Canadian National Railway Company, Grand Trunk Corporation, and Grand Trunk Western Railroad IncorporatedControlIllinois Central Corporation, Illinois Central Railroad Company, Chicago, Central and Pacific Railroad Company, and Cedar River Railroad Company

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 33556]

Canadian National Railway Company, Grand Trunk Corporation, and

Grand Trunk Western Railroad Incorporated--Control--Illinois Central

Corporation, Illinois Central Railroad Company, Chicago, Central and

Pacific Railroad Company, and Cedar River Railroad Company

AGENCY: Surface Transportation Board.

[[Page 34957]]

ACTION: Decision No. 5 in STB Finance Docket No. 33556; Request for

Comments on Procedural Schedule.

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SUMMARY: The Surface Transportation Board (Board) is inviting comments

from interested persons on a proposed procedural schedule for this

proceeding. On February 12, 1998, Canadian National Railway Company

(CNR), Grand Trunk Corporation (GTC), and Grand Trunk Western Railroad

Incorporated (GTW),1 and Illinois Central Corporation (IC

Corp.), Illinois Central Railroad Company (ICR), Chicago, Central and

Pacific Railroad Company (CCP), and Cedar River Railroad Company

(CRRC),2 filed a notice of intent (CN/IC-1) 3 to

file a joint application seeking Surface Transportation Board (Board)

authority under 49 U.S.C. 11321-26 for the acquisition of control, by

CNR, through its indirect wholly owned subsidiary Blackhawk Merger Sub,

Inc., of control of IC Corp. and through it of ICR and its railroad

affiliates, and for the resulting common control by CNR of GTW and its

railroad affiliates and ICR and its railroad affiliates.4

\1\ CNR, GTC, and GTW, and their affiliates, are referred to

collectively as CN.

\2\ IC Corp., ICR, CCP, and CRRC, and their affiliates, are

referred to collectively as IC. CN and IC are referred to

collectively as Applicants.

\3\ CN/IC-1 reflected Applicants' expectation that they would

file the Primary Application on or before June 12, 1998. In view of

the need to take account of subsequent developments, Applicants

state that they now expect to file in July.

\4\ In Decision No. 2 (served March 13, 1998, and published that

day in the Federal Register at 63 FR 12574), we found that the

transaction contemplated by Applicants is a major transaction, as

that term is defined at 49 CFR 1180.2(a); we assigned the proceeding

to Administrative Law Judge David Harfeld for handling of all

discovery matters and the initial resolution of discovery disputes;

and we advised the parties that they will be required to submit all

pleadings both in the required paper form and also as computer data

contained on diskettes (disks) or compact discs (CDs).

In Decision No. 4 (simultaneously being served with this

decision today), we address Applicants' petition (CN/IC-4) for

waiver or clarification of certain filing requirements.

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DATES: Written comments on the Board's proposed schedule must be filed

with the Board no later than July 16, 1998. Applicants' reply is due by

July 27, 1998.

ADDRESSES: Send an original and 25 copies of all pleadings referring to

STB Finance Docket No. 33556 to: Surface Transportation Board, Office

of the Secretary, Case Control Unit, 1925 K Street, N.W., Washington,

DC 20423-0001. In addition, one copy of all documents in this

proceeding must be sent to Administrative Law Judge David Harfeld,

Federal Energy Regulatory Commission, Office of Administrative Law

Judges, 888 First Street, N.E., Suite 11F, Washington, DC 20426 [(202)

219-2514; FAX: (202) 219-3289] and to each of Applicants'

representatives: (1) Paul A. Cunningham, Esq., Harkins Cunningham, 1300

19th Street, N.W., Suite 600, Washington, DC 20036-1609; and (2)

William C. Sippel, Esq., Oppenheimer Wolff & Donnelly, Two Prudential

Plaza, 45th Floor, 180 North Stetson Avenue, Chicago, IL 60601-6710.

Comments should contain the name and address of the commenting party,

any recommendations for changes to the attached proposed procedural

schedule and support for any such changes.

In addition to submitting an original and 25 copies of all paper

documents filed with the Board, the parties shall also submit, on disks

or CDs, copies of all textual materials, electronic workpapers, data

bases and spreadsheets used to develop quantitative evidence. Data must

be submitted on 3.5 inch IBM-compatible floppy disks or CDs. Textual

materials must be in, or convertible by and into, WordPerfect 7.0.

Electronic spreadsheets must be in, or convertible by and into, Lotus

1-2-3 97 Edition, Excel Version 7.0, or Quattro Pro Version 7.0. A copy

of each disk or CD submitted to the Board should be provided to any

other party upon request.5

\5\ In Decision No. 3 (served May 19, 1998, and published on May

22, 1998, in the Federal Register at 63 FR 28442-44), we denied a

petition for reconsideration of Decision No. 2, concerning the

requirement that parties submit copies of all textual materials on

disks or CDs, and stated that parties may individually seek a waiver

from the disk-CD requirement.

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FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD

for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: On May 20, 1998, Applicants filed a petition

(CN/IC-5) to establish a proposed procedural schedule 6 as

follows:

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\6\ Applicants' proposed schedule is similar to the 180-day

schedule proposed to the Interstate Commerce Commission by

applicants in Finance Docket No. 32549, Burlington Northern Inc. and

Burlington Northern Railroad Company--Control and Merger--Santa Fe

Pacific Corporation and The Atchison, Topeka and Santa Fe Railway

Company (BN/SF).

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Applicants' Proposed Procedural Schedule 7

F Primary Application and any related applications filed.

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\7\ The term ``F'' designates the date of filing of the

application and ``F + n'' means ``n'' days following that date.

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F + 30 Board notice of acceptance of primary application (and any

related applications) published in the Federal Register.

F + 30 Environmental Report and Safety Integration Plan due.

F + 45 Notification of intent to participate in proceeding due.

Description of anticipated inconsistent and responsive applications

due; petitions for waiver or clarification due with respect to such

applications.

F + 60 Inconsistent and responsive applications due. All comments,

protests, requests for conditions, and any other evidence and argument

in opposition to the Primary Application due. Comments by U.S.

Department of Justice (``DOJ'') and U.S. Department of Transportation

(``DOT'') due.

F + 75 Notice of acceptance (if required) of inconsistent and

responsive applications published in the Federal Register.

F + 90 Response to inconsistent and responsive applications due.

Response to comments, protests, requested conditions, and other

opposition due. Rebuttal in support of primary application and related

applications due.

F + 105 Rebuttal in support of inconsistent and responsive

applications due.

F + 125 Briefs due, all parties (not to exceed 50 pages).

F + 145 Oral argument.

F + 150 Voting conference (at Board's discretion).

F + 180 Date of service of final decision.

The proposed schedule contains substantially shorter time periods

than those provided for in the statute at 49 U.S.C. 11325. For

instance, pursuant to 49 U.S.C. 11325(b)(1), written comments about an

application may be filed with the Board within 45 days after Board

notice of acceptance of the primary application (and any related

applications) is published in the Federal Register. Applicants propose

that comments be filed within 30 days of publication in the Federal

Register. The proposed schedule also suggests that inconsistent and

responsive applications be filed 30 days following acceptance of the

primary application rather than the 90 days noted in the statute.

Comments in opposition to the Applicants' proposed procedural

schedule were filed by the Brotherhood of Maintenance of Way Employees

(BMWE), on June 2, 1998, and the United Transportation Union (UTU), on

June 8, 1998. Both BMWE and UTU state that the proposed schedule is too

short and urge the Board to adopt the statutory procedural schedule set

forth at 49 U.S.C. 11325(b). Alternatively, UTU urges the Board to

adopt a 350-day schedule modeled upon the procedural

[[Page 34958]]

schedule issued by the Board in CSX Corporation and CSX Transportation,

Inc., Norfolk Southern Corporation and Norfolk Southern Railway

Company--Control and Operating Leases/Agreements-- Conrail Inc., and

Consolidated Rail Corporation, STB Finance Docket No. 33388, Decision

No. 6 (STB served May 30, 1997).

We do not at this time see any compelling reason to adopt a 6-month

procedural schedule for this proceeding. The statute allows 16 months

for the processing of major consolidation proceedings. Under 49 U.S.C.

11325(b)(3), the Board must conclude the evidentiary stage of the

proceeding within 13 months of the application's filing

date,8 and must issue the final decision by the 90th day

after the conclusion of the evidentiary stage. We believe that a 10-

month procedural schedule would be sufficiently expeditious so as not

to delay unnecessarily any benefits that would flow from the proposed

integration of the CN and IC systems, while at the same time allowing

sufficient time to develop the record upon which the Board's decision

would be based. We propose to modify Applicants' proposed procedural

schedule so as to conclude the evidentiary stage of this proceeding

approximately 8 months after the application is filed, and to issue the

final decision approximately 2 months thereafter.

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\8\ Specifically, the statute requires the completion of the

evidentiary stage within 12 months after publication of the Federal

Register notice accepting the application. That publication is due

no later than 30 days after the application is filed.

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Given the importance of the safe implementation of major rail

consolidations, we propose to require Applicants to file Safety

Integration Plans on Day (F + 30) as they have proposed. Also, we

propose to require inconsistent and responsive applicants to file their

Responsive Environmental Reports and Environmental Verified Statements

on Day (F + 100), which is 20 days in advance of when inconsistent and

responsive applications would be due.

Specifically, as for the remainder of the procedural schedule, we

propose to modify Applicants' proposed schedule to allow 30 more days

for parties intending to file comments, protests, requests for

conditions, and any other opposition evidence and argument, so that

these filings would not be due until 90 days after the application is

filed [Day (F + 90)]. Comments from the U.S. Department of Justice

(DOJ) and the U.S. Department of Transportation (DOT) would be due 120

days after the application is filed. Responses to comments, protests,

requested conditions, and other opposition (except DOJ and DOT), and

also rebuttal in support of the primary application and related

applications would be due on Day (F + 120). We propose to keep

inconsistent and responsive applications due 120 days after the

application is filed [Day (F + 120)] as provided for under 49 U.S.C.

11325(b)(2). Response to comments of DOJ and DOT would be due on Day (F

+ 150 ). Descriptions of anticipated inconsistent and responsive

applications and petitions for waiver or clarification due with respect

to such applications would be due on Day (F + 60) (rather than Day (F +

45)).

In addition, we propose adding 5 days for responses to inconsistent

and responsive applications (which would be due Day (F + 155)), and

adding 15 days for rebuttals for inconsistent and responsive

applications (which would be due Day (F + 185)). Briefs would be due on

Day (F + 205), and we are proposing page limitations for briefs for all

parties to promote useful, focused filings, with Applicants permitted

to file somewhat longer briefs, as they would have more points to

address at that time than would other parties. We propose, however,

adding 10 days to Applicants' proposed period of time for parties to

prepare for oral argument, so that oral argument would occur on Day (F

+ 235). The oral argument would close the record. We propose (as did

the Applicants) a 5-day interval between the oral argument and the

voting conference, so that a voting conference would occur on Day (F +

240). We also propose allowing 60 days after the voting conference for

the service of the Board's final decision on Day (F + 300).

Proposed Procedural Schedule as Modified by The Board

F Primary application and any related applications filed.

F + 30 Board notice of acceptance of primary application (and any

related applications) published in the Federal Register.

F + 30 Safety Integration Plan due.

F + 45 Notification of intent to participate in proceeding due.

F + 60 Description of anticipated inconsistent and responsive

applications due; petitions for waiver or clarification due with

respect to such applications.

F + 90 All comments, protests, requests for conditions, and any

other evidence and argument in opposition to the Primary Application

due (except filings by U.S. Department of Justice (DOJ) and U.S.

Department of Transportation (DOT)).

F + 100 Responsive Environmental Report and Environmental Verified

Statements for inconsistent and responsive applicants due.

F + 120 Inconsistent and responsive applications due. Comments by

DOJ and DOT due. Response to comments, protests, requested conditions,

and other opposition (except DOJ and DOT) due. Rebuttal in support of

primary application and related applications due.

F + 140 Notice of acceptance (if required) of inconsistent and

responsive applications published in the Federal Register.

F + 150 Response to comments of DOJ and DOT due.

F + 155 Response to inconsistent and responsive applications due.

F + 185 Rebuttal in support of inconsistent and responsive

applications due.

F + 205 Briefs due, all parties (not to exceed 50 pages for

Applicants and not to exceed 25 pages for all other parties).

F + 235 Oral argument (close of record).

F + 240 Voting conference (at Board's discretion).

F + 300 Date of service of final decision.

Immediately upon each evidentiary filing, the filing party will

place all documents relevant to the filing (other than documents that

are privileged or otherwise protected from discovery) in a depository

open to all parties, and will make its witnesses available for

depositions. Access to documents subject to protective order will be

appropriately restricted.9 Discovery relating to

applications and other filings (including responsive and inconsistent

applications), where permitted, will begin immediately upon their

filing. The Administrative Law Judge (ALJ) assigned to this proceeding

will have the authority initially to resolve any discovery disputes.

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\9\ In Decision No. 1 (served February 26, 1998), a protective

order was issued in this proceeding.

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Environmental Review Process

Based on consultations with Applicants, the Board's Section of

Environmental Analysis (SEA) has determined that preparation of an

Environmental Assessment (EA) is appropriate in this proceeding. This

approach is consistent with the Board's environmental rules at 49 CFR

1105.6 (b)(4), which call for an EA in a merger or acquisition such as

this proceeding. Also, in making its determination to prepare an EA,

SEA considered the nature of the transaction, including the projected

changes in train traffic, the

[[Page 34959]]

anticipated changes at rail yards and intermodal facilities, and the

number, type, and location of proposed construction projects. However,

if SEA determines that this proceeding has the potential for

significant environmental impacts, then SEA may prepare an

Environmental Impact Statement, as required by the National

Environmental Policy Act (NEPA).

Applicants originally proposed to file an environmental report 30

days after they filed their application. In a letter dated June 18,

1998, however, Applicants requested that SEA conduct a modified

environmental review process in this proceeding. SEA concurs with this

approach. Under this approach, Applicants will provide, with their

application and operating plan, an environmental overview rather than

an environmental report. This is consistent with the Board's

environmental rules at 49 CFR 1105.10 (d), which waive the requirement

for an environmental report for applicants that retain an independent

third-party contractor to work under SEA's direction to prepare the

necessary environmental documentation. For this proceeding, Applicants

have retained the requisite independent third-party contractor.

With direction and guidance from SEA, Applicants will prepare and

submit to SEA a Preliminary Draft Environmental Assessment (PDEA).

Preparation of a PDEA is consistent with the Council on Environmental

Quality regulations at 40 CFR 1506.5(b) that permit preparation of an

environmental assessment by an applicant. Upon receipt of Applicants'

PDEA, SEA will review and verify the environmental information provided

by Applicants in this document. SEA will then prepare a Draft

Environmental Assessment (Draft EA) for public review and comment. The

Draft EA will include SEA's independent preliminary recommendations for

mitigation to address potentially adverse environmental impacts.

As part of the environmental review process, Applicants also

propose to submit a safety integration plan, which will fully describe

the extensive plans they have for maximizing the safe operation of the

combined system.

After reviewing all of the public comments on the Draft EA and

conducting additional analyses, SEA will prepare a Final Environmental

Assessment (Final EA). The Final EA will include SEA's final

recommendations for environmental mitigation. The Board will consider

all public comments, the Draft EA and Final EA, and SEA's environmental

recommendations in making its final decision in this proceeding.

Other Matters

Applicants recommend that, in addition to noting that new evidence

may not be filed with briefs, the Board should further clarify that

cross-examination depositions of rebuttal witnesses cannot be used as a

vehicle for adding to the evidentiary record any documents not filed

with the Board as part of the application or one of the rounds of

evidentiary filings specifically provided for by the Board's schedule.

Applicants suggest that the Board include in its procedural

schedule language which reminds parties that, in discovery and in

submissions to the Board, they focus strictly on relevant issues.

Applicants request that the Board direct that parties wishing to

engage in discovery consult with the ALJ designated to handle all

discovery matters and to resolve initially all discovery disputes, and

that the Board give the ALJ authority to adopt discovery guidelines and

rule on discovery matters but not to modify the procedural schedule.

Applicants also suggest that the Board require appeals of ALJ

decisions to be filed within 3 working days of the date of a bench

ruling, or in its absence the date of a written ruling, with replies to

appeals or to any motion filed with the Board to be filed within 3

working days.

We invite all interested persons to submit written comments on the

procedural schedule we are proposing here. Comments must be filed by

July 16, 1998. Applicants may reply by July 27, 1998.10

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\10\ The comments of BMWE and UTU will be considered along with

any other comments received in response to this notice.

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This action will not significantly affect either the quality of the

human environment or the conservation of energy resources.

Decided: June 22, 1998.

By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

[FR Doc. 98-17132 Filed 6-25-98; 8:45 am]

BILLING CODE 4915-00-P