# Appendix — United States v. Interstate Commerce Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0030%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1970 - **Citation:** 396 U.S. 491 ## Text +a IN THE Supreme Comt of the United States OCTOBER TERM, 1969 ay Re ee EN GS MENS aD NORTHERN LINES MERGER CASE No. 28 3 UNITED STATES OF AMERICA, APPELLANT k Vv. INTERSTATE COMMERCE COMMISSION, ET AL. No. 38 CHARLES E. BRUNDAGE, ET AL., APPELLANTS v. INTERSTATE COMMERCE COMMISSION, ET AL. No. 43 CiTy OF AUBURN, APPELLANT . INTERSTATE COMMERCE COMMISSION, ET AL. No. 44 LIVINGSTON ANTI-MERGER COMMITTEE, APPELLANT Vv. INTERSTATE COMMERCE COMMISSION, ET AL. ON APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ii INDEX VOLUME I Page Relevant Docket Entries —.....__»__ ef SR ee OE aS Soe Oe iv Goan of Disietst Court * 1 Judgment of District Court sebetnciencs 59 1966 Report of ee euisland authorization for merger Sub sioiddaieaenaaigia aieaiocnis 61 1967 Report of Commission on vsecnnaaiaaraitie ne DUNNE» hachsitedeeptanXan stesso: ane ciaoesasaaasnc cect aia apical 245 Second Report of Commission on Reconsideration, denying petitions for reconsideration and deviant certain con- I inccratercenie 463 Third Report of Commission on eeeonnaseaatines asain certain conditions _. SEEN 498 VOLUME II Order of Commission extending period for exercise of merger authorizations previously granted, April 23, 1969... 505 Report of the Hearing Examiner, served August 24, 1964 __. 507 VOLUME III Report of the Hearing Examiner (continued) - Sa ecias kee. ae Report of the Commission on Petitions for cmon March 31, 1966 _ Mas 1258 Complaint by the United States, filed May 9, 1968 _ Answer of Intervening Defendants, filed May 10, 1968 Answer of Interstate Commerce sbencanusicilia filed — * 14, 1968 . Secs 1284 *Includes minor corrections noted in sua sponte orders dated December 11, 1968 and April 16, 1969. ae INDEX (Continued) iii , Page Motion of Charles E. Brundage, et al., to Intervene as Plain- tiffs, together with complaint, filed May 15, 1968 _. _.. 1286 Order of District Court granting Motions to er filed May 16, 1968 1294 Motion of Livingston Anti-merger Committee to Intervene as Plaintiff, together with complaint, filed May 23, 1968 .. 1295 Court order granting aforesaid motion, filed June 3, 1968 1302 Answer of Intervening Defendants Great Northern Railway Company, et al. to ge en of en Anti-merger Committee... = 1303 Answer of Intervening Defendants Great Northern Railway Company, et al., to Intervening Complaint of Charles E. Brundage, et al., filed June 5, 1968... 1306 Answer of Intervening Defendants 230 Pacific Northwest Shippers to Complaint of Plaintiff United States of Amer- mR eR a ee ee ee 1309 Answer of Intervening Defendant Public a. Commis- sioner of Oregon, filed June 17, 1968 _. ae 1325 Answer of Chicago, og a St. Paul and Pacific Railroad Company, filed June 24, 1968 _. wees 1327 Notice of Appeal of Livingston Anti-Merger Committee __ 1336 Supreme Court’s Order of weenensil 24, 1969 noting — SNOT si iaesincecesinbcmecneahasesisesnagiteicetadireachihabaiasiatiahintntiaitdti tants 1337 May 14 RELEVANT DOCKET ENTRIES Complaint, appearance filed. Application for Temporary Restraining Order filed. . Motion for a Preliminary Injunction; Memoran- dum; MC. filed. Motion of Great Northern Railway Company, Northern Pacific Railway Company, Chicago, Bur- lington & Quincy Railroad Company, Spokane, Portland and Seattle Railway Company, Pacific Coast R.R. Co. and Great Northern Pacific & Bur- lington Lines, Inc., for leave to intervene as de- fendants filed. Claims of intervening defendants filed. Opposition of intervening defendants to Motion for temporary restraining order filed. Memorandum on behalf of the Interstate Commerce Commission in opposition to application for a temporary restraining order filed. Order denying plaintiffs application for a tempor- ary restraining order (n) Curran, C.J. Answer of intervening defts. to complaint filed. Designation of the Honorable David L. Bazelon, Chief Judge of the United States Court of Appeals, and the Honorable Charles Fahy, United States Senior Circuit Judge to serve with the Honorable Edward M. Curran, Chief Judge of the United States District Court for the District of Columbia, as members of a three/judge court, in above en- titled cause. Bazelon, C.J. Order granting motion of Great Northern Railway Company, Northern Pacific Railway Company, Chicago, Burlington & Quincy Railroad Company, Spokane, Portland and Seattle Railway Company, Pacific Coast R. R. Co. and Great Northern Pacific & Burlington Lines, Inc. for leave to intervene as parties defendant; directing intervening defendants answer complaint promptly. (N) Curran, C.J. 15 15 15 16 Memorandum of intervening defts. in opposition to motion for temporary restraining order directed to the Three Judge Court filed. Renewed application of plaintiff for temporary re- straining order served. Motion of the City of Auburn to intervene as plain- tiff filed. Answer of deft. Interstate Commerce Comm. to complaint filed. Motion of Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr. and Warren Clark, consti- tuting the Northern Pacific Stockholders’ Protective Committee for leave to intervene as plaintiffs filed. Motion of the Board of Railroad Commissioners of the State of Montana for leave to intervene as plain- tiffs filed. Motion of State of Washington for leave to inter- vene as plaintiff filed. Hearing begun on renewed Motion for Temporary Restraining Order and for Preliminary Injunction and concluded; taken under advisement. (Reporter Jack Maher) Bazelon, C.J.; Fahy, J. and Curran, C.J. Order staying pending decision on the merits of this case or further order of the Court; and the case being ready for submission to the Court on the merits on the record before the Commission, and it is further order plaintiff’s brief on the merits shall be filed on or before June 3, 1968, defend- ants’ brief shall be filed on or before June 24, 1968; and plaintiff’s reply brief, if any shall be filed on or before July 1, 1968. The record shall be filed after the filing of the plantiff’s reply brief, or the time for doing so has expired, in order to permit the Assignment Commissioner to promptly schedule argument on the merits herein. Bazelon, C.J., Fahy, J., Dissents from order Curran, C.J. June June June 16 16 Order granting motions to intervene. Bazelon, C.J., Fahy, J. and Curran, C.J. Memorandum of plaintiff in support of application for interlocutory injunction; affidavit 1; exhibit A filed. Complaint of Intervenors, City of Auburn filed. Complaint of Intervenors, Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr. and Warren Clark constituting The Northern Pacific Stockholders’ Protective Committee filed. Complaint of Intervenors, Board of Railroad Com- missioners of the State of Montana filed. Complaint of Intervenor, State of Washington filed. Motion of Livingston Anti-Merger Committee to intervene as plaintiff filed. Order granting motion of Livingston Anti-Merger Committee to intervene as plaintiff. (N) Bazelon, C.J., Fahy, J., and Curran, C.J. Brief of Intervenor State of Washington, c/m 5/31/68. fiied. Brief of Board of Railroad Commissioners of the State of Montana, Intervenor. c/m 5/31/68. Ex- hibit A. filed. Brief of intervenor City of Auburn. c/m 6/3/68. filed. Brief of plaintiff; c/s 6/3/68. filed. Memorandum of Northern Pacific Stockholders Protective Committee intervening plaintiffs and appendix A, B, C & D. c/m 6/3/68. filed. Brief of Livingston Anti-Merger Committee, plain- tiff intervenor; appendix A, B; c/m 6/3/68. filed. June 5 June 5 June 5 June 5 June 5 June 6 June 11 June 14 June 18 June 20 June 24 June 24 June 24 June 24 vil Answer of intervening defts. to intervening com- plaint of City of Auburn c/m 6/5/68. filed. Answer of intervening defts. to intervening com- plaint of Board of Railroad Commissioners of the State of Montana; c/m 6/5/68. filed. Answer of intervening defts. to intervening com- plaint of the State of Washington, c/m 6/5/68. filed. Answer of intervening defts. to intervening com- plaint of Livingston Anti-Merger Committee. c/m 6/5/68. filed. Answer of intervening defts. to intervening com- plaint of Charles E. Brundage, et al. c/m 6/5/68. filed. Motion of Public Service Commission of the State of Minnesota for leave to intervene as plaintiff filed. Motion of 230 Pacific Northwest Shippers to inter- vene as defendants filed. Order granting Motion of the Public Service Commission of the State of Minnesota to intervene as party plaintiff. (N) Bazelon, C.J., Fahy, J. and Curran, C.J. Motion of Chicago, Milwaukee, St. Paul & Pacific Railroad Co. for leave to intervene filed. Motion of Public Utility Commissioner of Oregon for leave to intervene as a defendant filed. Brief of Intervening deft. Public Utility Commis- sioner of Oregon filed. Brief of 230 Pacific Northwest Shippers. c/m 6/24/68. filed. Brief of Chicago, Milwaukee, St. Paul and Pacific Railroad Co., c/m 6/24/68. filed. Brief of Great Northern Railway Company, et al. Intervening defts. c/m 6/24/68. filed. BS a s 4 3 viii Date 1968 June 24 June 24 June 24 June 24 June 24 June 27 June 27 June 27 July 1 July 1 July 1 July 1 PAREN SESS Brief of the Interstate Commerce Commission; c/m 6/24/68. fied. Order granting Motion of Chicago, Milwaukee, St. Paul and Pacific Railroad Co. leave to intervene as a defendant. (N) Bazelon, C.J., Fahy, J.. & Curran, C.J. Order granting motion of 230 Pacific Northwest Shippers leave to intervene as defts. (N) Bazelon, C.J., Fahy, J. and Curran, C.J. Order granting motion of Public Utility Commis- sioner of Oregon for leave to intervene as a de- fendant. (N) Bazelon, C.J., Fahy, J., and Curran C.J. Answer of Chicago, Milwaukee, St. Paul and Pa- cific Railroad Co., intervening deft. to complaints of pltff. and intervening pltffs; ¢/m 6/24/68 appear- ance of Patrick H. Corcoran. filed. Complaint of intervenor, Livingston Anti-Merger committee; c/m 5/23/68. filed. Complaint of Public Service Commission of State of Minnesota. filed. Answer of 230 Pacific Northwest Shippers to com- plaint. filed. Letter dated 7/1/68 to Clerk of Court from Asst. Atty. General, Anti-Trust Division of filing Certi- fied copy of entire transcripts and all exhibits, pleadings and correspondence except for certain documents to be filed later. filed. Reply brief of Northern Pacific Stockholders Pro- tective Committee, intervenor pltf; c/m 7/1/68. filed. Reply brief of Livingston Anti-Merger Commit- tee, intervenor Pitf; c/m 7/1/68. filed. Reply brief of U.S.A.; p/s 7/1/68. Filed Qin Se in SY _ —— we pe A ee ee Me ee Date 1968 July 2 July 2 July 3 July 3 July 5 July 5 July 9 July 12 Nov. 20 Nov. 20 SOT SET ee ee, Oars wees Reply brief of Board of Railroad Commissioners of the State of Montana, pltfs. in Intervention, oppos- ing merger order of Interstate Commerce Commis- sion; c/m 6/28/68. filed. Reply brief of Intervenor State of Washington; c/m 6/28/68. filed. Letter to Clerk; U.S. District Court, dated July 3, 1968, of transmittal of certain petitions before 1.C.C. filed. Reply brief of U.S.A.; p/s 7/1/68. filed. Answer of intervening defts. Great Northern Rail- way Co., et al. to intervening complaint of Public Service commission of the State of Minnesota; affi- davit; c/m 7/5/68. Certification of pleadings and correspondence of record (5 volumes) of I.C.C. filed. Hearing begun, concluded and case taken under advisement. (Rep. D. Spencer) Bazelon, C.J.; Fahy, J., and Curran, C.J. Certified copy of 3rd report of commission on re- consideration. filed. Opinion re finding for defendants (n) Bazelon, Chief Judge, USCA, Fahy, Senior Circuit Judge Curran, Chief Judge, U.S.D.A. filed. Order dismissing complaints and denying prayers that orders of Commission be annulled, suspended, enjoined and set aside; affieming orders of the Com- mission and vacating stay order of May 16, 1968 entered by United States District Court staying this order for fifteen days from the date hereof, and if within that period notice of appeal to the Supreme Court is filed, accompanied by an applica- tion to that Court for further stay, the fifteen day period of this court’s stay will stand enlarged until determination of such application or other order of the Supreme Court. Per Curiam Fahy, Senior Cir- cuit Judge. PP PhS aces SEIS a eS Se et eee eee Dec. Apr. 26 16 Notice of appeals by pltffs. to Supreme Court from order of Nov. 20, 1968; c/m 12/5/68 filed. Notice of appeal by Intervenor-Plaintiff City of Auburn to Supreme Court from order of 11/20/68; c/m 12/5/68. Deposit $5.00 by Hoffman. filed. Order sua sponte amending opinion filed Nov. 20, 1968 (N) Fahy, U.S. Circuit Judge Notice of appeal by Intervenor-pltffs. to the Supreme Court, from order of 11/20/68. Deposit $5.00 by Deale; c/m 12/12/68. filed. Order directing Clerk to certify and transmit to Clerk of Supreme Court of the United States the original papers in this case, said papers, together with the Court’s opinion, judgment and notices of appeal, to constitute the record on appeal. (N) N/371. McGuire, J. Nofice of appeal by Charles E. Brundage, et al in- tervenor-pltff., to the Supreme Court, from order of 11/20/68. Deposit $5.00 by Carter; c/n. 11/20/68. filed. Notice of appeal by The Board of Railroad Cor- missioners of the State of Montana to Supreme Court from order of 11/20/68; c/m 12/17/68. De- posit $5.00 by Sheehy. filed. Order, sua sponte, amending order of November 20, 1968 by interline action. (N) Fahy, Senior Circuit Judge ~— APPENDEC AO _ UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Civil Action No. 1132-68 UNITED STATES OF AMERICA, PLAINTIFF, CHARLES E. BRUNDAGE, BRADFORD F. STORY, SAMUEL C. WILLIAMS, JR., WARREN CLARK, constituting THE NORTHERN PACIFIC STOCKHOLDERS’ PROTEC- TIVE COMMITTEE, BOARD OF RAILROAD COMMIS- SIONERS OF THE STATE OF MONTANA, STATE OF WASHINGTON, CITY OF AUBURN, PUBLIC SERVICE COMMISSION OF THE STATE OF MINNESOTA, LIV- INGSTON ANTI-MERGER COMMITTEE, INTERVENOR- PLAINTIFFS Vv. UNITED STATES OF AMERICA and INTERSTATE COMMERCE COMMISSION, DEFENDANTS, GREAT NORTHERN RAILWAY COMPANY, NORTHERN PACIFIC RAILWAY COMPANY, CHICAGO, BURLING- TON & QUINCY RAILROAD COMPANY, SPOKANE, PORTLAND AND SEATTLE RAILWAY COMPANY, Pa- CIFIC COAST RAILROAD COMPANY, GREAT NORTH- ERN PACIFIC & BURLINGTON LINES, INC., CHICAGO, MILWAUKEE, ST. PAUL & PACIFIC RAILROAD Com- PANY, 230 PACIFIC NORTHWEST SHIPPERS, PUBLIC UTILITY COMMISSIONERS OF OREGON, INTERVENOR- DEFENDANTS (1) alin ok nein. apie Be eae 27h 2 Donald F. Turner, Special Assistant to the Attor- ney General, argued the cause for plaintiffs. With Mr. Turner on the briefs were Assistant Attorney General Edwin M. Zimmerman, David G. Bress, United States Attorney, Robert A. Hammond, III, Howard E. Shapiro, Arthur I. Cantor and B. Barry Grossman. Robert W. Ginnane, General Counsel, Interstate Commerce Commission, argued the cause for defend- ants. With Mr. Ginnane on the briefs were Fritz R. Kahn, Jerome Nelson, Betty Jo Christian, Nahum Litt, and Raymond M. Zimmet. Louis B. DaifY argued the cause for Charles E. Brundage, Bradford F. Story, Samuel C. Williams, Jr., Warren Clark, constituting The Northern Pacific Stockholders’ Protective Committee, intervenor-plain- tiff. With Mr. Daily on the briefs was Harry Tyson Carter. John C. Sheehy argued the cause for Board of Railroad Commissioners of the State of Montana, in- tervenor-plaintiff, with Mr. Sheehy on the briefs were William T. O’Leary and Marvin J. Sonosky. Patrick McEligot, Assistant Attorney General for State of Washington, argued the cause for State of Washington, intervenor-plaintiff. With Mr. McEligot on the briefs were John J. O’Connell, Attorney Gen- eral, and Frank P. Hayes, Assistant Attorney Gen- eral, for State of Washington. Joel E. Hoffman argued the cause for City of Au- burn, intervenor-plaintiff. With Mr. Hoffman on the briefs were Robert L. Wald and Alva C. Long. weg I pate EES TE Py LO NIL A HE FTES 3 Valentine B. Deale argued the cause for Livingston Anti-Merger Committee, intervenor-plaintiff. Robert E. Sher filed a complaint of intervention for Public Service Commission of the State of Minnesota, intervenor-plaintiff. With Mr. Sher on complaint was Richard Musenbrock, Special Counsel to the Public Service Commission of State of Minnesota. D. Robert Thomas argued the cause for Great Northern Railway Company, Northern Pacific Rail- way Company, Chicago, Burlington & Quincy Rail- road Company, Spokane, Portland & Seattle Railway Company, Pacific Coast Railroad Company, and Great Northern Pacific & Burlington Lines, Inc., intervenor- defendants. With Mr. Thomas on the briefs were Ray Garrett, Lee B. McTurnan, Anthony Kane, Louis E. Torinus, Earl F. Requa, Frank S. Farrell, Eldon Martin, R. T. Cubbage and Richard J. Flynn. Raymond K. Merrill argued the cause for Chicago, Milwaukee, St. Paul & Pacific Railroad Company, in- tervenor-defendant. With Mr. Merrill on the briefs were Edwin O. Schiewe, Thomas H. Ploss and Patrick H. Corcoran. Fred H. Tolan argued the cause for 230 Pacific Northwest Shippers, intervenor-defendant. With Mr. Tolan on the briefs was Alan F. Wohlstetter. Henri F. Rush, Jr., Special Assistant to the Attor- ney General for State of Oregon, argued the cause for Public Utility Commissioner of Oregon, inter- venor-defendant. On the briefs were Robert Y. Thornton, Attorney General of Oregon, Richard W. Sabin, Dale T. Crabtree and William I. Harkaway. 4 Before: BAZELON,* Chief Circuit Judge, FAHY,* Senior Circuit Judge, and CURRAN, Chief District Judge. OPINION FAHY, Senior Circuit Judge: This suit arose on complaint of the United States, acting through the Department of Justice, to enjoin and set aside orders of the Interstate Commerce Commission of November 30, 1967, April 11, 1968, and June 17, 1968.’ The first of these orders approved, with conditions, appli- cations of the railroad companies hereinafter named to merge and to complete related transactions. The approval followed reconsideration of the “Report of the Commission” (First Report) of March 31, 1966, which had denied the merger applications as not con- sistent with the public interest.* The April 11, 1968 order denied petitions for reconsideration of the order of November 30, 1967, except in relatively minor re- spects which modified the Commission’s retention of jurisdiction and certain of the Commission’s protec- tive conditions. The order of April 11, 1968 is not now independently contested. The Interstate Commerce Commission answered the complaint, opposing the relief sought by the De- Se a ae ei ne eee I eee *Serving with Chief Judge Curran as members of the District Court of three judges designated by the Chief Cir- cuit Judge by order herein of May 10, 1968. 1 See note 4, infra. 2? The First Report was concurred in by a majority of six members of the Commission with five members dissenting. The orders now in suit represent the views of eight mem- bers, with two dissenting and one not participating. | P i i z 2 # x a 5 LLL LEE OO IEL LEE ERODE AEA ELLIE EI ERG HD Sg 5 partment of Justice. Other parties, as set forth in the margin,* have intervened, some as plaintiffs, some as defendants, the latter including the applicant rail- road companies. After preliminary proceedings resulting in a stay of the orders pending either decision on the merits or further order of the court the case was submitted to this three-judge District Court ‘2s'cvated in ac- cordance with 28 U.S.C. §§ 2325, 228. © decision on the record before the Commission, sie pleadings, briefs, memoranda and oral arguments. We sustain the Commission’s approval of the merg- er and related transactions. The history and nature of the case lead to an opinion which explains our reasons at some length. We review the elaborate de- cision of the Commission. We conclude that in giving its approval the Commission was guided by the ap- plicable legal principles and made findings, supported by substantial evidence, requisite to the validity of its action. We recognize that some of those findings are necessarily conclusional. These we hold to be reason- able. A number of conditions are attached by the *Intervening plaintiffs: Northern Pacific Stockholders’ Protective Committee; City of Auburn, Washington; State of Washington; Board of Railroad Commissioners of Montana; Livingston Anti-merger Committee. Intervening defendants: Great Northern Railway Company; Northern Pacific Rail- way Company; and their affiliates Chicago, Burlington & Quincy Railroad Company; Pacific Coast R.R. Co.; Spokane, Portland and Seattle Railroad Company; and Great Northern Pacific & Burlington Lines, Inc.; other intervening defend- ants: Chicago, Milwaukee, St. Paul & Pacific Railroad Com- pany; 230 Pacific Northwest Shippers. PIO ALTHETICS LES OA, BEL! BAAD ED LICL NIE: Pp OGLE RL EEE BATE NLL AL ALD 6 Commission to its approval. These in our view are just and reasonable, as well as reassuring. Our opinion also considers the objections raised by the Department of Justice, the State of Washington, the City of Auburn, the Board of Railroad Commis- sioners of the State of Montana, and the Livingston Anti-merger Committee. We devote special attention to whether the competitive situation to result from the unification, conditioned as it will be, is inconsist- ent with the public interest, or, as we believe, is con- sistent therewith in light of the national transporta- tion policy formulated by Congress. We conclude, also, that the ratio of stock exchange approved by the Commission is just and reasonable, that the employee problem is satisfactorily solved and, as will appear, that other contentions against the merger do not over- ride the benefits, including savings and better service, which are projected in the reasoned judgment of the agency charged with primary governmental responsi- bility. We note with approval the retention by the Commission of jurisdiction to enable it to make such readjustments as may appear to be desirable, includ- ing those which may arise from pending proceedings affecting other railroads in the vast territory involved. The orders in question * eventuated from applica- * After this case was filed but before submission of the case for decision by this court the Commission under date of June 17, 1968, on resconsideration of its report and order of April 11, 1968 made what is designated as a “Third Re- port of The Commission on Reconsideration” embodying the Commission’s construction of certain conditions contained in Appendix L of the report and order of November 30, 1967, as modified, particularly with respect to Condition 23. None aa 7 tions filed February 17, 1961,° under 49 U.S.C. § 5° of the parties has raised any question about this Third Re- port and we assume it is not independently contested. 5“Finance Docket No. 21478, Great Northern Pacific & Burlington Lines, Inc.—Merger, etc.—Great Northern Rail- way Company, et al.” This report also embraces Finance Docket No. 21479, Chicago, Burlington & Quincy Railroad Company, et al. —Stock Issuance, et cetera, and Finance Docket No. 21480, Great Northern Pacific & Burlington Lines, Inc., et al.—Construction and Abandonment. 328 I1.C.C. 460; 331 I.C.C. 228; 331 LC.C. 869; 333 I.C.C. 391. * This Section sets forth in its subdivision 2(a) the law- fulness of mergers approved in subdivision (b). The latter among other things sets forth the standards to be followed by the Commission in determining whether to approve: . .. If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed transaction is with- in the scope of subdivision (a) of this paragraph and will be consistent with the public interest, it shall enter an order approving and authorizing such transaction, upon the terms and conditions, and with the modifica- tions, so found to be just and reasonable; Subdivision 2(c) provides: (c) In passing upon any proposed transaction under the provisions of this paragraph, the Commission shall give weight to the following considerations, among others: (1) The effect of the proposed transaction upon ade- quate transportation service to the public; (2) the ef- fect upon the public interest of the inclusion, or failure to include, other railroads in the territory involved in the proposed transaction; (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected. Section 5 further provides in subdivision 11: The authority conferred by this section shall be exclu- sive and plenary, and any carrier or corporation par- CIES LOT ag Oe: 8 by Great Northern Railway Company (Great North- ern), Northern Pacific Railway Company (Northern Pacific), these companies being sometimes referred to as Northern Lines, the Pacific Coast R.R. Co. (Pa- cific Coast or PC), the Chicago, Burlington & Quincy Railroad Company (Burlington), and the Spokane, Portland and Seattle Railway Company (SP&S), these latter two companies being subsidiaries of the Northern Lines, all common carriers by railroad sub- ject to Part 1 of the Interstate Commerce Act, and Great Northern Pacific & Burlington Lines, Inc., (New Company or NuCo), which is not a carrier. The carriers applied to merge into New Company, ticipating in or resulting from any transaction approved by the Commission thereunder shall have full power ... to carry such transaction into effect and to own and operate any properties and exercise any control or fran- chises acquired through said transaction without invok- ing any approval under State authority; and any car- riers or other corporations, and their officers and em- ployees and any other persons, participating in a trans- action approved or authorized under the provisions of this section shall be and they are relieved from the op- eration of the antitrust laws and of all other restraints, limitations, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transaction so approved or pro- vided for in accordance with the terms and conditions, if any, imposed by the Commission, and to hold, main- tain, and operate any properties and exercise any con- trol or franchises acquired through such transaction. Nothing in this section shall be construed to create or provide for the creation, directly or indirectly, of a Fed- eral corporation, but any power granted by this section to any carrier or other corporation shall be deemed to be in addition to and in modification of its powers un- der its corporate charter or under the laws of any State. -. = * ae Fr P) and for lease by the latter of SP&S, with control of subsidiaries and the completion of other transactions better to effectuate the merger and lease.’ Extensive proceedings ensued before the Commis- sion, including public hearings and an examiner’s re- port served August, 1964, which recommended ap- proval of the applications, but with which the Com- mission did not agree. On applicants’ petition of July 27, 1966,° the Commission reopened the proceedings on January 4, 1967, for reconsideration and oral ar- gument on all issues and for limited further hearing to determine, on the basis of current information readily available, the amount of estimated savings re- sulting from the proposed merger in light of (1) agreements entered into between the applicants, on the one hand, and, on the other, the Milwaukee and * Among those transactions were the issuance of certain securities and the assumption of obligation and liability in respect of securities under Section 20a of the Act and the obtaining of certain extensions and abandonments of rail- road lines under Sections 1(18) to 1(20), inclusive, of the Act. 5A petition was simultaneously filed by Northern Pacific Stockholders’ Protective Committee (NPSC), intervener be- fore the Commission, seeking further hearings with respect to the justice and reasonableness of terms and conditions of applicants’ merger agreements. A petition was also filed by The Denver and Rio Grande Western Railroad Company (Rio Grande or DR&W), one of the railroads receiving pro- tective conditions, seeking an investigation into the agree- ments entered into by applicants with Milwaukee and the Chicago and North Western Railway Company (North West- ern or NW). Applicants replied to these petitions, and the Commission received from numerous parties replies to applicants’ petitions. 10 North Western and (2) the effect of relevant financial, operational and other changes related to savings, which had occurred subsequent to close of the hear- ings. Those matters were referred to an examiner for hearing. The reconsideration resulted in the decision of No- vember 30, 1967, accompanied by the exhaustive “Re- port of the Commission on Reconsideration and Fur- ther Hearing” (Second Report), with appropriate order approving the applications and related trans- actions. New Company in consequence would achieve unified control and operation of a network of railroads of almost 27,000 miles of tracks extending from the Great Lakes and Mississippi River through the North- ern Tier States to the Pacific Northwest and Cali- fornia, and reaching through affiliates*® to the Gulf of Mexico. Great Northern operates some 8200 miles of road located in ten states and two Canadian prov- inces. Northern Pacific operates some 6800 miles of road with lines in seven states and one Canadian province. These roads extend from the Twin Cities across the Northern Tier States to Spokane, Tacoma and Portland, with branch lines serving the lumber and agricultural producing territories along the route. Burlington’s 8648 miles of road are located in eleven states extending from Chicago northwesterly to the Twin Cities, and @#Sterly and southwesterly to Mis- souri, Kansas, Colorado and Montana, with subsidi- *The Colorado and Southern Railway Company (C&S) and Fort Worth and Denver Railway Company (FW&D), both controlled by Burlington. 11 aries reaching the Gulf of Mexico at Houston and Galveston.” Since the Burlington routes are largely complementary to those of Northern Lines there is no substantial competition between Burlington and its parents. The SP&§ in Washington and Oregon has the most direct route from Spokane- to Portland and is of strategic importance to Northern Lines since Spokane is on the main transcontinental routes and Portland is an important terminal for both. Northern Pacific has extensive land holdings, from which it de- rives important income; and New Company would obtain title in fee to more than two million acres and to mineral rights in an additional six million acres. The main lines of Great Northern and Northern Pacific are both parallel and complementary. The greater part of the latter’s mileage is in the western part of the system while the greater part of the form- er’s is in its eastern portion. West of Minnesota, Great Northern serves primarily those communities lying to the north while Northern Pacific serves the southern parts of these states. Only Great Northern reaches California. The area transversed by North- ern Lines is lightly populated except at its eastern and western extremities. But the area is extensive, some 1700 miles in length and 900 miles in breadth. It is rich in animal, mineral and forest resources, with, however, a limited market for its products. For this reason producers are heavily dependent upon transportation. Rail transportation to populous cen- ters at cost low enough to permit participation in those markets is important. ” See note 9, supra. ‘a ? POON RENEE TO LIEB MELE OR TI ~ 7% ory BP Pa RET ee ee RIE i. & As the Commission also points out there is an im- balance of traffic. Historically the West has been a market for the finished products of the Midwest and the East and a supplier to those areas of basic raw materials. Its lower-rated traffic in its long haul east is not as vulnerable to incursions by intermodal com- petitors of Northern Lines as is the higher-rated manufactured traffic moving into the area served by Northern Lines. The latter, both from the east and from the West Coast is vulnerable to motor carrier competitors and others. It is this traffic which the rail carriers must retain to balance their operations. A combination of factors, the Commission narrates, had long convinced the management of Northern Lines that, together with Burlington, SP&S and Pa- cific Coast, they should be unified under New Com- pany’s control. They serve the same eastern terminals and western ports as competitors and the traffic they carry is similar. It is different only in areas where their lines are widely separated, with no substantial competition, however, between either of the Northern Lines and Burlington, whose traffic differs and whose service area is not only more heavily populated than that of Northern Lines but also furnishes an impor- tant market for producers in the area served by Northern Lines. Management of Northern Lines considered that these railroads, with Burlington, SP&S and Pacific Coast, which they control, if unified under New Com- pany with an enlarged and more efficiently coordi- nated pool of rolling equipment, elimination of dupli- cative functions, facilities and personnel through at- = tr ayperng5otwopeaedrnaeed 8 ee ae eS eS ll 13 trition, and with routing, transit and other services more finely tuned to the needs of the shipping public, would be a more proficient railroad than the appli- cants separately. Greater ability to adjust to sea- sonal and economic fluctuations in traffic, thus main- taining a better overall balance, would result. The whole would be better than the sum of its component parts and better able to cope with the increased inter- modal competition of motor and water carriers which has intensified with improved highways and water- ways. In early 1956 Northern Lines through a joint man- agement committee began preparations for merger proceedings. The independent transportation engi- neering firm of Wyer, Dick & Company, referred to as Wyer, was employed to analyze and report on the operating advantages and financial savings which could be realized. This was followed by agreements under which New Company was formed and the terms and conditions of the proposed unification were for- malized. The Second Report of the Commission embodying the basic decision of November 30, 1967, now chal- lenged, in addition to the above background material, includes a reexamination of the First Report, out- lines the hearing on reconsideration, explains the po- sitions of various parties, and devotes special atten- tion to the objections of the Department of Justice. The agreements executed by applicants with the Mil- waukee and the North Western railroads are ex- plained. These evidence applicants’ acceptance of con- ditions favorable to Milwaukee and North Western, h a “ = Pte: b+ eee, eee Kalas aie - Kae eaegs SA acs gg RS a ts RP hie a eS SEC a a ih ag i aria be hac ae ams ae a Pe Gai ei NORE aaa : acaianaia , k: p 14 deemed essential to the public interest finding of the Commission accompanying its approval of the appli- cations. As a consequence of these conditions those roads withdrew opposition to the merger. Agreements of applicants with representatives of the employees are considered. While the Commission notes the op- position of the ailway Labor Executive Association (RLEA), we point out that subsequent agreements affecting employees have led to withdrawal of em- ployee opposition to the merger. The Commission re- quired, as a condition to approval, that attrition con- ditions such as were contained in agreements which had been reached would be applied to all affected ” employees, thus eliminating one of the reasons for the First Report’s denial of the applications. The Second Report states: [A]s this report will show, we are convinced on deliberate and searching reconsideration that the proposed unvfication, fsie}subject to appropriate conditions which we shall specify to protect com- peting railroads, employees and the general pub- “ RLEA sought protective conditions to cover all employ- ees, of all carriers, adversely affected by the merger. The Commission responded: As found in the Seaboard-Coast Line case, employees affected are those of the carriers involved in the merger and most immediately affected thereby. Our discussion and conclusions herein should be viewed in that context. 331 I.C.C. 276. The Commission’s position in Seaboard Air Line R. Co.—Merger—Atlantic Coast Line, 320 I.C.C. 122, was affirmed. Florida East Coast Ry. Co. v. United States, 259 F. Supp. 993, 1019 (M.D. Fla.), aff’d per curiam, 386 U.S. 544. 15 lic, will be consistent with the public interest and should be approved. 331 I.C.C. 244-45. Tlie Commission followed with a discussion of the relevant statutory criteria, analyzed the relevant fi- nancial data, included a finding that merger would entail no increase in the aggregate fixed charges, set forth the major proposals for unification of opera- tions and of properties, and explained the stock ex- change ratio between the holders of Northern Pacific and Great Northern stock. The benefits of merger to applicants, to shippers and to the general public, were enumerated. The Commission analyzed at length the competitive situation, which we shall consider more fully, and discussed and made findings with respect to the pro- tection of other railroads. It emphasized the change in the situation since the prior report, reaffirmed its finding that the survival of no railroad operating in the territory was imperiled, and further found, As modified by the conditions which we impose hereinafter, most of which were the subject of agreements between applicants and the railroad interveners, the proposed unification presents an entirely new perspective for intramodal competi- tion in the efficient and economical movement of transcontinental, western and Pacific Coast traf- fic. That perspective portends for a stronger capability in those railroads individually and col- lectiveiy to prosper and to effect numerous econo- mies and efficiencies from which the public will benefit. 331 I.C.C. 281. The situation with respect to Western Pacific and the objections of Union Pacific, not here pursued, to 16 Milwaukee’s entry to Portland, were discussed. Ref- erence was also made to applicants’ stipulations with the Milwaukee, the North Western and other roads. The Commission concluded this branch of its Report by stating that the over-all effect of the conditions imposed, which it found to be just and reasonable, would make for a stronger degree of intramodal rail competition in the affected territory, promote the ef- fective development of improved transportation serv- ices to the shipping and receiving public, and comport generally with the purposes and objectives of the na- tional transportation policy as declared in the Act, and “are within the scope of section 5(2)(a) and will be consistent with the public interest.” The con- ditions are set forth in Appendix L to the Second Report, as modified by the reports of April 11, 1968, and June 17, 1968. Under the heading “Other Issues” the economic ef- fect of the unification on various communities, in- cluding the loss of job opportunities or tax revenues due to elimination or rerouting of traffic, is consid- ered. The Second Report concludes that the record does not show that the transportation requirements or well-being of the areas or communities would best be served by denial of the applications, but, to the contrary, that the mergers suitably conditioned augur an era of increased railroad strength, in both intra- modal and intermodal competitive aspects in the long run. The stress placed in the earlier. stages of the pro- ceedings on the potential effect of merger on motor carrier rights and operations was considered. The 17 objection raised by Rio Grande to the inclusion of Burlington in the proposed merger was also consid- ered. The Commission concluded that the inclusion of Burlington was necessary not only if the merger is to achieve the results desired but also in order that the many shippers and receivers served by Burling- ton would participate in the public benefits flowing from the merger. As to the further point raised by Rio Grande concerning the over-all effects and cross- effects of the merger and of the proposals pending in Finance Docket No. 22688, et al., involving North Western and other roads, and the proposals in Fi- nance Docket No. 24182, et al.,” involving the Mil- waukee and the North Western and other roads, the Commission points out that it is faced with various procedural alternatives. In view of the over-all situ- ation the Commission decided to reserve jurisdiction for a period of five years following consummation of the transactions authorized so as to be able to impose such just and reasonable conditions upon petition of any party in interest or upon its own motion, after hearing, that may be necessitated by any cumulative or cross-over problems stemming from approval of this merger and any other transaction authorized un- der Section 5 with respect to the territory involved, citing B. & O. R. Co. v. United States, 386 U.S. 372, 387. See Condition 33, Appendix L, as modified by the subsequent report of April 11, 1968. 12 Called the Rock Island case. 18 Called the Milwaukee case. 18 The Commission also retained jurisdiction for a like period for the purpose among others of consider- ing petitions under Section 5(2)(d) of the Act by any railroad in the territory involved requesting in- clusion in the merger. The Commission held that con- summation of the transactions authorized would con- stitute irrevocable assent by applicants to the Com- mission’s reservation of power to impose, after hear- ing, such just and reasonable conditions as may be necessary and appropriate. In its “Summary” the Commission pointed out that the result of the prior First Report was a product of a weighing of three factors: a lessening of compe- tition as between Great Northern and Northern Pa- cific; an adverse effect upon employees; and the bene- fits to be derived by applicants and the shipping pub- lic; but that on reconsideration of these factors based upon the entire augmented record: [W]e now reach a different conclusion. The con- cern expressed in the prior report as to employee hardship has been relieved by the attrition con- ditions imposed and agreed to. The speculation that imposition of conditions for the benefit of Milwaukee and NW might actually preclude con- summation has been set to rest by the agreements accepting those conditions. The preservation of competition between the Northern Lines in the four northern tier States, which was a dominant factor in the prior decision, we now view in a different perspective and do not see it as an in- vincible impediment to this merger. Like the many shippers who support the applicants and —y | 19 who do business in the said States, and like the numerous States, State and Federal agencies, communities and shipper groups which have dropped their opposition and now favor the merger, we see this transaction as a means for achieving, through appropriate conditions, over- riding benefits to the public through improved transportation. Broadening the focus of our ap- praisal to the area relevant to transcontinental traffic and other interterritory considerations, and reweighing the facts pertaining to the ever- increasing intermodal competition, have made it apparent that this merger can lead to the crea- tion of meaningful rail competition through strengthening the Milwaukee and the NW, as well as making the combined applicants a more proficient transport agency. Viewing the consid- erations anew, we conclude that the proposals, with requisite conditions, are entirely consistent with the public interest. 331 I.C.C. 289. The Commission thereupon added its ultimate find- ings that, if approved with the conditions it requires, the transactions meet the requirements of Sections 5(2) and 20a and b of the Act, conform generally with the purposes and objectives of the national trans- portation policy, are consistent with the public inter- est, will enable New Company to use service by motor carrier to public advantage in its rail operations, and will not unduly restrain competition. Moreover, the Commission found that the financial arrangements it outlined are compatible with the public interest, are necessary, appropriate and consistent with perform- ance of service to the public as common carriers, will = — not impair the ability to perform that service, and should be authorized. Finally, the Commission found that the present and future public convenience and necessity require con- struction and operation by New Company of the con- necting lines enumerated in the Second Report, (Ap- pendix J), and permit abandonment by applicants of designated railroad lines, (Appendix K). It is seen from the foregoing that the findings es- sential to approval of the applications were made. Some of these are not ordinary factual findings. They are conclusions drawn from the relevant factual situ- ations disclosed by the evidence. We now test further the action of the Commission ‘by considering it more fully in light of the objections to approval. We bear in mind that, as the reviewing court, “We do not inquire whether the merger satis- fies our own conception of the public interest... . The judicial task is to determine whether the Com- mission has proceeded in accordance with law and whether its findings and conclusions accord with the statutory standards and are supported by substantial evidence.” Penn-Central Merger & N. W. Inclusion Cases, 389 U.S. 486, 498-99. 20 The Problem of Competition—In General. The United States, through the Department of Jus- tice, centers its opposition upon the Commission’s ap- praisal of the resulting competitive situation. The Department sees an invasion of the public policy rep- resented by the antitrust laws, not countered by bene- fits which justify the merger in the public interest. — Since the transactions came within Section 5(a), the over-all guide is the national transportation policy to further the public interest in efficient transportation. 49 U.S.C. § 5(2) (b), note 6, supra. The Department contends that the Commission erred in construing the national policy as one to fur- ther consolidation of railroads into a limited number of systems with a presumption in favor of mergers. While the Commission interpreted the national policy as encouraging mergers, we do not think it was guided by a presumption. It concluded that “the pol- icy of the [Transportation Act of 1940] is clearly to facilitate and thereby foster and encourage consolida- tions which can be shown to be consistent with the public interest.” 331 I.C.C. 269. Thus, consolidation must be shown and not presumed to be consistent with the public interest. The importance of competition as an indispensable factor in the public interest equation is recognized in the Second Report; but it is not the only factor to be weighed under the policy of Congress. Penn-Central Merger Cases, supra at 500; Seaboard Air Line R. Co. v. United States, 382 U.S. 154. Competition is merely one consideration here. See Seaboard Air Line R. Co. v. United States, 382 U.S. 154 (1965). This departure from the general and familiar standard of industrial reg- ulation emphasizes the need for insistence that, before a rail merger is approved, there must be convincing evidence that it will serve the national interest and that terms are prescribed so that the congressional objective of a rail system serv- 21 —" ing the public more effectively and efficiently will be carried out. Obviously, not every merger or consolidation that may be agreed upon by pri- vate interests can pass the statutory tests. Penn-Central Merger and N & W Inclusion Cases, 389 U.S. at 500. The Commission in its Second Re- port evidenced an understanding of the governing guidelines. The tremendous area involved, with its numerous centers of population and diversified sources of traf- fic, leads to equally tremendous detail related to the effect of the merger on competition. In its First Re- port of March 31, 1966, disapproving the merger, see, €.g., 328 L.C.C. 511, et seg., and in its Second Report of November 30, 1967, approving the merger, see, ¢.g., 331 I.C.C. 269, et seqg., the Commission ana- lyzed the competitive problem in detail. In the First Report it concluded that after merger the applicants would overshadow their rail competitors and that they had failed to show that merger would result in transportation service to the public superior to that which could be provided without merger, “or that the benefits reasonably attributable to the proposed merg- er outweigh the adverse effects of the merger on car- rier employees and the benefits that shippers derive from the competition to be eliminated.” 328 I.C.C. 528. Following this Report the employee problem disap- peared, and, moreover, a different conclusion was reached as to the benefits to shippers. But at this point we are concerned with competition. The Com- mission classified stations into four classes: I. Sta- 22 SOLO POLE 0 OLLIE SD Dil SAGES ALE BRIG LRN SN IR LPG EDIE LIOR EET, SED Gp TOMEI GS VE She — 23 tions commonly served by two of the applicant car- riers and no other rail carrier; II. Stations commonly served by two of the applicant carriers and at least one nonapplicant carrier; III. Stations served by one applicant only; IV. Stations served by one applicant and one or more other rail lines. The Commission noted that some of the Class II points, though served by one or more of the applicants, did not have actual competition between any of the applicants because the applicant lines were end-to-end or complementary at these points. As to the principal Class II points in the Northern Tier, Head-of-Lakes, Portland, Seattle, Spo- kane, and the Twin Cities, the Commission observed that each of these points would be served after the merger by at least three railroads (in the case of the Twin Cities, by nine) and by numerous truck lines, bus lines, and airlines. The Commission concluded: In our view the competitive impact upon the Class II stations is not so significant as to war- rant denial of the applications. First, apportion- ment of traffic between (Great Northern), (Northern Pacific) and other roads serving these points is not wholly the result of interplay of competitive forces, but often results from other factors entirely. Second, shippers at these Class II locations, in addition to the Northern Lines and one other rail carrier, are generally served by other modes of transportation vigorously com- peting for traffic. Third, by virtue of the condi- tions imposed in this case, the Milwaukee—which is the other railroad serving many of the Class II points—will be substantially strengthened as a meaningful transcontinental competitor. 331 LC.C. 273. OF A pelt AE PMS tt ar — Accordingly, without reassessing the market shares of the merging lines in the relevant Northern Tier, the Commission concluded that the locations at which competition would be most significantly reduced would still have available substantial rail and nonrail car- riers so as to preserve sufficient competition to war- rant approval of the merger. Moreover, in its Second Report the Commission concluded that the number of stations at which com- petition would be entirely eliminated was small, “and these stations do not produce any great volume of applicants’ business.” 331 I.C.C. 272. Some of these stations are located on the main line of one applicant _and on a branch line of another, “with the result that loss of competition is more theoretical than real.” 331 I1.C.C, at 272. Concern was evidenced as to Class II stations. However, the finding that the allocation of traffic is not wholly the result of competitive forces is another way of saying that the percentage figures per- tinent to Class II stations tend to over-emphasize the importance of intramodal competition at these points. This conclusion finds ample support in the record. The factcrs considered by the Commission are broadly indicative of the weakness of the Department of Jus- tice’s emphasis on raw statistics. For example, be- tween the Twin Cities and points served by only one of the applicants shipments are on the one line that serves the noncompetitive point although nine rail- roads serve the Twin Cities. Noncompetitive Class III stations account for 37 percent of applicants’ reve- nues, Ex. 16, p. 3. Since the elimination of competi- tion between the applicants is now the issue, it should 24 » ; 30 24(c) will allow Milwaukee to serve Billings, one of the two largest cities in Montana, which is presently served only by the Northern Lines. Milwaukee al- ready serves the other major Montana city. Exam. Rep. 287; 331 L.C.C. 281, 357. Condition 25(a) will eliminate the dual basis of switching charges that dis- courages the movement of traffic over the Milwaukee and the location of industry along its lines. Exam. Rep. 289-91; 328 I.C.C. 493; 331 I.C.C. 280, 357. Condition 25(b) will require reestablishment of rate relationships disturbed by the merger, 331 I.C.C. 280, 358. The Commission concluded that “a properly condi- tioned merger, with NuCo competing against a - strengthened Milwaukee, will serve to enhance rail competition,” achieve a more desirable competitive pattern, while at the same time conferring substan- tial benefits upon the shipping public throughout the 15 We note the Commission’s statement that “a properly conditioned merger, with NuCo competing against a strength- ened Milwaukee, will serve to enhance competition. .. .” 331 I.C.C. 275. This is to be read in context, with the full discussion of the effect of the merger on competition. It is not properly to be interpreted as a finding of an over-all en- hancement of competition but rather as an enhancement of the competitive situation of Milwaukee in relation to Nor- thern Lines. It was, of course, recognized that competition between the latter would be eliminated. In its “Summary,” 331 I.C.C. 289, the Commission set forth reasons why “this merger can lead to the creation of meaningful rail competi- tion, through strengthening the Milwaukee and the NW, as weil as making the combined applicants a more proficient transport agency.” Nv final conclusion of the Commission rests upon a finding by it that competition after would nec- essarily be greater than before the merger. —— ae territory involved in this case.” 331 1.C.C. 275. And see 331 I.C.C. 289. It was not necessary, as the Department of Justice suggests, that the Commission analyze in more detail the relative competitive strengths of the Milwaukee and the applicants after the merger. The evidence gives substantial support to the conclusion of en- hanced competition by Milwaukee, with traffic diver- sions to it from the merged lines. The Commission’s reliance upon this factor in reaching its conclusion that the merger was in the public interest must be accepted as valid, even though the merged lines will have a larger market share than Milwaukee. Mil- waukee, by no means a negligible competitor previ- ously, will become for the first time a much strength- ened competitor, realistically vying for long haul traf- fic at every major point served by Northern Lines. The Commission was not required in all the circum- stances upon which it did rely to go further by seeking unattainable precision as to the amount of traffic di- version. One further word on this subject: The Commission was not unmindful of the pending proceeding involv- ing the merger of the Milwaukee with the North Western. Although this merger was not discussed in connection with the strengthening of the Milwaukee by conditions accompanying approval of the Northern Lines merger, the Commission prefaced its “Sum- mary” om reconsideration: 21 We cannot isolate our actions herein from [the larger context of the western rail merger pic- ture], but intend this decision to be a beginning . _— - LOL LE: Se ERE ERE EA LS ENA RUM VION. a step in the orderly resolution of what has become a highly involuted situation affecting many rail- roads throughout the territory. 331 I.C.C. 289. 32 Competition—The Question of Strengthening the Milwaukee Independently of the Merger. The Department contends that Milwaukee could have been strengthened without the merger and, therefore, the Commission was not entitled to at- aise the merger any benefits due to those condi- tions # approval which aid the Milwaukee. It is the position to the Depariment that under Section 1(4), 49 U.S.C. § 1(4), of the Act the Commission could re- quire the railroads to “establish reasonable through routes” with other carriers. It is said that this, with the duty of the railroads under Section 3(4), 49 U.S.C. § 3(4), to “afford all reasonable, proper, and equal facilities for the interchange of traffic between their .. . lines and connecting lines,” and not to “dis- criminate in their rates, fares, and charges between connecting lines, or unduly prejudice any connecting line in the distribution of traffic that is not specifically routed by the shipper,” empowers the Commission to require the opening of gateways, end discrimination in interchanges, and otherwise remedy the practices of the Northern Lines which the Commission found have severely limited Milwaukee’s competitive potential in the past. The Depar‘ment also refers to Section 15 (3), 49 U.S.C. § 15(3), which provides: The Commission may, and it shall whenever deemed by it to be necessary or desirable in the public interest, after full hearing upon complaint or upon its own initiative without complaint, wail an 33 establish through routes, joint classifications, the joint rates, fares, or charges, applicable to the transportation of passengers or property by car- riers subject to this chapter, ... It is not disputed, however, that these provisions do not enable the Commission to require Northern Lines to grant trackage rights into Portland and Billings as required in the conditions attached to approval of the merger; so, it seems clear, the full benefits of the mer- ger in strengthening Milwaukee could not be obtained as suggested by the Department. As to the other arrangements which the Department says the Com- mission could require without merger, the Commission itself disclaims such authority, relying upon its own construction of its powers. For this position it enlists some support from Chicago, M., St. P. & P. R. Co. (Milwaukee) v. United States, 366 U.S. 745; Thomp- son v. United States, 343 U.S. 549; and United States v. Great Northern R. Co., 343 U.S. 562. The Depart- ment thus rests its position upon a construction of the statute which the Commission considers erroneous and opposes. Were the Commission to overcome its opposition and seek to require Northern Lines to make the arrange- ments under statutory authority independently of that used in approving the merger it is probable the matter would become involved in protracted proceedings, in- cluding litigation, with the outcome quite uncertain. In this situation we do not deem it essential for the court to make a definitive decision as to the correct- ness of the Department’s position; for it is clear the conditions for improvement of Milwaukee in its com- petitive position with Northern Lines can be accom- : a plished now as the Commission requires. This seems the most certain and expeditious manner of doing so, if not the only manner. Moreover, the question in the end is whether the merger is in the public interest. The strengthening of Milwaukee is quite relevant to that question. In its strengthened position, Milwau- kee on its part would assure greater intramodal com- petition. If it were strengthened independently of the merger, as the Department suggests should have been done, the issue of the public interest, though made simpler, would still exist in the merger proceedings. Assuming that the Commission attributes to the con- ditions strengthening Milwaukee benefits which arise from approval of the merger, the fact that some of those benefits might possibly otherwise have been ob- tained hardly detracts from the actual advantage of the present conditions, if, as we believe, they give sup- port to the Commission’s finding that the merger is consistent with the public interest. SR EE RRR, aA mh ont aac Competition—Intermodal. This brings us to a fuller consideration of inter- modal competition. As we have seen, the Commission referred to the construction of new superhighwayand pipelines and to improvements in waterways. These developments, in view of the Commission, presage a competitive future even more intense than the present. The Commission concluded that applicants are faced not only with growing intermodal competition but are losing to competitors a steadily increasing share of the transportation market. While it states that appli- cants have enjoyed a moderate success, “increasing BUA Rar rete ee AF gr yn ie: CL Af OLE LOVEL ELEM V GLEN DOV ON NG AIGE OL BLN Rd DOYLE BRINE PRIA 044 ne 4 h a wD = =~ sd ao ifcice ¥ = competition and an inability to prevent traffic erosion make it necessary that applicants take measures now to assure continued success in the future.” They seek this through the merger, leading to a “more efficient transportation plant capable of meeting competition as well as providing equal and in many respects, im- proved service to the public.” 331 LC.C. 260. This is a different conclusion from that reached in the First Report. We bear in mind, however, that the Second Report is now the critical one. In it inter- modal competition assumes a dual significance. First, it was found that the savings and increased physical resources of the merged lines would enable New Com- pany to run a more efficient transportation system so as to compete better with other modes. It is not con- tended that New Company, given its estimated sav- ings, will not be able to offer improved service. Sec- ondly, it was concluded that the elimination of compe- tition between Northern Lines in the Northern Tier was not of overriding importance due to the presence of vigorous intermodal competition. The First Re- port’s finding does not invalidate the conclusion in the Second Report. There is ample evidence in the record that motor carriers are reasonable substitutes for rail- roads in many instances. Numerous witnesses, prin- cipally shippers, described substantial incursions by motor carriers into railroad traffic in paper products, steel, cement, fruit, grain, et cetera. See, e.g., Tr. 5754, 11836, 9527, 7224, 8023, respectively. Nor is the long haul the sanctuary of the railroad. The aver- age length of haul of Class I motor carriers operating in the merger territory in 1959 was 402 miles, as com- 35 PLLC OL ALG L LONE LEELA LALLA CNL A PIAL AID —7 pared with 381 miles for Great Northern and 462 miles for Northern Pacific. Tr. 523; Transport Sta- tistics in the United States, 1959, Section A-1, Statis- tics of Rail-Line Operations, (Bureau of Accounts, I.C.C.). Among the 248 Class I motor carriers serv- ing the merger territory, there are two major coast- to-coast trucking concerns operating at virtually every major terminal served by applicants. Ex. 17. New interstate highways between Chicago, Twin Cities, and Seattle will make the Twin Cities-Seattle truck route 241 miles shorter than the Northern Pacific track. The same highway will reduce truck travel time to 36 hours as compared with 431% hours, the fastest rail freight time. Tr. 516, 1474. Applicants proffered substantial evidence as to the rapid growth of motor carriers in the merger territory in terms of revenue, tonnage, and truck registrations. See Ex. 17, Tr. 521-525. Shipper testimony revealed a wide range of reasons for the switch to motor carriers—lower costs, better service, more flexible routing, faster delivery. The } manner in which trucks have managed to undercut the | railroads in one or another facet of almost every sub- market illustrates the fungibility of rail and motor § 4 transport. The rapid growth of the trucking industry and incursion of motor transportation into railroad traffic of all types provide a substantial basis for the Commission’s conclusion that motor carriers are ready substitutes for, and vigorous competitors with, rail transport in the Northern Tier. The Commission’s reliance on intermodal competi- tion to justify the reduction or elimination of inter- 36 oa kt. te bh Beka ot Pree ren Se SRE OLAL SA LOUTH PIPE LIL EI Le AE A MPLA SEINE EON LOO AX LE ~—— railroad competition has been judicially approved in comparable situations, see, e.g., Penn-Central Merger Cases, 389 U.S. at 501; Florida Coast Railway Co. v. United States, 259 F. Supp. at 1010, 1015-16, and has been supported by most commentators.”* Recent Com- mission merger cases have stressed “the intensive competition the railroads face today and in the future from other modes of transportation.” Louisville & Nashville R. Co. Merger, 295 1.C.C. 457, 475, aff'd sub nom., City of Nashville v. United States, 155 F. Supp. 98 (M.D. Tenn.), aff'd per curiam, 355 U.S. 63." We conclude the above consideration of the bearing of the problem of competition on the public interest equation of the merger by stating that the significant findings and conclusion of the Commission in this mat- ter, to the effect that the competitive situation which 37 #* Phillips, Railroad Mergers: Competition, Monopoly and Antitrust, 19 Wash. & Lee L. Rev. 1, 17 (“so long as the public has a choice of transportation, the elimination of in- terrailroad rivalry cannot be equated with the elimination of competition”), Fulda, Competition in the Regulated Indus- tries: Transportation 52 (“the relevant market is now pre- dominantly the market for transportation services rather than railroad services’). 17 See also Virginian R. Co. Merger, 307 I.C.C. 401, 416; Erie R. Co.—Merger—Delaware, Lackawanna & Western Railroad Co., 312 LC.C. 185, 246-47, complaint dismissed, Brotherhood of Maint. of Way Employees v. United States, 189 F. Supp. 942 (E.D. Mich.), aff'd per curiam, 366 U.S. 169; Chicago & N. W. R. Co.— Purchase—Minneapolis & St. L. R. Co., 312 LC.C. 285 296-97; Seaboard Air Line R. Co.—Merger—Atlantic Coast R. Co., 320 1.C.C. 122, 149-53; aff'd sub nom., Florida East Coast Railway Co. v. United States, 259 F. Supp. 993 (M.D. Fla.), aff'd per curiam, 386 U.S. 544. BMAP TOIE ) eR Thr pon Mad Wiel 38 will result from the merger is consistent with the pub- lic interest, are supported by substantial evidence con- sidering the record as a whole, are reasonable and are sustained, Benefits in Savings. The Commission in its Second Report states: “Sub- stantial dollar savings plus an improved earning po- tential constitute tangible benefits which will accrue to applicants by merger.” 331 I.C.C. 260. The Com- mission estimated the savings at about $40,000,000 annually, due principally to labor savings through re- duction of the number of jobs, including the effect of consolidation of operations at various common points. A major part of the savings was to be attributed to unification of applicants’ separate organizations at the levels of administration, operation, maintenance, traffic, and others. The Commission relied primarily upon a study and report by Wyer, completed in 1957, revised in 1960, updated in 1965, and supplemented by Wyer’s testimony at the rehearing in 1967. The Commission related the savings to the resulting improved financial posture of applicants and the ulti- mate issue of the public interest. This improved fi- nancial posture, the Commission found, [Will enable applicants to become stronger and more stable, and thus be better equipped to meet the growing competition now being felt. More- over, consolidation of facilities, elimination of wasteful duplication, improved routing, better car fleet utilization, and avoidance of time-con- suming interchanges among applicants will re- sult in a more efficient railroad. Such achieve- a — ments clearly are consistent with the public inter- est. 331 1.C.C. 263. The First Report discounted by one-third savings estimated at approximately $15,000,000 attributable to “common points” because they “could be realized without merger.” 328 I.C.C. at 503. In the Second Report these savings were estimated at about $18,- 000,000, and the Commission concluded that such sav- ings (including the discounted percentage) could not be realized without merger because of the unequal benefits accruing to the respective applicants as a re- sult of consolidations at common points. The findings in the First Report are not binding. The relevant test is substantial evidence to support the present findings. The situations cited in the First Report as instances of successful joint operations without merger were more or less unique. We cannot overrule the Commis- sion’s final conclusion that coordination on the con- templated scale is physically impossible absent merger. The Department of Justice urges that the savings projected by the Commission are excessive because of alleged errors in the Wyer method of updating the savings due to job eliminations. In giving his figures at the 1967 hearing, Mr. Wyer was subjected to exten- sive cross-examination. His testimony and accom- panying tabulations and analyses, while we cannot say they lead to a precise amount to be accepted as correct, on the whole furnish substantial evidence to support the savings as found by the Commission. The findings are not tied to a precise amount: 39 As is implied above the exact amount of merger savings cannot be precisely determined under any — circumstances. Here, we are convinced that they would be substantial and of sufficient amount to justify the merger, both in terms of enabling the merged company to improve its service to the public and of providing a return on investment more nearly commensurate with the investment requirements of a viable and progressive trans- portation system. 331 I.C.C. 264. And see, Frie-Lackawanna R. Co. v. United States, 279 F. Supp. 316, 343 (S.D.N.Y.), aff'd sub nom. Penn Central Merger Cases, 389 U.S. 486. With this basic conclusion of the Commission, and with very substantial savings not left in doubt, at- tacks upon the Wyer updating methodology, not ig- nored by the Commission, by no means persuade us that we should either remand for further hearings on this subject, or disapprove the merger.” The Com- 40 i ; : 18 Before the Commission and in court the Department pressed its requests for discovery and/or a broader hearing involving intervening changes bearing upon labor savings. The Commission, in adhering to its limited further hearing, stated : We are well aware that the technological and opera- tional improvements on the Nation’s railroads have brought about a reduction in the number of railroad employees and a redistribution in the consist of the rail labor force. This has been true in varying degrees throughout the railroad industry. We realize these proc- esses do not stop simply because a transaction has been proposed under section 5 (2) (d) or mark time while we and the courts take evidence and consider the views of all of those who are concerned with the structuring of the Nation’s railroad system. Because of the complexi- ties of rail mergers and the demands of due process, ad- ministrative consideration of these cases consumes sub- stantial periods of time. But there comes a point at altar ha Sie Tacs SE Raa ot Ee STD ee gee ee in te be TRA LT POE OP A Sd PARES os pat BEELER COGS ANDI LLY ORS BIEN IS # SRE TIES BS DE: ONTO I eee 41 mission explicitly recognized that the level and con- sist of employment on the railroads are changing con- stantly and took this into consideration in reaching its final judgment about labor cost savings, a judgment which we must honor our concomitant obligations to complete our proceedings upon a rail merger applica- tion within a reasonable time. Most crucial, as the courts have recognized repeatedly, is the point at which we are confronted with petitions for reopening and re- hearing in proceedings which already have been pend- ing, sometimes for years—with potential judicial review waiting beyond. See Interstate Commerce Commission v. Jersey City, 322 U.S. 503, 514 (1944); and cf. Flori- da East Coast R. Co. v. United States, 242 F. Supp. 14, reversed per curiam subnom. Seaboard Air Line Co. v. United States, 382 U.S. 154 (1965); Florida East Coast R. Co. v. United States, 259 F. Supp. 993 (1966), af- firmed per curiam, 386 U.S. 544; the Seaboard-Atlantic Coast Line merger application was filed with the Com- mission on July 22, 1960, and the administrative and judicial review proceedings were completed on April 19, 1967. It is in this context that we have considered the De- partment’s contentions. As we have recognized above, the level and consist of employment on the Nation’s rail- roads are changing constantly. We assume that the length of the proceedings on any significant rail merger application means that by their completion it can be shown that the estimated savings at some points or in some operations have been overtaken or outdated by technological change. Similarly, we recognize that our permissive order approving a merger does not require that it be effectuated in terms of every savings-produc- ing change visualized by a management consultant. Rather, we recognize that with the passage of time, when an approved merger finally is consummated, it will realize savings which were not anticipated, while other anticipated savings are not achieved... . 331 1.C.C. 263-64. iieeenen PESO LAIN ah Ge ADSENSE ODM ET, Te TOES LOOMIS TIN A YRS Spek. See — supported by substantial evidence to which the Com- mission’s reasoning was applied. Thus, in the present proceeding, we are convinced that labor cost savings, in the approximate mag- nitude discussed elsewhere in the report, will oc- cur. Moreover, in our judgment the likelihood that the Department would have been able to show otherwise through the discovery or further hearing procedures which it sought, was not suf- ficiently. great to justify any additional time and expense in this already prolonged proceeding. 331 1.C.C. 264. The Stock Exchange Ratio. By Section 5(2)(b) of the Act the Commission in ' authorizing a merger may provide such terms and con- ditions as it finds to be “just and reasonable.” One of } the present terms and conditions makes provision for 3 the ratic of stock exchange. See Schwabacher v. é United States, 334 U.S. 182; Friedman v. United ; States, 168 F. Supp. 815, 818 (S.D. N.Y.), aff'd per curiam, 359 U.S. 205; Stott v. United States, 166 F. Supp. 851 (S.D. N.Y.). The Commission decided that the stock of New Company would be exchanged with the stockholders of the respective Northern Lines as follows: Northern Pacific stockholders would receive common stock on a share for share basis. Great Northern stockholders would receive stock on a share for share basis plus one-half share of New Company’s $10.00 par value 514 percent preferred stock for each share of Great Northern stock held at the date of the merg- 42 WILLS REEDS IEEE ONS IY IEE MARLINS LIES GLONG BIE LNT TEIN RIOT JORIS ICE thon SUP EE 43 er.” The preferred stock is to be retired, through the operation of a mandatory sinking fund, over a 25 year period beginning at the fifth anniversary of the merger. Also, the preferred stock would be redeem- able at the option of New Company after the fifth an- niversary in a manner not separately opposed. The present opposition to the exchange ratiop is advanced by The Northern Pacific se aesibis Fo tective Committee, to be referred to as the Committee. It appears to represent some 3 percent of Northern Pacific stockholders holding about 5 percent of the stock of that company, We review first the manner in which the Commission arrived at the exchange ratio. We then consider the Committee’s objections. The officials of the companies, advised by experts, began discussions as early as 1955, and thenceforth engaged in extensive negotiations seeking agreement in this matter. A very important problem in deter- mining the ratio resides in the extensive land holdings of Northern Pacific, with their values in timber, oil, gas and other minerals. This company’s over-all fi- __ nancial advisor was Morgan-Stanley & Company, which probed various aspects of the nroblem deemed by these experts to be relevant. The i:iancial adviser to Great Northern was the First Boston Company. An expert jointly available was Wyer. Ata certain point in the negotiations agreement between the officers of The Burlington stock owned by Great Northern and Northern Pacific, totalling 97.18 percent of the total out- standing Burlington stock, will be canceled but the minority stockholders of Burlington will receive 3.25 shareg of com- mon stock in New Company in exchange for each share of their Burlington stock. Ce areca crn ec crac ce ae ae EE ED OSL OC LESLIE ADAGE LEY VE ERNE SA em ye . » ~ site tt eo ’ 7 ~~ son — a i . pa xt ee ee wemuiahaanncb scales shines. RL AIMS DL REE. HRT LS OE ERT WARS DAI eR , etc ee eae 44 the two companies was reached to the effect that on the basis of railroad earnings, Great Northern would contribute 60 percent of the value of New Company to 40 percent contributed by Northern Pacific. The Com- mittee does not question these figures. The negotia- tions then were devoted to seeking agreement as to treatment of the natural resources. There was exploration of an approach by which two classes of stock would be issued by New Company, one to Northern Pacific stockholders alone from which they would derive income only from Northern Pa- cific’s natural resources, The difficulty New Com- pany would encounter in administering the two classes of property, with stockholders having diver- . gent interests, opposed this possible solution. An- other possibility was to spin off from its other proper- ties the natural resource properties of Northern Pa- cific. This was rejected because a spin-off free of en- cumbrances would create problems with mortgage trustees and bond holders, with the prospect of ex- tended litigation and the probability that it could never be consummated successfully; and if a spin-off were subject to the mortgages there would be prohibitive tax consequences. Northern Pacific concluded that the natural resource properties would have to be in- cluded in the merger. Great Northern’s proposals rested in good part upon its greater earning power to be contributed to New Company. Northern Pacific finally acceeded to the need to abandon its claim of full equality and to give Great Northern stockholders full recognition for a time at least of that company’s greater earning —_—_ . — " - Bee ES EELS LOREM ISR EIS EET as EILEEN ee I é Poke Cer se ee — 45 power. After prolonged discussions the companies agreed to the terms of the stock exchange ultimately approved by the Commission. It had been approved by the consultants of both companies, Morgan-Stanley for Northern Pacific and First Boston Corporation for Great Northern. It was also approved by applicants’ respective Boards of Directors and stockholders. The Commission, however, based its approval upon an independent determination, considering the pro- longed negotiations involving arms length bargaining as evidence of fairness in the exchange ratio and con- cluding that the ratio reflected fairly the contributions of each group of stockholders to the combined system. The Committee conceded that a definitive valuation would be difficult if not impossible. The Commission pointed to the fact that the Committee’s real objection was to the inclusion of the natural resources and not to undervaluation of them. The Commission con- cluded the Committee’s position was “contrary to the record, which shows that the full potential value of the natural resources properties was fully reflected in the shares allotted to the Northern Pacific stockholders.” 331 I.C.C. 259. This whole matter, including the views advanced by the Committee, was explored in great detail by the Commission. On the basis of the record upon which the Commission relied, we have no reason to rule other than that the ratio which was established, with ap- proval of the companies and of a large majority of their stockholders, is just and reasonable. Moreover, we do not agree that the Commission should be re- quired to reopen the record to update it. We think that such fluctuations as the Committee refers to as a EO ae eT yea Fa EE LEA GTE ALE BAT LGR ELEN Te BAT A BFS tise: . Fo hers nb lia go SEs 5 y possibly relevant are, as the Commission now urges, those normal fluctuations which can _— to occur during the course of any protracted administra- tive proceedirg and which have no effect upon the ultimate fairness of the Commission’s finding. The arguments pro and con reopening cancel out each other sufficiently to leave the discretion exercised by the Commissicn free of abuse. United States v. Pierce Auto Lines, 327 U.S. 515, 534-35. In conclusion on this branch of the case, although we have not specifically discussed each of the argu- ments advane:d by the Committee, we think all sig- nificant issues regarding the ratio were fully consid- ered and decided in a manner which requires the court to withhold any direction of its own that the ratio should be different.” The Alleged Agreement of Burlington Not to Seek Entrance to the City of Milwaukee. As has been said the applicants, after the First Report’s disapproval of the merger, entered into sepa- rate agreements with Milwaukee and North Western to meet conditions the absence of which had led Mil- waukee and North Western originally to oppose the merger and in part had led the Commission to dis- approve it. The substance of these agreements is now required by the Commission to be met as conditions accompanying its approval. North Western withdrew its opposition and urged approval, and Milwaukee now 2 The Commission advised that as of March 14, 1968, 73.20% of Northern Pacific’s stockholders voted in favor of the merger, 2.57% against. a : actively supports approval of the merger. In connec- tion with all this, applicants have undertaken not to contest the pending merger of Milwaukee and North Western. The Department of Justice considers that these arrangements have been made to further the private interest of the railroads, to the detriment of the public interest. Moreover, the Department refers to a serious possibility, which it unsuccessfully sought to have the Commission explore, that the Milwaukee (and the North Western as well) withdrew its opposi- tion to this merger in return for the Burlington’s promise not to seek a condition in the North Western- Milwaukee proceeding giving Burlington entry into the City of Milwaukee. We accept the Commission’s treatment of the matter, as follows: Justice views such an arrangement as an objec- tionable attempt by these carriers to compromise their differences at the expense of the general public, and to effect a restructuring of railroad alignments in the West with no regard for the public interest and in derogation of our statu- tory authority. Our duty under. section 5 is to examine the proposal to determine whether it is consistent with tle public interest. The fact that C&NW and the Milwaukee withdrew their oppo- sition following the agreement does not delete from the record nor detract from the significance of the evidence they presented in opposition to the Northern Lines proposal. It is that record, as amplified on limited further hearing, and not the agreement, which justifies the result reached after reevaluation. We have the power to re- quire protective conditions, whether agreed to or not, when the public interest demands. Accord- ingly, the fact that the parties may have reached PIM a “—" an agreement in no way relieves us of our statu- tory duty. We approach the case in that light without regard to alleged motivation of the par- ties. 331 LC.C. 243. As to the alleged undertaking of Burlington not to seek entrance into the City of Milwaukee we think the Commission was not required because of this to en- large the scope of the limited further hearing. The question whether the present merger is consistent with the public interest must be determined independ- ently of any such undertaking. Burlington, in the Milwaukee-North Western proceeding, has denied any such agreement; but if it were made it does not affect the power of the Commission to require Burlington to - disregard such an undertaking should the Commis- sion deem it in the public interest in either the Mil- waukee-North Western proceedings or in these North- ern Lines proceedings. See Condition 33 of the Com- ; mission’s Order. 331 I.C.C. 359, as modified, 331 : I.C.C. 879. In determining whether to require such action by Burlington, the Commission must act j strictly in the public interest uninfluenced by any such | undertaking, if such there be. See B. & O. R. Co. v. United States, 386 U.S. 372, 436-37, concurring opin- ; ion of Mr. Justice Brennan; Interstate Commerce Commission v. Chicago, Rock Island & Pacific Ry. Co., i 218 U.S. 88, 103. The Department does not allege that the suspected undertaking is in violation of law. The Question of Consolidation of Western Railroad Mergers with the Northern Lines Proceeding. The Denver & Rio Grande Western Railroad Com- pany, after the Commission’s limited further hearing 48 aa ; on reconsideration of the applications, petitioned the Commission to be allowed to present evidence on the over-all effects and cross effects of this and two other pending mergers.” Rio Grande also sought a with- holding of decisions in this proceeding, as well as in the others, pending determination of the effects of the proposals. In denying a further hearing the Commis- sion nevertheless recognized the importance of the effect of its decision upon the general railroad struc- ture in the west.” In the event the Commission should find other pend- ing unifications to warrant approval, it decided to meet the problem by the exercise of its broad power to relate the pending applications to other proposals, while at the same time moving this proceeding for- ward in a manner deemed best to protect the public and competing rail carriers. It was decided that con- solidation of the cases was unworkable and that final ** These were proposals involving the Chicago and North Western Railway Company—Control—Chicago, Rock Island & Pacific Railroad Co., the Rock Island case, the Chicago, Milwaukee & North Western Transportation Company—Con- solidation—Chicago & North Western Railway Co., and Chi- cago, Milwaukee, St. Paul & Pacific Railroad Company, the Milwaukee case. Finance Docket Nos. 22688 and 24182. *2 The Commission stated: “The Rio Grande request places in sharp perspective the important question of what will be the effect of our decision here upon the general railroad structure in the West generally in the event other pending western rail unifications should later also warrant our ap- proval. While we will not follow the course of action pro- posed by Rio Grande, we will herein provide an effective procedure by which that impact can later be measured and appropriately dealt with.” 331 I.C.C. 286. p ne —" decision in each case should not be withheld until all were ready for decision. We have pointed out that the Commission reserved jurisdiction for a period of five years in order to im- pose such just and reasonable conditions as may be necessitated by any cumulative or cross-over problems stemming from approval of this merger and any other transaction authorized under Section 5 with respect to the territory involved, citing B. & O. R. Co. v. Unit- ed States, 386 U.S. 372, 387. Jurisdiction was re- tained for a like period of five years in order to en- able the Commission to consider among other things petitions under Section 5(2)(d) of the Act by any railroad in the territory involved requesting inclusion ' in the merger authorized. Moreover, the Commission decided that consummation of the merger would con- stitute irrefutable assent by applicants to the reserva- tion of power by the Commission to impose, after hearing, such just and reasonable conditions as may be necessary and appropriate. In its April 11, 1968, Second Report on Reconsid- eration, the Commission went further. Referring to the delays incident to court litigation and other fac- tors in connection with merger proceedings but at the same time not overlooking the fact that cross-over ef- fects, if any, would not come into being until after consummation of one or more of the proposed merg- ers, the Commission modified the provision for five- year retention of jurisdiction by reserving jurisdic- tion to alter that period if and when it is shown to be necessary or appropriate so that the period would be “5 years or such other period as the Commission may, 50 — for good cause shown, hereafter prescribe.” 331 I.C.C. 879. The Commission stated that this would not impose an undue burden on applicants or render the merger in any way inconsistent with the public interest and that at the same time it would further the congressional policy toward consolidation of the Nation’s railroads. See Brotherhood of Railroad Maintenance Employees v. United States, 221. F Supp. 19, 30 (E.D. Mich.), aff'd per curiam, 325 U.S. 216. Apparently satisfied with the situation as it thus developed Rio Grande does not press in court any objection to the merger of the Northern Lines, Our position is that we find no solid basis for con- cluding that the discretion exercised by the Commis- sion is unreasonable. There are such cases, as illus- trated by the Supreme Court’s remand in B. & O. R. Co. v. United States, supra, where failure to afford protection for other railroads would be fatal to final approval of the merger. No showing is made in the present case of a comparable situation.” The manner in which the Commission moved forward while at the same time providing for readjustments in the light ot the over-all situation in the territory affected as it might develop seems to the court to be reasonable in 51 28 With respect to a like contention urged by Soo in op- position to the merger of the North Western and the Chi- cago & Great Western Railway Company, Commission treat- ment, similar to that involved herein, was upheld: “Concern- ing these facts and that the Supreme Court has not held that the Commission must consolidate all current and re- lated merger proceedings, we hold that it was not an abuse of discretion to refuse to do so here.” Soo Line R. Co., v. United States, 280 F. Supp. 907, 913. ; Ty pursuit of the public interest as represented by the national transportation policy. Contentions of the State of Washington. | The State of Washington contends against the merger on the basis of a provision of her constitution, article XII, section 16, prohibiting consolidation of the stock, property, or franchises of competing railroads within the State. All else aside this provision must give way to the federal power to regulate commerce among the States, which is the basis for the Act the Commission has administered in this case. That Act provides inter alia that carriers which merge with Commission’s approval are relieved from the opera- tion not only of federal antitrust laws but of all pro- hibitions of State law. 49 U.S.C. §5(11), note 6, supra. Schwabacher v. United States, 334 U.S. 182, 193-197; Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 126. In other significant respects contentions of the State of Washington overlap those considered in por- tions of this opinion which concern the strengthening of the Milwaukee, the savings attributable to the merger, and the over-all competitive situation, both intramodal and intermodal. Contentions of the City of Auburn, in Western Washington. Auburn fears that it would be eliminated as a transcontinental freight origination and termination point with the result that the Northern Pacific yard there would be closed. Though it is not certain this 53 would in fact occur,” it is said that about half of the 500 Auburn residents employed at the yards would lose their employment and the balance would be obliged to move elsewhere if they wished to retain a job, with substantial economic loss to Auburn. None of the employees of the Northern Lines join Auburn in urging disapproval of the merger. Satisfactory ar- rangements have led to withdrawal of employee oppo- sition. The Commission considered Auburn’s position in the context of the whole problem. The possible ad- verse economic effect upon the city was thought not to justify withholding the benefits of approval. On the whole case this is a reasonable judgment of the Commission which we accept. Contentions of the Board of Railroad Commissioners of the State of Montana, Referred to as Montana. Montana pursues contentions, sponsored also by the Department of Justice, regarding the effect of the merger on competition, which we need not discuss anew, believing that we have already sufficiently en- larged upon our views. Montana also warns against attaching weight to approval of the merger by vari- ous elements within the State; but its principal con- tentions, other than with respect to the competitive situation, are against the Commission’s approval of certain inter-railroad stipulations between New Com- pany and Western Pacific, Southern Pacific and the Santa Fe, and acquisition by New Company of the The President of Northern Pacific filed an affidavit in Auburn’s suit against the United States [(W. D. Washing- ton) Civil No. 7706, filed May 3, 1968] to the effect that the Auburn yard would be maintained. : 7 properties of motor carriers owned by Burlington, Northern Pacific and Great Northern. On a record in which they are incorporated the Commission described the stipulations as [B]asically the standard routing conditions tailored to the specific situations involved, [rep- resenting] the voluntary action of free parties, each looking to its reasonable interests and those of its patrons and markets. In our opinion, these stipulations are indeed in the public interest and should be approved. 331 I.C.C. 282. We defer to the judgment of the Commission after its full consideration of the stipulations in its Second - Report, preceded by the Examiner’s approval and the Commission’s in its First Report. See 328 I.C.C. 480. The record, aided by the expertise involved, precludes a ruling by the court now that approval of the stipula- tions is unsupported by the requisite evidence or is otherwise invalid. As to the problem of motor carriers Montana states that the Act, 49 U.S.C. § 5(2) (b), provides that if a carrier by railroad is an applicant in a case which in- volves a motor carrier, “the Commission shall not en- ter such an order unless it finds that the transaction proposed will be consistent with the public interest and will enable such carrier to use service by motor vehicle tc public advantage in its operations and will not unduly restrain competition.” Montana contends that the findings thereby required were not made and that those made are not supported by requisite evi- dence. a 55 Montana seems to overlook the findings of the Sec- ond Report, 331 I.C.C. 29C, not only as to the public interest but also that the proposed transaction “will enable the Great Northern Pacific and Burlington Lines, Inc., as in the case of its predecessors in inter- est, to use service by motor vehicle to public advan- tage in its rail operations, and will not unduly re- strain competition.” The details of the motor carrier operations are disclosed in the record. The Commission made find- ings that each subsidiary motor carrier would con- tinue to operate its own equipment under its own au- thority and over its own routes, no new motor currier network would be created, and the only change would be in ownership, that is, New Company in lieu of the individual applicants, with no adverse effect on com- peting motor carriers. The evidence in the record with respect to the details of these matters support the conclusionaly factual findings of the Commission. Contentions of Livingston Anti-Merger Committee. : The principal contention of the Committee seeks to raise for decision within the merger case a title case of great magnitude. The Committee contends that the history of the title to the properties now in Northern Pacific Railway Company, beginning with the Act of Congress of July 2, 1864 (13 Stat. 365) incorporating the “Northern Pacific Railroad Company,” shows that the acquisition in 1896 of the properties by Northern Pacific Railway Company by foreclosure proceedings was invalid. This history is long in time and com- plicated in nature. After reviewing it with aid of the 56 briefs we conclude the Commission did not err in re- fusing to disapprove the merger because of the Com- mittee’s challenge. In United States v. Northern Pa- cific Ry. Co., 311 U.S. 317, 328, though the litigation involved other issues, the Supreme Court in 1940, in tracing the title of Northern Pacific, said: The corporation chartered by Congress [the Rail- road Company] operated the road until receivers were appointed in 1893. Pursuant to foreclosure proceedings the Northern Pacific Railway Com- pany [the applicant] acquired title to the rail- road, the land grant, and all other property of the original corporation and has since operated the road and obtained patents for millions of acres under the land grants. And see Northern Pacific Ry. Co. v. Boyd, 228 U.S. 482, 502, holding the foreclosure sale binding between the parties though not against the creditor Boyd; Landell vy. Northern Pacific Ry. Co., 122 F. Supp. 253 (D.D.C.), where it is held that laches barred the effort there to upset Northern Pacific’s title, aff'd, 96 U.S. App. D.C. 24, 223 F.2d 316, cert. denied, 350 U.S. 844. And see the opinion of Attorney General Judson Harmon, 21 Op. Atty. Gen. 486 (1897), and that of Attorney General W. H. Moody, 25 Op. Atty. Gen. 401 (1905). Mr. Moody became an Associate Justice of the Supreme Court. The Commission was not re- quired to re-litigate the issue or to withhold approval of the merger pending possible new litigation over Northern Pacific’s title. For purposes of merger pro- ceedings it could rely on the existing judicial records in that regard, supplemented by the opinions of two 57 Attorneys General. Should these old problems engage the judiciary again in separate litigation placing Northern Pacific’s title in issue, and any different re- sult eventually be reached from that heretofore re- corded, the effect on the merger in its then status would be for the judiciary to resolve in its decree in that litigation. ' Conclusion. To explain in a manner to carry conviction to all concerned the decision of so intricate a case is per- haps impossible. The merger, its accompanying con- ditions and its related transactions will bring about_ changes in vast enterprises which took over from the pony express, the stagecoach and the covered wagon.” The romance of railroad building is all but lost in the welter of data in the record before us, which has been sculptured into positions which are not adhered to with unanimity by all affected. Great expectations of an earlier era became modified by the impact of events. More rails were laid than need required as matters developed, or so it is claimed.’ Only time and experience can tell with greater certainty whether this is so. The Commission’s present judgment, however, is not for that reason to be voided. We think the orders in suit, considered under the criteria respectively applicable to the Commission and to this court, see Penn-Central Merger and N & W. Inclusion Cases, supra at 498-99, withstand the chal- lenges of the litigation. 2sThe pony express carried the mail from St. Joseph to Sacramento. . . 58 ; The complaints accordingly will be dismissed and the orders of the Commission will be affirmed. Our order will be stayed for fifteen (15) days from its date. If within that period notice of appeal to the Supreme Court is filed and an application for further stay is made to that Court our stay will stand en- larged until determination of such application or other order of the Chief Justice of the United States, or of an Associate Justice of the Court, or of the Court it- self.” /s/ David L. Bazelon Chief Judge, United States Court of Appeals for the District of Columbia Circuit /s/ Charles Fahy Senior Circuit Judge, United States Court of Appeals for the District of Columbia Circuit /s/ Edward M. Curran Chief Judge, United States District Court for the District of Columbia Date of Issuance: November 20, 1968. 26 See Erie-Lackawanna R.R. Co. v. United States, 279 F. Supp. 316, 356. | 59 APPENDIX BS _ UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Civil Action No. 1132-68 UNITED STATES OF AMERICA, PLAINTIFF, CHARLES E. BRUNDAGE, BRADFORD F. STORY, SAMUEL C. WILLIAMS, JR., WARREN CLARK, constituting THE NORTHERN PACIFIC STOCKHOLDERS’ PROTEC- TIVE COMMITTEE, BOARD OF RAILROAD COMMIS- SIONERS OF THE STATE OF MONTANA, STATE OF WASHINGTON, CITY OF AUBURN, PUBLIC SERVICE COMMISSION OF THE STATE OF MINNESOTA, LIV- INGSTON ANTI-MERGER COMMITTEE, INTERVENOR- PLAINTIFFS Vv. UNITED STATES OF AMERICA and INTERSTATE COMMERCE COMMISSION, DEFENDANTS, GREAT NORTHERN RAILWAY COMPANY, NORTHERN PACIFIC RAILWAY COMPANY, CHICAGO, BURLING- TON & QUINCY RAILROAD COMPANY, SPOKANE, PORTLAND AND SEATTLE RAILWAY COMPANY, Pa- CIFIC COAST RAILROAD COMPANY, GREAT NORTH- ERN PACIFIC & BURLINGTON LINES, INC., CHICAGO, MILWAUKEE, ST. RAUL & PACIFIC RAILROAD CoM- PANY, 230 PACIFIC NORTHWEST SHIPPERS, PUBLIC UTILITY COMMISSIONER OF OREGON, INTERVENOR- DEFENDANTS ie. 60 P| Before: Bazelon,* Chief Circuit Judge, Fahy,* Senior Circuit Judge, and Curran, Chief District Judge. ORDER Upon consideration of the whole case as submitted, and in accord with the opinion of the court issued this date, it is ORDERED AND ADJUDGED that the complaints are dismissed and the prayers that the orders of the Com- mission in suit be annulled, suspended, enjoined and set aside are denied, and it is FURTHER ORDERED AND ADJUDGED that the orders of the Commission in suit are affirmed; and it is FURTHER ORDERED AND ADJUDGED that the stay or- der of May 16, 1968, entered herein by this court, is vacated; and it is FURTHER ORDERED AND ADJUDGED that this order is stayed for fifteen (15) days from the date hereof, and if within that period notice of appeal to the Supreme Court is filed, accompanied by an application to that Court for further stay, the fifteen day period of this court’s stay will stand enlarged until determination of such application or other order of the Supreme Court or of the Chief Justice of the United States or of an Associate Justice of the Court. Per Curiam. Dated: November 20, 1968. * Serving with Chief Judge Curran as members of the Dis- trict Court of three judges designated by the Chief Circuit Judge by order herein of May 10, 1968. nN vv . — ¢ 61 APPENDIX-C OH INTERSTATE COMMERCE COMMISSION Finance Docket No. 21478 * GREAT NORTHERN PACIFIC & BURLINGTON LINES, INC. —MERGER, ETC.—GREAT NORTHERN RAILWAY COMPANY ET AL. Decided March 31, 1966 1. Merger of the properties and franchises of Great Northern Railway Company, Northern Pacific Railway Company and Chicago, Burlington & Quincy Railroad Company, into Great Northern Pacific and Burlington Lines, Inc., for ownership, management and operation, found not to be con- sistent with the public interest. 2. Applications in the major and related transactions denied. Kenneth F. Burgess, Ray Garrett, John B. Schwemm, D. Robert Thomas, Harold K. Bradford, Jr., Roger T. Crosby, E. T. Conmy, Jr., R. T. Cubbage, M. L. Countryman, Jr., Frank S. Farrell, James A. Gillen, Anthony F. Kane, Martin Lucente, Frank J. Magill, Eldon Martin, Earl F. Requa, Woodrow L. Taylor, R. Paul Tjossem, L. E. Torinus, and James R. Walker for applicants. 2 This report also embraces Finance Docket Nos. 21479, Chi- cago, Burlington & Quincy Railroad Company, et al.—Stock Issuance, et cetera, and 21480, Great Northern Pacific & Bur- lington Lines, Inc., et al—Construction and Abandonment. 62 Homer G. Hamilton for the State of Nebraska, El- don Martin for the State of Missouri, The Missouri Farmers Association, The Nebraska Lumber Mer- chants Association, the North Idaho Economic De- velopment Association, Inc., The Quincy (Ill.) Cham- ber of Commerce, The Alliance (Nebr.) Chamber of Commerce, and six shippers, Henry A. Archambo for the Minneapolis (Minn.) Traffic Association, I. N. Early for the Billings (Mont.) Traffic Bureau, H. E. Franklin, Jr., for the port of Tacoma, Wash., and the Tacoma (Wash.) Chamber of Commerce, Gerald E. Franzen for the Chicago Association of Commerce and Industry, EZ. J. Hansen for the Grand Forks (N. Dak.) Chamber of Commerce and Red River Valley | Potato Growers, Association, J. D. Paul for the Seat- tle (Wash.) Chamber of Commerce and the Seattle Traffic Association, E. C. Pewters for the Everett (Wash.) Chamber of Commerce, Robert B. Post for Cargill, Incorporated, Harry C. Sundblad for the Omaha (Nebr.) Chamber of Commerce and the Oma- ha Grain Exchange, Erv. A. Timm for the St. Paul (Minn.) Area Chamber of Commerce, and Lillian Widmyer for herself, interveners in support. John M. Agrey, John C. Stewart, and Martin Va- aler for the Public Service Commission of State of North Dakota, John G. Alley for the Province of British Columbia (Canada), J. E. Finsness for the Fargo (N. Dak.) Chamber of Commerce, and Fred H. Tolan for Whatcom County (Wash.) Traffic and Rates Bureau, Alaska Copper Companies, Inc., Wash- ington-Oregon Shippers Cooperative Association, and Van Waters & Rogers, Incorporated, and 227 ship- . 63 pers and shipper associations, interveners in condi- tional support. Osborne Becklund, Charles H. Clay, F. W. Crouch and C. Harold Peterson for Soo Line Railroad Com- pany, Gene F. Bennett, Edwin R. Eckersall, J. C. Garlington, Raymond K. Merrill, Robert F. Munsell, Warren H. Ploeger, Stuart W. Rider, Jr. and Edwin O. Schiewe for the Chicago, Milwaukee, St. Paul & Pacific Railroad Company, George L. Buland, Charles W. Burkett, Jr., Kenneth M. Judd, Thormand A. Miller, and Oglesby H. Young for the Southern Pa- cific Company, Martin Cassell and Thomas I. Megan for the Chicago, Rock Island & Pacific Railroad Com- pany, Frank W. Davis, Jordan J. Hillman, John C. Danielson, Carl McGowan, Charles H. Dickman, Rich- ard M. Freeman, Harry B. Otis, and Edgar Vanne- man, Jr., for the Chicago and North Western Rail- way, Leighton Hatch, Walter G. Treanor, and E. L. Van Dellen for the Western Pacific Railroad Com- pany, L. W. Hobbs, Randall B. Kester, Francis J. Melia, and Howard E. Roos for the Union Pacific Railroad, and Starr Thomas for the Atchison, Topeka and Santa Fe Railway Company, intervening rail carriers. Elmo F. Clark, Edward F. Heitz, Charles W. Bucy, and Joseph E. Quin for Orville F. Freeman, Secre- tary of Agriculture of the United States, and William H. Orrick, Jr., Joseph J. Saunders, Thomas S. How- ard, Earl A. Jinkinson, and James R. Mitchell for the United States Department of Justice, interveners in opposition. 64 Be Robert W. Mattson, Richard Musenbrock and Wal- ter F. Mondale for the State of Minnesota and the Minnesota Railroad and Warehouse Commission, C. A. Carr, Herman L. Bode and C. A. Merkle for the State of South Dakota and the Public Utilities Commission for the State of South Dakota; John J. O’Connell and Fran.: B. Hayes for the State of Wash- ington, Waldo F. Wheeler, John J. Goen, and Leo J. Steffen for the Iowa State Commerce Commission, and Ronald L. Anderson, Jack L. Chestnut, Walter F. Mondale, Oliver A. Ossanna, Elmer Petersen, Paul Rasmussen, and Otto A. Ratke for the Minnesota Railroad and Warehouse Commission, John L. Mc- Keon, John C. Sheehy, William P. Myfich and Paul | T. Smith for the Board of Railroad Commissioners of the State of Montana, and Robert Y. Thornton, Lloyd G. Hammel and John F. Weisser for the Public Utility Commissioner of Oregon, interveners in op- position. Arvid M. Falk and Keith M. Stidd for the city of Minneapolis (Minn.), Richard P. Gallagher for the city of Mandan (N. Dak.), Anthony C. Gospodar for the city of Breckenridge (Minn.), Daniel A. Klas for the city of St. Paul (Minn.), Alva C. Long for the cities of Auburn and Sumner (Wash.) and the Au- burn (Wash.) Chamber of Commerce, Toby FE. Marke- wicz for the city of Superior (Wis.), R. G. Nerison for the city of Jamestown (N. Dak.), Thomas E. Plante for the city of Duluth (Minn.), Bernard J. Gallagher for the Spokane (Wash.), Anti-Merger Association, George Kargianis for the Seattle ( Wash.) Improvement Council, Thomas Kennedy for the Mis- 65 soula (Mont.) Civie Group, C. W. Leaphart, Jr., W. R. McGee, and Webb Sullivan for the Livingston (Mont.) Anti-Merger Committee, Harry C. Munger for the Duluth (Minn.) Volunteer Committee Oppos- ing Merger, and Robert D. McMullan for the Clark County (Wash.) Anti-Merger Association, interven- ers in opposition. Edward J. Hickey, Jr., James L. Highsaw, and William G. Mahoney for Railway Labor Executives Association, and FE. L. Dirks, Charles B. Falconer, Robert Lee Kelleher, Ernest Monroe, J. H. McLaugh- lin, Paul EF. Peterson, and C. W. Wellnitz, for various other organizations of railway employees, interveners | in opposition. Joseph R. Dudley for the Minnesota Motor Trans- port Association, Clifford Ferguson for Ed Benedict, and Samuel R. Freeman for Wheat Producers Trans- portation Committee, interveners in opposition. A. Wilford Larson and Richard V. Maves for the Public Service Commission of Wisconsin, A. C. Stod- dard and John E. Tormey for the Michigan Public Service Commission, Louis B. Dailey for Northern Pacific Stockholders’ Protective Committee, Philip H. Porter for the Wisconsin Manufacturers Association, and Oliver Lee Siewart for Southwest Oregon Ship- pers Traffic Association, interveners seeking imposi- tion of specified conditions. REPORT OF THE COMMISSION WEBB, Commissioner: By joint application filed February 17, 1961, au- thority is sought by Great Northern Railway Com- 7. , . pany (Great Northern),? of St. Paul, Minn., Northern Pacific Railway Company (Northern Pacific), also of St. Paul, Pacific Coast R. Co. (Pacific Coast), of Seat- tle, Wash., Chicago, Burlington & Quincy Railroad Company (Burlington), of Chicago, Ill., and Spokane, Portland and Seattle Railway Company (SP&S), of | Portland, Oreg., common carriers by railroad subject to part I of the Interstate Commerce Act, and Great Northern Pacific & Burlington Lines, Inc. (New Com- | pany), not a carrier, of Wilmington, Del., to consum- | mate certain transactions under section 5(2) of the act, to issue certain securities and assume obligation and liability in respect of securities under section 20a of the act, and to effect certain extensions and aban- donments of lines of railroad under sections 1(18) to 1(20), inclusive, of the act. The several docketed applications are described fully and correctly at pages 7-10, inclusive, of the recommended report. These applications are interde- pendent parts of a proposal for the unified operation, control and management of the Northern lines (Great Northern and Northern Pacific), Burlington, and SP&S. Extensive public hearings were held beginning Oc- tober 10, 1961, and ending July 10, 1962. The exam- iner’s report recommended approval of the merger and related transactions, subject to various conditions, and was served August 24, 1964. Exceptions to the 66 2In this report reference to applicants and interveners and others mentioned will be by the distinctive names in their respective corporate titles or by the designation shown in parentheses. paabiennapeianntian — 67 recommended report and replies thereto were filed by numerous parties. Oral argument before the Com- mission was held on June 16, 1965. CHARGES OF LACK OF A FAIR HEARING Before considering this proceeding on the merits, we made an exhaustive examination of the record to determine whether there was any substance to the charges concerning lack of a fair hearing. We are convinced that such charges are totally lacking in merit. Our reasons for reaching this conclusion are explained fully in the Report of the Commission on Petitions for Rehearing served concurrently with this report. OPERATIONS AND PROPERTIES OF THE APPLICANTS The corporate status of the applicants, together with the financial transactions involved in consum- mating the proposed merger, are set forth correctly and in detail at pages 21-22, 27, 33, 38-39, and 57-88 of the recommended report. In view of our reasons for finding that approval of the proposed merger would not be consistent with the public interest, it is unnecessary to discuss the financial implementation of the proposal. Great Northern’s railroad operations are conducted over 8,277 miles of road, of which 4,355 are main lines and 3,613 are branch lines.’ Its principal main lines of railroad are located in 10 States‘ and 2 Cana- * The figures cited reflect operations as of December 31, 1960. * Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Montana, Idaho, Washington, Oregon, and California. me. dian provinces,* extending from Duluth, Minneapolis, and St. Paul, Minn., ‘superior, Wis., and Sioux City, Iowa, westerly to Seattle, Wash., and other western cities, including Vancouver, B. C., and Portland, Oreg. Great Northern's principal branch line mileage is in Minnesota and North Dakota. A line also ex- tends southerly through central Oregon to Bieber, Calif., over a portion of which between Chemult and Klamath Falls, Oreg., it operates over the tracks of Southern Pacific. Its principal points of interchange with other railroads, in addition to the terminal points mentioned above, are Laurel, Billings, Butte, and Sweetgrass, Mont., Spokane, Chemult, and Noyes, _Minn., Northgate, N. Dak., New Westminster, B. C., and Winnipeg.® Northern Pacific conducted operations as of De- cember 31, 1960, over 6,800 miles of road, of which 2,784 were main line and 4.016 miles were branch line. Its principal main lines of railroad are located in seven States’ and the Canadian Province of Mani- toba, and extend from St. Paul and Minneapolis, and from Superior and Ashland, Wis., and Duluth, west- erly via Fargo and Bismarck, N. Dak., Billings, Butte and Helena, Mont., Spokane, Seattle and Tacoma, Wash., and Portland. Branch lines connecting with EE 5 Manitoba and British Columbia. * A more detailed description of Great Northern’s property and equipment and that of its subsidiaries and affiliates may be found at pages 23-27 and in appendix E of the recom- mended report. ? Wisconsin, Minnesota, North Dakota, Montana, Idaho, Washington, and Oregon. _7_—" 69 the principal main lines serve the agricultural and lumber producing territories which are intermediate, and a line extending to a connection with its affiliate, Midland, at Pembina, N. Dak., and International Falls, Minn., enables it to serve Winnipeg. Its prin- cipal points of interchange are at St. Paul, Duluth, Ashland, Superior, Laurel, Billings, Butte, Spokane, Seattle, Pasco and Portland. Internationally, the principal peints of interchange with other carriers by railroad are at Sumas, Wash., Pembina, and Winni- peg." In addition to its transportation properties and other investments, Northern Pacific has large land holdings which are important sources of income. Most of the lands were part of the land grant made by the Act of Congress of July 2, 1864, incorporating the Northern Pacific Railroad Company and granting lands to encourage construction of the railroad from Lake Superior to Puget Sound by the northern route, so as to bring about settlement and development of that region, add value to the government lands there- in, and establish facilities for the transportation of mail, troops, munitions and public stores to and from the west coast. To aid in the construction, 39,473,369 acres of alternate, odd-numbered sections of non- mineral public lands were granted originally, together with a right of way of 200 feet on either side of the railroad where it passed through the public domain *A more detailed description of Northern Pacific’s prop- erty and equipment and that of its subsidiaries and affiliates may be found at pages 27-33 and in appendix E of the recommended report. - and necessary lands for station buildings, shops and other appurtenances. The rights to them were ac- quired by Northern Pacific at foreclosure and seques- tration sales following foreclosure in 1896 of mort- gages placed on the railroad and land grant by the federal corporation. As of December 31, 1960, Northern Pacific and its subsidiaries owned in fee, 2,236,992 acres of land (with the exception of certain minerals in 23,177 acres) in Wisconsin, Minnesota, North Dakota, Mon- _ tana, Wyoming, Idaho, Washington, and Oregon; and certain mineral rights in an additional 6,075,659 acres of land in those eight States. In 1961, Northern _ Pacifie’s net income of $5,913,216 from the natural resources properties, without certain deductions, was more than one-third of the total ret income of $16,- 313,322. Northern Pacific’s gross revenues from timber, oil and gas and other minerals for the 10-year period 1951-60, were as follows: 70 Year Timber Oil and gas Other minerals Total 1951------- $677,224 $695,520 $551,890 $1,924,634 1952------- 651,253 851,253) 511,449 2,144,076 1953------- 615,771 987,017 599,160 2,201,948 1954------- 1,023,063 1,327,019 1,023,711 3,373,793 1955------- 1,400,000 1,656,153 1,001,885 4,088,038 1956------- 1,914,538 3,209,362 1,224,277 6,348,177 1957------- 1,343,951 6,004,294 1,326,927 8,675,172 1958------- 2,036,313 7,074,449 752,639 9,863,391 1959------- 3,950,927 7.615,894 519,881 12,089,702 1960------- 3,584,685 7.387, 1&3 517,457 11,489,325 Burlignton’s railroad operations are conducted on 8,648 miles of road, of which 5,111 are main lines and 3,536 are branch lines. Its principal main lines of railroad are located in 11 States * and extend from ® Illinois, lowa, Kansas, Colorado, Minnesota, Missouri, Mon- tana, Nebraska, South Dakota, Wisconsin, and Wyoming. >a Chicago, Ill., northwesterly to St. Paul and Minne- apolis, and from Chicago westerly and southwesterly to St. Louis and Kansas City, Mo., Omaha and Lin- coln, Nebr., Denver, Colo., and Billings and Huntley, Mont. Comnecting main lines extend to Peoria and Rockford, Ill., Des Moines and Sioux City, Iowa, Dead- wood, S. Dak., and via the line of a subsidiary (Padu- cah & Illinois Railroad Company) to Paducah, Ky. It maintains an extensive branch line system, principally for grain in Nebraska and Kansas. Its principal points of interchange are at Chicago, P [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_IA40386413_0030%3A01. Public record. Not legal advice.