|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|THE INDIANA RAILROAD COMPANY-ACQUISITION-SOO LINE RAILROAD COMPANY|
|(1) ACCEPTED FOR CONSIDERATION AN APPLICATION IN STB FINANCE DOCKET NO. 34783 FILED BY THE INDIANA RAIL ROAD COMPANY AND SOO LINE RAILROAD COMPANY; (2) DIRECTED THE PARTIES TO COMPLY WITH THE PROCEDURAL SCHEDULE ADOPTED BY THE BOARD IN THIS PROCEEDING AND THE PROCEDURAL REQUIREMENTS STIPULATED IN THIS PROCEEDING; AND (3) FOUND THAT THE TRANSACTION IS A "MINOR TRANSACTION UNDER 49 CFR 1180.2(C).|
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|Full Text of Decision|
36581 SERVICE DATE –
SURFACE TRANSPORTATION BOARD
STB Finance Docket No. 34783
THE INDIANA RAIL ROAD COMPANY – ACQUISITION – SOO LINE RAILROAD COMPANY
AGENCY: Surface Transportation Board, DOT.
ACTION: Decision No. 2 in STB Finance Docket No. 34783; Notice of Acceptance of Application; Issuance of Procedural Schedule.
SUMMARY: The Surface
Transportation Board (Board) is accepting for consideration the application
finds that the Transaction is a “minor transaction” under 49 CFR 1180.2(c), and
the Board adopts a procedural schedule for consideration of the primary
application and the related filings, under which the Board’s final decision
would be issued on
DATES: The effective
date of this decision is
ADDRESSES: Any filing
submitted in this proceeding must be submitted either via the Board’s e-filing format or in the traditional paper format.
Any person using e-filing should comply with the instructions found on
the Board’s website at “www.stb.dot.gov” at the “E-FILING” link. Any person submitting a filing in the
traditional paper format should send an original and 10 paper copies of the
filing (and also an IBM-compatible floppy disk with any textual submission in any
version of either Microsoft Word or WordPerfect) to: Surface Transportation Board,
FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1655. [Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at 1-800-877-8339.]
Soo, a Class I railroad, is a
Minnesota Corporation that operates approximately 3,500 miles of track in the
States of Illinois,
owns and operates a line of railroad running between
CSX Transportation, Inc. (CSXT) currently owns 85% of the common stock of Midland United, which in turn owns 100% of the common stock of INRD. Thomas G. Hoback, president of INRD and of Midland United, owns the remaining 15% of Midland United’s common stock. The applicants submit that, at the time CSXT acquired control of INRD, it was contemplated that INRD would remain a separate short line or regional railroad and would not be functionally integrated into CSXT. The applicants state that this approach has been followed, and INRD retains its separate engineering, operating, mechanical, marketing, accounting and labor relations functions.
The Transaction for which the applicants seek approval consists of INRD’s: (a) purchase of Soo’s Latta Subdivision; (b) acquisition by assignment of all of Soo’s right, title and interest in and to the Main Line Trackage Rights; and (c) acquisition by assignment of all of Soo’s right, title and interest in and to the Ancillary Trackage Rights. Collectively, the Latta Subdivision, the Main Line Trackage Rights, and the Ancillary Trackage Rights are referred to herein as the Acquired Lines.
The Latta Subdivision. The Latta Subdivision extends from milepost
(i) Overhead trackage to operate over and use certain trackage of Union Pacific Railroad Company (UP) between 80th Street, Chicago, and Dolton Junction, IL, on terms established pursuant to the trackage rights agreement between Soo and Missouri Pacific Railroad Company, dated August 23, 1995, as amended, a distance of 8.32 miles. The trackage rights are assignable with the consent of UP, which should not be unreasonably withheld;
(ii) Overhead trackage rights to operate over and use certain trackage of CSXT and UP from Dolton Junction, IL, to Woodland Junction, IN, on terms established by the agreement between Soo and CSXT, dated November 23, 1988, as amended, a distance of 65.7 miles. The trackage rights are assignable with the consent of CSXT;
Overhead trackage rights to operate over and use
certain trackage of CSXT from Woodland Junction, IN, to
(iv) Overhead trackage rights to operate over and use certain trackage of CSXT from Bedford, IN, to New Albany, IN, on terms established by the agreement between Louisville & Nashville Railroad Company (L&N) and Milwaukee, dated July 17, 1973, as amended, a distance of 71.77 miles. The trackage rights are assignable with the consent of CSXT; and
Rights to use the property of the former Kentucky &
Indiana Terminal Company (K&ITC) between
The Ancillary Trackage Rights. The Ancillary Trackage Rights to be assigned to INRD are as follows:
Overhead trackage rights to operate over and use
certain trackage rights of Indiana Southern Railroad (ISRR) from Elnora, IN, to
Maysville, IN, on terms established by the agreement governing Soo’s grant of
trackage rights to ISRR, dated April 15, 1993, a distance of 19.6 miles. The agreement is assignable without ISRR’s
consent in connection with a sale of all or substantially all of Soo’s interest
in its line between
(ii) Overhead trackage rights to operate over and use certain trackage of ISRR from Beehunter, IN, to Sandborn, IN, on terms established by the agreement between Consolidated Rail Corporation (Conrail) and Milwaukee, dated June 28, 1985, as amended, a distance of 6.12 miles. ISRR’s consent is required for the assignment of the trackage rights except in connection with the sale or assignment of all or substantially all of Soo’s properties; and
(iii) The option to acquire trackage rights under specified conditions on ISRR’s line between Elnora, IN, and Evansville, IN, on terms established by the agreement between Soo and ISRR, dated April 15, 1993, whereby Soo obtained the option to acquire such trackage rights in exchange for ISRR’s receipt of trackage rights over Soo’s line between Beehunter, IN, and Elnora, IN.
The applicants are in the process of obtaining consents for the assignments where required and anticipate receiving them prior to the closing of the Transaction.
In addition, INRD and Soo have entered into three agreements dealing with their future relationship: (1) the “Power Run Through Agreement,” which establishes terms under which CPRC will supply run-through power for potash trains originating on CPRC and destined for Jeffersonville, IN, and the terms under which INRD will supply run-through power for petroleum coke trains originating in Rosemount, MN, and destined for the gasification facility at Fayette, IN; (2) the “Interchange Agreement,” which establishes terms under which CPRC and INRD will interchange traffic at Chicago; and (3) the “Marketing and Divisions Agreement,” which establishes divisions and other commercial arrangements between INRD and CPRC.
Financial Arrangements. INRD advises that it does not plan on any new financial arrangements in connection with the Transaction. No new securities will be issued. INRD will finance the Transaction with bank loans.
Passenger Service Impacts. The Transaction would have no impact on commuter or passenger operations because the Acquired Lines have no commuter or other passenger service.
Discontinuances/Abandonments. INRD does not contemplate any discontinuances or abandonments as a result of the Transaction.
Public Interest Considerations. Applicants assert that, if approved, the Transaction would promote inter- and intramodal competition and would not result in any lessening of competition, creation of a monopoly, or restraint of trade in freight surface transportation in any region of the United States.
applicants assert that the Transaction would produce significant operating
efficiencies and service improvements.
Currently, INRD and Soo’s lines intersect at
that it would be able to operate more efficiently on the Acquired Lines and on
its existing lines by making Soo’s Latta Yard, which is located close to the geographic
center of the Acquired Lines and INRD’s existing system, the central hub of the
combined system. INRD’s operating plan
contemplates that trains would operate between Latta Yard, on one hand, and
Applicants submit that the Transaction would improve the level of service to local shippers on the Acquired Lines by reducing transit time, increasing local service, and providing an additional intermodal service facility, in addition to service improvements on traffic that is now interchanged between Soo and INRD, as INRD assumes full control of the moves.
Applicants further note that the
Transaction would allow for an improved marketing focus, which would attract
additional traffic. As the Acquired
Lines’ original function as a bridge for traffic moving between the Chicago gateway
and points in the Southeast has been rendered obsolete by industry
consolidation, the Acquired Lines must now rely upon traffic originating or
terminating at local points on those lines.
INRD’s marketing experience in, and proximity to, central and southern
Applicants submit that the Transaction
would not result in a substantial lessening of competition for overhead traffic
The applicants further assert that there would be no lessening of competition for traffic originating and/or terminating on the Acquired Lines. This applies to the shipment of on-line coal, off-line coal, received petroleum coke, plastics, and potash. The applicants state that no shipper would be left without competitive options as a result of the Transaction, and INRD would not acquire any market power through its purchase of the Acquired Lines.
Lastly, INRD believes that its acquisition of the Acquired Lines would provide it with more opportunities to compete effectively with motor carriers than is the case today, and to divert traffic from truck to rail.
Schedule For Consummation. If the Board approves the Transaction,
applicants intend to consummate the transaction on
Environmental Impacts. Applicants contend that no environmental documentation is required because there would be no operational changes that would exceed the thresholds established in 49 CFR 1105.7(e)(4) or (5) and there would be no action that would normally require environmental documentation. Applicants therefore assert that the Transaction does not require environmental documentation under 49 CFR 1105.6(b)(4).
Historic Preservation Impacts. Applicants contend that a historic report is not required because INRD would operate the Acquired Lines and would require further Board approval to discontinue service or abandon any service. According to applicants, there are no plans to dispose of or alter properties subject to Board jurisdiction that are 50 years old or older. Applicants therefore assert that a historic report under 49 CFR 1105.8(b)(1) is not required.
Soo states that no Soo employee currently working on the Acquired Lines would
lose the opportunity for continued employment on Soo as a result of the
Transaction. As of
INRD expects to be able to handle the combined operation of the Acquired Lines and its existing line with 41 additional employees. INRD plans to hire the additional 41 people needed to operate the Acquired Lines by taking applications and hiring on the basis of those applications. Applications from current Soo employees who work on the Acquired Lines would be treated on an equal basis with all others received. INRD has entered preliminary discussions with the Brotherhood of the Locomotive Engineers and Trainmen (BLET), representing INRD’s train and engine personnel, regarding the terms of an implementing agreement, covering the extent to which former Soo employees hired by INRD are given credit for their prior employment within INRD’s seniority system. INRD expects to be able to reach a consensual implementing agreement with BLET, and would notify the Board when such agreement has been reached.
expects to change the reporting point for many of its train and engine
Protective Conditions. For the Transaction, applicants assert that, to provide the level of labor protection mandated by 49 U.S.C. 11326, the Board should impose the labor protective conditions in New York Dock Ry. – Control – Brooklyn Eastern Dist., 360 I.C.C. 60, 84-90 (1979), as clarified in Wilmington Term. RR, Inc. – Pur. & Lease – CSX Transp., Inc., 6 I.C.C.2d 799, 814-826 (1990), aff’d sub nom. Railway Labor Executives’ Ass’n v. ICC, 930 F.2d 511 (6th Cir. 1991). Some of the Soo employees who may be affected would be entitled to elect, alternatively, to receive benefits under provisions of existing employee protective agreements that are in effect on Soo.
APPLICATION ACCEPTED. The Board finds that the proposed Transaction would be a “minor transaction” under 49 CFR 1180.2(c), and the Board is accepting the application for consideration because it is in substantial compliance with the applicable regulations governing minor transactions. See 49 U.S.C. 11321-26; 49 CFR part 1180. The Board reserves the right to require the filing of supplemental information, if necessary to complete the record.
PUBLIC INSPECTION. The application is available for inspection
in the Docket File Reading Room (Room 755) at the offices of the Surface
PROCEDURAL SCHEDULE. The Board has considered applicants’ INRD-3/SOO-3 request (filed December 15, 2005) for a procedural schedule, under which the Board would issue its final decision on April 24, 2006, and that decision would become effective on May 24, 2006.
is adopting a procedural schedule that is essentially the same as applicants’
proposed procedural schedule. However,
whereas applicants’ schedule provides that an oral argument will be held, if
procedural schedule adopted by the Board:
any person who wishes to participate in this proceeding as a POR must
file, no later than January 27, 2006,
a notice of intent to participate; all comments, protests, requests for
conditions, and any other evidence and argument in opposition to the primary
application or either of the related filings, including filings by DOJ and DOT,
must be filed by February 21, 2006;
and responses to comments, protests, requests for conditions, and other
opposition and rebuttal in support of the primary application or either of the
related filings must be filed by March
8, 2006. As in past proceedings, DOJ
and DOT will be allowed to file, on the response due date (here, March 8), their comments in response to
the comments of other parties, and applicants will be allowed to file (as
quickly as possible thereafter) a response to any such comments of DOJ and/or
DOT. Under this schedule, a public
hearing or oral argument may be held the
NOTICE OF INTENT TO PARTICIPATE. Any person who wishes to participate in this proceeding as a POR must file with the Board, no later than January 27, 2006, a notice of intent to participate, accompanied by a certificate of service indicating that the notice has been properly served on the Secretary of the United States Department of Transportation, the Attorney General of the United States, Mr. Hynes (as representative of Soo), and Mr. Broadley (as representative of INRD).
SERVICE LIST NOTICE. The Board will serve, as soon after
COMMENTS, PROTESTS, REQUESTS
FOR CONDITIONS, AND OTHER OPPOSITION EVIDENCE AND ARGUMENT, INCLUDING FILINGS
BY DOJ AND DOT. All comments,
protests, requests for conditions, and any other evidence and argument in
opposition to the primary application or either of the related filings,
including filings by DOJ and DOT, must be filed by
Because the Transaction proposed in the application is a minor transaction, no responsive applications will be permitted. See 49 CFR 1180.4(d)(1).
Protesting parties are advised that, if they seek either the denial of the application or the imposition of conditions upon any approval thereof, on the theory that approval (or approval without conditions) would harm competition and/or their ability to provide essential services, they must present substantial evidence in support of their positions. See Lamoille Valley R.R. Co. v. ICC, 711 F.2d 295 (D.C. Cir. 1983).
RESPONSES TO COMMENTS,
PROTESTS, REQUESTS FOR CONDITIONS, AND OTHER OPPOSITION; REBUTTAL IN SUPPORT OF
THE APPLICATION. Responses to
comments, protests, requests for conditions, and other opposition submissions,
and rebuttal in support of the primary application or either of the related
filings, must be filed by
PUBLIC HEARING/ORAL ARGUMENT. The Board may hold a public hearing or an
oral argument in this proceeding the
DISCOVERY. Discovery may begin immediately. The parties are encouraged to resolve all discovery matters expeditiously and amicably.
ENVIRONMENTAL MATTERS. Under the Council on Environmental Quality (CEQ) regulations, for those types of proposed actions for which the environmental effects are ordinarily insignificant, an environmental review need not be conducted under the National Environmental Policy Act of 1969 (NEPA). Rather, such activities are covered by a “categorical exclusion.” In its environmental rules, the Board has various categorical exclusions. As pertinent here, where portions of the Acquired Lines are located in an air quality “nonattainment” area, a rail line acquisition proposal that would not result in operational changes that exceed certain thresholds-generally an increase in rail traffic of at least three trains a day or 50% in traffic (measured in gross ton miles annually)-normally requires no environmental review. 49 CFR 1105.6(c)(2)(i).
Applicants state that the traffic
increases they project to occur, should this proposal be approved, consist of
increasing local service to and from
While INRD believes that these efficiencies would eventually attract additional rail traffic, including diversion from trucks, applicants state that the potential traffic increases would not result in any changes in operations that exceed the Board’s thresholds for environmental documentation established in the Board’s environmental rules at 49 CFR 1105.7(e)(5)(ii), and there is nothing in the application to indicate that the transaction has any potential for significant environmental impacts. The Board’s Section of Environmental Analysis (SEA) therefore has concluded that formal environmental review is not warranted in this case, and that this proceeding is “categorically excluded” from environmental review under NEPA.
Finally, SEA agrees with applicants that the proposed action does not require historic review under the National Historic Preservation Act of 1966 because further approval would be required to abandon any service, and there are no plans to dispose of or alter properties subject to the Board’s jurisdiction that are 50 years old or older. 49 CFR 1105.8(b)(1).
FILING/SERVICE REQUIREMENTS. Persons participating in this proceeding may “file” with the Board and “serve” on other parties: a notice of intent to participate (due by January 27); a certificate of service indicating service of prior pleadings on persons designated as PORs on the service-list notice (due by the 10th day after the service date of the service-list notice); any comments, protests, requests for conditions, and any other evidence and argument in opposition to the primary application or either of the related filings (due by February 21); and any responses to comments, etc., and any rebuttal in support of the primary application or either of the related filings (due by March 8).
Any document filed in this proceeding must be filed either via the Board’s e-filing format or in the traditional paper format.
Any person e-filing a document should comply with the instructions found
on the Board’s website at “www.stb.dot.gov” at the “E-FILING” link. Any person filing a document in the
traditional paper format should send an original and 10 paper
copies of the document (and also an IBM-compatible floppy disk with any
textual submission in any version of either Microsoft Word or WordPerfect)
to: Surface Transportation Board,
Service Requirements. One copy of each document filed in this proceeding must be sent to each of the following (any copy may be sent by e-mail only if service by e-mail is acceptable to the recipient): (1) Secretary of the United States Department of Transportation, 400 Seventh Street, S.W., Washington, DC 20590; (2) Attorney General of the United States, c/o Assistant Attorney General, Antitrust Division, Room 3109, Department of Justice, Washington, DC 20530; (3) John Broadley (representing INRD), John H. Broadley & Associates, P.C., 1054 31st Street, N.W., Suite 200, Washington, DC 20007; (4) Terence M. Hynes (representing Soo), Sidley Austin Brown & Wood, 1501 K Street, N.W., Washington, DC 20005; and (5) any other person designated as a POR on the service-list notice.
SERVICE OF DECISIONS, ORDERS, AND NOTICES. The Board will serve copies of its decisions, orders, and notices only on those persons who are designated on the official service list as either POR, MOC, or GOV. All other interested persons are encouraged either to secure copies of decisions, orders, and notices via the Board’s website at “www.stb.dot.gov” under “E-LIBRARY/Decisions & Notices” or to make advance arrangements with the Board’s copy contractor, ASAP Document Solutions (mailing address: Suite 103, 9332 Annapolis Rd., Lanham, MD 20706; e-mail address: firstname.lastname@example.org; telephone number: 202-306-4004), to receive copies of decisions, orders, and notices served in this proceeding. ASAP Document Solutions will handle the collection of charges and the mailing and/or faxing of decisions, orders, and notices to persons who request this service.
ACCESS TO FILINGS. An interested person does not need to be on the service list to obtain a copy of the primary application or any other filing made in this proceeding. Under the Board’s rules, any document filed with the Board (including applications, pleadings, etc.) shall be promptly furnished to interested persons on request, unless subject to a protective order. 49 CFR 1180.4(a)(3). The public version of the primary application and other filings in this proceeding will also be available on the Board’s website at “www.stb.dot.gov” under “E-LIBRARY/Filings.”
This action will not significantly affect either the quality of the human environment or the conservation of energy resources.
It is ordered:
1. The application in STB Finance Docket No. 34783 is accepted for consideration.
2. The parties to this proceeding must comply with the Procedural Schedule adopted by the Board in this proceeding as shown in Appendix A.
3. The parties to this proceeding must comply with the procedural requirements described in this decision.
4. This decision is effective on
By the Board, Chairman Buttrey and Vice Chairman Mulvey.
APPENDIX A: PROCEDURAL SCHEDULE
 Under 49 U.S.C. 11325(d)(2), the Board must conclude any evidentiary proceedings by the 105th day after the publication of the notice and must issue a final decision by the 45th day after conclusion of the evidentiary proceeding. While the Board will attempt to meet the applicants’ accelerated schedule, the Board will take the full statutory time allotted to issue a final decision if necessary.
 The Board’s regulations divide railroads into three classes based on annual carrier operating revenues. Class I railroads are those with annual carrier operating revenues of $250 million or more (in 1991 dollars); Class II railroads are those with annual carrier operating revenues of more than $20 million but less than $250 million (in 1991 dollars); and Class III railroads are those with annual carrier operating revenues of $20 million or less (in 1991 dollars). See 49 CFR Part 1201, General Instruction 1-1(a).
 Soo, its
parent, CPRC, and its affiliate,
 See CSX
Corporation and CSX Transportation, Inc.—Control—The
 CSXT and UP jointly own the Dolton Junction to Woodland Junction line. Each has the right unilaterally to grant trackage rights over the line.