Hearings

We find that part 1112 of subchapter B, chapter X of title 49 of the Code of Federal Regulations, should be modified by the addition of new sections as follows:

$1112.9 Common Control.

It shall not be necessary for any person to secure an order of authorization under the foregoing provisions to hold the position of officer or director of two or more carriers, if such carriers are operated under common control or management, either

(a) pursuant to approval and authority of the Commission granted under section 5 of the act, or

(b) pursuant to a controlling, controlled, or common control relationship which has existed between such carriers since before June 16, 1933. $1112.10 Jointly used Terminal Properties.

Any person holding the position of officer or director of a carrier is hereby relieved from the foregoing provisions to the extent that he may also hold a directorship and any other position to which he may be elected or appointed with a terminal railroad the properties of which are operated or used by such carrier jointly with other carriers.

We further find that neither public nor private interests will be adversely affected by any person holding the position of officer or director of more than one carrier within the rule so adopted; and that such holding shall be authorized by the order entered herein.

An appropriate order will be entered.

Sec.

APPENDIX A

Part 1112-Interlocking Officers

1112.1 Meaning of term "carrier." 1112.2 Application of regulations. 1112.3 Order of authorization.

1112.4 Application for order.

1112.5 Contents of application.

1112.6 Subscription and verification of application.

1112.7 Number of copies; form and style.

1112.8 General authority.

AUTHORITY: The provisions of this part 1112 issued under sec. 12, 24 Stat. 383, as amended; sec. 439, 41 Stat. 494, as amended; 49 U.S.C. 12, 20a.

SOURCE: The provisions of this part 1112 appear at 32 F.R. 20095, Dec. 20, 1967, unless otherwise noted.

$1112.1 Meaning of term "carrier."

The term "carrier" is used in this part as it is defined in section 20a (1) of the Interstate Commerce Act.

$1112.2 Application of regulations.

The regulations in this part apply to any person authorized by or undertaking for each of two or more carriers to perform the duties, or any of the duties, ordinarily performed by a director, president, vice president, secretary, treasurer, general counsel, general solicitor, general attorney, comptroller, general auditor, general manager, freight traffic manager, passenger traffic manager, chief engineer, general superintendent, general land and tax agent, or chief purchasing agent of a carrier.

$1112.3 Order of authorization.

An order of authorization will be granted only upon application therefor as hereinafter provided in this part.

$1112.4 Application for order.

An application for such an order may be made by any person in his own behalf.

$1112.5 Contents of application.

Each application shall state the following:

(a) The full name, occupation, business address, place of residence, and post office address of the applicant.

(b) A specification of every carrier of which the applicant holds stock, bonds, or notes, individually, as trustee, or otherwise; and the amount of and accurately describe the securities, owned or held by him, of each carrier for which he seeks authority to act. Whenever it is contemplated that the applicant will represent on the board of directors of any carrier securities other than those owned by him, the application shall describe such securities, state the character of representation, the name of the beneficial owner or owners, and the general nature of the business conducted by such owner or owners.

Which is held by the applicant at the time of the application; and which he seeks authority to hold, together with the date and manner of his election or appointment thereto and, if he has entered upon the performance of his duties in any such position, the nature of the duties so performed and the date when he first entered upon their performance. (An order authorizing a person to hold the position of director of a carrier will be construed as sufficient to authorize him to serve also as chairman of its board of directors or as a member or chairman of any committee or committees of such board; and, therefore, when authority is sought to hold the position of director, the applicant need not request authority to serve in any of such other capacities.)

(d) As to each carrier covered by the requested authorization, whether it is an operating carrier, a lessor company, or any other corporation organized for the purpose of engaging in transportation by railroad subject to the act. If any such carrier neither operates nor owns any railroad, transportation by which is subject to the act, there shall be filed with the application, as a part thereof, a copy of such carrier's charter or certificate or articles of incorporation, with amendments to date. When such copy has once been filed with the Commission, reference thereto, with amendments, if any, will suffice.

(e) Thereafter a full statement of pertinent facts relative to any carrier which does not make annual reports to the Commission, authorization for a position with which is sought.

(f) Full information as to the relationship, operating, financial, competitive, or otherwise, existing between the carriers covered by the requested authorization.

(g) Specify every corporation-industrial, financial, or miscellaneous-of which the applicant is an officer or director, and the general character of the business conducted by such corporation.

(h) The reasons, fully, why the granting of the authority sought will not affect adversely either public or private interests.

(i) Whether or not any other application for authority has been made in behalf of the applicant and, if so, shall show the date and finance docket number thereof, by who made, and the action thereon, if any.

(j) When application has been made in behalf of any person, a subsequent application by him need not repeat any statement contained in the previous application but may incorporate the same by appropriate reference.

$1112.6 Suscription and verification of application.

The original application shall be signed by the individual applicant, and shall be verified under oath in substantially the following form: State of

County of

make

SS.

oath and say

that

hold no position as officer or director of any carrier or other corporation except as indicated in the foregoing application, and that all of the statements contained therein are true and correct to the best of knowledge and belief.

The original application and six copies thereof shall be filed with the Commission. Each copy shall bear the dates and signatures that appear on the original and shall be complete in itself, but the signatures in the copies may

be stamped or typed and the notarial seal may be omitted. The application shall be submitted in typewritten or printed form, on paper not more than 81⁄2 inches wide and not more than 12 inches long, with a left-hand margin of 11⁄2 inches, and if typewritten, the impression must be on only one side of the paper, and must be double spaced.

§1112.8 General authority.

Any person, who has been or shall hereafter be authorized to hold positions with a carrier or with a company or companies subsidiary thereto or affiliated therewith, may include in any application made by him pursuant to the foregoing regulations in this part a request for an order authorizing him to hold generally, in addition to the positions so specifically authorized, a directorship or any office or offices with the first-mentioned carrier and all companies subsidiary thereto or affiliated therewith, or the properties of which are operated or used by the carrier, either separately or jointly, with other carriers. Like general authority may be applied for by the first-mentioned carrier in behalf of any person or persons to whom such specific authority has heretofore been granted: Provided, That such general authority may not be applied for by such carrier when the person for whom authority is desired holds a position or positions with any carrier or carriers not subsidiary to or not affiliated with the firstmentioned carrier, or the properties of which are not operated or used by the first-mentioned carrier, either separately or jointly with other carriers. Every carrier application shall be verified by an executive officer having knowledge of the facts.

APPENDIX B

Amendment proposed by the Association of American Railroads

That 49 CFR §1112 be amended by the addition of a new paragraph to be numbered $1112.9 reading as follows:

$1112.9 Common control.-Notwithstanding the provisions of the foregoing regulations, it shall not be necessary for any person to secure the prior approval of the Commission to held the position of officer or director of two or more carriers when such carriers are lawfully operated under common control or management pursuant to approval and authority of the Commission previously granted under section 5 of the Interstate Commerce Act.

APPENDIX C

Notice of proposed rulemaking

PROPOSED NEW SECTION: APPROVAL OF SYSTEMS OF AFFILIATED CARRIERS Notwithstanding the provisions of the foregoing regulations, but subject to the other provisions of this section:

(a) It shall not be necessary for any person to secure the prior approval of the Commission to hold the position of officer or director of two or more carriers when such carriers are lawfully operated under common control or management pursuant to approval and authority of the Commission previously granted under section 5 of the Interstate Commerce Act; and such relationships are specifically authorized upon a general finding that neither the public nor private interests will be adversely affected thereby.

(b) The authorization herein granted shall be automatically canceled with respect to any position held in any carrier which at any time ceases to be an affiliated carrier, without notice thereof by the Commission either to the interlocking officer or director or to the carrier, each of whom shall notify the Commission of said cessation. In the event of such cancellation, the interlocking officer or director shall immediately cease and desist from acting in that capacity with respect to the carrier which has ceased to be an affiliated carrier until such time as appropriate authorization is obtained pursuant to this part.

APPENDIX D

Proponents

1. Association of American Railroads, the membership of which includes substantially all class I railroads subject to the Commission's jurisdiction, encourages the adoption of any regulation which would eliminate the filing of applications in the particular circumstances under consideration. In its petition seeking institution of this proceeding it relied on the supremacy clause of section 5(11) of the act to override the requirements of section 20a (12). It believes if reliance is placed on that clause, there would be no need to make any finding as to public or private interests, and the granting of a "blanket authorization" would be superfluous. It is not clear whether the Commission is proposing to adopt the new regulation by an exercise solely of its power under section 20a (12) and its general rulemaking powers or whether it is also relying to some degree on section 5(11).

Referring to appendix C, the portion of paragraph (a) following the semicolon is considered to be misleading and unnecessary. It is ambiguous as to when the general finding as to public and private interests is to be made. If a general finding is necessary, it would more appropriately be recited solely in the report emanating from this proceeding. See, for example, the finding of public convenience and necessity on a national scale in Motor Service on Interstate Highways-Passengers, 110 M.C.C. 514. Additionally, the provisions of paragraph (b) are redundant and unnecessary, particularly if reliance is placed on the section 5(11) argument. When and if a carrier ceases to be an affiliated carrier, then the approved common control or management likewise lapses and with it the relief granted by section 5(11) as to the interlock.

2. Union Pacific Railroad Company, a common carrier by railroad subject to part I of the Interstate Commerce Act, submits that the proposals, as drafted, would not give recognition (i) to lawful control or management arrangements not specifically approved or authorized by the Commission or (ii) to joint control arrangements of terminal companies not within the purview of section 5. Specifically, in the first instance, Union Pacific refers to control or management arrangements which are lawful but nevertheless antedate the enactment of the Transportation Act of 1920 (making it permissible for one carrier to seek Commission approval to control another carrier, or purchase, lease, or contract to operate the properties or any part thereof of another carrier) or the enactment of the Emergency Transportation Act of 1933 (making Commission approval requisite to any such control, purchase, lease, or contract). In the second instance, Union Pacific refers to joint control of terminal railroad companies which does not vest control in any single carrier and consequently is arguably not within the purview of section 5. Listed are five carriers in which Union Pacific or a subsidiary lawfully holds shares without approval or authorization under section 5; Portland Terminal Railroad Company, 40 percent, acquired in 1882; St. Joseph Terminal Railroad Company, 50 percent, acquired in 1887; Ogden Union Railway & Depot Company, 50 percent, acquired in 1888; Kansas City Terminal Railway Company, 8.33 percent, acquired in 1906; and Denver Union Terminal Railway Company, 16.67 percent, acquired in 1912. Under the proposal, Commission approval would be required with respect to carriers of the aforementioned character and the resultant administrative burden would remain.

Referring to appendixes B and C, Union Pacific proposes that the phrase "pursuant to approval and authority of the Commission previously granted under section 5 of the Interstate Commerce Act" be deleted and that the phrase "or where one or more carriers is a terminal railroad company operated under lawful joint control of two or more carriers" be inserted in its place. 3. Boise Cascade Corporation, a noncarrier, has received authority under section 5 for common control of three class II rail carriers, namely, California Western Railroad, Minnesota, Dakota & Western Railway Company, and Valley & Siletz Railroad Company. It has had occasion to submit many applications for interlocking officers and directors and feels that when the Commission has granted approval for common control under section 5, this should be sufficient