 396 U.S. 491, 503 (1970). Regardless of the ultimate merits, or even lawfulness, of the acquisition here in question, I am convinced that the ICC plainly failed to apply the proper legal standards under the Act. In short, the ICC’s new interpretation of the Act is not “sufficiently reasonable”. See majority op. at 6. In my view, the ICC decision should be vacated and the case should be remanded for proceedings in accordance with proper legal standards. See Coal Exporters Ass'n v. United States, 745 F.2d 76, 80 (D.C. Cir. 1984), cert. denied, 53 U.S.L.W. 3769 (U.S. April 30, 1985). ' Throughout this dissenting opinion, the transaction involved is referred to interchangeably as an “acquisition” or “merger”. ? Since I believe that the Act has been improperly interpreted and applied by the ICC, this dissenting opinion is addressed solely to that issue, it being neither necessary nor appropriate in my view to reach any other issues. 33a I. Several aspects of the ICC’s decision raise especially serious doubts about the result reached. I agree with the majority’s holding that the Act does not provide for an absolute prohibtion of railroad ownership of bargelines. I do take issue, however, with the method by which the ICC and the majority conclude that this acquisition is permitted under the Act. The essential, and fatal, error upon which the ICC’s decision is based, is its utter failure to consider the effect of this acquisition on com- petition between railroads and bargelines. Since the very pur- pose of the Act was to foster and maintain rail/barge competi- tion, this failure strikes me as curious. Indeed, it suggests an at- tempt to frame the analysis in such a way as to support a result- oriented decision. While I acknowledge that the majority's statement of the facts is straightforward and accurate, the following brief reference to some of the relevant facts as found by the ICC may help to place in perspective the issue to which this dissent is addressed. CSX and its rail subsidiaries operate over 27,000 miles of track. CSX is the leading carrier of solid bulk commodities by any mode. In 1981, for example, CSX moved 541 million tons of traffic. This constitutes one-half of all coal and chemical shipments and nearly one-third of all agricultural products shipped by rail in the eastern United States. Most importantly, CSX controls primary access to one-half of all the rail/barge coal-loading capacity on the Ohio River system, including all of the terminals along one important 300 mile stretch of the Ohio River. CSX and two other railroads account for 86% of all eastern Class I rail revenues. Revenues for 1982 totalled nearly $5 billion, with net income for that year amounting to $338 ,400,000. ACL operates its barge lines over 7,500 miles of the 15,000 miles of inland waterways. ACL is the nation’s largest line-haul bargeline. ACL is one of the top three for-hire bargelines in the 34a transport of coal, chemicals and agricultural products on the inland waterways. ACL and five other carriers transport 70% of all eastern coal shipments to utilities along water routes. ACL’s revenues for 1982 totalled $295,000,000, with net in- come for that year amounting to $21,000,000. CSX and ACL directly compete for customers to transport coal, chemicals and agricultural products in 12 states and 59 metropolitan areas, including Chicago, Cincinnati, Louisville, Memphis, Mobile, New Orleans and Pittsburgh. CSX and ACL directly compete at 163 points along the inland waterway system in these states. Thirty utility plants have the capacity to receive either the rail or water services provided by CSX and ACL. II. The ICC found that CSX and ACL compete in three ways. First, they directly compete for business to and from the 163 points along the water route mentioned above and to and from points within a band extending 25 to 200 miles on either side of the water route, depending on circumstances. Second, they compete for service to the same destination from different points of origin where the end-user has the option of buying from two different sellers, one with access to water routes and the other with access to rail routes. Third, there is some com- petition for the carriage of goods and commodities where both destination and origin are different but the products compete in the same end-use market. Thus, the ICC found that ACL and CSX actually do compete for traffic. Indeed, absent such direct competition, ICC approval of the acquisition would not be required. The Act only prohibits a rail carrier from maintaining an interest in a water carrier “with which it does or may compete for traffic.” 49 U.S.C. § 11321(a)(1) (1982). The ICC referred to specific examples of instances in which CSX and ACL sought traffic from the same shipper, including a bidding competition to sup- ply the Tennessee Valley Authority’s Cumberland, Tennessee, iat 35a plant. CSX and ACL submitted the two lowest bids, with ACL eventually winning the contract to supply 120 million tons of coal over a 20 year period. Nevertheless, in pursuing its analysis under § 11321(b), the ICC completely disregarded the effect of the acquisition on rail/ barge competition and considered only competition among water carriers. In defining the relevant product market, the ICC stated it would “focus on water carrier transportation”. (Dec. at 24). In its view, railroads are not effective constraints on barge rates because barge rates are so much lower. I believe that this conclusion reached by the ICC is highly questionable and probably erroneous—-for the following reasons. First, this conclusion ignores the [CC’s other finding that ACL and CSX directly compete for the same traffic. Second, it ignores specific instances in which CSX and ACL. were the two lowest bidders on the same contract, such as the TVA's Cumberland plant contract. Third, it ignores the historic ability of railroads in general, and CSX in particular (as demonstrated by the evidence), to reduce rates to levels that are competitive with barges. P.D. Locklin, Economics of Transpor- tation 729 (6th ed. 1966); Mapes, Competition Between Railroads and Water Carriers: A Comparison of the Kegulatory and Antitrust Approaches and a Proposal for Reform, 39 U. Pitt. L. Rev. 653, 657 (1978). Fourth, it ignores the ICC’s own prior decisions in which it relied on the competition provided by barges to justify railroad mergers. In CSX Corp.—Con- trol—Chessie System, Inc., and Seaboard Coast Line Indus., Inc., 363 I1.C.C. 521 (1980), for example, the ICC approved the consolidation of three railroads which now constitute the present CSX. The ICC stated at that time that “(t]he affiliated carriers will be able to compete more effectively with truck and barge operations” (emphasis added) by offering “single-system service” to shippers. Jd. at 563. See also Norfolk Southern Corp.—Control—Norfolk & W. Ry., 366 I.C.C. 173, 201-02 (1983). The ICC’s convenient manipulation of the facts and the law to reach the result it did in the instant case strikes me as nothing short of astounding. 36a The ICC’s slight of hand, moreover, does not end there. On this appeal, it argues that § 11321(b) is concerned only with competition among water carriers on the route in question and that competition between the rail and water carriers involved in the acquisition is irrelevant. It argues that § 11321(b) would be superfluous if rail/barge competition were considered because § 11321(a) requires direct competition for the section to be operable and in every such case some reduction of competition will result. In its decision in this very case, however, the ICC has defined the competitive analysis under § 11321(b) as follows: “The involved competition has many facets. Competi- tion between the involved water carrier and the acquiring railroads, between the involved water carrier and other water carriers, and among the non-included water carriers all may effect the level of competition on the water route in question.” (Dec. at 18) (emphasis added) This standard is consistent with the ICC’s decisions in prior similar cases. E.g., Illinois Central R. Co.—Control—John I. Hay Co., 317 1.C.C. 39, 55 (1962); Lake Line Applications Under Panama Canal Act, 33 1.C.C. 699, 715-16 (1915). In short, the ICC either has failed to follow its own interpretation of the statute in its decision in the instant case or it seeks to alter that interpretation on appeal in an attempt to avoid what even it thought would likely be an adverse result. Unhappily, this is not the first time that the ICC has resorted to such questionable attempts to impose its will over that of Congress. It has not been successful in the past. As the District of Columbia Circuit so succinctly stated in vacating another result-oriented ICC decision, “[a]n agency cannot hide the stan- dards under which it operates, for we are unable to evaluate whether its reasoning meets the reasoned decision making re- quirement unless we know against what standards its factual findings have been judged.” Coal Exporters, supra, 745 F.2d at 99; see also id. at 90. 37a Whatever deference must be accorded “the interpretation of a statute by an agency charged with its enforcement”, Meade Township v. Andrus, 695 F.2d 1006, 1009 (6th Cir. 1982), such an agency, at the very least, must be held to its own interpreta- tion. While an agency may not be “disqualified from changing its mind”, it must give sufficient reasons for its new interpreta- tion. Otherwise, a reviewing court cannot “approach the statutory construction issue...with[] regard to the ad- ministrative understanding of the statute[ |.” NLRB v. Local Union No. 103, 434 U.S. 335, 351 (1978); see majority op. at 13. No reasons whatsoever were given by the ICC for the broad change in its interpretation of the Act in the instant case. Moreover, the ICC’s new interpretation of the Act utterly fails to satisfy Congress’ intent to prohibit all rail/ barge mergers that effect any reduction in competition on the water routes in question. 49 U.S.C. § 11321(b) (ICC may permit merger of rail and bargelines only if “it will still allow competition, without reduction, on the water route in question.”) (emphasis added). Aside from the ICC’s own past practice of examining the level of rail/barge competition, basic competition principles require such an examination to determine the effect of the merger, not only on rail/barge competition, but on competition among bargelines as well. This merger has vertical as well as horizontal aspects in that CSX transports cargo from inland points to points on the water's edge for loading on barges. Of all the coal shippers in CSX’s operating region, 85% are limited to using CSX. Com- pounding this control is CSX’s substantial control of rail/ barge loading terminals along the most significant coal transport water routes. Accordingly, the ICC concluded that “the merger is likely to lead to diversion to [ACL] from other carriers of some CSX-originated ‘~affic”. (Dec. at 44). The ICC assumes, however, that only a small amount of such traffic will be diverted to ACL because ACL will not always be the most “cost effective barge partner for CSX”. (Dec. at 43). 38a Even if only “some” traffic in this concentrated market is diverted to ACL solely because ACL is affiliated with CSX, necessarily there has been a prohibited reduction in competi- tion. Moreover, the ICC made no attempt to ascertain the extent to which other water carriers will be foreclosed from this traffic; it only assumed the amount would be “small”. Finally, the assumption that other barge carriers will have a nearly equal opportunity to compete with ACL for CSX-generated traffic is belied by the ICC’s heavy emphasis on the supposed “efficiencies” that will result from this merger. If those “effi- ciencies” are as great as the ICC suggests, other water carriers will not be able to compete effectively with ACL even if given the opportunity; and, it can be predicted, the ICC will rely in the future on this imbalance to justify mergers of other water carriers with railroads, ultimately defeating Congress’ goal of separate ownership of water and rail carriers. Most significant for the instant case, however, is the potential for predatory pricing designed to drive other water carriers from ACL's routes. Such an attempt to monopolize would be made possible by the railroad’s ability to “subsidize” reduced rates on water routes with higher rates on all-rail routes. While it is true that an increase in price, made possible by ACL-CSX achieving market power, might encourage other barge oper- ators to enter the market, the real danger lies in driving com- petitors from ACL’s water route with price reductions. The ICC discounted this admittedly real possibility by stating that “The barge industry is comprised of a large number of firms, many owned or controlled by large and well- financed corporate parents... . It would not be in the best interests of these large corporate parents to sit back and allow CSX-ACBL to destroy their investments in the barge industry. Instead, they could be expected to exert pressure on CSX, both through antitrust actions and competitive responses, to forego any attempt to monopolize the market....” (Dec. at 36). 39a Such abdication of responsibility on the part of ICC makes a mockery of its regulatory functions. It is difficult to fathom this reasoning—by any agency created to regulate an industry of the very highest national priority—which suggests that private enterprise must fill the role entrusted to the ICC, and that private antitrust actions are the most efficient way to preserve the competitive market that Congress intended in enacting the Panama Canal Act. Congress already has recognized the inadvisability of this proposition. Under 49 U.S.C. § 11341(a) (1982), ICC approval of a carrier consolidation immunizes the transaction from the applicability of the antitrust laws. By building competitive principles into Panama Canal Act, Con- gress clearly intended not only that the ICC regulate rail/ barge consolidations in the public interest but also that the ICC police competition in the two industries. As the ICC itself held in Lake Line Applications Under Panama Canal Act, 33 1.C.C. 699 (1915), in which divestiture of bargelines by the railroads was first ordered: “These boat lines under the control of the petitioning railroads have been first a sword and then a shield. When these roads succeeded in gaining control of the boat lines which had been in competition with parallelling rails in which they were interested, and later effected their com- bination. .., by which they were able to and did drive all independent boats from the through lake-and-rail transportation, they thereby destroyed the possibility of competition with their railroads other than such competi- tion as they were of a mind to permit. Having disposed of real competition via the lakes, these boats are now held as a shield against possible competition of new independents. Since it appears from the records that the railroads are able to operate their boat lines at a loss where there is now no competition from independent lines, it is manifest that they could and would operate at a further loss in a rate war against independents. The large financial resources of 40a the owning railroads make it impossible for an indepen- dent to engage in a rate war with a boat line so financed.” Id. at 716. The ICC’s argument that rail/ barge competition is irrelevant to the determination of whether a merger will reduce competition on water routes is confounded by the facts and by its own prior decisions. The majority's two paragraph discussion of this issue strikes me as blinking at a most serious deficiency in the ICC decision. See majority op. at 13-14. While it is true that “[b]arges, not trains, operate on water routes”, in the Act Congress obviously concluded that railroad entry into the barge market might have an adverse effect on competition for water routes. Moreover, in view of the structure of thé industries, it was well nigh impos- sible for the ICC “reasonably” to conclude that it could disregard rail/barge competition when considering the effects of a merger on a given water route. It appears that, despite more than 70 years of separate ownership of barge and rail lines, during which time, as the ICC itself stated, “the barge industry has developed into an effi- cient, effective competitor for intercity freight traffic” (Dec. at 14), if the instant ICC decision is permitted to stand, history will be allowed to repeat itself and the very evil the Panama Canal Act was intended to prohibit will be permitted to flourish. 4la Ill. To summarize: The ICC has failed to consider the effect of the acquisition on rail/ barge competition—as has been the ICC’s practice in prior cases—and has failed to consider the effect that a reduction in rail and water competition would have on purely water carrier competition. Until Congress sees fit to amend or repeal the Panama Canal Act—something it has repeatedly refused to do—the ICC and the courts are duty-bound to apply it properly. Since I am con- vinced that the ICC has committed serious errors of law in its interpretation and application of the Act, I would vacate the decision of the ICC and remand the case for further proceedings in accordance with proper legal standards. From the majority's refusal to do so, I respectfully dissent. 42a APPENDIX B UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Nos. 84-3743 THRU 84-3753, 84-3842/84-3868 CROUNSE CORPORATION, ET AL., PETITIONERS, v. INTERSTATE COMMERCE COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS. Before: KEeNNepY and Krupansky, Circuit Judges; and Timsers, Senior Circuit Judge. JUDGMENT On Petition To Review a decision of the Interstate Com- merce Commission. Tuis Cause came on to be heard on the transcript of record from the said Agency and was argued by counsel. On CONSIDERATION WHEREOF, It is now here ordered and adjudged by this court that the decision of the said Agency in this cause be and the same is hereby affirmed. No costs taxed. ENTERED BY ORDER OF THE COURT Joun P. Henman, Clerk (s) Joun P. Henman, Clerk FILED Jan. 23, 1986 Joun P. Henman, Clerk 43a APPENDIX C UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Nos. 84-3743 THRU 84-3753, 84-3842/ 84-3868 CROUNSE CORPORATION, ET AL., PETITIONERS, v. INTERSTATE COMMERCE COMMISSION and THE UNITED STATES OF AMERICA, RESPONDENTS. Before: Live.ty, Chief Judge, ENceL, KeirH, Merritt, KENNEDY, MarTIN, JoNEs, CoNTIE, KRUPANSKY, WELLFORD, MILBURN, Guy, NeLson and Ryan, Circuit Judges ORDER The Court having received a petition for rehearing en banc, and the petition having been circulated not only to the original panel members but also to all other active judges of this Court, and less than a majority of the judges having favored the sug- gestion, the petition for rehearing has been referred to the original hearing panel. The panel has further reviewed the petition for rehearing and concludes that the issues raised in the petition were fully considered upon the original submission and decision of the case. Accordingly, the petition is denied. ENTERED BY ORDER OF THE COURT (s) JouN P. HEHMAN Joun P. Henman, Clerk FILED Mar. 28, 1986 Joun P. Henman, Clerk 44a APPENDIX D UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Nos. 84-3743 THRU 84-3753, 84-3842/84-3868 CROUNSE CORPORATION, ET AL., PETITIONERS, v. INTERSTATE COMMERCE COMMISSION and THE UNITED STATES OF AMERICA, RESPONDENTS. Before: ENGEL, KEITH, MERRITT, KENNEDY, MARTIN, JONES, CONTIE, KRUPANSKY, MILBURN, Guy, NELSON and Ryan, Circuit Judges * ORDER Upon consideration, it is OnpERED that the order entered in this case on March 28, 1986 denying the petition for rehearing en banc be amended to add the following dissents: “Merritt, Circuit Judge, dissenting from denial of petition for rehearing en banc, in which Circuit Judges Keith, Martin and Jones joined. Jones, J. delivered a separate dissent. “I believe that we should have granted rehearing en banc in this important antitrust case. Congress has enacted a law flatly prohibiting a merger between a railroad and a barge line if that merger results in any reduction in competition. Never before has a railroad been permitted to merge with a competing barge line, regardless of the political cast or regulatory philosophy of the Commission or the antitrust philosophy of the courts. Yet in this * Chief Judge Lively and Circuit Judge Wellford recused themselves from participation in this case. 45a case the Interstate Commerce Commission has refused to look at what effect the merger of the largest railroad east of the Mississippi with the largest barge line in the nation will have on rail-barge competition, and at whether the lessening of rail- barge competition will lead to a lessening of competition among barge lines. As Judge Timbers correctly observes in his dissent, such refusal is an “abdication of responsibility on the part of the ICC” that “makes a mockery of its regulatory func- tions.” Slip op. at 40. We do not perform our judicial function when we uphold it. “In terms of its economic impact, this case is significant. Our decision will affect the price of coal, grain, and other commodities for many years in the Ohio and Tennessee Valleys and beyond. The railroad in question controls 50% of the barge terminals on the river system in question, and all of the terminals on large stretches thereof. If, after buying the barge line in question, the railroad restricts the use of its termi- nals to that barge company, it will eliminate competition among barge lines that haul coal and other commodities to and from those terminals. Given the number of terminals in- volved, it is inconceivable that the merger in question will not result in a reduction of competition on the water routes in question. “Yet that—no reduction in competition—is what Congress required the Commission to find before permitting the merger of a railroad with a barge line. 49 U.S.C. § 11321(b). It is nonsense to suggest, as the Commission does, that any anti- competitive effects of the merger will be remedied by com- petitive pressures and private antitrust actions. The size of the parties being merged, their market shares, and the near- stranglehold that the resulting entity will have on many routes, makes it unlikely that competitive pressures will pre- vent the misuse of its market power, which is precisely why Congress forbade such mergers in the first place. And the statute in question, the Panama Canal Act, immunizes ICC- min 8 ome) (CeO. ed ee Be eee 46a sanctioned mergers from the antitrust laws, thus eliminating any chance of the private antitrust actions in which the com- mission rests its faith. See 49 U.S.C. § 11341(a) (1982). “Congress presumably knew what it was doing when it found, after considerable investigation and debate, that mergers such as the one in question posed serious dangers to the freedom of transportation markets. The provision in ques- tion was reenacted, after considerable debate, some years later in 1940. Perhaps, as the majority opinion seems to suggest (slip op. at 7, 11), predatory pricing is not the serious threat that it was in 1912 (or even in 1940), so that the policy behind the statute is obsolete. However, it is not generally the province of courts to make such determinations. Even if the Commission and the courts think it foolish and outdated to bar mergers be- tween railroads and barge lines except where competition is not affected, Congress has declared otherwise and we are bound to respect that declaration. For these reasons, and for those expressed in Judge Timbers’ dissent, I believe that the panel’s majority erred in affirming the Commission’s decision to approve the merger and that we should reconsider the case en banc. “Jones, Circuit Judge. I join in Judge Merritt’s dissent to the denial of the petition for rehearing en banc out of concern for the importance of the issue which is so well stated therein. It is my view that the issue invites and requires the attention of the full court. I regret that an en banc exploration will not occur. ENTERED BY ORDER OF THE COURT (s) JoHN P. HEHMAN Joun P. HEHMaN, Clerk FILED Apr. 11, 1986 JoHN P. HeHMan, Clerk 47a APPENDIX E INTERSTATE COMMERCE COMMISSION DECISION FINANCE Docket No. 30300 CSX CorporaTION —- CONTROL- AMERICAN COMMERCIAL LINES, INC. TABLE OF CONTENTS Page GR 8) re 50a i; Gi es aS cee ie cewek inis 5la A. SUMMARY OF DECISION..................... Sla B. PROCEDURAL AND PRELIMINARY MATTERS....... 33a a ee 53a 2. No. 39599—ACBL Tariff Exemption.... 54a Il. NATURE anp SCOPE or APPLICATION....... 55a ATL. GPA its PE. oo ie ascan eens Se i SoG i knob ae eae 57a Ba ES ra a a ele oes ee eee 57a ee igre ee ng he a 58a 3. Phosphates and Potash................ 59a es es DS. Weems: SAAS, Sc ooo wn ce ee aes 60a 1. ACL’s Louisville Terminal............. 60a 2. New Transloading Facility............. 60a Te - - e as v e e 6la C. OvnHer CHANGES AND BENEFITS.............. 6la Re. QR IIE obs Oy Sense ne aed was 6la eee ee 62a 3. Coordinated Information System....... 62a iV. POST Mame OF Pik PAR Ties. «ces is... aes: 63a I ot aig ee er ee ae 63a ee WM I eo ooo oe eee kes kee wie 63a i= TIS ori Oe ror ea ours 9s a> w 63a 2. U.S. Department of Transportation... .. 64a 3. State and Local Governments. ........ 64a ee eres 65a 48a TABLE OF CONTENTS Page C. PARTIES IN OPPOSITION.................-45. 66a 1. U.S. Department of Agriculture........ 66a 2. State and Local Governments.......... 66a 3. Water Transport Association........... 67a 4. National Coal Association.............. 68a i: ET a es are eS ee en wo xe wa tl 68a i - Se ites oS Le Oe wk rae 69a 7. United Transportation Union........... 69a BD: WRU SOI os wa 6 vie ph cum av cteans 69a 1. U.S. Department of Energy............ 69a 2. State and Local Governments.......... 70a 3. U.S. Department of Justice............. 70a V. DISCUSSION anno CONCLUSIONS............ 70a A. Sraruromy COOTMMMA...........00.c cece. 70a 1. Panama Canal Act, 49 U.S.C. 11321..... 70a 2. 49 U.S.C. 11343-11344(d)...... anes 8la a ee 83a 4. Antitrust Considerations............... 84a eS 85a 6. Environment and Energy Factors....... 85a x: Spl oe es ees vac esau. 86a ee ee 87a @:. Peed Beet... ee 87a b. Geographic Market............... 90a ole wa sah ve cscs ees 9la me “I os og vans canoe an 93a a. Panama Canal Operations......... 93a b. Competition without reduction. .... 94a O.* FY IIs 55 5 5 OS a es oan vee 120a S. TOUR Bes oc ee ex canes 122a a. Competitive Effects.............. 122a 5S. Specific Commodities................ 127a a. Coal Transportation............. 127a b. Agricultural Markets............. 134a E. F A B. C mo 1. 49a TABLE OF CONTENTS Rte I 6 ee ee vas Gk es ce es een age Pig oe Oe ee Oversight & Reporting Conditions. . . . 2. Public Interest Conditions........... eg ne a rr . ENVIRONMENTAL IMPACTS................ VI. FINDINGS es Ges he Oe kak eo APPENDIXES pI a COMMENTING PARTIES.................. . SUMMARY OF COMPETITIVE ANALYSES....... SUI Sac re SS ee ah . amos Maneer AMALYSIS................ FINANCIAL ANALYSIS... ... ae eae OVERSIGHT AND REPORTING CONDITIONS. . . Page 143a 145a 145a l47a 149a I5la 57a l57a 159a 160a 165a 165a 75a l77a 180a ISla 19la 194a 195a 202a 208a | ’ | 50a CSX CorporaTION-CONTROL-AMERICAN COMMERCIAL Lines, INC. Decipep: Aucust 27, 1984 Acquisition of control of American Commercial Lines, Inc., and its water carrier subsidiary American Commercial Barge Lines Company is authorized, subject to conditions. Mark Aron, Alan Geolot, David M. Levy, R. Eden Martin, CG. Paul Moates, Michael Nemeroff, John J. Paylor, and Vincent P. Prada for applicant CSX Corporation. Richard B. Felder, Michael Harris, Kathryn H. Klassen, and Charles H. White, Jr., for applicant American Commercial Lines, Inc. Robert M. Bruskin, Roxann Henry, Paul A. Koches, Suzanne Nyland, Eberhard Phailer, A. Duncan Whitaker, and Alan M. Wiseman for American Waterways Operators, Inc. Smith R. Brittingham Ill, Gregory M. Gordon, Mark E. Staib, and Richard A. Zellner for Water T ransport Association, Canal Barge Company, Inc., Crounse Corporation, Dixie Carriers, Inc., S.C. Loveland Company, M/G Transport Services, Inc., The Ohio River Company, SCNO Barge Lines, Inc., and the Valley Line Company. Peter A. Gabauer and Robert F. Stauffer for National Coal Association. Donald G. Avery for Louisville and Jefferson County Port Authority and Eastern Coal Transportation Conference. James F. Bromley and Donald MacLeay for Tampa Electric Com- pany, Gatliff Coal Company, and TECO Transport & Trade Cor- poration. Edward H. Comer, Michael F. McBride, and Leonard M. Trosten for Edison Electric Institute. George J. Ryan for Lake Carriers Association. John Barry Kelly Il, Brent R. Marquand, Herbert S. Sanger, Gregory R. Signer, and Lewis E. Wallace for Tennessee Valley Authority. Arthur Perry Bruder and Paul Phillips for United States Depart- ment of Energy. Rosalind A. Knapp, Diane R. Liff, Jim J. Marquez, James P. Moore, Joseph Pomponio, and Mary Bennett Reed for United States Department of Transportation. Gordon MacDougal for Patrick W. Simmons, Illinois Legislative Director for United Transportation Union. William L. Hammond, John A. Matta, John A. Vuono, and Richard R. Wilson for PPG Industries, Inc. Donald A. Tracy for United States Department of Agriculture. Priscilla R. Budeiri, Douglas H. Ginsberg, J. Paul McGrath, James R. Rattner, Elliott M. Seiden, R. Timothy Slattery, and James R. Weiss for United States Department of Justice. 5la DECISION BY THE COMMISSION: I. INTRODUCTION A. SUMMARY OF THE DECISION. General. On November 4, 1983, CSX Corporation (CSX) and American Commercial Lines, Inc. (ACL) jointly filed an application under 49 U.S.C. 11321, 11343, and 11344 seeking authority for CSX to acquire control of ACL and its certificated water carrier subsidiary, American Commercial Barge Line Company (ACBL).' No related applications were filed. On November 25, 1983, applicants filed their response to the sup- plemental information request contained in Decision No. 3, served October 19, 1983. We accepted the application and supplementary informa- tion for filing and published notice of acceptance in the Fed- eral Register on December 2, 1983, 48 Fed. Reg. 54402 (1983). Many shippers and several States filed comments in support of the proposed consolidation, while a number of shippers, States, utilities, water carriers, and labor organizations filed statements in opposition. Several conditions, such as labor pro- tection, route, rate, traffic protection, and reporting require- ments were sought. No responsive applications were filed. Public hearings on the application were conducted by Chief Administrative Law Judge David H. Allard from February 22, 1984, to May 11, 1984. The evidentiary record was closed on June 18, 1984. Oral argument was heard June 21, 1984. An open voting conference was held on July 24, 1984. The application seeks authority for CSX to acquire and exer- cise control over ACL and its carrier subsidiary, ACBL. CSX has already acquired ACL’s corporate parent, Texas Gas Re- sources Corporation (TGR). The ACL stock has been placed in an independent voting trust. Under the proposed transaction, ' The list of abbreviations used throughout this decision may be found in Appendix A. Reference to CSX embraces its rail carrier subsidiaries, includ- ing the C&O, B&O, and SBD. Reference to ACL includes its water carrier subsidiary, ACBL. 52a the voting trust would be dissolved and ACL will become a direct subsidiary of CSX. ACL will retain its separate corpo- rate identity. Section 11321. In considering the consolidation of a rail carrier and a water carrier, the Commission is required to determine if the two carriers compete. If we find that they do compete, we must determine whether the consolidation will still allow competition without reduction on the water route in question and will still allow the water carrier to be operated in the public interest advantageously to interstate commerce. We conclude that CSX and ACL do compete because they serve common points and solicit the same traffic. We have analyzed the possible anticompetitive effects of the transaction on the barge industry and conclude that, due to the highly competitive nature of the barge industry and the relative ease of entry associated with it, no reduction in com- petition will occur. We also conclude that ACL will continue to operate in the public interest advantageously to interstate commerce. We are imposing oversight and reporting condi- tions to allow the Commission to review periodically the effects of the transaction on competition. Section 11344. In considering a consolidation application of this type, the Commission is primarily required to consider the competitive impacts. We conclude that the transaction will not result in a substantial lessening of competition in freight surface transportation in any region of the United States. Pos- sible anticompetitive effects on the transportation of coal and agricultural commodities have been analyzed, and no adverse impacts have been found. In addition, public benefits will result from a combination of CSX and ACL. These benefits generally consist of improved efficiency and service options resulting from the creation of an integrated, intermodal system. 53a Labor Issues. Railroad employees of CSX will be protected by the standard labor conditions for railroad consolidations. No other labor protection conditions will be imposed. Energy and Environment. The transaction presents no energy conservation or significant environmental impact prob- lems. Thus, we are imposing no energy or environmental con- ditions. No need has been shown for any other conditions proposed by any party. Therefore, all requests for relief, other than those discussed above, are denied. B. PROCEDURAL AND PRELIMINARY MATTERS. 1. Procedural Objections. During the proceedings, WTA raised several procedural objections. These objections have been renewed on brief.* In various interlocutory decisions, all of WTA’s petitions alleging procedural errors were denied. WTA’'s brief raises no new arguments regarding the procedures followed in the disposition of this proceeding. Therefore, we will deny WTA’s requests for relief on these matters for the reasons set forth in our prior decisions. ? In our various interlocutory decisions, we noted the applica- bility of the time frames of 49 U.S.C. 11345(c). The procedural schedule in this case was designed to comply with statutorily- mandated deadlines. During the proceeding, the Administra- * WTA's objections, as summarized in its post hearing brief, WTA 216, volume II, include: (1) failure to initiate a rulemaking proceeding to pro- mulgate regulations governing railroad-water carrier consolidations; (2) waiver of information required der the railroad consolidation regula- tions and acceptance of an incomplete application; (3) designation of this transaction as “significant”, rather than “major”, under 49 U.S.C. 11344(d); (4) waiver of an initial decision by the Administrative Law Judge; (5) setting a procedural schedule not permitting a full and fair hearing; (6) failure to disqualify Commissioner Gradison from participating in the proceeding; and (7) failure to address adequately environmental and energy issues. ® Decision No. 5, served November 15, 1983; Decision No. 6, served December 2, 1983; Decision No. 12, served January 27, 1984; and Decision on Motion to Disqualify, served February 10, 1984. 54a tive Law Judge took into consideration numerous requests to extend or modify the procedural schedule. Where necessary and appropriate, extensions of time were granted. As a result of the flexibility in scheduling, a full and fair hearing was held while conforming as closely as possible to the statutory dead- lines. In view of the full hearing and the substantial record developed, we find no merit in WTA’s allegation that the pro- cedures for hearing this case did not provide for an adequate hearing. ‘ 2. ACBL Tariff Exemption. In No. 39599, American Com- mercial Barge Line Company — Petition for Exemption from Tariff Filing Requirements (not printed), served January 19, 1984, we exempted ACBL from contract carrier tariff filing requirements, thereby placing its contract services on an equal footing with those of rail and motor carriers. We recognized the pendency of the CSX control application, but concluded that the present voting trust arrangement obviated any need to incorporate intermodal competition issues in the January 1984 exemption decision. Instead, we conditioned the exemption on a requirement that ACBL resubmit its exemption request within 30 days if control is authorized, so that issues related to intermodal competition and possible revocation of the exemp- tion could then be addressed. We need not further consider the exemption in the present proceeding. ACBL will be expected, however, to resubmit its exemption request within 30 days of the consummation of CSX’s acquisition of control. * WTA notes in its post hearing brief, WTA-215, page 11-33: “In all, Veri- fied Statements by over 200 witnesses were filed and 54 appeared to give oral testimony. The evidentiary record exceeds 15,000 pages, including testimony by no less than 14 economists, and detailed traffic and financial data submit- ted by numerous carriers, shippers and various government agencies.” 55a Il. NATURE AND SCOPE OF THE APPLICATION CSX proposes to acquire control of ACL and its water carrier subsidiary, ACBL. CSX has acquired ACL's corporate parent, TGR, and placed the ACL stock in an independent voting trust. At present, CSX and its carrier subsidiaries have no offi- cers or directors in common with ACL or its carrier subsidiary ACBL. If the Commission approves control, the voting trust will be dissolved when the Commission's decision becomes ef- fective and ACL will become a wholly-owned subsidiary of CSX. No further cash transactions or securities issuances or ex- changes are planned. CSX is a non-carrier holding company® with subsidiaries engaged in railroad operations, real estate and land develop- ment, energy and natural resource development, and motor car- rier operations.® Its gross revenue for 1982 was $4,908,600,000 and net income was $338,400,000. Based on revenues, the principal commodities handled by CSX’s rail subsidiaries in 1982, were coal. paper, phosphates, chemicals, and grain. * Rail carrier subsidiaries of CSX include: the Chesapeake and Ohio Railway Company (C&O) and its subsidiaries the Baltimore & Ohio Rail- road (B&O), Akron and Barberton Belt Railroad Company, Baltimore and Ohio Chicago Terminal Railroad Company, Staten Island Railroad Corpo- ration, Monongahela Railway Company, Terminal Railroad Association of St. Louis, Belt Railway Company of Chicago, Chicago South Shore and South Bend Railroad, Nicholas, Fayette and Greenbrier Railroad Company, Norfolk and Portsmouth Belt Railroad Company, and the Toledo Terminal Railroad Company; the Seaboard System Railroad, Inc. (SBD) and its sub- sidiaries Atlanta and West Point Railroad Company, Carrollton Railroad Company, Chicago and Western Indiana Railroad Company, Clinchfield Railroad Company, Columbia, Newberry and Laurens Railroad Company, Gainesville Midland Railroad Company, Glasgow Railway Company, Paducah and Illinois Railroad Company, Western Railway of Alabama, Winston-Salem Southbound Railway Company, and the High Point, Thomasville and Denton Railroad Company; and the Richmond, Fred- ericksburg, and Potomac Railroad Company. ® Motor carrier subsidiaries of CSX include Chessie Motor Express, Inc. (CMX) and Seacoast Transportation Company. 56a CSX’s rail subsidiaries operate 27,000 route miles in the Dis- trict of Columbia and the 21 States of: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. ACL’s also a non-carrier holding company with subsidiaries engaged in water carrier operations,’ boat building, and marine terminal operations.*® Its gross revenue for 1982 was $295,000,000 and net income was $21,000,000. Based on rev- enues, the principal commodities handled by ACBL in 1982 were coal, grain, and liquids such as chemicals and food oils. ACBL operates on approximately 7,500 miles of inland water ways. Operations are conducted on the following rivers: Ohio River and all navigable tributaries between Pittsburgh, PA, and the Mississippi River; Illinois River; Upper Mississippi River from Minneapolis, MN, to Cairo, IL; Lower Mississippi River, from Cairo to New Orleans, LA; the Gulf Intracoastal Waterway from Florida to Brownsville, TX; Tennessee River; Cumberland River; Warrior River; Alabama River; and Mis- souri River (rarely). These rivers serve portions of the follow- ing States: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Pennsy]l- vania, Tennessee, Texas, West Virginia, and Wisconsin. ACBL and the CSX _ rail subsidiaries can interchange traffic at numerous points along the above-listed waterways. The con- solidated companies propose to offer an integrated, single- system transportation service over the 29 State area that will be jointly served by CSX and ACBL. 7 American Commercial Barge Line Company. * ACL’s major non-carrier subsidiaries include: Jeffboat Incorporated, a major inland shipbuilding company; Louisiana Dock Company, Inc., a marine services, maintenance, and repair company; and American Commer- cial Terminals Inc., a cargo transfer and storage company. 57a III. OPERATING PLAN The appiicants have submitted a detailed post-approval operating plan. They anticipate that most of the operational changes described in the plan will commence during the first year after the consolidation is approved. Applicants seek to take advantage of opportunities to operate more efficiently and to provide improved service. Operating improvements and changes were proposed in ex- isting patterns of service for coal, grain, phosphate/potash, and chemical traffic. Also discussed were changes to ACL’s Louisville, KY, coal terminal; development of a new trans- loading facility along the Tennessee River; and the creation of a new Thru-Bulk Service facility. These changes are discussed below. A. New SERVICE. 1. Coal. Applicants anticipate that the combined company will be able to compete in coal markets where neither company now competes effectively. These new marketing opportunities include the extension of the market for eastern Kentucky coal to Texas and Upper Midwest utility customers, to compete with western coal. Applicants foresee coal moving from mines on SBD’s lines in the eastern Kentucky coal fields to Louisville (or other terminals on the Ohio River) to be loaded into ACBL barges. The barges would travel via Cairo, IL, or New Orleans, LA, to such possible destinations as Houston or Corpus Christi, TX, or destinations on the Upper Mississippi River in Minne- sota and Wisconsin. Applicants also foresee an increase in the tonnage of western Kentucky coal being exported via New Orleans or moved to utilities in the Upper Mississippi River. This coal could be carried by SBD to Mt. Vernon, IN, then transferred to covered barges moving north to Minneapolis and St. Paul, MN. This traffic would reduce empty backhaul mileage for ACBL covered barges moving grain from Minne- sota to New Orleans for export. 58a 2. Grain. Applicants contend that consolidation would permit new, intermodal movements of grain. They argue that at present there is little exchange between rail and barge on grain movements because of a lack of coordination. Applicants note that CSX and ACBL now serve distinctly different markets. With consolidation, new service could be offered to grain producers in Iowa, Indiana, and Ohio by opening the Gulf export market to shippers that presently either lack access to river terminals or the necessary volumes to move grain in unit trains. New domestic markets could also be explored. In the export market, the transaction would allow CSX to act as a gatherer bringing grain to the river. CSX’s greater gathering range, as compared to trucks presently being used, will permit more shippers to send their grain to the river for export, thus broadening the grain producers’ marketing op- tions. CSX would have a new incentive to pursue these move- ments on a regular basis in conjunction with ACBL, because close coordination will permit important efficiencies for im- proved equipment use, quicker turnarounds, and increased volumes. In the domestic markets, applicants argue that a large mar- ket now exists in the Southeastern United States for grain grown in the Midwest to be used as feed for poultry and live- stock. Most of this grain currently moves all-rail. The proposed consolidation offers the prospect of intermodal moves as sub- stitutes for this all-rail service to areas like Florida and Georgia. An example is grain moving from a Midwest point, e.g. Terre Haute, IN, by rail to Evansville, IN, for transfer to barge; barge down the Ohio and Tennessee Rivers to a transloading point, e.g. Decatur, AL, where it would be reloaded on rail cars for shipment to consumption points. This type of move- ment could reduce costs by 40 to 60 cents per ton as compared to an all-rail movement. 59a 3. Phosphates/Potash. The applicants are considering the initiation of two new rail-barge movements of phosphates. First, ACBL is exploring the acquisition of an ocean-going tug/ barge to transport phosphate rock from the Bone Valley in Florida to fertilizer producers on the Lower Mississippi River or Texas Gulf Coast. Approximately 700,000 to 900,000 tons would be involved in this movement. This proposed move- ment would improve the east-west balance of CSX-ACBL traffic in conjunction with the proposed new grain movements from the Mississippi River to Florida. Second, applicants propose to transport phosphatic chemi- cals from the Bone Valley by unit train to an interchange point along the Tennessee River, such as Decatur. This traffic, ex- pected to be approximately 400,000 to 500,000 tons a year, would be transloaded to ACBL barges for movement to points along the Mississippi and Illinois Rivers in the Midwest. Applicants also expect to offer a new transportation option for shipping Canadian potash to the Southeast. The potash currently moves in all-rail service. The new service would transport potash by rail from Canada to St. Paul, by barge toa Tennessee River transloading point, and then by rail to final delivery. They expect that about 180,000 to 235,000 tons of potash could be accommodated by the new service. These pro- posed southward movements would also partially balance the proposed northbound phosphatic chemical movement. 4. Chemicals. Applicants propose to penetrate new markets in the Northeast by promoting the rail-barge transportation of chemicals from points on the Texas-Louisiana Gulf Coast, such as Houston, Galveston, and Port Arthur, TX. The traffic would move by barge via the Gulf Intracoastal Waterway and the Mississippi and Ohio Rivers for transloading into rail cars at Ohio River ports such as Cincinnati, OH. The chemicals would be transloaded at Philadelphia, PA, into trucks (owned by CMX) for delivery. Much of this traffic currently moves all- water. Construction of a new rail-truck terminal in Philadel- phia would be required for this service to be instituted. B. TERMINAL CHANGES. 1. ACL’s Louisville Terminal. Applicants could make sub- stantial changes at the Louisville terminal if the new coal mar- kets they propose develop as projected. The Louisville terminal currently can handle 3 million tons of coal a year by operating two shifts a day. By making the physical changes discu:;ed below, the terminal’s capacity could be increased to approxi- mately 3.5 million tons, while still operating only two shifts. Joint ownership will allow continuous communication be- tween the barges and the railroad, resulting in better coordi- nation and substantial savings. This would substantially re- duce the turnaround time of rail cars to approximately 24 hours, and eliminate at least 5 hours of work by a switch crew of 4 employees per day. If consolidation is approved, and the coal volumes justify it, CSX proposes to construct a new lead track to by-pass the cur- rent lead track entering the ACL terminal. This would elimi- nate a 14-degree curve immediately adjacent to the terminal that limits deliveries to 40-car blocks instead of the more effi- cient 80-car blocks. Elimination of the curve would, therefore, end the need to break larger trains down into 40-car blocks before entering the terminal. In addition, CSX proposes to build a loop track at the termi- nal to allow an 80-car train to be run through the ACL bottom dumper without uncoupling. This would minimize time re- quired to unload the trains. The estimated cost of construction of the new lead track and loop track is approximately $920,000, with an estimated annual savings to the consolidated compa- nies from more efficient operation of $1,530,000. 2. New Transloading Facility. Applicants are considering the development of a new transloading facility along the Tennessee River for use in the phosphate/potash interchanges previously described and also, for the interchange of rail-barge grain shipments. Decatur, AL, is a possible location because an existing CSX facility could be expanded to handle the ex- pected traffic. 6la CSX’s Tennessee River facility at Decatur has two 15-car tracks that run perpendicular to the river and two other parallel tracks of equal length that are used to load another barge line. CSX could acquire adjacent property and construct three more tracks of equal length. For the phosphate traffic, applicants would use a bottom dumper to unload and a conveyor to move the phosphate to the barge slip. Unloading grain and potash would be accomplished by a 5-yard clam shell crane to be located at the site. The cost of these improvements at the ter- minal would be approximately $1,950,000 and could be com- pleted within the first year after consolidation. 3. Thru-Bulk Facility. At the CSX Snyder Avenue Yard in Philadelphia, CSX intends to construct a new facility to trans- load chemicals and plastic pellets to CMX trucks for delivery to destinations in the Northeast. The facility would contain sufficient equipment to handle the expected volumes of liquid and dry bulk commodities. Existing tracks would be relocated and new tracks and switches added. A new fleet of trucks would have to be acquired at an estimated cost of $350,000. The new facility would cost approximately $1.1 million and require at least 3 months to construct and place in service. C. OTHER CHANGES AND BENEFITS. 1. Joint Purchasing. Applicants state that control of ACL by CSX will afford the applicants opportunities to realize sav- ings through joint purchasing, particularly of steel products. Both ACL and CSX are large purchasers of steel plate; ACL for the production of barges and CSX for production of rail cars. CSX uses approximately 40,000 tons of plate and struc- tural steel a year. ACL, in recent years, has purchased annual amounts of between 30,000 and 185,000 tons of steel plate. By combining orders applicants estimate that they could save $2 million annually through volume discounts. 62a 2. Communications. CSX owns and operates a modern microwave network for internal communications to which ACL would have access upon consolidation. Adequate capacity exists to handle ACL’s communication traffic at no additional cost once the initial connection costs are incurred. ACL would also be able to reduce its internal communication costs by ap- proximately $300,000 per year. CSX may also assist ACL in the construction of a modern in- land waterways communication system. An ACL subsidiary, Waterways Communication System, Inc. (WATERCOM), has been licensed by the Federal Communication Commission to construct and operate such a system. Applicants propose that WATERCOM would handle radivtelegraph service to vessels and allow vessel operators to originate direct-dial calls onto the land-based telephone network. There are a number of TGR properties that could be used for the location of WATERCOM facilities. Applicants estimate that WATER- COM could save $900,000 in land acquisition, site prepara- tion, and construction costs by using the availabe TGR sites. 3. Coordinated Information System. Applicants also repre- sent th [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2115%3A2. Public record. Not legal advice.