APPEALS
COURT UPHOLDS STB'S RAIL MERGER MORATORIUM
The U.S. Court of Appeals in Washington Friday upheld
the Surface Transportation Board's right to declare a 15-month moratorium on
major rail mergers.
Absent a reversal by the U.S. Supreme Court, the 2-1
Appeals Court decision bars Burlington Northern Santa Fe and Canadian National
Railway Company from moving forward with their merger application before the STB
until the agency lifts the moratorium. It is a setback to CN and BNSF, whose
merger would create the largest rail network in North America, covering 33 U.S.
states, eight Canadian provinces and more than 50,000 miles of track.
The moratorium was issued March 16, and is not due to be
lifted until June 16, 2001.
Aside from the STB, the decision represents a victory
for competing U.S. railroads that oppose the CN-BNSF merger.
In a joint statement, BNSF and CN said they "will
discuss the ruling’s implications for their proposed business combination, and
each will consult its respective board of directors."
"Neither BNSF nor CN will speculate about its
options," the statement said.
Judge Douglas H, Ginsburg delivered the majority
opinion, which was also supported by Judge Stephen F. Williams. Judge David B.
Sentelle dissented.
The court rejected arguments that the STB lacks
authority to impose the moratorium, and must abide by a strict schedule laid
down by Congress when acting on rail mergers.
"We will not dictate that the board must comply
with a deadline for determining whether a merger application is in the public
interest when in claims, in apparent good faith, that in its ‘unique and
authoritative" view that it needs time to reconsider its standards for
evaluating the public interest," the majority opinion said.
While recognizing congressional intent for the STB to
consider merger applications as quickly as possible, the court also said the STB
must review merger proposals along with public interest and competition issues.
The court majority also took note of the STB concern
over the large number of rail mergers over the past few years and their effects
on service, competition and the capability of serving the shipping public.
"The present state of the railroad industry thus is
one of those ‘unanticipated circumstances’ that require us to ‘construe the
relevant statutes in a manner that most fully effectuates the policies to which
Congress was committed' ", said the majority ruling. "The board has
reasonably interpreted the relevant statutes to accommodate a moratorium where
necessary to carry out its duties to preserve competition and protect the public
interest."
In his dissenting opinion, Sentelle said that Congress
laid down specific time frame for the STB to act on merger applications.
In the Interstate Commerce Commission Termination Act of
1995, Congress mandated the STB to receive merger application filings, reject
them if incomplete, or give notice of their filing if complete, within 30 days.
After that process, the STB then undertakes an
evidentiary hearing, limited to one year, Sentelle said.
"Congress included very specific statutory
directives concerning the process and time frame for the board to accomplish its
adjudicatory task," Sentelle said. "The fact that Congress …
shortened the (STB’s) statutory review … from 31 to 16 months further supports
the conclusion that Congress intended the merger review process to be completed
expeditiously within the statutory deadlines."
APPEALS COURT UPHOLDS STB
Appeals Court upholds STBÆs rail merger moratorium
