The Interstate Commerce Commission yesterday approved the sale of the Rock Island Railroad's 965-mile Tucumcari Line to the Southern Pacific for $57 million.
The agency's approval of the sale of a major portion of the Rock's system -- running between Santa Rosa, N.M., and St. Louis via Kansas City -- is part of the breakup of the once "mighty fine line" immortalized in song. The Rock Island, in bankruptcy proceedings since 1975, has been ordered liquidated by the court.
The ICC made it decision over the objections of 13 western and midwestern railroades, opposed to the Southern Pacific's acquisition out of fear of losing freight business to it. However, the ICC found that no carrier would be seriously harmed by the transaction. "Most of the competing rail carriers have sufficient financial strength to withstand the diversion of traffic without a decline in the quality of their service," the ICC said.
It added that the additional competition from the Tucumcari line -- which had been neglected for years -- should generate responses by the other rails which will result in increased efficiencies and better service.
The agency said two protesting railroads that are in much poorer financial health have been doing better lately and should be able to withstand any traffic loses, because the full impact of the sale won't occur until three to four years after its consummation. The Southern Pacific will have to spend about $250 million over a three-year period to restore the line to its former competitive position, the ICC pointed out.
In approving the purchase, the ICC found that it would benefit shippers and the SP, and would provide important fuel savings through shorter routes at a time when energy conservation is important. Shippers would benefit from service improvements; with trains running as fast as 70 miles an hour after the line is rebuilt, the Icc said.
With the Tucumcari, which the SP has been operating under temporary ICC authority, the SP will be able to offer single-system service to the important Kansas City rail market, new fast service to Chicago -- by interchanging freight with the Burlington Northern at Kansas City -- and a more direct route to St. Louis once the line is rebuilt, the ICC said.
The Southern Pacific now operates 12,980 miles of mainline track in 12 western and southwestern states; it has proposed a merger with its old rival, the Santa Fe, a merger which is expected to receive close antitrust scrutiny once it is filed with the ICC.
In its decision yesterday, the ICC denied a competing application by the Missouri Pacific Railroad to acquire the Kansas City-St. Louis portion of the route. "We cannot permit a parallel line to be purchased for the primary purpose of avoiding competition," the ICC stated.