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             California Public Utilities Commission
505 Van Ness Avenue, Room 5301            San Francisco, CA 94102
CONTACT: Armando Rendon           May 23, 1996           CPUC-047
         415-703-1366

       CPUC SUPPORTS UNION PACIFIC-SOUTHERN PACIFIC MERGER

     The California Public Utilities Commission (CPUC) is backing
the proposed Union Pacific and Southern Pacific (UPSP) railroad
merger, in a recommendation to be submitted to the Surface
Transportation Board (STB) in Washington, DC, by June 3.
     The Commission's decision, made yesterday, basically
reinforced a filing made to the STB in March, saying the
consolidation should result in improved service and have a
positive economic impact on the state.
    At present, three major freight railroads serve the state,
the Union Pacific, the Southern Pacific and the Burlington
Northern/Santa Fe.  The merger would leave only two.  Though
supporting the merger, the CPUC also urged the STB to monitor the
effect of the merger on competition.
    Earlier this month, the CPUC had considered a proposal by
Montana Rail Link, a shortline railroad in Montana, that the
merger be conditioned on the divestiture of a major portion of
the Central Corridor, the primary rail line between the San
Francisco Bay Area and the Midwest.
     The CPUC decided not to support the Montana Rail Link
proposal, but instead to support the trackage rights agreement
that allows Burlington Northern/Santa Fe Railroad the use of a
line through the Central Corridor.
     Additionally, the CPUC is asking the STB to order that the
Modoc Line in the northeastern part of the state remain open and
also that the North Coast shortline railroad be granted
interchange rights with the Burlington Northern/Santa Fe near
Fairfield.
                               ###