951122.docx

MEMORANDUM
TO: ALAN G. LANCE, ATTORNEY GENERAL
FROM:DON L. HOWELL, DEPUTY ATTORNEY GENERAL
DATE:NOVEMBER 22, 1995
RE:REVIEW OF SUBSEQUENT DRAFT OF YOUR VERIFIED STATEMENT IN THE UP-SP MERGER CASE BEFORE THE ICC
The Attorney General has asked me to review a second draft of his proposed verified statement in the Union Pacific-Southern Pacific (UP-SP) railroad merger application before the Interstate Commerce Commission (ICC).  UP’s Charlie Clark has submitted a second draft of the Attorney General’s verified statement.  The differences between Mr. Clark’s second draft and the verified statement signed by the Attorney General on November 16 are contained in the last paragraph on the first page.  There are basically two changes.
1.  In Mr. Clark’s second draft the Attorney General is urging UP-SP and Burlington Northern-Sante Fe (BN-SF) “to consider” a share trackage agreement that would have access points in southern Idaho.  The Attorney General’s verified statement of November 16 urged UP-SP and BN-SF to consider the share trackage agreement and requested that the ICC consider requiring a shared trackage agreement as a condition to granting the merger application.  While the second draft merely requests that the parties consider a shared trackage agreement, the initial draft urged the ICC to impose such a condition.  As outlined in my previous memo, I understand that UP management has already rejected such a trackage agreement.
2.  The second difference addresses the benefits of introducing rail competition in southern Idaho.  Currently, UP is the sole interstate provider of rail service in southern Idaho.  The second draft lists one benefit of the merger—that enhanced rail competition would generally benefit Idaho rail shippers particularly in light of the BN-SF merger.  In comparison, the initial draft referred to a second benefit of enhanced rail competition—placing “Idaho shippers on an equal, competitive footing with its neighboring states.”  The second benefit addresses the “captive shipper” issue.
In summary, the first change is more significant than the second change.  Even though the ICC has generally refused to impose such a condition, the Attorney General may nonetheless address this important issue for Idaho.  As a compromise between the two drafts, I recommend the Attorney General consider adopting the following language:
While I support the UP-SP merger, I urge UP-SP and BN-SF to consider a shared trackage agreement that would have access points in southern Idaho.  This type of agreement would enhance rail competition and benefit Idaho’s captive UP customers.  I would also urge the Commission consider taking action to introduce rail competition in southern Idaho.  Enhanced rail competition statewide would be beneficial to Idaho particularly in light of the BN-SF merger.
I have enclosed a “new” first page of the verified statement for your review.
DLH/vld/l:lance3