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Whether BN's legal analysis is correct in light of the Commission's conclusions. in its Railroad Conglomerates Study is open to question (See p. 75). Clearly, however, the BN is dead wrong on its assertion that BN is a "single integrated transportation system." The Fort Worth & Denver Railway Company and the Colorado & Southern Railway Company are independent and distinct transportation companies with separate managements, headquarters, etc., and, indeed, they are so treated by the Commission for purposes of revenue adequacy. As such, the proposed new holding company will control, at least, three (3) separate railroad companies (i.e: BN, FW&D and C&S).

Because the Commission has announced in its Railroad Conglomerates Study that it would take action in connection with future holding company proposals, especially where land grant properties are involved and because the BN's proposal will violate Section 11343 of the Act, if consummated without prior I.C.C. approval; please accept this letter as our request that the Commission take immediate and decisive action to protect the tremendous public interest at stake in this proposed multi-billion dollar transaction.

Very truly yours,

Joseph H. Shefer, je

Joseph H. Shafer, Jr.
President

JHS:ke

CC: Vice Chairman Robert C. Gresham (4136)

Commissioner Charles L. Clapp (3229).

Commissioner Thomas A. Trantum (5124)

Commissioner Reginald E. Gilliam, Jr. (4211)

Mr. Richard M. Bressler

President and Chief Executive Officer

Burlington Northern

176 East Fifth Street

St. Paul, Minnesota 55101

General Counsel Richard A. Allen, Esq.. (5211)

The Honorable Bob Packwood, Chairman

Senate Commerce, Science & Transportation. Committee 5205.Dirksen Senate Office Building

Washington, D. C. 20510

The Honorable John D. Dingell, Chairman

House Energy & Commerce Committee
2125 Rayburn House Office Building
Washington, D. C. 20515

It is our conclusion, based on the results
of the investigations and studies.conducted
for the purpose of preparing this report,
as well as our many years of regulating the
surface transportation industry, that the
services of this country's major railroads
are too important--and that the potentials
for abuse are too great--to permit the
transfer of control over any one major rail-
road to be accomplished without appropriate
regulatory agency approval. (p. 73)

Among the other findings reached by the Commission in its report were the following:

Few holding companies have provided rail-
roads with any tangible benefits. (p. 69).

The railroads, once divested of non-
carrier assets, remain a non-growth..
sector of the holding company group.
.(p. 70)

...the railroad as an instrument of public
service has been deprived of wealth
accumulated over many years, including
resources such as land grants provided
at public expense. (p. 70)

It is no understatement to say that the Commission's Railroad Conglomerates Study is a ringing indictment of the very kind of financial transaction now proposed by BN. For this reason, the Commission concluded in 1977 and represented to the Congress that it would "take action" to monitor the future creation of railroad conglomerates especially in proposed transactions governing land grant properties. (Report, p. 75)

The BN proposal calls upon the Commission to make good its promise to the public and to the Congress. The BN seeks to elude any Commission scrutiny of its proposed transaction on the basis of its self-serving representatica that as a "single, integrated transportation system, the formation of such a holding company, under existing law, does not require Commission approval" (See Attachment I).

Whether BN's legal analysis is correct in light of the Commission's conclusions. in its Railroad Conglomerates Study is open to question (See p. 75). Clearly, however, the BN is dead wrong on its assertion that BN is a "single integrated transportation system." The Fort Worth & Denver Railway Company and the Colorado & Southern Railway Company are independent and distinct transportation companies with separate managements, headquarters, etc., and, indeed, they are so treated by the Commission for purposes of revenue adequacy. As such, the proposed new holding company will control, at least, three (3) separate railroad companies (i.e. BN, FW&D and C&S).

Because the Commission has announced in its Railroad Conglomerates Study that it would take action in connection with future holding company proposals, especially where land grant properties are involved and because the BN's proposal will violate Section 11343 of the Act, if consummated without prior I.C.C. approval; please accept this letter as our request that the Commission take immediate and decisive action to protect the tremendous public interest at stake in this proposed multi-billion dollar transaction.

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General Counsel Richard A. Allen, Esq.. (5211)

The Honorable Bob Packwood, Chairman

Senate Commerce, Science & Transportation. Committee 5205 Dirksen Senate Office Building

Washington, D. C. 20510

The Honorable John D. Dingell, Chairman

House Energy & Commerce Committee
2125 Rayburn House Office Building
Washington, D. C. 20515

It is our conclusion, based on the results
of the investigations and studies.conducted
for the purpose of preparing this report,
as well as our many years of regulating the
surface transportation industry, that the
services of this country's major railroads
are too important--and that the potentials
for abuse are too great--to permit the

transfer of control over any one major rail-
road to be accomplished without appropriate
regulatory agency approval. (p. 73)

Among the other findings reached by the Commission in its report were the following:

Few holding companies have provided rail-
roads with any tangible benefits. (p. 69)

2

The railroads, once divested of non-
carrier assets, remain a non-growth.',
sector of the holding company group.
(p. 70)

...the railroad as an instrument of public
service has been deprived of wealth
accumulated over many years, including
resources such as land grants provided
at public expense. (p. 70)

It is no understatement to say that the Commission's Rail-
road Conglomerates Study is a ringing indictment of the very
kind of financial transaction now proposed by BN. For this
reason, the Commission concluded in 1977 and represented to
the Congress that it would "take action" to monitor the
future creation of railroad conglomerates especially in
proposed transactions governing land grant properties.
(Report, p. 75)

The BN proposal calls upon the Commission to make good its promise to the public and to the Congress. The BN seeks to elude any Commission scrutiny of its proposed transaction on the basis of its self-serving representation that as a "single, integrated transportation system, the formation of such a holding company, under existing law, does not require Commission approval" (See Attachment I).

Whether BN's legal analysis is correct in light of the Commission's conclusions. in its Railroad Conglomerates Study is open to question (See p. 75). Clearly, however, the BN is dead wrong on its assertion that BN is a "single integrated transportation system." The Fort Worth & Denver Railway Company and the Colorado & Southern Railway Company are independent and distinct transportation companies with separate managements, headquarters, etc., and, indeed, they are so treated by the Commission for purposes of revenue adequacy. As such, the proposed new holding company will control, at least, three (3) separate railroad companies (i.e. BN, FW&D and C&S).

Because the Commission has announced in its Railroad Conglomerates Study that it would take action in connection with future holding company proposals, especially where land grant properties are involved and because the BN's proposal will violate Section 11343 of the Act, if consummated without prior I.C.C. approval, please accept this letter as our request that the Commission take immediate and decisive action to protect the tremendous public interest at stake in this proposed multi-billion dollar transaction.

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General Counsel Richard A. Allen, Esq.. (5211)

The Honorable Bob Packwood, Chairman

Senate Commerce, Science & Transportation. Committee 5205.Dirksen Senate Office Building

Washington, D. C. 20510

The Honorable John D. Dingell, Chairman
House Energy & Commerce Committee
2125 Rayburn House Office Building
Washington, D. C. 20515

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