Representatives of a group of shippers and employes of the Milwaukee Road faced tough questioning yesterday from members of the Interstate Commerce Commission on their plan to take over ownership of the financially stricken railroad.
"There is a recognition here of the desirability of competitive transcontinental railroad transportation across the northern tier," ICC Chairman A. Daniel O'Neal said in opening yesterday's hearing. "But the plan as submitted leaves serious questions . . ."
The skeptical-sounding commission members, who must decide by the end of the year whether to approve the plan, have been advised by their staff and two outside consultants that the empolye-shipper plan doesn't appear to be feasible and should be rejected by the ICC.
One of the major deficiencies cited was the plan's optimistic projections for traffic increases long before the track rehabilitation program necessary to attract that traffic is completed.
Despite the questions raised, Lawrence McCaffrey Jr., counsel for the New Milwaukee Lines -- as the group is called -- was optimistic about the plan and its chances for success. "This is a unqiue railroad," he said. "The shippers and employes are the two groups who have the most incentive to make it work."
He contended it makes sense to cut down Milwaukee's current 9,500-mile system to its proposed 3,500-mile core system running from the State of Washington through the Twin Cities to Milwaukee, Chicago and Louisville which would face only one competitor -- the Burlington Northern.
It didn't make sense to allow the Milwaukee to cut the system down to its proposed 3,200-mile Midwest system where it would compete with five railroads, he argued.
The employe-shipper plan faced opposition from the Milwaukee Road, the court-appointed trustee and the creditors, although it won the support of three senators and five representatives who testified.
Submission of the plan by the group was specifically authorized by a federal law signed by President Carter last month which provided the railroad with millions of dollars in emergency aid to keep the trains rolling on western lines that a federal judge had said could be abandoned.
In bankruptcy proceedings, the Milwaukee's court-appointed trustee, former Illinois governor Richard B. Ogilvie, has said the railroad must be allowed to sell off the western lines that the employe-shipper group wants to save in order to salvage a financially viable inner core in the Midwest.