318 Federal Register / Vol. 65, No. 2 / Tuesday, January 4, 2000 / Notices

1BNSFC and BNSFR are referred to collectively

as BNSF.

2CNR, GTW, and IC are referred to collectively

as CN.

3BNSF and CN are referred to collectively as

applicants.

4A major transaction is one under 49 U.S.C.

11323 involving the merger or control of two or

more Class I railroads.

5 In addition, parties must submit electronic

copies, which we discuss in detail further below.

6Applicants have advised that only NAR will

have a common equity interest in CNR.

7Applicants have advised: that the exchangeable

preferred shares are expected to be attractive to

Canadian residents because such shares will permit

such residents, among other things, to defer

taxation; that, since the exchange, but not the

receipt, of these shares will be taxable for Canadian

tax purposes, the holders will in effect be given a

choice as to whether, when, and to what extent they

will exchange their CNR exchangeable preferred

shares for NAR common shares; and that, by

comparison, U.S. residents would be expected to

elect to receive the NAR common stock at the outset

because, under U.S. tax laws, such receipt will be

essentially nontaxable to U.S. residents for federal

income tax purposes and, on an ongoing basis, will

not be subject to Canadian withholding tax.

Applicants have further advised that the dividend

rights of the holders of CNR’s exchangeable

preferred shares will be maintained in economic

parity with the dividend rights of the holders of

NAR’s common shares.

8Applicants have advised that NAR’s 10.1%

voting right in CNR will permit NAR to claim

foreign tax credits for federal income tax purposes

with respect to Canadian income taxes payable by

CNR, which will reduce the federal income taxes

payable by NAR with respect to dividends and

other income received by NAR from CNR.

9Applicants have advised: that the holders of

CNR’s exchangeable preferred shares will direct the

trustee as to the voting of the NAR special voting

share; and that this arrangement will give them the

same vote at NAR shareholder meetings as if they

were the direct owners of NAR common shares.

10Applicants have advised that, as respects the

‘‘stapled’’ units that will be received by BNSFC

shareholders and also as respects the ‘‘stapled’’

units that will be received by CNR shareholders, the

term ‘‘stapled’’ is intended to mean that the shares

in each such unit are ‘‘stapled’’ together and cannot

be traded or otherwise disposed of separately.

Comments are invited on: (a) The

need for the proposed collection of

information for the proper performance

of the functions of the agency, including

whether the information will have

practical utility; (b) the accuracy of the

agency’s estimate of the burden of the

proposed collection of information

including the validity of the

methodology and assumptions used; (c)

ways to enhance the quality, utility and

clarity of the information to be

collected; and (d) ways to minimize the

burden of the collection of information

on those who are to respond, including

the use of appropriate automated,

electronic, mechanical, or other

technological collection techniques.

Issued in Washington, DC on December 29,

1999.

Richard B. Felder,

Associate Administrator for Pipeline Safety.

[FR Doc. 00–93 Filed 1–3–00; 8:45 am]

BILLING CODE 4910–60–P

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 33842]

Canadian National Railway Company,

Grand Trunk Western Railroad

Incorporated, Illinois Central Railroad

Company, Burlington Northern Santa

Fe Corporation, and The Burlington

Northern and Santa Fe Railway

Company—Common Control

AGENCY: Surface Transportation Board.

ACTION: Decision No. 1; Notice of

prefiling notification.

SUMMARY: Pursuant to 49 CFR 1180.4(b),

Burlington Northern Santa Fe

Corporation (BNSFC) and The

Burlington Northern and Santa Fe

Railway Company (BNSFR),1 and

Canadian National Railway Company

(CNR), Grand Trunk Western Railroad

Incorporated (GTW), and Illinois Central

Railroad Company (IC),2 have notified

the Surface Transportation Board

(Board) of their intention to file an

application 3 seeking Board

authorization under 49 U.S.C. 11323–25

and 49 CFR part 1180 for a ‘‘major’’

transaction 4 (hereinafter referred to as

the BNSF/CN transaction) under which

BNSF and CN would be brought under

common control.

ADDRESSES: An original and 25 copies of

all documents 5 filed in this proceeding

must refer to STB Finance Docket No.

33842 and must be sent to the Surface

Transportation Board, Office of the

Secretary, Case Control Unit, ATTN:

STB Finance Docket No. 33842, 1925 K

Street, N.W., Washington, DC 20423–

0001. In addition, one copy of each

document filed in this proceeding must

be sent to the Administrative Law Judge

(ALJ) who will be assigned to entertain

and rule upon all disputes concerning

discovery in this proceeding, and to

each of applicants’ representatives: (1)

Erika Z. Jones, MAYER, BROWN &

PLATT, 1909 K Street, N.W.,

Washington, DC 20006–1101

(representing BNSF); and (2) Paul A.

Cunningham, HARKINS

CUNNINGHAM, 801 Pennsylvania

Avenue, N.W., Suite 600, Washington,

DC 20004–2664 (representing CN).

FOR FURTHER INFORMATION CONTACT: Julia

M. Farr, (202) 565–1613. [TDD for the

hearing impaired: (202) 565–1695.]

SUPPLEMENTARY INFORMATION: In the

notice of intent (BN/CN–1) filed

December 20, 1999, applicants have

advised that, on December 18, 1999,

BNSFC and CNR entered into a

Combination Agreement, a Plan of

Arrangement, a Co-Operation

Agreement, and a Voting and Exchange

Trust Agreement (VETA), under which,

subject to Board authorization and other

conditions: (1) BNSFC will become a

wholly owned subsidiary of a new

parent company named North American

Railways, Inc. (NAR), which will also

acquire (in addition to its 100% interest

in BNSFC) all of the equity in CNR6 and

a 10.1% voting right in CNR; (2) BNSFC

shareholders will receive, for each share

of their BNSFC common stock, a

‘‘stapled’’ unit consisting of one share of

NAR common stock plus one share of

CNR voting stock; (3) CNR shareholders

will receive, for each share of their CNR

common stock, 1.05 ‘‘stapled’’ units,

each consisting of, at the option of the

holder, either (a) one share of NAR

common stock plus one share of CNR

voting stock, or (b) one share of CNR

nonvoting exchangeable preferred stock

(exchangeable at the option of the

holder into one share of NAR common

stock) plus one share of CNR voting

stock; 7 (4) NAR will receive 100% of

CNR’s limited voting equity shares,

entitling NAR, as the holder, to a vote

equal to 10.1% of the total number of

votes to be cast by the holders of CNR’s

outstanding voting shares; 8 and (5) The

Trust Company of the Bank of Montreal,

as trustee under the VETA, will receive

NAR’s special voting share entitling the

trustee to a number of votes at NAR’s

shareholder meetings equal to the

number of outstanding shares of CNR’s

exchangeable preferred stock.9

Applicants have further advised: that

NAR, BNSF, and CN will be operated

under the direction of the boards of

directors of NAR and CNR, which will

be identical after closing of the BNSF/

CN transaction; that NAR’s Chairman

and its Chief Executive, Chief

Operating, and Chief Financial Officers

will serve in those same capacities at

CNR; that NAR and CNR will have, at

all times, the same shareholder base;

that the NAR/CNR stapled units will

continue to be publicly traded; and that

each stapled unit will have the same

voting power and economic interest in

the combined enterprise.10

Major Transaction Status

The Board finds that the BNSF/CN

transaction is a ‘‘major transaction,’’ as

defined at 49 CFR 1180.2(a), because, if

implemented, it will bring under

common control the Class I railroad

now controlled by BNSFC (BNSFR) and

the Class I railroads now controlled by

CNR (GTW and IC). The BNSF/CN

Federal Register / Vol. 65, No. 2 / Tuesday, January 4, 2000 / Notices 319

11 The results derived from electronic

workpapers must be reproducible, i.e., all

underlying data bases, computer programs

(FORTRAN, COBOL, C++, etc.) and electronic

spreadsheets must be submitted in evidence.

Program flows and logic trails must also be

included. Computer programs must be submitted in

both source code and executable modules.

Electronic spreadsheets must be executable and all

cell inputs must be documented.

12 The electronic submission requirements set

forth in this decision supersede, for the purposes

of this proceeding, the otherwise applicable

electronic submission requirements set forth in our

regulations. See 49 CFR 1104.3(a).

13 Indeed, the most recent round of major mergers

began with the consolidation of the ‘‘Burlington

Northern’’ and ‘‘Santa Fe’’ systems.

14 Of course, we also expect applicants to address

the statutory criteria set forth in 49 U.S.C. 11324,

including the effect on competition among rail

carriers in the national rail system.

1A copy of this decision is being served on all

persons designated as POR, MOC, or GOV on the

service list in STB Finance Docket No. 33388.

application must therefore, except as

modified by advance waiver, conform to

the 49 CFR part 1180 requirements

applicable to major transactions.

Impact Analysis Base Year

Applicants have indicated that they

will use the year 1998 as the base year

for purposes of the impact analysis to be

filed in their application.

Application Filing Date

Applicants have indicated that they

anticipate filing their application on or

after the 90 days after December 20,

1999. See 49 CFR 1180.4(b)(1) (this

provision provides, in essence, that an

application respecting a major

transaction must be filed between 3 and

6 months after the filing of the prefiling

notification).

Administrative Law Judge

As in past proceedings, an

Administrative Law Judge will be

assigned to entertain and rule upon all

disputes concerning discovery in this

proceeding.

Protective Order; Procedural Schedule

As in past proceedings, applicants

will be expected to submit: a draft

version of a protective order to govern

the production of material regarded as

either ‘‘confidential’’ or ‘‘highly

confidential’’ (as those terms have been

used in past proceedings); and a

proposed procedural schedule to govern

the processing of the BNSF/CN

application.

Electronic Submissions

In addition to submitting an original

and 25 copies of all paper documents

filed with the Board, parties must also

submit, on diskettes (3.5-inch IBMcompatible floppies) or compact discs,

one electronic copy of each such

document (e.g., textual materials,

electronic workpapers, data bases and

spreadsheets used to develop

quantitative evidence).11 Textual

materials must be in, or convertible by

and into, WordPerfect 7.0. Spreadsheets

must be in some version of Lotus, Excel,

or Quattro Pro. Each diskette or compact

disc should be clearly labeled with the

identification acronym and number of

the corresponding paper document, see

49 CFR 1180.4(a)(2), and a copy of such

diskette or compact disc should be

provided to any other party upon

request. The data contained on the

diskettes or compact discs submitted to

the Board may be submitted under seal

(to the extent that the corresponding

paper copies can be submitted under

seal pursuant to the protective order

that will be entered in this proceeding),

and will be for the exclusive use of the

Board employees reviewing substantive

and/or procedural matters in this

proceeding. The flexibility provided by

such computer data is necessary for

efficient review of these materials by the

Board and its staff. 12

Downstream Effects and Service Issues

In the past several years, the leading

North American railroads have

undertaken a series of major

transactions that, when taken together,

have dramatically reconfigured the

entire North American railroad

industry. This process has proved not to

be an easy one, as evidenced by the

significant and ongoing adjustments

required by railroads, shippers, and rail

employees as the implementation

process for those transactions continues.

The BNSF/CN transaction, if

approved and implemented, may trigger

yet another full round of major

transactions, as other railroads seek to

position themselves and their customers

to meet the competitive effects of a

unified BNSF/CN. 13 The ‘‘one case at a

time’’ rule, 49 CFR 1180.1(g), provides

that in a major transaction proceeding,

‘‘consideration will be limited to the

impacts of transactions which have

already been approved and are,

therefore, reasonably certain to occur.’’

However, given the competitive

responses that can be expected of other

railroads, we will waive, on our own

motion, the rule set out in 49 CFR

1180.1(g), so that applicants and other

interested persons can submit, and the

Board can consider, evidence respecting

the ‘‘cumulative impacts and crossover

effects,’’ that are likely to occur in the

wake of a BNSF/CN transaction.

Similarly, parties should address the

effect of the proposed transaction and

any likely subsequent transactions, that

would produce further significant

consolidation in the industry, upon the

statutory goals embodied in 49 U.S.C.

10101, with particular attention to those

aimed at fostering sound and

competitive economic conditions in the

U.S. railroad industry. 14

Furthermore, as noted, North

American railroads, together with their

customers and employees, have not yet

fully adjusted to the recent wave of

major rail transactions. Given our recent

experience with post-merger rail service

disruptions, we expect applicants and

other interested persons to submit

evidence respecting the likely effects on

rail service of any action we may take,

considering again the statutory goals

cited above.

This action will not significantly

affect either the quality of the human

environment or the conservation of

energy resources.

Decided: December 27, 1999.

By the Board, Chairman Morgan, Vice

Chairman Clyburn, and Commissioner

Burkes.

Vernon A. Williams,

Secretary.

[FR Doc. 00–105 Filed 1–3–00; 8:45 am]

BILLING CODE 4915–00–P

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 33388 (Sub-No.

90)] 1

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 (Buffalo Rate Study)

ACTION: Decision No. 2; Extension of

Deadlines Applicable to the First Phase

of the Buffalo Rate Study.

SUMMARY: In Decision No. 1, which was

served December 15, 1999, and

published in the Federal Register on

December 20, 1999 (at 64 FR 71188), the

Board initiated a 3-year study (the

Buffalo Rate Study) to examine linehaul

and switching rates for rail movements

into and out of the State of New York’s

Buffalo area. By petition filed December

23, 1999, CSX Corporation and CSX

Transportation, Inc. (collectively, CSX)

and Norfolk Southern Corporation and

Norfolk Southern Railway Company

(collectively, NS) have requested that

each of the respective due dates for the

first phase (also referred to as the initial