ICC TO CONSIDER NEW PLAN TO GET THE SP TO CHICAGO

ICC TO CONSIDER NEW PLAN TO GET THE SP TO CHICAGO

The Interstate Commerce Commission today should give a good indication when the Southern Pacific Transportation Co. can plan to start operating trains between Chicago and Kansas City, Mo.

The agency is scheduled to consider pleas to dismiss a new application by Rio Grande Industries, which owns the SP, to reduce the scope of an application to acquire some lines from the Soo Line Railroad Co.Terms of the new application, filed at the commission last month, ask ICC approval of SP's proposal to acquire only the line segments between Kansas City and Chicago that are actually owned by the Soo.

At the same time SP wants advance approval of any agreement it reaches with other railroads to acquire the trackage rights.

The original sale agreement called for SP to gain access through a combination of track purchases and trackage rights acquisitions from the Soo.

Trackage rights are agreements between two railroads permitting one to operate over the other's line. They are often used to permit more than one carrier to gain access to serve a designated point it does not currently reach.

Three railroads, the Burlington Northern Railroad Co., the Chicago and North Western Transportation Co. and Kansas City Southern Lines, were unable to reach an agreement with SP and Soo covering the trackage rights proposals.

Two major problem areas included the 42-mile segment between Palo and Kansas City, Mo., which is jointly owned by the C&NW and the Soo. This segment is particularly important since it gives SP access from Kansas City to the Soo track that goes into Chicago.

An arbitrator recently rejected a Soo attempt to overturn provisions of the trackage rights agreement that prohibits sale of the rights by one company without the consent of the other.

The other major trackage rights dispute is between the SP and the BN. It involves a 33-mile segment between Clinton and Davenport, Iowa.

In order to get around these problems, Rio Grande wants the commission to give advance approval of any agreement to acquire the trackage rights reached with the railroads.

This approval will allow SP to begin operating between Kansas City and Chicago when the agreements are reached without waiting to receive ICC approval to do so.

Such approval can take between six and 24 months.

Talks have been going on between the SP, the C&NW and the KCS for the past few weeks, industry sources said, but no deals appear to be in the offing.

Advance approval of trackage rights agreements is unusual but not without precedent, one commission official said.

"We're merely considering whether to issue the marriage license," he said. "It is up to those involved to consummate."

The advance approval of the trackage rights is no different from a competing application filed in a major merger case that also does not have a written contract agreement.

The key vote will occur on a request to require the commission to start a totally new proceeding to consider the new SP-Soo application.

Any such move could delay ICC approval of the sale agreement until the end of the year or early 1991.

Commission approval to substitute the new application for the original filing means that initial briefs will be filed in April, he said.

This would clear the way for a final decision on the application by midsummer, he said.