The Interstate Commerce Commission fined the Southern Pacific railroad $4.4 million yesterday for failing to act on government orders to move critically needed freight cars out of its system to areas needing them.
The action is the largest government civil fine ever levied on a railroad.
The ICC also went into U.S. District Court here with the Justice Department in an attempt to force the San Francisco-based Southern Pacific Transportation Co. to stop hoarding the freight cars.
The commission charged the railroad with not moving freight cars (in some cases entire trains) within the time frame set out by the ICC, and subsequently levied fines of $500 plus $50 a day for each day each car was held - for a total of 15.717 violations.
Meanwhile, Southern Pacific revealed it held another meeting last Thursday with officials of Seaboard Coast Line Industries Inc., a southern railboard that SP had indicated interest in acquiring.
Although earlier merger talks between the two lines broke down recently, SP indicated in a filing with the Securities and Exchange Commission last week that it stil is acquiring shares in Seaboard.
The filing shows that SP already had acquired 6.1 percent of Seaboard's outstanding shares for about $27.3 million. Because the ICC must approve a railroad's purchases of more than 10 percent in another railroad. SP has said that it would place any shares in excess of 9.9 percent that it buys in a trust with voting rights or others means of control transferred to a trustee.
SP hopes further talks between the two railroads will lead to a mututally acceptable agreement to merge, an SP spokesman said yesterday.
The $4.4 million fine follows recent penalties for similar violations against Conrail ($2.3 million) and the Santa Fe ($445.000).
The actions are part of an ICC attempt to get the railroads to take its enforcement threats seriously, according to ICC sources.
The major problem is a critical freight car shortage for grain-hauling railroads. The ICC contends that many railroads are not responding to the need for cars by expenditiously returning them to the railroads that own them.
"Southern Pacific owes an obligation to its customers," said Warren McFarland, ICC regional managing director for San Francisco in announcing the fine there yesterday. "It is a giant common carrier regulated by the federal government to serve the public. Failure to move its freight cars on time hurts not only its own customers, but the customers on other lines and John Q. Public and consumers generally."
The alleged violations involve ICC Service Order No. 1309, whichwas issued last May.