APPEALS COURT UPHOLDS STB

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."