WASHINGTON - The Society of the Plastics Industry Inc. formally announced opposition March 26 to the merger of two major railroads. However, Lawrence H. Kaufman, a spokesman for Southern Pacific Lines in Denver, said SPI's announcement opposing SP's merger with Union Pacific Railroads amounted to ``sophistry,'' and relied on old information.
The Washington-based SPI claims the merger would cause one railroad to ``control 84 percent of the storage capacity on the Gulf Coast - a crucial need of the plastics industry.'' The association planned to file comments and testimony opposing the merger with the federal government March 29.
Barring federal approval of the merger, SPI would ask the national Surface Transportation Board to require the merged UP/SP railroad to divest itself of one set of trackage and storage facilities in the corridors from the Mexican border through Houston to New Orleans and from Houston through Memphis, Tenn., and St. Louis to Chicago.
The three-member Surface Transportation Board - the name given the former Interstate Commerce Commission - is expected to vote on the merger July 3 and issue a written decision in August.
``The plastics industry would be devastated by this merger in its present form, which would effectively eliminate any meaningful rail competition in the Gulf Coast region,'' said SPI President Larry Thomas in a written statement.
If the merger is approved, the SPI said in the statement that the combined railroad would control 90 percent of the ``lucrative plastics industry shipping market on the Gulf Coast.''
But Kaufman said Maureen Healey, SPI's director of federal environmental and transportation issues, ``has frequently used selective data selectively'' to describe the effect the railroad merger would have on the plastics industry.
For example, Kaufman said, the statement of railroad control of 90 percent of the plastics market is based on 1994 information that does not account for a 1995 agreement that gives Burlington Northern/Santa Fe access to trackage, storage and switching yards of the UP and SP lines.
But Healey said SPI uses 1994 data because that was the baseline set by the ICC at the time of the merger request filing for the analysis of the data related to the merger.
She added that on March 4, a Burlington Northern executive was asked whether an agreement between the railroads would change the value or importance of that 1994 data, and he replied: ``There are no plans in the works.''
Regarding competition, ``This is where Mr. Kaufman was misguided,'' said Healey. ``Theoretically, there would be an increase in [track and facilities] access to the SP. In reality, the BNSF is going to be prevented from realizing much of this access, due to storage and switching limitations, traffic flow, cost disadvantages and pre-existing, long-term contracts by the competition.''