Dardenelle & Russellville Railroad Co.; Authorized To Operate Lines of Arkansas Midland Railroad Co.

INTERSTATE COMMERCE COMMISSION

[Service Order No. 1516]

Dardenelle & Russellville Railroad Co.; Authorized To Operate

Lines of Arkansas Midland Railroad Co.

In 1992, the Arkansas Midland Railroad Company (AMR) acquired from

the Union Pacific Railroad Company (UP) as part of a 131-mile package,

four disconnected line segments. Each of the branch lines acquired by

AMR extend from the same North/South UP line in central Arkansas. Five

(5) active shippers (International Paper Company, Gifford-Hill &

Company, Barksdale Lumber Company, Bean Lumber Company, and G&S Roofing

Products Company, Inc.), and one inactive shipper (Cargill) are located

on the Norman Branch. The line extends approximately 52.9 miles from

its connection with UP at Gurdon, AR to Birds Mill, AR, which is the

end of the line.

Discussion

On December 3, 1993, a storm caused flooding, washouts, and

landslides that seriously affected the Norman Branch. On December 15,

1993, the AMR embargoed 31 miles of the line from Pikes Junction to

Birds Mill as a result of the storm damage. This embargo affected

Barksdale Lumber, Bean Lumber, and G&S Roofing. On February 22, 1994,

AMR embargoed approximately 17 additional miles of the line which

included service to Gifford Hill & Company located at Delight, AR.

On December 29, 1993, after the initial embargo was placed in

effect, a complaint was filed by G&S Roofing (G&S) indicating that

AMR's cessation of operations was depriving G&S of essential rail

service. On December 30, 1993, the Commission's Office of Compliance

and Consumer Assistance (OCCA) assigned a Special Agent to make an on-

site investigation of the Norman Branch situation. On the basis of its

inquiry, OCCA determined that a technical evaluation of the track

conditions by the Federal Railroad Administration (FRA) had not been

made since June of 1993 and that an updated FRA assessment of the

condition of the line was necessary. The Commission asked FRA to

inspect the line and provide a report. FRA's report, dated March 2,

1994, concluded that the line was in poor condition; that extensive

rehabilitation was necessary to bring the line up to Class I (10 mile

per hour) standard, and that operations over the line in its current

condition would likely result in derailments.

On March 18, 1994, as supplemented on March 22, 1994, attorneys for

the Dardanelle & Russellville Railroad Company (DRRC) and its newly

formed non-carrier subsidiary, the Caddo, Antoine, Little Missouri

Railroad Company (CALM) filed a request with the Commission requesting

directed service authority to operate approximately 49 miles of the AMR

line currently under embargo, and trackage rights over approximately 3

miles of the remaining portion of the Norman Branch that AMR continues

to operate. DRRC/CALM's filing also requests ``that it be entitled to

all other benefits set forth in 49 U.S.C. 11125''.

The Commission also received filings by affected shippers

indicating the urgency of the situation and the potential impact on

certain areas including points in Arkansas and Louisiana, if a shutdown

of their industries were to occur because of lack of service. In

addition, Gifford-Hill Company, Inc. indicated in its filing to the

Commission that it has a contract with the State of Louisiana to

deliver 640 cars of aggregate to be used in a current highway

construction project, and that it requires service by March 28, 1994.

The Commission also received a filing from the UP Railroad in support

of a directed service order by the Commission. UP's stated objective is

the immediate restoration of service.

On March, 25, 1994, AMR filed a reply to DRRC/CALM's request

indicating that it does not oppose an order by the Commission allowing

DRRC/CALM access to the embargoed portion of the line on the basis of a

proposed 120-day lease agreement, so long as DRRC/CALM agres to:

(1) Indemnify AMR for any liability that might occur as a result

of DRRC/CALM's operation of AMR's northern line segment;

(2) Assume sole responsibility for maintenance of the northern

line segment; and pursuant to authority granted by the Commission,

(3) Assume sole responsibility for all common carrier

obligations to shippers on the northern line segment; and

(4) Assure that operations comply with all applicable State and

Federal safety regulations.

During the 120-day period, and pursuant to Commission authority,

AMR would allow operations over the southern line segment to affect

interchange with the UP at Gurdon.

On March 28, 1994, DRRC/CALM filed a joint rebuttal statement to

AMR's March 25 comments. In its pleading, DRRC/CALM seeks to refute

statements made by AMR and addresses AMR's proposal for the 120-day use

of its line by DRRC/CALM.

Section 11123(a) of the Interstate Commerce Act authorizes the

Commission to take immediate action in situations where it finds that a

shortage of equipment, congestion of traffic, or other failure in

traffic movement exists which creates an emergency situation of such

magnitude as to have substantial adverse effects on rail service in the

United States or a substantial region of the United States (emphasis

added). Under these circumstances, the Commission can, for an initial

period of not more than 30 days,

(A) Suspend any car service rule or practice;

(B) Take action during the emergency to promote service in the

interest of the public and commerce, regardless of the ownership of

equipment, on terms of compensation the carriers establish between

themselves, subject to Section 11123(b)(2);

(C) Require joint or common use of facilities, on terms of

compensation the carriers establish between themselves, or as set by

the Commission in a later proceeding pursuant to Section 11123(b)(2)

when the carriers cannot agree.

Conclusions

We believe that the authority requested for operations over AMR is

not appropriate under 49 U.S.C. 11125. Under that statutory provision,

directed service may be ordered when a carrier cannot transport the

traffic offered to it because: it lacks the cash needed to continue

operations; a court has ordered cessation of operations; or it has

discontinued operations without requisite authority from the Commission

under 49 U.S.C. 10903. None of those conditions is present here. AMR

has not been determined, nor does it contend to be cashless. Also,

there is no court order requiring AMR to cease operations, and, while

operations on the line have ceased due to unsafe track conditions and

an embargo, the line in question has not been abandoned.

AMR retains the common carrier obligation to continue operations

unless and until it receives authority from the Commission to abandon

the line. However, there is an immediate need for rail service over the

AMR's Norman Branch, especially considering the urgency of aggregate

shipments to the State of Louisiana for a highway construction project.

AMR has indicated that it is willing to allow DRRC/CALM to operate the

Norman Branch line under specified proposed conditions and DRRC/CALM

has expressed a willingness to rehabilitate the line to the extent

necessary and to provide service to shippers. Based upon these

circumstances and the statutory requirements, an emergency service

order under 49 U.S.C. 11123 is appropriate, is responsive to the

shipper's service needs, and will allow overhead trackage rights by the

DRRC/CALM to interchange traffic with the UP.

In view of the need for continued rail service over AMR's Norman

Branch, and DRRC/CALM's willingness to provide this service and limited

track rehabilitation, this decision grants the requests of interested

parties for interim service authority to DRRC/CALM on the terms and

conditions noted below.

The emergency nature of the situation compels us to conclude that

advance public notice and hearings would be impractical and contrary to

the immediate public interest in assuring the immediate resumption of

essential rail transportation services. Accordingly, we exercise our

authority under 49 U.S.C. 11123(a)(1) to waive advance public notice in

the present circumstances.

Section 11123 permits us to authorize service for an initial period

of not more than 30 days, with an option to extend authority beyond 30

days after a hearing, if cause exists. We believe this authority to be

necessary here at least for an initial 30-day period. Any interested

party may file comments on this action during this period relating to

the necessity and appropriateness of continuing this order in effect

beyond the initial 30-day period by filing a statement in affidavit

form within 10 calendar days after service of this order. All filings

should be addressed to Bernard Gaillard, Director, Office of Compliance

and Consumer Assistance, Interstate Commerce Commission, Washington, DC

20423; and in the lower left hand corner of the envelope in large

letters should be printed, ``OCCA-4412.'' An original and 10 copies

should be filed of all statements. Interested parties wishing to review

the public docket file may do by calling 202-927-5538 for an

appointment at the Commission's Headquarters in Washington, DC.

Terms and Conditions

Effective Date

Service Order No. 1516 shall be effective at 12:01 a.m., March 29,

1994, but operations by DRRC/CALM may commence only upon consummation

of an agreement between DRRC/CALM and AMR on the terms and conditions

described herein and upon notice to the Commission by DRRC/CALM that

repairs have been made consistent with FRA standards to allow safe

operations to commence over pertinent portions of the Norman Branch.

Expiration Date

Unless otherwise modified by the Commission, Service Order No. 1516

will expire at 11:59 p.m., on April 27, 1994.

Compensation

DRRC/CALM's authority under Service Order No. 1516 is expressly

conditioned upon its agreeing to:

(1) indemnify AMR for any liability that might occur as a result

of DRRC/CALM's operation of AMR's northern line segment;

(2) its assumption of responsibility for maintenance of the

northern line segment;

No further compensation during the initial period of this order is

contemplated.

Track Safety

In accordance with the above, operations by DRRC/CALM may commence

only upon consummation of an agreement between DRRC/CALM and AMR on the

terms and conditions described herein and upon notice to the Commission

by DRRC/CALM that FRA's safety exceptions in its March 2, 1994 report,

are resolved to the extent necessary to allow safe operations to

commence over pertinent portions of the Norman Branch.

Cars and Operating Equipment

In operating AMR's line, DRRC/CALM shall use its own cars and

operating equipment, or cars of other AMR connections as agreed to by

those connections.

Employees

In providing service under this service order, DRRC/CALM shall

comply with the requirements of 49 U.S.C. 11123(a)(3) with respect to

AMR employees required for this operation.

Rates

Rates and charges shall be those applicable to the line and in

effect at the time DRRC/CALM commences operations. DRRC/CALM shall not

seek changes in AMR rates and charges during the initial period of this

order. All revenues from such charges shall accrue to the account of

DRRC/CALM during the effective period of this order, and shall not

constitute assets of AMR.

Liability for Expenses

Any rehabilitation, operational, or other costs related to the

authorized operations shall be the sole responsibility and liability of

DRRC/CALM. Any such costs or expenditures shall not be deemed an

obligation or liability of the United States Government. DRRC/CALM

shall hold the United States Government harmless from any claim arising

out of the authorized operations.

Operational Difficulties

Any operational difficulties associated with the authorized

operations shall be resolved by DRRC/CALM and any other affected party

through negotiated agreement, or, when the parties cannot reach

agreement, by the Commission.

We find: 1. DRRC/CALM has requested the Commission to permit it to

provide continued rail service over those portions of the AMR lines

included in the Norman Branch which it determines to be operationally

safe, and, accordingly, shall so notify the Commission.

2. To prevent transportation and economic disruptions in this area

of Arkansas, and to assure the immediate continued movement of

critically needed commodities to adjoining regions of the United States

including Louisiana, it is necessary for the Commission to authorize

DRRC/CALM to operate AMR's Norman Branch line under 49 U.S.C. 11123,

conditioned up-on a waiver of any compensation from the Federal

government and DRRC/CALM's agreement to hold the United States

Government harmless from any claim arising out of the authorized

operations.

This action will not significantly affect either the quality of the

human environment or energy conservation.

It is ordered: 1. Based upon its undertaking to do so upon the

terms and conditions noted above, DRRC/CALM is authorized under 49

U.S.C. 11123 to enter upon and operate AMR's Norman Branch pursuant to

the terms of this service order.

(a) Entry by DRRC/CALM on the lines of AMR may occur on the date

and time authorized in this decision provided it reaches an agreement

with AMR and gives appropriate notification to the Commission that the

lines to be operated have been made safe for that operation. Operations

by DRRC may continue no later than the thirtieth day from the effective

date of this decision.

2. Operations performed under authority of this order shall conform

to the directions and conditions prescribed above.

3. All submissions filed in this proceeding should refer to Service

Order No. 1516 and should be sent to the Commission's headquarters at

12th Street and Constitution Avenue, NW., Washington, DC 20423. As

noted above, an original and 10 copies should be submitted.

4. The provisions of this decision shall apply to intrastate,

interstate, and foreign commerce.

5. The Commission retains jurisdiction to modify, supplement, or

reconsider this decision at any time.

6. Notice to the general public of this decision shall be given by

publication in the Federal Register. The decision will be served on the

Federal Railroad Administration, the Association of American Railroads,

American Short Line Railroad Association, DRRC/CALM, AMR, and UP.

7. This decision and order shall become effective at 12:01 a.m., on

March 29, 1994.

8. Unless otherwise modified by the Commission, this order will

expire at 11:59 p.m., on April 27, 1994.

9. DRRC/CALM's request for directed service under 49 U.S.C. 11125

is hereby denied.

Decided: March 28, 1994.

By the Commission, Chairman McDonald, Vice Chairman Phillips,

Commissioners Simmons, and Philbin.

Sidney L. Strickland, Jr.,

Secretary.

[FR Doc. 94-8550 Filed 4-8-94; 8:45 am]

BILLING CODE 7035-01-P