the equivalent of 2.1 percent of its total gross revenues. The Wabash owns and operates a freight house on land owned by the Erie, and uses the latter's team tracks in Buffalo at Smith and Seneca Streets, and, since about 1898 operated between such facilities and Black Rock under lease, limited to through movements, over approximately 11 miles of the Erie's trackage.

The Wabash submits that the applicant underestimated by 2,652 cars the October 1956 Wabash-Lackawanna interchange traffic which would be susceptible of rerouting by the unified company. Recomputing the net results, the Wabash contends that its revenue losses would be $1,900,000 on the basis of $150 per car average Wabash revenues (approximately the average used by the applicants), or $2,200,000 annually on the basis of $174 average Wabash revenue per car on Wabash-Lackawanna interchange traffic in 1958. Further, the Wabash points out that its traffic connecting at the Niagara gateway consists of about 43.9 percent overhead or bridge business; almost half of the cars interchanged with the Lackawanna in that area originate on the Lackawanna; that Wabash-Lackawanna interchange traffic moves via Black Rock, the only junction point, even though practically none of the billing involved names the junction; that as the overhead carrier, the Wabash would have difficulty soliciting the shippers to insert Black Rock as the point of junction, and the traffic probably would be routed by the unified company via the Huntington or Chicago gateways; that previous combined solicitation efforts to secure LackawannaWabash routings for traffic necessarily would end, and in its stead, the unified company would solicit for routes avoiding Buffalo; and that at the Black Rock connection, the Lackawanna presently delivers 1.4 cars to the Wabash for each car it receives from the Wabash, but the Wabash delivers 13 cars to the Erie for each car the latter delivers to the Wabash, and, after the merger, the latter ratio probably would prevail in regard to interchange between the unified company and the Wabash. In view of these and similar other characteristics, the Wabash contends that the proposed elimination of the Lackawanna as an independent railroad connecting at Niagara Frontier with the Wabash would change the competitive service via that gateway, and that to continue to compete with the unified company it would be imperative that the Wabash improve its position by effectively arranging to expedite the interchange of traffic with all its connecting carriers.

The Wabash also interchanges traffic with the Lehigh which, as the Lackawanna does, has its western terminus in the Buffalo area, and operates between that area and points in New Jersey adjacent to New York City. The Wabash's traffic within the Niagara area is interchanged with the Lehigh at Suspension Bridge and involves Wabash operations over facilities of the Canadian National Railways under an agreement dating from 1898, and the use of terminal services of the Canadian National in effecting delivery of Wabash cars to and from the connections at Suspension Bridge with the Lehigh, the Erie, and the Central, and at Black Rock with the Lackawanna, the Erie, and the Central. Cars moving to and from connections at Suspension Bridge involve lengthy transfer operations via Welland Junction, Ontario, Canada, on Canadian National's line about 17 miles by railroad west of Fort Erie, and 18 miles west and south of Suspension Bridge; and additional transfers to the Lehigh's main line at Depew, about 25.8 miles east and south of Suspension Bridge. Exhibits presented by the Wabash show that such interchange with the Lehigh, almost entirely at Suspension Bridge, consisted of 30,778 carloads during 1958, and 16,720 carloads in the first 6 months of 1959, and that the Wabash's revenues thereon were $6,203,174 and $3,421,222, respectively. The movement of Wabash traffic to Depew via Welland Junction involves 11 additional miles, which would be avoided if an

arrangement permitting the Wabash-Lehigh interchange through Black Rock in lieu of Suspension Bridge. The Lehigh joins in contending that the proposed merger, if approved, would make it imperative that the Wabash terminate its trains at East Buffalo in order to effect substantial savings in time consumed on Wabash-Lehigh interchanges, and to materially improve the interchange of traffic with all connections, including the unified company.

The Lehigh's position is that the contemplated elimination of competition between the Erie and the Lackawanna, and the diminution of the Lackawanna's interchange traffic with the Nickel Plate and the Wabash to and from the west, and with the Lehigh & Hudson to and from New England points, would not result in the Lehigh's interchange business increasing to the extent predicted by Wyer's Study XIII, unless Lehigh could improve its connections with the western railroads and become competitive with the unified company. Its goal is asserted as to be able to provide service in conjunction with the connecting railroads that would overcome the present disadvantage of the Lehigh interchange route being longer in distance and time requirements than if the Lackawanna were the interchange carrier.

The lines of the Central and certain of its leased lines connect with the Lackawanna at Buffalo and Black Rock for the interchange of traffic to and from points on the Central's lines in the so-called Central Freight Association Territory, and connect with the Erie's lines at Buffalo and numerous points west thereof. The Central submits that the applicants' estimates of the revenue which the Central would lose as a result of the rerouting contemplated by the unified company is not realistic because more of the Central's interchange traffic susceptible to rerouting probably could successfully be solicited in whole or in part; and that the amount of revenues Study XIII shows might be diverted by the Central from the unified company is speculative and improbable, and is not supported by evidence of record.

The Central's principal concern regards the manner in which the unified company would change the routing of the Lackawanna's present traffic to, from, and via points now served commonly by the Erie and the Lackawanna, so that by using the Erie's junction west of Buffalo, the distance that the Lackawanna's traffic would move over the Central's lines after the merger would be shortened. This would be achieved by new tariffs of the unified company failing to identify the present Lackawanna origin and destination points, industries, and through routes, and permitting the use of the Erie's present routes to and from the points served commonly by the Erie and the Lackawanna. The Central contends that the movement of Lackawanna traffic over the Erie routes presently is not allowable and that such route changes would be effected automatically without the concurrence of the Central, and without regard to the public interest. The Central also contends that effective tariff publication rules pertaining to the applicability of rates at intermediate points would make susceptible to the same type of rerouting by the unified company, traffic originating or terminating at local points of the Lackawanna intermediate to the common ErieLackawanna points. As examples of the effect of changing the routes pertaining to Lackawanna traffic to and from the present common points, the Central shows that traffic from a Lackawanna New York-New Jersey area point to Kankakee, Ill., would connect with the Central at North Judson, Ind., instead of at Buffalo, and the Central's division of the applicable rate would be reduced from 60 percent to 20 percent; that its division on shipments from Elmira to Elyria, Ohio, would change from 54 percent to 20 percent; and its division in shipments from Paterson, N.J., to Columbus, Ohio, would be reduced from 49 percent to Interstate Commerce Commission Tariff Circular 20, Supplement No. 8, rule 27(b).

20 percent. It also forsees instances where the Central's revenues would be reduced even where the traffic involved would continue to move over the same operating routes via the same junctions, because the Central's division with Erie generally are not as high as its divisions with the Lackawanna.

Requests to restrict unified company's routing.—Each of the intervening railroads, whose positions are discussed hereinabove, suggested conditions tailored to provide protection against the unified company's plans to reroute traffic which would decrease the distance of the hauls of the connecting railroads, or, reduce their proportion of the joint-rate revenues presently applying over the routes in which the interveners participate. Several intervening railroads professed satisfaction with the type of restrictive conditions which the Commission in the public interest heretofore has imposed upon parties to transactions relating to mergers, acquisitions of control, and other forms of unification of railroad properties and franchises. In view of the position of the connecting railroads regarding protective conditions, the applicants assert they have no objection to the imposition of conditions relating to the continued maintenance of routes and channels of trade via existing junctions and gateways; neutrality of handling traffic to and from connecting railroads; continuation of existing traffic and operating relationships with connecting railroads; serving connecting carriers without discrimination as to promptness and frequency; noninterference by the unified company with the rights of industries to route traffic over any or all existing routes and gateways; and the right of any person in interest to apply to the Commission for modifications of the aforesaid conditions as required in the public interest. The conditions specified by the applicants (standard conditions) have been imposed in a long series of decisions involving section 5 of the act. See Detroit, T. & I.R. Co. Control, 275 I.C.C. 455 (Ironton case); Louisville & N.R. Co. Merger, 295 I.C.C. 457 (Louisville case); and Norfolk & W. Ry. Co. Merger, 307 I.C.C. 401 (Norfolk case).

For convenient comparison of the language and scope of the several sets of suggested conditions, appendix E, attached hereto, sets forth the foregoing standard conditions proposed by the applicants and separately, those suggested by the Nickel Plate, the Wabash, the Lehigh, and the Central.

The Nickel Plate rejects as ineffective under the circumstances herein, the standard conditions which the applicants concede should be imposed. It submits 12 conditions which in its estimation would protect the Nickel Plate from the unified company's efforts to divert freight traffic and related revenues, and contends that if such appropriate safeguards are not imposed, the substantial lessening of competition that would result from the proposed merger would be contrary to the public interest. The Nickel Plate concludes that, unless the conditions it suggests are adopted, the application to merge should be denied in view of the detriment to competitive equality between the unified company and the connecting carriers outweighing the advantages that would accrue to the merging railroads.

Several of the conditions suggested by the Nickel Plate differ from the standard conditions only by the inclusion of the intervener's name. Common to most of the conditions are provisions that future changes undertaken by the unified company in relation to routes, facilities, services, and other operating features first to be agreed to in writing by the Nickel Plate; be subject to the Nickel Plate's full cooperation and the mutual agreement of all affected connecting carriers, particularly those also connecting with the Nickel Plate; be extended to the Nickel Plate if they involve carriers or routes competitive with the latter; and otherwise maintain the parity of the Nickel Plate as to services, rates, and

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charges. As framed, the requested conditions would require continuation of the existing services, uses of facilities, locations of connecting tracks, manner of interchanging traffic, and similar arrangements which are subject to written agreements; would assure the unified company's neutrality and impartiality, and its cooperation with the Nickel Plate regarding the establishment of freighttrain service at, to, and from Buffalo at least equal in every respect to other routes between the same origins, destinations, and connecting carriers in which the unified company participates in similar or competitive service; would maintain without prejudice to the Nickel Plate the present freight-train service and schedules of traffic regarding times of departure and cutoff times for the handling of cars, with no additional trackage charges to the Nickel Plate for operating over facilities owned or controlled by the unified company; would permit the designation of those of the Lackawanna's present interchange tracks and facilities in the Buffalo area which the Nickel Plate deems necessary to reach any modified or new yards of the unified company and such facilities of other connecting carriers, upon compensation mutually agreed to or determined by arbitration; would provide granting to the Nickel Plate upon the same terms of payment, trackage and other rights which subsequently might be accorded to the Lehigh; would require continuation of the present Nickel Plate-Lackawanna interchange at Buffalo with respect to all cars moving on billings not designating other of the unified company's Nickel Plate interchange points; would extend to the Nickel Plate, rates via all points of connection, no higher than those via any competitive route in which the unified company participates individually or with any other railroad; and would assure to the Nickel Plate upon its request, whatever benefits, more favorable than enjoyed by the Nickel Plate, are accorded to any connecting railroad, whether arising as a result of acceptance of conditions, or any other circumstance. In addition, the Nickel Plate subscribes to conditions suggested by the Central, outlined hereinafter, which would prohibit the unified company from using the merger as a device to create new routes which would eliminate the Central as a connecting carrier, or, provide it shorter hauls than it now secures in conjunction with the Lackawanna.

The applicants consider the conditions proposed by the Nickel Plate, to the extent they would add restrictions not embraced in the standard conditions or in effective agreements between the applicants and connecting railroads, to be unjust and unreasonable, and request that they not be imposed. The objections generally are upon grounds that the Nickel Plate desires to acquire power to control the routing and service arrangements which normally are subject to negotiation between the affected railroads, or decision of the Commission when controversies arise; that the unified company would be unable to make changes believed necessary or desirable in light of experiences that may arise after the the merger is consummated; and that the future management of the unified company would be prevented from adopting changes in services, facilities, and practices expected to produce efficient and economical operations. In that vein, witnesses for the applicants asserted that several of the activities which the Nickel Plate would restrict normally must be controlled by local supervisory personnel as conditions warrant, and others would be ineffective if they were not capable of meeting changing conditions and fluctuating volumes of traffic.

The applicants also disapprove the imposition of the suggested requirement that all Nickel Plate interchange traffic which is not routed as to junction point be delivered at the Buffalo gateway. This, they charge would unfairly deprive the unified company of its right to enjoy the longest haul possible on traffic which it is entitled to so handle under the provisions of section 15(4) of the

act; and unless consented to by the unified company would violate the regular and accepted practice among railroads. The applicants submit that the Nickel Plate and the other connecting railroads would continue to have the same opportunity for soliciting the affected shippers to designate the desired point of interchange as they have had in the past to solicit traffic for movement over the route involving the Lackawanna lines.

The Wabash requests that the merger under consideration be denied unless the conditions which it suggests are prescribed. The primary objective is to assure that shippers would continue having the present routes available and that Wabash would be able to render competitive and adequate transportation service through the Buffalo gateway by having direct connections with other railroads, particularly the Lehigh. The conditions would require the unified company to permit the Wabash and the Lehigh to utilize portions of existing trackage and interchange yard facilities including some of which the applicants are seeking to abandon; would enable Wabash to originate and terminate trains at East Buffalo in a manner that would improve its interchange arrangements with the Lehigh; would reduce the time necessary to effect transfer of cars to and from the unified company; and would maintain the Wabash's position to compete within the Buffalo area and to achieve the best possible interchange at Buffalo. The Wabash submits that unless the volume of its present traffic with Lackawanna is protected by the aforesaid conditions, the potential loss of revenues pertaining thereto would react adversely upon the transportation facilities and services of the entire Wabash system. Apropos thereto, the Wabash proferred testimony of spokesmen for the States of Missouri and Illinois and the Chamber of Commerce of the St. Louis metropolitan area pleading that the suggested conditions are essential for the general public served by the Wabash.

The Lehigh joins in the position of the Wabash, and in addition requests that it be permitted to install a track connection between the main lines of the Lehigh and the Erie at Union Road (east of the Lackawanna's Sloan yard); that the Nickel Plate conditions be imposed; and that in order to effect the desired trackage rights, permission to abandon portions of the Lackawanna's Black Rock branch line be denied. The Lehigh emphasizes that its interest is to prevent any change in the competitive status of the railroads within the Buffalo area that would be to the disadvantage of the public.

The applicants challenge the fundamental power of the Commission to require as condition precedent to approval of the proposed merger, the granting of trackage rights to connecting carriers desiring to achieve improved interchange arrangements, in view of the acknowledged fact that existing arrangements for interchange between those carriers would not be interfered with as a consequence of the merger. The only reason cited in support of the requested trackage rights is that the sponsors each desire additional or alternative methods of interchange traffic within the Buffalo area. Under the circumstances, the applicants urge that imposition of the trackage-rights and joint-use conditions would be unjust and unreasonable. Further, the applicants submit that the proposed trackage-rights conditions fail to delineate in reasonably precise terms the use proposed to be made of the applicant's facilities, or the character, time, and extent of the train movements contemplated by the interveners.

Responsible officials of the applicants analyzed the probable effect of the trackage rights, if ordered, and concluded that the feasibility of the proposed joint operations could not reliably be estimated until after a reasonable period of operation, involving the handling of the combined traffic of the Erie and the Lackawanna, has been experienced. The present volume of daily train movements over the sections of the lines designated by the interveners is