Ky., a wholly owned subsidiary of SCL, seek authority under section 5(2) of the act for the operation by SCL and L&N of the rolling stock belonging to Auto-Train and the acquisition by Auto-Train of trackage rights over certain lines of SCL and L&N. The lines over which trackage rights is sought run from Louisville, Ky., on the line of L&N at milepost 0, thence southerly over the lines of the L&N, passing through Elizabethtown and Bowling Green, Ky.; Nashville, Tenn.; Decatur and Birmingham, Ala.; and Montgomery, Ala. (L&N milepost 489). From Montgomery, Ala., over the line of the SCL (SCL milepost AN-902), passing through Troy, Ala.; Bainbridge, Valdosta and Waycross, Ga. (AN-587); Jacksonville and Palatka, Fla.; and terminating at the existing Auto-Train facilities at Sanford, Fla.

No representations have been made by any State authority. Protests filed by two labor organizations are discussed below. On December 4, 1973, the National Railroad Passenger Corporation (Amtrak) filed a motion to strike the subject application and dismiss these proceedings on the grounds that the applications did not fully comply with the Commission's rules governing filings. Following the submission by applicants of supplemental material, the Commission, division 3, denied the motion of Amtrak, by order served January 24, 1974.

On January 18, 1974, Amtrak filed a statement opposing the granting of the subject applications. By order of the Commission, Commissioner Tuggle, dated January 24, 1974, it was directed that these proceedings be handled under the modified procedure. Prior to the filing of any verified statements under the modified procedure, Amtrak withdrew its objections to these proceedings. In a letter to the Secretary of the Commission dated February 4, 1974, and filed February 11, 1974, Amtrak explained its previous objection as a means "to protect its interest" during discussions with Auto-Train regarding the position that Auto-Train would take under Auto-Train's contract with SCL with respect to a proposed Amtrak auto-ferry service between Indianapolis, Ind., and Poinciana, Fla. The letter further stated:

Amtrak, having weighed all the relevant legal and factual issues and having obtained the agreement of Auto-Train that Auto-Train will waive any contractual rights it may have to object to the operation by Seaboard Coast Line of Amtrak's autoferry service between Indianapolis and Poinciana, Florida whether the requested authority is awarded to Auto-Train or not, now wishes to withdraw its protest.

On February 11, 1974, the order directing modified procedure was vacated by the Commission, Commissioner Tuggle.

347 I.C.C.

Auto-Train presently offers to the general public a regularly scheduled service that simultaneously transports automobiles and their occupants by specially designed railroad trains (auto-train or auto-ferry service) between Alexandria, Va., and Sanford, Fla. This service was instituted on December 6, 1971, following authorization by the Commission pursuant to section 1(18-20) of the act in its report dated April 23, 1971, Auto-Train, Rail Pass. and Auto Transport Serv., 342 I.C.C. 533, and approval in the same report, pursuant to section 5(2) of the act, of an operating agreement between Auto-Train and the railroads over which the present service operates, SCL and Richmond, Fredericksburg and Potomac Railroad Company (RF&P) of Richmond, Va. In addition to the Alexandria-Sanford route, this operating agreement covers autotrain service over any additional routes in the SCL and RF&P railroad systems or systems controlled by either of them. An amendment of the agreement concerning payments by Auto-Train to SCL and RF&P was effected pursuant to our supplemental order dated April 30, 1973, in Auto-Train, Rail Pass. and Auto Transport Serv., supra.

Auto-Train is a Florida corporation organized for the purpose of engaging in business as a carrier by railroad subject to the act.

NEED FOR SERVICE

The history of the development of the auto-train concept and the demonstration of public need for such service is set forth in detail in our prior report approving the Alexandria-Sanford service. In summary, studies of the feasibility of auto-train service were conducted by the Office of High Speed Ground Transportation (OHSGT) of the Federal Railroad Administration in implementation of the congressional mandate expressed in the High Speed Ground Transportation Act of 1965 (HSGT Act) (Public Law 89220, September 30, 1965). These studies reveal that a significant demand existed for an auto-train service between Washington, D.C., and Florida. In 1968, upon considering the OHSGT report, the Congress concluded that the auto-train project should be sufficiently profitable to be undertaken by the private sector. Accordingly, it decided not to appropriate more funds to develop the auto-train concept.

Based upon Auto-Train's experience since service began on December 6, 1971, the projections of OHSGT regarding public demand and the assumptions of Congress as to profitability have

proven to be accurate. Since commencement of service through September 1, 1973, Auto-Train has transported 108,488 automobiles and 331,138 passengers, which represents approximately 2 percent of the market, i.e., automobiles traveling between Florida and the 11 State area north of and including Washington, D.C. Auto-Train's revenues for the fiscal year ending April 30, 1973, were $13,976,335 with net earnings of $804,872 or $0.56 per outstanding common share and for the quarter ending July 31, 1973, revenues were $4,433,259, with net earnings of $406,663 or $0.29 per share. To further demonstrate public acceptance of its service, Auto-Train has submitted a large collection of magazine and newspaper articles concerning the service, and copies of a substantial number of letters from public customers complimenting Auto-Train on its service.

Auto-Train has also filed copies of several hundred letters expressing interest in establishing a service in the Midwest comparable to its present operations. To support its claim that a need exists for its proposed Louisville-Sanford service, Auto-Train relies primarily, however, on a report prepared by the Florida State Department of Commerce entitled the "1972 Florida Tourist Study" (Florida Study). Auto-Train's proposed Louisville-Sanford route will serve primarily the five North Central States of Ohio, Michigan, Illinois, Indiana, and Wisconsin.2 According to the Florida Study, approximately 27 million tourists visited Florida in 1972, of which some 7,307,813 tourists in 2,283,692 automobiles originated in these five States.

Operating daily with a capacity of 112 automobiles per southbound train, Auto-Train's Louisville-Sanford service could carry an annual southbound volume of 40,880 automobiles, or 1.8 percent of the total number of tourist automobiles that entered Florida from the five North Central States in 1972. According to the Florida Study, approximately 4,654,255 tourists in 1,454,455 automobiles entered Florida in 1972 from the 11 States north of and including Washington, D.C., the area presently served by Auto-Train. In 1972, Auto-Train transported approximately 96,927 passengers and 31,149 automobiles southbound on its Alexandria-Sanford route, or 2.1 percent of the total number of tourist automobiles that entered Florida from the 11-State area north of and including Washington, D.C. Auto-Train would need to transport only 1.4 percent of the total number of automobiles that entered Florida from the five

The counties through which the lines pass are shown in appendix A.

North Central States in 1972 to equal its 1972 Alexandria-Sanford results since the potential on the proposed Louisville-Sanford route is far greater: 2,283,692 tourist automobiles on the Louisville routes as apposed to 1,454,455 tourist automobiles on the current route. As indicative of the future potential of the proposed new route, Auto-Train points to the dramatic growth of automobile traffic entering Florida. According to the Florida Study, 90 percent of the tourist automobiles from Ohio, Michigan, Illinois, Indiana, and Wisconsin entered Florida on Interstate 75. Traffic on this highway has increased from 2.6 million automobiles in 1969, to 3.6 million in 1972. Auto-Train asserts that it would benefit from further growth in tourist traffic to Florida through its proposed Louisville-Sanford service, since this route will serve four of the six leading States of origin for visitors registering at Florida Welcome Stations on Florida highways. The Florida Study gives the following ranking for 1972: 1. Ohio, 2. Michigan, 3. Georgia, 4. New York, 5. Illinois, and 6. Indiana. The visitors from these six States represented 48 percent of the total number of visitors registering at the Welcome Stations in 1972.

OPERATIONS

Auto-Train proposes to run a single train from Louisville to Sanford and return on alternate days, making 365 trips a year, over the existing track of L&N and SCL. The special equipment and terminals used in this service will be owned by or leased to AutoTrain. Auto-Train will not acquire any additional auto-carrier or coach cars for use in the Louisville-Sanford service. However, it will spend approximately $1,100,000 refurbishing equipment it presently owns. Auto-Train will acquire by lease three additional locomotives. While no additional expense is anticipated in connection with Auto-Train's Sanford terminal, approximately $1,250,000 will be expended on construction of the Louisville terminal facilities. Approximately 1,500 feet of parallel spur track will be constructed by Auto-Train adjacent to the Louisville terminal for maintenance, parking, and switching purposes. The cost of this trackage is included in the $1,250,000 to be expended on the Louisville terminal.

The auto-trains used in the Louisville-Sanford service will be operated by L&N and SCL in general conformity with the terms of the above-mentioned operating agreement, dated August 1, 1970, as

amended. The term of the agreement is from August 1, 1970, until the end of the 15th year from the commencement of auto-train service thereunder. Service under the agreement was commenced on December 6, 1971. The operating agreement provides that "comparable terms" would be adopted by the parties in the event Auto-Train desired to institute service over additional routes within the SCL-controlled system, which includes L&N. While an implementing agreement has not yet been executed, it is the expressed intention of the applicants that the specific terms applicable to the Louisville-Sanford service will be essentially the same as those of covering the present service. For our part, we expect that these terms will conform to the appropriate portions of this report.

Under the terms of the operating agreement, SCL and L&N (the operators) shall do all things reasonably necessary in connection with the on-time scheduled operation of auto-train service on a nonstop basis between Sanford and Louisville. The obligations undertaken by the operators under the agreement include establishing schedules. However, Auto-Train has the right to determine the number of complete trips made a year. Operators are to provide all on-train and off-train operating personnel and all yard personnel, except that on-train personnel exclusively engaged in rendering passenger service and off-train personnel rendering loading services are to be provided by Auto-Train. The operators must provide inspection and running maintenance for the auto-train and provide overall maintenance for the auto-train locomotives. As agents for Auto-Train, L&N and SCL will purchase all fuel, lubricants, parts, and supplies needed for such services and on a limited basis furnish replacement locomotives in emergencies. Finally, the operators are to provide switching services.

The operating agreement also obligates Auto-Train to provide the operating equipment, including auto carrier cars and coach cars. In addition, Auto-Train is to provide complete terminal facilities at Sanford and Louisville (including connecting tracks), all necessary maintenance (beyond that to be provided by the operators), all fuel, lubricants, parts and other supplies, all advertising and promotion, all passenger services such as food and entertainment, and will be in charge of all ticket sales. Auto-Train can appoint the operators as its agent to sell tickets and make reservations.

As consideration under the operating agreement, Auto-Train is to pay operators a "train-mile charge" calculated in accordance with an agreed formula for each fiscal year during the term of the agree