STB REPORT #3 - FEBRUARY 1 - 15, 1998 ****************************************************************************** A compilation of decisions and notices published by the Surface Transportation Board. Includes information on track abandonments, ownership changes and trackage rights agreements. Condensed for readability. The full text is available at www.stb.dot.gov/ ****************************************************************************** SURFACE TRANSPORTATION BOARD DECISION AND NOTICE OF INTERIM TRAIL USE OR ABANDONMENT Docket No. AB-33 (Sub-No. 94X) UNION PACIFIC RAILROAD COMPANY--ABANDONMENT EXEMPTION-- MAGNOLIA TOWER-MELROSE LINE IN ALAMEDA COUNTY, CA Union Pacific Railroad Company (UPRR) filed a notice of exemption under 49 CFR Subpart F--Exempt Abandonments and Discontinuances to abandon approximately 4.9 miles of the Magnolia Tower-Melrose line (portion of the Canyon Subdivision) from milepost 5.8 near Magnolia Tower to milepost 10.7 near Melrose, in Alameda County, CA. Notice of the exemption was served and published in the Federal Register on August 13, 1996. A 180-day public use condition was imposed under 49 U.S.C. 10906 at the request of San Francisco Bay Trail (San Francisco) for a portion of the line from milepost 7.6 to milepost 7.1. The condition required that UPRR keep the right-of-way intact, including bridges, culverts, and similar structures, for a period of 180 days after the September 11, 1996 effective date of the exemption to permit San Francisco and any other state or local government agency, or other interested person to negotiate for acquisition of the line for public use. On January 22, 1997, a decision and notice of interim trail use or abandonment was served authorizing a 180-day period for the City of Oakland (City) to negotiate an interim trail use/rail banking agreement with UPRR for the portion of the right-of-way from milepost 7.6 to milepost 7.1. The 180-day period was scheduled to expire on July 21, 1997, but was extended through February 8, 1998, by decision served on February 10, 1997. On January 14, 1998, the City filed a request for a 180-day extension of the NITU and the public use condition for the .5-mile portion of the right-of-way from milepost 7.6 to milepost 7.1. The City also requested a NITU pursuant to section 8(d) of the National Trails System Act, 16 U.S.C. 1247(d) (Trails Act), and a 180-day public use condition under 49 U.S.C. 10905, in order to negotiate with UPRR for the 3.6-mile portion of the right-of-way from milepost 7.1 at Oak Street to milepost 10.7 at Calhoun and 49th Avenue. The City submitted a statement of willingness to assume financial responsibility for management of, for any legal liability arising out of the transfer or use of, and for payment of taxes for, the right-of-way, as required at 49 CFR 1152.29, and acknowledged that use of the right-of-way for trail purposes is subject to future reactivation for rail service. The City states that it needs the full 180-day period to undertake negotiations with UPRR. Under 49 U.S.C. 10906, the Board's public use jurisdiction expires 180 days from the effective date of the decision approving or exempting the abandonment. The public use condition imposed in the August 12, 1996 decision was for the maximum period permitted by statute. Therefore, the requested extension of the public use condition for the .5-mile portion of the right- of-way from milepost 7.6 to milepost 7.1 and the request to impose a public use condition on the 3.6-mile portion of the right-of-way from milepost 7.1 at Oak Street to milepost 10.7 at Calhoun and 49th Avenue are not permitted by the law and will be denied. By letter filed January 27, 1998, UPRR states that it is not willing to negotiate with the City for interim trail use for the right-of-way between milepost 5.8 and milepost 7.1 and between milepost 9.0 and milepost 10.7 and, indeed, that it had previously advised the Board that it had abandoned the segment between milepost 5.8 and milepost 7.1. UPRR also states that it is willing to negotiate interim trail use on the right-of-way from milepost 7.1 to milepost 9.0, and is willing to continue negotiations with the City until August 8, 1998. It is ordered: 1. This proceeding is reopened. 2. The request of the City to extend the public use condition on the .5-mile line of railroad from milepost 7.6 to milepost 7.1 and for the issuance of a public use condition on the remaining 3.6-mile line of railroad from milepost 7.1 at Oak Street to milepost 10.7 at Calhoun and 49th Avenue are denied. 3. The negotiation period under the NITU for the right-of-way between milepost 7.1 and milepost 7.6 is extended to August 8, 1998, and a NITU, also extending through August 8, 1998, is issued for the right-of-way between milepost 7.6 and milepost 9.0. 4. Upon reconsideration, the notice of exemption served and published in the Federal Register on August 12, 1996, exempting the abandonment of the line described above is modified to the extent necessary to implement interim trail use/rail banking as set forth below, for the portion of the right-of-way from milepost 7.1 at Oak Street to milepost 9.0 until August 8, 1998. 5. If an interim trail use/rail banking agreement is reached, it must require the trail user to assume, for the term of the agreement, full responsibility for management of, for any legal liability arising out of the transfer or use of (unless the user is immune from liability, in which case it need only indemnify the railroad against any potential liability), and for the payment of any and all taxes that may be levied or assessed against, the right-of-way. 6. Interim trail use/rail banking is subject to the future restoration of rail service and to the user's continuing to meet the financial obligations for the right-of-way. 7. If interim trail use is implemented, and subsequently the user intends to terminate trail use, it must send the Board a copy of this decision and notice and request that it be vacated on a specified date. 8. If an agreement for interim trail use/rail banking is reached by August 8, 1998, interim trail use may be implemented. If no agreement is reached by that time, UPRR may fully abandon the line. Decided: January 29, 1998 Service Date: February 2, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-459 (Sub-No. 2X)] Central Railroad Company of Indiana--Abandonment Exemption-- in Dearborn, Decatur, Franklin, Ripley, and Shelby Counties, IN On January 14, 1998, Central Railroad Company of Indiana (CIND) filed with the Surface Transportation Board (Board) a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903 to abandon a line of railroad known as the Shelbyville Line, extending from approximately railroad milepost 23.0, near Thatcher station and the town of Greendale, to approximately railroad milepost 81.0, near Shelbyville, a distance of approximately 58 miles, in Dearborn, Decatur, Franklin, Ripley, and Shelby Counties, IN. The line traverses U.S. Postal Service Zip Codes 47025, 47022, 47550, 47041, 47033, 47006, 47263, 47240, 47272, 46182, and 46176. The line includes the stations of Sunman, IN (milepost 39.9), Morris, IN (milepost 45.5), Batesville, IN (milepost 48.0), New Point, IN (milepost 54.0), Greensburg, IN (milepost 63.0), Adams, IN (milepost 68.0), Saint Paul, IN (milepost 73.0), and Waldron, IN (milepost 75.2). By issuance of this notice, the Board is instituting an exemption proceeding pursuant to 49 U.S.C. 10502(b). A final decision will be issued by May 4, 1998. Decided: January 27, 1998. Service Date: February 2, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-459 (Sub-No. 2X) CENTRAL RAILROAD COMPANY OF INDIANA--ABANDONMENT EXEMPTION-- IN DEARBORN, DECATUR, FRANKLIN, RIPLEY, AND SHELBY COUNTIES, IN MOTION FOR PROTECTIVE ORDER On January 14, 1998, Central Railroad Company of Indiana (CIND) filed a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903 to abandon a line of railroad known as the Shelbyville Line, extending from approximately milepost 23.0, near Thatcher station and the town of Greendale, to approximately milepost 81.0, near Shelbyville, a distance of approximately 58 miles in Dearborn, Decatur, Franklin, Ripley, and Shelby Counties, IN. Concurrently with its petition, CIND filed a motion for protective order. CIND requests that the Board maintain as confidential certain information submitted in connection with its petition for exemption, including, for example, annual summaries of CIND's financial results. CIND believes that unrestricted disclosure of commercially sensitive information, such as details regarding its present and previous financial results, could be competitively damaging to it. The railroad asserts that the sensitive information at issue need not be made public for proper disposition of the proceeding. On January 22, 1998, certain entities who ship goods over the line or who otherwise have an interest in the proceeding, and who intend to oppose the petition (hereafter protestants), filed a reply in opposition to the motion. Protestants complain that CIND seeks an overly broad license to keep secret from public scrutiny a wide range of unspecified data. They argue that the financial data that CIND seeks to keep confidential is relevant to the issues presented and should be made available to protestants. They also contend that provisions of the railroad's proposed protective order are unduly burdensome or overly stringent, as they would force some protestants to retain outside professionals to review protected data, and these professionals would be barred from discussing the data with them. The motion for protective order will be granted in part. Protestants are correct that the request lacks specificity. Nevertheless, the only matter that CIND has segregated as confidential is its Exhibit H, containing annual summaries of financial results (consolidated balance sheets), and section F of Part I of its petition, which discusses that exhibit. As such, the coverage of the protective order can be limited accordingly. Protestants are incorrect regarding the relevance of this matter to the issues presented. While the railroad's overall financial condition might be relevant to issues presented in the related complaint proceeding, it does not appear relevant here. In an abandonment proceeding, the Board's focus is on costs and revenues associated with the operation of the subject line. As a railroad is not required to cross-subsidize an unprofitable line, the railroad's overall financial condition is not an issue. There is, however, merit in protestants arguments that the proposed protective order contains some provisions that appear overly stringent. Accordingly, the Board will substitute for CIND's proposed order an order of the type it customarily issues. It is ordered: 1. The motion for a protective order is granted in part. CIND's balance sheets shall be kept under seal by the Board and not placed in the public docket or otherwise disclosed to the public or any participants in this proceeding, unless otherwise ordered by the Board. Decided: January 30, 1998 Service Date: February 2, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-55 (SUB-NO. 552X) CSX Transportation, Inc. -- Abandonment Exemption -- In Raleigh County, WV NO. AB-290 (SUB-NO. 201X) Norfolk and Western Railway Company -- Discontinuance of Trackage Rights Exemption -- In Raleigh County, WV In this proceeding, the CSX Transportation, Inc.(CSXT) has filed a petition under 49 U.S.C. 10502 seeking exemption from the requirements of 49 U.S.C. 10903 in connection with the abandonment of its railroad line located between milepost CAR-0.58 at Beckley Junction and milepost CAR-6.82 at the end of the track at Cranberry, a distance of 6.24 miles in Raleigh County, WV. The Norfolk and Western Railway Company (N&W), a wholly-owned subsidiary of Norfolk Southern Railway Company (NS), has jointly filed this petition to discontinue its trackage rights over this rail line. In recent years, only CSXT has provided rail service to the four shippers on the line. NS has not handled any rail traffic over this line in over two years. Austin Powder Company received 114 carloads of ammonium nitrate at Beckley in 1995, 244 carloads in 1996, and 29 carloads through March 1997, when it began receiving all its shipments at its new rail-served facility in Mt. Hope, WV. Dowell Schlumberger, Inc. received 33 carloads of industrial sand at Beckley in 1995, 47 carloads in 1996, and 46 carloads through September, 1997. Dowell is relocating its Beckley rail receiving facility to another rail-served facility in Raleigh, WV. Beckley Newspapers received 37 carloads of newsprint in 1995, 25 carloads in 1996, and its last shipment of one carload in January 1997. Beckley now uses motor carriers exclusively. Southern West Virginia Asphalt received 169 carloads of aggregate at Sprague in 1995, and 151 carloads in 1996. Since late 1996, Southern has used truck transportation exclusively. The right of way width varies from 66 to 180 feet. There is one deck plate girder bridge on the line. We recommend that no environmental conditions be placed on any decision granting abandonment authority. Service Date: February 3, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-167 (Sub-No. 1161X) CONSOLIDATED RAIL CORPORATION--ABANDONMENT EXEMPTION-- IN VERMILION AND CHAMPAIGN COUNTIES, IL On February 7, 1997, a decision and notice of interim trail use or abandonment (NITU) was served, authorizing a 180-day period for Champaign County Design and Conservation Foundation (CCDC Foundation) to negotiate an interim trail use/rail banking agreement with Consolidated Rail Corporation (Conrail) for approximately 24.50 miles of its line of railroad known as the Pekin Secondary Track from approximately milepost 4.00 to approximately milepost 28.50, in Vermilion and Champaign Counties, IL. The 180-day period under the NITU was scheduled to expire on August 8, 1997, but was extended through February 4, 1998, by decision served August 1, 1997. On January 27, 1997, CCDC Foundation, with the consent of Conrail, filed a request for an extension of the negotiation period for an additional 180 days. CCDC Foundation states that it and Conrail have been negotiating in good faith and that it has signed a written agreement of sale subject to appraisals, environmental and title work, but additional time is needed to complete the conditions and reports under the written agreement for interim trail use/rail banking with Conrail. It is ordered: 1. The negotiating period under the NITU is extended to August 3, 1998. Decided: January 30, 1998 Service Date: February 3, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-477 (Sub-No. 2X) OWENSVILLE TERMINAL COMPANY, INC. ABANDONMENT EXEMPTION IN GIBSON AND POSEY COUNTIES, IN By decision served November 7, 1997, the Board granted the Owensville Terminal Company, Inc. (OTC), an exemption under 49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C. 10903 to abandon a line of railroad known as the Cynthiana- Owensville line, subject to labor protection conditions. The rail line runs from milepost 277.0 north of Cynthiana to milepost 271.0 north of Owensville, a distance of 6.0 miles, in Gibson and Posey Counties, IN. Before the decision authorizing abandonment became effective, the Gibson County Farm Bureau Cooperative Association (the Farm Bureau) timely filed an offer of financial assistance (OFA) under 49 U.S.C. 10904 and 49 CFR 1152.27 to purchase a 2-mile segment of the line between milepost 273.0 and milepost 271.0. A decision served November 20, 1997, found the Farm Bureau financially responsible and postponed the effective date of the exemption for the 2-mile segment to permit the OFA process to proceed. Subsequently, the Farm Bureau requested that the Board establish the conditions and amount of compensation for sale of the segment. Thereafter, in a decision served January 16, 1998, the Board set the purchase price of the segment at $120,500 and established terms for transfer of the segment. On January 12, 1998, the Farm Bureau filed a petition to reopen the November 7, 1997 decision, asserting that the Board committed material error. The Farm Bureau's petition will be considered in a subsequent decision. On January 26, 1998, the Farm Bureau notified the Board that it accepted the terms and conditions set in the January 16 decision. When a person offering to purchase a line accepts the terms and conditions set by the Board, the offer is binding. Accordingly, the sale will be approved, and the petition for exemption will be dismissed as to the segment located between milepost 273.0 and milepost 271.0. It is ordered: 1. Under 49 U.S.C. 10904, the Farm Bureau is authorized to acquire the segment located between milepost 273.0 and milepost 271.0. 2. Under 49 U.S.C. 10904 and 49 CFR 1152.27(h)(7), the petition for exemption is dismissed as to that segment located between milepost 273.0 and milepost 271.0, effective on the date the sale is consummated. Decided: January 29, 1998 Service Date: February 3, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-55 (Sub-No. 557X) CSX TRANSPORTATION, INC.--ABANDONMENT EXEMPTION--IN ATKINSON COUNTY, GA CSXT Transportation, Inc. (CSXT) filed a notice of exemption under 49 CFR 1152 Subpart F--Exempt Abandonments to abandon approximately 0.51 miles of its line of railroad between milepost AP-617.94 and milepost AP-618.45 at the end of track, in Pearson, Atkinson County, GA. The notice was served and published in Federal Register on January 7, 1998. The exemption is scheduled to become effective on February 6, 1998. The Board's Section of Environmental Analysis (SEA) has issued an environmental assessment (EA) in this proceeding, served January 12, 1998. In the EA, SEA indicates that the Georgia State Historic Preservation Officer (SHPO) advised that the entire line should be considered eligible for listing in the National Register of Historic Places. Therefore, SEA recommends that CSXT consult with SHPO to aid the Surface Transportation Board in meeting its responsibilities under the National Historic Preservation Act. SEA states that the purpose of this consultation is to: (1) determine whether the rail line segment is potentially eligible for inclusion in the National Register of Historic Places; and (2) determine ways to avoid or reduce any adverse impacts association with abandonment if the line is eligible for inclusion. Therefore, pending resolution of this issue, SEA recommends that CSXT be required to retain its interest in and take no steps to alter the historic integrity of the line segment until completion of the section 106 process of the National Historic Preservation Act, 16 U.S.C. 470f. It is ordered: 1. This proceeding is reopened. 2. Upon reconsideration, the exemption of the abandonment of the line described above is subject to the condition that CSXT retain its interest in and take no steps to alter the historic integrity of the line segment until completion of the section 106 process of the National Historic Preservation Act, U.S.C. 470f. Decided: January 27, 1998 Service Date: February 4, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33350 SOO LINE RAILROAD COMPANY PETITION FOR DECLARATORY ORDER On May 29, 1997, the Soo Line Railroad Company (Soo) filed a petition for a declaratory order to determine if its acquisition of a 33 % ownership interest in I&M Rail Link, LLC (I&M) requires approval under 49 U.S.C. 11323, et seq. Soo indicates that its petition addresses issues that we had deferred ruling on in I&M Rail Link, LLC Acquisition and Operation Exemption Certain Lines of Soo Line Railroad Company D/B/A Canadian Pacific Railway, STB Finance Docket No. 33326 (STB served Apr. 2, 1997) (I&M Acquisition). With its petition, Soo submitted a verified statement from its president and chief executive officer, Edwin V. Dodge. A decision served June 23, 1997, instituted a proceeding and established a schedule for filing reply comments. Comments were filed by the United Transportation Union (UTU) and jointly by the City of Ottumwa, IA, and UTU officials, Patrick C. Hendricks and Joseph C. Szabo (Ottumwa). Soo filed a rebuttal. After reviewing these pleadings, we have determined that Soo will not control I&M. In STB Finance Docket No. 33326, I&M, a newly-created noncarrier, filed a notice of exemption under 49 CFR 1150.31 to acquire from Soo and to operate approximately 1,109 miles of rail lines and 262 miles of trackage rights in the States of Minnesota, Wisconsin, Illinois, Iowa, Kansas and Missouri. The system to be acquired consisted of Soo's KC Mainline between Kansas City, MO, and Pingree Grove, IL, including trackage rights between Pingree Grove and Chicago, IL, and Soo's Corn Lines between Sabula and Sheldon, IA, including branch lines and trackage rights in southern Minnesota. In STB Finance Docket No. 33327, a directly related notice of exemption under 49 CFR 1180.2(d)(2) was filed by Dennis Washington, Dorn Parkinson, Mort Lowenthal, William H. Brodsky, J. Fred Simpson and Thomas J. Walsh (collectively, the Washington Organization), seeking authority to continue in control (through stock ownership and management) of both I&M and Montana Rail Link, LLC (MRL), an existing Class II rail carrier, following I&M's acquisition of the Soo lines. In that notice, the Washington Organization stated that Mr. Washington would be the majority owner of both I&M's parent, I&M Holdings, LLC (Holdings), and MRL, and that the other individuals named in the notice would act as officers and/or directors of both I&M and MRL. (In STB Finance Docket No. 33328, MRL filed another directly related notice of exemption under 49 CFR 1180.2(d)(2), seeking authority to control I&M, along with a motion to dismiss. The Board subsequently dismissed MRL's notice, finding that the relationship between MRL and I&M would not result in improper control by MRL.) As part of the transaction, Soo obtained the option to acquire, and has acquired, a 33 % membership interest in I&M for $18,333,333. Apparently, a membership interest in a limited liability company such as I&M is equivalent to ownership of common stock in a corporation. Soo's membership interest in I&M was placed directly into an irrevocable voting trust, pending our decision on whether Soo's 33 % interest constitutes control of I&M. The remaining 66 % interest in I&M is held by Holdings. According to Soo, the rights and obligations of I&M's membership interest holders are contained in a Members Agreement and an Operating Agreement executed by Soo and Holdings. Under those agreements, Holdings has the right to nominate five of the seven members of I&M's Board of Managers, and Soo may nominate the other two members. The Operating Agreement provides that the Board of Managers shall have the sole right and authority to exercise the powers of the Company, and to manage, control and make all decisions affecting the business and affairs of the Company, and that [Soo] shall not be involved in the operations or management of the Company. Soo indicates that the agreements also contain provisions to protect its interest as a minority owner in I&M. The agreements specify that a supermajority of six board members would be required to approve: (1) the acquisition by I&M of an additional rail line for more than $5 million; (2) a major corporate reorganization by I&M involving the sale, purchase or lease of assets valued at more than $50 million; (3) a financing or refinancing by I&M exceeding $50 million; (4) any insider transaction between I&M and the Washington Organization (or its affiliates); (5) any major change in the policy regarding distributions by I&M to its members; and (6) dissolution of I&M. In addition, neither Holdings nor Soo may transfer its interest in I&M without the consent of the other party. Finally, Soo says, the Operating Agreement gives it a preemptive right to acquire a share of any additional membership interests issued by I&M proportionate to Soo's current percentage interest, and prohibits I&M from issuing additional ownership interests (or other rights) that would have the effect of diluting Soo's ownership percentage. Soo indicates that these contractual provisions protect it by prohibiting (without Soo's consent) extraordinary actions by I&M's management that might jeopardize Soo's investment in I&M. In I&M Acquisition, we denied petitions by UTU and Ottumwa to revoke the exemptions for I&M's line acquisition and Washington Organization's control of I&M. We also rejected arguments by UTU and Ottumwa that the section 10901 class exemption did not apply to I&M's line acquisition. Additionally, we disagreed with their contentions that Soo's option to acquire a minority interest in I&M and enter into commercial arrangements with I&M rendered the line sale transaction a sham, and that the transaction should be considered under 49 U.S.C. 11323. However, we deferred ruling on the control implications of Soo's option to acquire a minority interest in I&M, indicating that if and when Soo exercised its option, and a declaratory order was commenced to address the control issue, all interested persons would have an opportunity to submit pertinent evidence and argument. Soo contends that its ownership of a 33 % membership interest in I&M would not, in and of itself, amount to control of I&M. It notes that the remaining shares of I&M are not diffused, but are controlled by a single individual, Dennis Washington, through his ownership of Holdings. It points out that I&M's board would be controlled by the Washington Organization through its power to appoint five of the seven members. Soo further states that I&M's board will direct the day-to-day operations of I&M, noting that the Operating Agreement gives the board the sole right and authority to manage, control and make all decisions affecting the business of I&M. Soo adds that none of I&M's officers will be appointed by, or affiliated with, Soo or its parent, Canadian Pacific Railway Company (CPR). Moreover, Soo's witness Dodge testifies that I&M's board has exercised exclusive control over I&M's business affairs since I&M began operating on April 5, 1997. In I&M Acquisition, Commissioner Owen commented about the effect that two board members elected by Soo might have upon I&M especially if the remaining five board members are in disagreement. Soo responds that because all of the five remaining board members are effectively appointed by a single individual, Mr. Washington, it is unlikely that those majority directors would disagree about business issues having a substantial impact on I&M. Moreover, Soo states, even if two or more Washington-appointed board members did, in a particular instance, vote in a manner consistent with the views of the Soo-appointed board members, that action would be the result of the exercise by the Washington-appointed directors of their independent judgment, based on their perception of their fiduciary duty to I&M, and not because Soo could control their decisions. In such circumstances, Soo indicates, any corporate action taken by I&M would be the product of independent decisionmaking by the I&M board, not of control by Soo. Soo asserts that neither the minority shareholder protections it was accorded under the Operating Agreement nor any of the commercial arrangements between I&M and Soo either alone or in conjunction with Soo's proposed equity interest in I&M will enable it to control I&M. According to Soo, these agreements contain certain provisions and preemptive rights designed to prevent Soo's abuse, as the minority interest holder, by Holdings, the majority interest holder. In Soo's view these provisions protect it against actions by I&M's management that might jeopardize or dilute Soo's investment in I&M. However, as noted by Soo Witness Dodge, the minority shareholder protections do not in any way give Soo the power to control the management of I&M, or to direct I&M's day-to-day operations. Having the right to elect only two board members, Mr. Dodge notes, Soo will not have the power affirmatively to direct I&M to take any corporate action, or to pass any initiative before the I&M board over the objection of the majority owner, Holdings. Rather these provisions are claimed to enable Soo only to exercise a veto over actions initiated by Holdings that might erode the value of Soo's investment in I&M. Mr. Dodge further notes that while Soo has the right, in certain circumstances, to require Holdings to buy back Soo's interest in I&M, Soo has no right to require Holdings to sell its interest in I&M to Soo. Soo indicates that these provisions are far less restrictive than the covenants typically found in financing documents executed by new short-line carriers in connection with similar line sale transactions. Soo claims that other provisions reflect that Holdings, not Soo, controls I&M. It notes that the Operating Agreement specifies that Soo shall not be involved in the operations or management of I&M. Moreover, the Operating Agreement provides that the transaction is not a joint venture between Soo and Holdings, and that neither Soo (nor Holdings) is assuming any responsibility for the debts, liabilities or obligations of I&M. Soo further notes that in I&M Acquisition, the Board acknowledged that, if Soo were to exercise its option and become a minority investor in I&M, [Soo] would have a legitimate interest in ensuring that the terms of the commercial agreements between I&M and its affiliate are arms length arrangements in which I&M receives fair value. Soo states that it and I&M have entered into several ancillary agreements in connection with the I&M line sale transaction. Soo granted I&M incidental trackage rights over its line between St. Paul and River Jct., MN, and certain Soo lines in the Twin Cities and Chicago terminal areas. Apparently, Soo retained its line between St. Paul and River Jct. to preserve CPR's single-line route between western Canada and Chicago. Allegedly, the trackage rights were necessary to enable I&M to serve the Twin Cities-Kansas City north-south corridor. Soo indicated further that it had also retained its yard facilities in the Twin Cities and Chicago, and agreed to provide certain terminal services to I&M at the Bensenville Yard at Chicago and St. Paul Yard. Additionally, I&M agreed to provide haulage of finished automobiles that will be shipped for Soo's account to/from points on the Kansas City-Chicago line, to enable Soo to meet pre-existing contractual commitments to automotive shippers. Also, pursuant to the Asset Purchase Agreement (APA) filed in I&M Acquisition, Soo and I&M had entered into agreements for interline marketing and the division of revenues on joint movements. The parties agreed generally to cooperate in soliciting traffic for joint I&M- CPR/Soo routings where: (1) revenues and service via such routes are at least equal to those available via alternative routings, and (2) the shipper has not requested an alternate route. In addition, I&M granted CPR the right to quote rates from origins on CPR lines to destinations on I&M's lines (subject to certain minimum I&M revenue requirements), and CPR granted reciprocal rights to I&M for traffic moving from origins on I&M's lines to destinations on the CPR system. The Divisions Agreement provides for the division of revenues on joint I&M-CPR/Soo movements on a mileage prorate basis (subject to a minimum share for the carrier with the short haul). To enable I&M to meet demands of grain shippers located on the Corn Lines, Soo assertedly agreed to assign approximately 800 CPR/Soo covered hopper cars for I&M's use for a period of 12 months. Soo says that this equipment is being furnished at market-based rates. The APA provides that I&M will pay for its use of these cars at prescribed car hire charges established by CPR in the ordinary course of business. Soo contends that these voluntary, limited-term agreements will assist the parties in making a smooth transition in ownership of the Kansas City-Chicago and Corn Lines, and will foster the efficient movement of Soo/I&M interline traffic, but they will not and cannot give Soo any ability to direct or to control the day-to-day business or operations of I&M. Soo indicates that Soo would have considerably less influence over I&M's pricing and routing than is customary in most shortline transactions. UTU replies that the transaction between Soo and I&M and the related commercial relationships between these parties, establishes either control or joint use under section 11323. UTU asserts that, by retaining a 33 % interest in the I&M and appointing two of the seven board members, Soo will control I&M, or, at least, have joint ownership of the trackage. Assertedly, I&M will not be able to make any major decision without the approval of the two Soo members. UTU further claims that under the APA, Soo, as a minority member, will assume any losses by I&M in an amount proportionate to its interest. In its view, Soo's role is substantially more than a passive investor, since it has made a financial guarantee to this newly created operation. UTU cites operating, financial, marketing and management ties between I&M and Soo, which it contends shows that either Soo controls I&M or that these parties have entered into a joint business relationship which requires approval under section 11323. UTU alleges that Soo will continue to control over approximately 16% of the trackage over which I&M operates. UTU notes that the agreements granting trackage rights to I&M over Soo's lines between St. Paul and River Jct., and the terminal areas of the Twin Cities and Chicago, will enable Soo to control construction, maintenance, management, operation, train requirements, billing, insurance and renewal of the trackage, and subject I&M employees to CPR work rules and labor restraints. UTU indicates further that, as an aspect of I&M's purchase of Soo's line from Comus to Owatonna, MN, Soo acquired trackage rights to serve industries on this line, which are inaccessible to the remainder of the line I&M is purchasing. UTU asserts that this I&M track will still be subject to Soo management, operation and rules, and trains will be dispatched by Soo; that Soo will install and maintain all trains, locomotives, cabooses and other equipment and will be responsible for all mileage allowances and car hire charges on the trackage; and that Soo's employees who operate Soo trains over the Owatonna trackage are subject to Soo work rules. UTU claims that Soo will control I&M's terminal operations at the Bensenville Yard in the Chicago Terminal District and at the St. Paul Yard, where a substantial portion of I&M's traffic will be interchanged and switched. The union states that Soo will be responsible for all the operation, maintenance, repair, renewal, and management services and will perform the switching and exchange/interchange services and mechanical and clerical support for I&M. Soo has also granted to I&M the use of certain tracks in Northfield, MN, for interchange purposes, subject to Soo's operating rules, regulations, and supervision. UTU alleges that agreements relating to dispatching, haulage, equipment and marketing are further evidence of Soo's control or joint ownership. The union notes that I&M also entered into a haulage agreement with Soo, and now handles automobiles shipments for Soo's account on schedules consistent with the transit time requirements of Soo's automotive shipper contracts. Also, UTU observes, I&M switches or delivers in interchange Soo auto cars at the destination industry connecting carrier, as appropriate, and assembles, picks up and delivers all CPR auto cars coming to CPR from locations or connecting to I&M's lines. Moreover, according to UTU, I&M is not required to pay to Soo any trackage rights fees, terminal services fees, or other similar fees in connection with the handling of Soo auto cars. UTU notes that Soo added I&M as a named insured to CPR's property and liability insurance policies, which provide I&M the same coverage as Soo and with coverage limits equal to $100 million (in Canadian dollars), at no cost to I&M, to provide additional insurance protection for I&M in excess of I&M's own insurance coverage with respect to the entire system and acquired assets. Also, I&M maintains an insurance policy which names CPR as an insured. UTU views the agreements for interline marketing and the division of revenues on joint movements as further indicating Soo's control. UTU contends that these marketing and division agreements will enable I&M to receive the good will of Soo's name and its extensive marketing resources while Soo receives the benefits of I&M's lower labor costs. Furthermore, UTU submits that I&M's use of CPR/Soo cars suggests control. According to UTU, I&M and Soo have entered into agreements pursuant to which Soo (or CPR) makes equipment available to I&M. As indicated, Soo has also agreed to assign for I&M's use, for a period of 12 months, approximately 800 CPR/Soo covered hopper cars to assist I&M in meeting the demands of grain shippers located on the Corn Lines. UTU maintains that CPR has also agreed to permit I&M to use CPR's rail inspection trains and track testing equipment, using Soo employees to carry out the track testing work. According to UTU, I&M also subleases 270 gondola cars from Soo, and Soo provides to I&M up to 45 open top hoppers on a per diem basis for up to a year. UTU states that, while this number of CPR cars to be used by I&M does not appear significant, I&M would only own 210 miscellaneous cars and I&M would essentially be running with CPR rolling stock. UTU states that I&M has given Soo employees hired by I&M credit for up to four weeks of vacation time, and has permitted Soo employees it hires to roll their Soo 401k retirement accounts into I&M's retirement plan. Moreover, UTU indicates that Soo would give physical examinations to employees who work on I&M. UTU argues that the interrelationship between I&M and Soo with regard to hiring, work rules and pensions further demonstrates the strong and unusual ongoing ties between these supposedly separate entities. UTU further alleges that Soo has agreed to provide the dispatching service for I&M's operations from the date I&M commences operations. While this agreement is characterized as temporary, UTU suggests that the status of who will handle dispatching cannot be predicted in the future. Also, UTU states, I&M is required to install radio frequencies compatible with the radios used by Soo dispatchers on the radios used on I&M trains, vehicles, equipment, etc. According to UTU, Soo issues written instructions to all personnel (including supervisors) responsible for train dispatching on the I&M lines and I&M trains are to be dispatched exactly as if they were trains of Soo. Ottumwa argues that Soo has failed to submit information to show that it and its affiliates are not in control of I&M. It claims that Soo should have submitted an application and supporting documentation including corporate charts, lists of directors, or other information to indicate whether it controls I&M. Ottumwa asserts that the carriers failed to disclose the interest of Soo's parent, CPR, which was the entity named in I&M Acquisition as the selling carrier and any relationships CPR has with transportation entities controlled by Mr. Washington, including MRL, and Southern Railway of British Columbia (SRY). Mr. Washington's other transportation holdings include C. H. Cates & Sons, a shipberthing company in Western Canada, Seaspan International Limited (SIL), a tug and barge company operating on the west coast of Canada, and Norsk Pacific Steamship, Seaforth Towing & Salvage, and Westran. According to Ottumwa, Mr. Washington also controls Morrison Knudsen, a construction company in Boise, ID. Ottumwa claims that full disclosure is required to determine whether there are any interrelationships between CPR and transportation companies controlled by Mr. Washington. Ottumwa argues further that Soo's relationship to I&M amounts to control. Ottumwa has submitted verified statements from Patrick C. Hendricks, Iowa Legislative Director for UTU, which were originally submitted in I&M Acquisition. Mr. Hendricks refers to statements made by Soo and Washington Organization officials at several public meetings prior to the transaction which, he says, indicate that CPR and I&M were creating a partnership beyond CPR's one-third equity ownership. He states that the statements indicate that the partnership included a commercial relationship, which includes routing of traffic and soliciting traffic. Ottumwa also cites the minority shareholder provisions in the Membership Agreement and commercial agreements as further evidence of Soo's control of I&M. In its rebuttal, Soo asserts that UTU and Ottumwa have not presented any evidence that would support a finding that its acquisition of a 33 % ownership interest in I&M either individually or in conjunction with the commercial arrangements between Soo and I&M gives it the power to control I&M or to direct its operations. Soo contends that UTU has misinterpreted the terms of I&M's corporate documents. Soo states that UTU's assertion that Soo has agreed to assume any losses by I&M is simply not true. I&M's Operating Agreement describes the manner in which profits and losses incurred by I&M are to be allocated among the company's members. Soo indicates that these provisions are merely accounting provisions, and impose no obligation upon Soo or Holdings to assume any liability or to guarantee any financial obligation of I&M. Soo notes that other provisions of the Operating Agreement make it clear that I&M is not a joint venture between Soo and Holdings, and that neither Soo nor Holdings has agreed to assume any responsibility for the debts, liabilities or obligations of I&M. Responding to UTU's claims about the trackage rights and terminal services agreements, Soo asserts that those agreements confirm Soo's right as the landlord carrier to dispatch, maintain and control the operation of the Soo trackage over which I&M exercises trackage rights, and to require I&M crews and equipment to comply with Soo's rules while operating on Soo trackage. Soo states that these provisions are found in virtually every trackage rights agreement in the rail industry today. Soo contends that agreements under which I&M purchases terminal and dispatching services and leases rolling stock are purely voluntary in nature. Soo notes that I&M may purchase these services from Soo, but is not required to do so. Soo points out that I&M has entered into alternative terminal services arrangements with the Minnesota Commercial Railway for the handling of I&M cars at St. Paul, and with the Belt Railway of Chicago for I&M cars in the Chicago terminal area. Soo indicates that in I&M Acquisition, the Board noted that the ancillary agreements, other than I&M's trackage rights over Soo, are terminable in five years. Soo asserts that these agreements would not provide Soo with any long-term opportunity to exercise control over I&M's operations. Soo also disputes Ottumwa's assertion that it failed to provide information about the transaction. Soo states that the Board and interested parties have been furnished all of the documents relating to Soo's proposed minority ownership interest in I&M, as well as the ancillary commercial arrangements between I&M and Soo. It contends that it need not have filed an application, as suggested by Ottumwa. Responding to Ottumwa's assertions about interrelationships between CPR and companies owned by Mr. Washington, Soo has submitted a verified statement from Wayne C. Serkland, a Soo staff attorney. Mr. Serkland provides a corporate chart listing the companies in which CPR and its parent, Canadian Pacific Limited (CPL) hold ownership interests. The chart shows that neither CPL nor CPR nor Soo owns any interest in any of the companies controlled by Mr. Washington. Mr. Serkland also has submitted a list of CPL's directors and officers. The chart shows that none of the directors of CPR or Soo serves as a director of any of the companies controlled by Mr. Washington, and none of the individuals named as controlling I&M and MRL is a director or officer of CPL or Soo. Mr. Serkland indicates that the two Soo-appointed members of I&M's board are the only interlocking directors between the Washington Organization companies and CPR/Soo. Soo further maintains that there are no extensive day-to-day business relationships between CPR/Soo and the companies controlled by Mr. Washington. According to Soo, the CPR system does not interchange freight directly with either MRL or SIL, and Soo doubts that it does business with other companies controlled by Mr. Washington. Soo states, however, that even if it had ordinary business relationships with companies controlled by Mr. Washington, this would not constitute control within the meaning of section 11323. Soo disagrees with Ottumwa about the impact of statements made by Soo and Washington personnel prior to the line sale transaction concerning a partnership relationship between Soo and I&M. According to Soo, these statements reflect nothing more than that Soo and I&M hoped to work cooperatively in developing additional freight traffic for their respective rail lines. Soo asserts that a partnership relationship between a new short line and the selling Class I railroad following a line sale is typical of many successful short line ventures. However, Soo maintains, the existence of such cooperation does not demonstrate that the Class I carrier controls the connecting short line for purposes of section 11323. The definition of control in 49 U.S.C. 10102(3) includes actual control, legal control, and the power to exercise control, through or by (A) common directors, officers, stockholders, a voting trust, or a holding or investment company, or (B) any other means. Control of a carrier for which 11323 authorization is required embraces the power or authority to manage, direct, superintend, restrict, regulate, govern, administer or oversee the day-to-day affairs of that carrier. The existence of control is an issue of fact to be determined by the circumstances of each case. Our review of all of the relevant facts here reveals that Soo will not control I&M. Control does not require ownership of a majority of a corporation's voting stock. For example, control has been found in the owner of the largest block of shares where the remaining shares are widely diffused. Also, a minority shareholder can have control, if it has substantial and dominant influence or power over the corporation. On the other hand, a minority interest in a closely held corporation with minority owner protections has been held not to constitute control. Soo's ownership of a 33 percent membership interest in I&M would not place Soo in control of I&M within the meaning of section 11323. The remaining shares of I&M are not diffused, but are controlled by a single individual, Mr. Washington, through his ownership of Holdings. The Washington Organization has the power to appoint five of the seven members of I&M's board, which has the sole right and authority to manage, control and make all decisions affecting the business of I&M. Soo will have the power to appoint two members of the seven member board. Except for these two board members, Soo will have no other affiliation with I&M. No I&M officer will be appointed by, or affiliated with, Soo or CPR. Clearly, the Washington Organization, not Soo, will control the I&M's board which, in turn, has the power to direct the day-to-day operations of I&M. Moreover, we have noted Soo witness Dodge s statement that I&M's board has exercised exclusive control over I&M's business affairs since I&M commenced operations on April 5, 1997. There is nothing in the record indicating that Soo has become or will become involved in I&M's day-to-day management or that Soo or CPR has any intercorporate relationships with companies controlled by Mr. Washington. Nor is there anything in the record to support a finding that Soo would jointly control I&M with Holdings. The minority protections accorded Soo in the Operating Agreement allow Soo to monitor I&M's corporate activities in order to protect its economic position. These provisions appear similar to other safeguards designed to protect the interest of minority shareholders and which have been held not to constitute control. UTU and Ottumwa have offered no convincing arguments that these protections would give Soo effective control over I&M within the meaning of the statute. In I&M Acquisition, we rejected claims by UTU and Ottumwa that the marketing and operating agreements would give Soo the power to control I&M. We noted that the relationship created by these commercial arrangements appears to be no different from those between numerous shortline or regional spinoffs and the Class I railroads of which the lines were previously a part. The same can be said for the incidental trackage rights and terminal agreements that Soo and I&M entered into. UTU and Ottumwa have not presented anything in this proceeding to warrant changing our view that these agreements between Soo and I&M would not transform Soo's minority equity investment in I&M into a controlling interest for purposes of section 11323. These voluntary agreements, some having limited terms, will assist the parties in making a smooth transition in ownership of the Kansas City-Chicago and Corn Lines, and will foster the efficient movement of Soo/I&M interline traffic, but they will not enable Soo to direct or to control the day-to-day business or operations of I&M. The UTU asserts that the chief motivation for this transaction was the desire of the Soo to transfer the employees working on the sold lines out from under a collective bargaining agreement favorable to labor and to bring them within an assertedly inferior agreement with the Brotherhood of Locomotive Engineers. This novel theory assumes that I&M and Soo are the same company; they are not. The chief beneficiary of any reduced labor costs from the operation of these lines will be I&M, not Soo. Nothing in the arrangements cited by UTU or Ottumwa is alleged to funnel a disproportionate share of the revenue from rail operations to Soo. Finally, we note that this proceeding was instituted to determine whether Soo has acquired control of I&M. Accordingly, we will not revisit other issues raised by UTU relating to I&M's acquisition of Soo's lines which were resolved in I&M Acquisition. Nor will we again discuss claims by Ottumwa that inadequate notice of the proceeding was provided and that it was not given the opportunity for discovery. We find that Soo's acquisition of a 33 % ownership interest in I&M does not constitute control and does not require approval under 49 U.S.C. 11323. It is ordered: 1. This proceeding is discontinued. Decided: February 3, 1998 Service Date: Late Release February 4, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD Finance Docket No. 32821 BAR ALE, INC. v. CALIFORNIA NORTHERN RAILROAD CO. AND SOUTHERN PACIFIC TRANSPORTATION COMPANY This proceeding was instituted by complaint filed by Bar Ale, Inc. (complainant), on November 13, 1995, against the California Northern Railroad Company (CNR) and Southern Pacific Transportation Company (SPT) (collectively defendants). On November 30, 1995, a Notice of Complaint and a copy of the complaint alleging an unlawful embargo and an unlawful abandonment were served on defendants. Defendants filed separate answers on December 20, 1995. A procedural schedule under the modified procedure was served on January 26, 1996, and provided for complainant to submit its opening statement on or before February 26, 1996. Subsequently, discovery disputes required the postponement of the submission of opening statements. By decision served April 9, 1996, the procedural schedule was suspended pending action on complainant's motions to compel, and on the completion of discovery. On May 1, 1996, complainant requested the issuance of a protective order to facilitate resolution of the discovery disputes. Complainant indicated that the only remaining discovery dispute involved the lease agreement between CNR and SPT. SPT stated that it was "willing to provide this information to Bar Ale once an appropriate protective order has been agreed to by SPT, CNR and Bar Ale and entered by the Board." On August 21, 1996, a protective order was issued. On September 18, 1996, complainant filed with the Board a copy of its answers and responses to SPT's First and Second Set of Interrogatories as well as a signed confidentiality statement pursuant to the August 21 decision. Since that time, neither party has made any filings with the Board. Over a year has passed without any discernable action by either party. Parties to proceedings before the Board are obligated to prosecute their claims and defenses with reasonable diligence, or to inform the Board that the controversy is no longer in dispute. Accordingly, we will vacate the April 9, 1996 order suspending the procedural schedule, and the parties will be ordered to advise the Board whether the case has been settled. If the controversy has not been resolved, defendants are ordered to provide Bar Ale a copy of SPT-CNR lease pursuant to the protective order. In addition, a new procedural schedule is being established so that record development can be promptly completed in the event that the parties require a resolution by the Board. It is ordered: 1. The April 9, 1996 decision suspending the procedural schedule in this proceeding is vacated. 2. Parties shall indicate, by February 20, 1998, whether they desire the Board to proceed with this complaint. 3. If the controversy has not been resolved, defendants are directed to furnish to complainant the SPT-CNR lease agreement pursuant to the protective order by March 2, 1998. 4. Should defendants timely comply with the directive set forth in the preceding paragraph, the following procedural schedule is established: a. Complainant shall file its opening statement by April 1, 1998. b. Defendants shall file their replies by May 1, 1998. c. Complainant shall file its rebuttal by May 21, 1998. Decided: February 2, 1998 Service Date: February 5, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33545] Turners Island, LLC Acquisition and Operation Exemption Portland Terminal Company Turners Island, LLC (TI), a noncarrier, has filed a verified notice of exemption under 49 CFR 1150.31 to acquire from Portland Terminal Company (PT) and to operate approximately 1.09 miles of rail line designated as Yard 3 Track extending between Engineering Station 82+ 03 and Engineering Station 23 + 97, in South Portland, Cumberland County, ME. PT received Board authorization to abandon this line through a notice of exemption in 1997. In addition, TI will also acquire incidental trackage rights over PT's rail line between Engineering Station 82 + 03, where it intersects with the line being acquired, and Engineering Station 148 + 72 on Yard 3 Track, in South Portland, a distance of approximately 1.27 miles. The transaction is expected to be consummated after the January 29, 1998 effective date of the exemption. Decided: January 28, 1998. Service Date: February 5, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-31 (SUB-NO. 31X) GRAND TRUNK WESTERN RAILROAD INCORPORATED ABANDONMENT EXEMPTION -- IN PONTIAC, MICHIGAN In this proceeding, Grand Trunk Western Railroad Incorporated (GTW) has filed a notice of exemption under 49 CFR 1152.50 seeking exemption from the requirements of 49 U.S.C. 10903 in connection with the abandonment of its railroad line located between Milepost 0.0 (the south end), and Milepost 0.72 (north of Tregent Street), a distance of 0.72 miles in the City of Pontiac, Oakland County, Michigan. The line is located in a mixed industrial and commercial area, with some residences at the northern end of the line. There has been no local traffic on the line for at least two years. We recommend that no environmental conditions be placed on any decision granting abandonment authority. Service Date: February 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-32 (SUB-NO. 83) and AB-355 (Sub-No. 23) BOSTON AND MAINE CORPORATION ABANDONMENT AND DISCONTINUANCE OF SERVICE IN HARTFORD AND NEW HAVEN COUNTIES, CONNECTICUT In this proceeding, the Boston and Maine Corporation (B&M) and Springfield Terminal Railway Company (ST) have filed an application seeking authority under 49 U.S.C. 10903 to abandon and discontinue service on the railroad line located between milepost 14.50 in Cheshire and milepost 24.00 in Southington, a distance of 9.50 miles in located in Hartford and New Haven Counties, Connecticut. Two former shippers on the line (Country Lumber and Dalton Enterprises) have not shipped or received rail shipments since November 1994. The sole remaining shipper on the line, Rex Forge, receives very occasional (roughly once every five years) delivery of certain heavy machinery. B&M states that it is willing to develop a transload arrangement to accommodate future deliveries, if any, of this type. Applicant further states that discontinuance of rail service would not result in an increase in local road traffic volumes. The Connecticut Historical Commission advises that the line encompasses an important section of the historical Farmington Canal, which is listed on the National Register of Historic Places. Therefore, we recommend that Boston & Maine Corporation shall retain its interest in and take no steps to alter the historic integrity of all sites and structures on the line until completion of the Section 106 process of the National Historic Preservation Act, 16 U.S.C. 470f. Following abandonment and salvage of the rail line, the right-of-way may be suitable for other public use. The Town of Cheshire and the Farmington Canal Rail to Trail Association have expressed a desire to acquire and develop public projects on the property, including a recreational path. A request containing the requisite four-part showing for imposition of a public use condition (49 CFR 1152.28) must be filed with the Board and served on the railroad within the time specified in the Federal Register notice. Service Date: February 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION AND NOTICE INTERIM TRAIL USE OR ABANDONMENT Docket No. AB-397 (Sub-No. 1X) TULARE VALLEY RAILROAD COMPANY--ABANDONMENT EXEMPTION--IN KINGS AND TULARE COUNTIES, CA STB Docket No. AB-397 (Sub-No. 4X) TULARE VALLEY RAILROAD COMPANY--ABANDONMENT-- EXEMPTION--IN TULARE COUNTY, CA In Docket No. AB-397 (Sub-No. 1X), by decision served March 24, 1994, the ICC granted Tulare Valley Railroad Company (TVR) an exemption under 49 U.S.C. 10505 from the prior approval requirements of 49 U.S.C. 10903-04 to abandon 29.5 miles of rail line: (1) between milepost 0.3 at Corcoran and milepost 15.1 at Tulare, and (2) between milepost 23.8 at Visalia and milepost 38.5 at Cutler, in Kings and Tulare Counties, CA. The exemption became effective on April 23, 1994, subject to employee protective conditions. On May 3, 1994, a decision and notice of interim trail use or abandonment (NITU) was served that reopened the proceeding to implement interim trail use/rail banking under 49 CFR 1152.29 and provided a 180- day period for TVR to negotiate an agreement with American Trails Association (ATA). On April 20, 1995, ATA notified the Board that an interim trail use/rail banking agreement had been timely reached. On April 22, 1997, ATA filed a request for partial vacation of the NITU served May 3, 1994. By decision served May 14, 1997, the NITU was modified and vacated with respect to the line segment between milepost 0.3 at Corcoran and milepost 12+5055 at the west side of Inyo Avenue in Tulare, in Kings and Tulare Counties, CA, a distance of 12 miles. In STB Docket No. AB-397 (Sub-No. 4X), TVR filed a notice of exemption under 49 CFR 1152, Subpart F--Exempt Abandonments to abandon approximately 5 miles of railroad from milepost 15.1 at Tulare, to milepost 20+1191.3 at Loma, in Tulare County, CA. A notice of the exemption was served and published in the Federal Register on August 20, 1996 . On September 17, 1996, a decision and notice of interim trail use or abandonment (NITU) was served, which authorized a 180-day period for the City of Tulare (City), to negotiate an interim trail use/rail banking agreement with TVR for the right-of-way involved in this proceeding. The negotiation period expired on March 18, 1997. On March 26, 1997, a NITU was served, which authorized a 180-day period for ATA, as a new negotiation party, to negotiate an interim trail use/rail banking agreement with TVR for the 5-mile line of railroad. By decision served December 19, 1997, the proceedings were reopened and the segment between milepost 12+5055 and milepost 17+3025, the decision and notices of interim trial use served May 3, 1994, and March 26, 1997, were vacated and the City of Tulare was authorized to replace ATA as the new trail user over the involved right-of-way, effective on December 19, 1997. The NITU issued on March 26, 1997, in STB Docket No. AB-397 (Sub-No. 4X) evidently led to a trail use agreement between TVR and ATA that covered at least the segment between milepost 15.1 and milepost 17+3025 because the City's filing indicates that this segment has been in ATA's possession since April 1997. On January 28, 1998, ATA filed a notice of intent to terminate trail use for the right-of- way between milepost 38.5 at Cutler and milepost 27+4200 at Visalia, a distance of approximately 11 miles in Tulare County, CA, in Docket No. AB-397 (Sub-No. 1X), and between milepost 20+1191.3 near Loma and milepost 17+3025 in Tulare, a distance of approximately 3 miles in Tulare County, CA, in STB AB-397 (Sub-No. 4X), pursuant to 49 CFR 1152.29(d)(2). ATA requests that the NITUs as to these line segments be vacated as of February 13, 1998. A NITU authorizes a carrier either (1) to negotiate and enter into a trail use/rail banking agreement with a qualified trail user or (2) to abandon the line if no agreement is reached during the negotiation period set out in the NITU. Here, ATA requests that trail use as to these segments acquired by ATA be terminated. ATA's request complies with the Board rule applicable to such modification. Under the circumstances, TVR may fully abandon the line between milepost 38.5 at Cutler and milepost 27+4200 at Visalia, and between milepost 20+1101.3 near Loma and milepost 17+3025 in Tulare, effective February 13, 1998. It is ordered: 1. This proceeding is reopened. 2. The decisions and notices of interim trail use served May 3, 1994, and March 26, 1997, are vacated with respect to the line segments between milepost 38.5 at Cutler and milepost 27+4200 at Visalia; and between milepost 20+1191.3 near Loma and milepost 17+3025 in Tulare and TVR may abandon the line segments. Decided: February 3, 1998 Service Date: February 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-312 (SUB-NO. 2X) South Carolina Central Railroad Company, Inc. D/b/a Carolina Piedmont Division -- Abandonment Exemption -- In Greenville County, SC In this proceeding, the South Carolina Central Railroad Company, Inc., d/b/a Carolina Piedmont Division (CPDR) has filed a petition under 49 U.S.C. 10502 seeking exemption from the requirements of 49 U.S.C. 10903 in connection with the abandonment of its railroad line located between (1) milepost AJK 585.34 in East Greenville and milepost AJK 588.63 in Greenville, and (2) milepost 0.0 and 2.0 in Greenville, a distance of 5.29 miles in Greenville County, SC. Boral Brick Company is the only active shipper located on the southern segment of the line (MP 585.34 to 588.63). Since 1992, Boral has received the following number of carloads of brick: 50 carloads (1992); 65 (1993); 65 (1994); 34 (1995); 37 (1996); 60 (1997 through November). Alternative motor carrier service is available, and Boral currently uses trucks for 95 percent of its shipping needs. No train operations have been conducted over the northern segment (MP 0.0 to 2.0) since 1993 because one of the bridges is partially washed out and the line is in poor condition. The National Geodetic Survey (NGS) identified 2 geodetic station markers along the rail line that may be affected by the proposed abandonment and requests 90 days notice to plan relocation of any markers which may be disturbed or destroyed. Therefore, we recommend that the following condition be imposed on any decision granting abandonment authority: South Carolina Central Railroad Company, Inc., d/b/a Carolina Piedmont Division (CPDR) shall consult with the National Geodetic Survey and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. Service Date: February 10, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 32760 (Sub-No. 25) UNION PACIFIC CORPORATION, UNION PACIFIC RAILROAD COMPANY, AND MISSOURI PACIFIC RAILROAD COMPANY--CONTROL AND MERGER-- SOUTHERN PACIFIC RAIL CORPORATION, SOUTHERN PACIFIC TRANSPORTATION COMPANY, ST. LOUIS SOUTHWESTERN RAILWAY COMPANY, SPCSL CORP., AND THE DENVER AND RIO GRANDE WESTERN RAILROAD COMPANY By decision served August 12, 1996, in Finance Docket No. 32760 (Decision No. 44), we approved the common control and merger of the rail carriers controlled by Union Pacific Corporation and the rail carriers controlled by Southern Pacific Rail Corporation. The controlling operating railroad is now the Union Pacific Railroad Company (UP), the respondent in this proceeding. In Decision No. 44, we imposed the employee protective conditions established in New York Dock Ry.--Control--Brooklyn Eastern Dist., 360 I.C.C. 60, 84-90 (1979) (New York Dock). The Brotherhood of Maintenance of Way Employes (BMWE) and UP were unable to reach an implementing agreement on labor changes involving the selection and assignment of forces to implement the consolidation of certain maintenance-of-way functions in the western territory of the merged system. The dispute was taken to arbitration under New York Dock. On October 15, 1997, arbitrator Peter R. Meyers issued his decision (Arbitration Award). On November 12, 1997, BMWE filed an appeal to the Arbitration Award. On December 5, 1997, UP filed a reply to the appeal. On December 19, 1997, BMWE filed a petition to stay the Arbitration Award, pending our decision on the appeal. By decision served December 30, 1997, BMWE's petition for stay was denied, based on UP's assurance that no employee members of BMWE would lose their jobs or seniority or would have to relocate their homes or families pending our determination of the appeal of the Arbitration Award. This decision addresses BMWE's appeal. We have reviewed the evidence and arguments of both BMWE and UP and find that the record is insufficient to allow us to make a decision on the merits at this time. Accordingly, we are requiring the parties to submit additional evidence and argument, particularly concerning the September 26, 1996 Mediation Agreement (the Mediation Agreement) between the railroads represented by the National Carriers Conference Committee (NCCC) and BMWE. UP was a party to the NCCC and signed the Mediation Agreement. The Mediation Agreement specifically provides that carriers that opted in 1991 to retain their old collective bargaining agreements with BMWE, rather than to operate under system-gang rules derived from Presidential Emergency Board No. 219, would continue to operate under their old agreements. The Denver and Rio Grande Western Railroad Company (DRGW) and Southern Pacific Transportation Company (SPT) also retained their old agreements. The arbitrator, nevertheless, found that it was necessary to abrogate BMWE's collective bargaining agreements with SPT and DRGW, as well as Article XVI of the Mediation Agreement, in order to carry out the merger transaction in an efficient and economic manner. BMWE objects to this finding, arguing that, because UP signed the Mediation Agreement after we approved the merger, UP is estopped from overriding SPT's and DRGW's collective bargaining agreements. Under 49 U.S.C. 11347, we are required to ensure a fair and equitable arrangement for the protection of employee interests. BMWE has raised a legitimate issue of whether it is fair to allow UP, after signing the Mediation Agreement, to abrogate SPT's and DRGW's collective bargaining agreements. UP's response is that it signed the Mediation Agreement because a national strike was looming and with BMWE's knowledge that, after the merger, UP intended to conduct consolidated system-gang operations under a single system-gang agreement (i.e., the existing UP-proper agreement). UP is directed to provide whatever evidence exists that supports this assertion, including a complete, unredacted copy of its existing UP-proper collective bargaining agreement with BMWE. Both parties are encouraged to brief us more thoroughly on the fair and equitable issue. UP argues, and arbitrator Meyers found, that the changes in the combined system's maintenance-of-way forces are in the public interest. UP states that the reorganization of the maintenance-of-way operations for the western portion of its system is essential for its ongoing recovery from the track congestion problems that it has experienced since we approved this merger and to avoid such problems in the future. BMWE states that transportation benefits are possible without permitting UP to abrogate its existing labor agreements. BMWE states that it is flexible when the situation requires and, as an example, points to its coordination agreements with UP to operate UP system gangs over the former Western Pacific Railroad (WP). Our examination of the current record indicates, however, that the creation of system gangs might be precluded if the SPT and DRGW agreements are not abrogated as arbitrator Meyers found they should be. Accordingly, we will require BMWE to provide a copy of one of its coordination agreements for UP operations over WP and explain what type of system operations over the entire western part of UP's system is or may be possible under such an agreement. It is ordered: 1. UP and BMWE shall submit supplemental statements addressing our concerns by March 3, 1998 and each shall serve a copy of its statement on the other. UP must also provide a copy of its collective bargaining agreement with BMWE for UP-proper. BMWE must also provide a copy of its coordinating agreement for UP operations over WP. 2. Both parties may file responses by March 13, 1998. Decided: February 9, 1998 Service Date: February 11, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-31 (Sub-No. 30)] Grand Trunk Western Railroad Incorporated--Adverse Discontinuance of Trackage Rights Application--A Line of Norfolk and Western Railway Company in Cincinnati, Hamilton County, OH On January 23, 1998, the Norfolk and Western Railway Company (NW) filed an application under 49 U.S.C. 10903 requesting that the Surface Transportation Board (Board) order the discontinuance, or find that the public convenience and necessity require and permit the discontinuance, of the limited overhead trackage rights asserted to be held by Grand Trunk Western Railroad Incorporated (GTW) over the entire Riverfront Running Track, which is described in the agreement granting those rights, as that portion of the line of NW through Cincinnati, OH, from the first switch west of Oasis Block Station to a connection with the Southern Railway in the vicinity of Front and Smith Streets . . . a distance of 1.6 miles, in Cincinnati, Hamilton County, OH. GTW acquired its interest in the agreement through the automatic assignment to GTW, as successor to the Detroit, Toledo and Ironton Railroad Company. The line is about 1.6 miles and no more than 2.2 miles in length. The line has no stations, and traverses United States Postal Service ZIP Codes 45202 and 45203. NW states that the line is out of service, but that GTW declines to file or concur in a notice of exemption because it claims to have assigned its trackage right to Indiana & Ohio Railway Company (IORY). Applicant has asked the Board to expedite handling of the matter due to the fact that the line is out of service and due to NW's stated intent to transfer its interest in the line to the City of Cincinnati for public purposes. Because the real party of interest here is in question, both GTW and IORY are requested to participate in this proceeding. NW has petitioned the Board to waive the informational or procedural requirements of discontinuance applications that do not apply to a notice of exemption. The waiver requests as to information will be granted in a separate decision to be served concurrently with this notice. The request for modification of the schedule for filing comments will be denied. NW also requests exemption from the provisions of 49 U.S.C. 10904 and 10905. Those exemption requests will be considered by the Board in the final decision on the merits of the application. GTW filed a petition to reject the application. The petitioner argues that the application should be rejected as prematurely filed. GTW asserts that it has assigned the trackage rights to IORY. The petition to reject argues that a grant of this application would amount to an adjudication of the dispute between NW and GTW over whether it lawfully assigned the rights to IORY. GTW cites the trackage rights agreement, which provides for the resolution of disputes arising under the agreement by arbitration. The petitioner states that it has invoked arbitration . In further support of its argument that the application is premature, GTW says that the application should not have been filed until the various petitions for waiver filed by NW had been acted upon. Finally, GTW argues that the NW application is defective. The Board will address the relevance of and, if appropriate, the merits of GTW's and NW's arguments as to the assignment of the trackage rights in the decision on the application. In an application by a third party for a determination that the public convenience and necessity permits a line to be discontinued or abandoned, the issue before the Board is whether the public interest requires that the line in question be retained as part of the national rail system. The question of the ownership of the line is relevant chiefly as it pertains to the question of whether the public is better served by the maintenance or discontinuance of the rights and the service they afford. By granting a third party application, the Board withdraws its primary jurisdiction over the line. Questions of the disposition of the line, including the adjudication of various claims of ownership or other rights and obligations, are then left to state or local authorities. It should be noted that, whenever the Board or its predecessor, the Interstate Commerce Commission, has granted abandonment or discontinuance authority, whether by application of a third party or otherwise, the agency finds that the public convenience and necessity supports the abandonment or discontinuance of a specific line by a specified carrier. The parties may address this issue further in their comments and the replies thereto. GTW correctly notes that requests for waivers are typically filed before the application drawn in reliance on those waivers is filed. But in filing its application contemporaneously with the waivers, NW has merely run the risk that the waivers will be denied in whole or part and it will have wasted time and effort in filing an application based on them. Grants of petitions for waiver of the filing of the materials required in typical abandonment applications in applications filed by third parties are customary. The regulations require information intended to help the Board decide whether a particular line or service is losing money. That is typically not the issue in third party applications. It is not the issue here, where no service has been provided in recent years. We have denied NW's requests to shorten the procedural schedule or to waive the statutorily mandated OFA procedures. The procedure NW chose in filing its waiver requests is no reason to reject its application. Nor is GTW's catchall assertion that the application is defective. The line has not appeared on the system diagram maps (SDM) or been included in the narrative in category 1. The Interstate Commerce Commission (ICC) has found that the SDM requirement, while imposed by statute, is not necessary in the context of an adverse abandonment, where the line has been out of service for many years. Any interested person may file with the Board written comments concerning the proposed adverse discontinuance or protests (including the protestant's entire opposition case), by March 10, 1998. Because this is a discontinuance proceeding and not an abandonment, trail use/rail banking and public use requests are not appropriate. Likewise, no environmental or historical documents are required here under 49 CFR 1105.6(c)(6). Decided: February 6, 1998. Service Date: February 12, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-31 (Sub-No. 30) GRAND TRUNK WESTERN RAILROAD INCORPORATED-- ADVERSE DISCONTINUANCE OF TRACKAGE RIGHTS APPLICATION-- A LINE OF NORFOLK AND WESTERN RAILWAY COMPANY IN CINCINNATI, HAMILTON COUNTY, OH By petition filed January 23, 1998, Norfolk and Western Railway Company (NW) seeks waiver of certain regulations to enable it to file an adverse discontinuance application. The adverse discontinuance application evidently became necessary when the tenant railroad, Grand Trunk Western Railroad Incorporated (GTW), declined to seek authority or exemption to discontinue operations and the City of Cincinnati desired to have the railroad interests in the property terminated expeditiously so that the property could be used for public purposes. NW seeks waiver on the grounds that the line at issue is out of service and none of the information in the regulations sought to be waived is relevant to the merits of the adverse application. Moreover, NW states that it does not have any information pertaining to the GTW trackage rights other than that which has been provided. NW seeks waiver of all of the filing requirements of the Board's regulations applicable to discontinuance applications that do not apply to notices of exemption. These include 49 CFR 1152.22(a)(5), which requires inclusion of the line on a system diagram map (SDM); 49 CFR 1152.22(a)(6), which requires a detailed statement of the reasons for filing the application; 49 CFR 1152.22(b), which requires a statement of the condition of the properties; 49 CFR 1152.22(d), which requires a statement of revenue and costs; 49 CFR 1152.22(e)(1-3), which requires a statement of rural and community impact; and 49 CFR 1152.22(g), which requires a statement concerning passenger service. GTW has filed a petition asking the Board to reject NW's application. In its petition, GTW states that NW should have filed its petition for waiver before filing its application. Those arguments have been addressed in the Federal Register notices accepting the application and published contemporaneously with the service of this decision. GTW's arguments will not be reiterated here. NW's waiver request will be granted. NW correctly states that the requirements cited are not relevant to an adverse discontinuance application. In appropriate instances, such as situations involving adverse applications, the Board, or its predecessor agency, has waived inapplicable and unneeded portions of its abandonment regulations. The filing of a SDM, which is imposed by statute, is not appropriate in the context of an adverse abandonment. NW cannot include the line on its map because the service at issue is not service that NW provides. Nor is it appropriate to require the tenant railroad to include the line on its map as a candidate for discontinuance. The tenant has no intention to discontinue service. Accordingly, waiver of our regulations involving the SDM is warranted. Nor is there any point in requiring either strict adherence to the notice provisions or the submission of material where the information is not relevant to our decision on the merits. The regulations require information relevant to abandonments or discontinuances sought by the carriers that own, or operate on, the affected lines. That information, chiefly designed to show whether or not the line is a burden on interstate commerce, is irrelevant to an application filed by a third party. Strict adherence to the notice provisions, therefore, would not serve the chief purpose for which they were promulgated, i.e., to alert those served by the line, because no rail service has been provided on the line in 11 years. Similarly, requiring NW to provide information where none exists would serve no useful purpose. NW obviously does not possess the data required by the regulations. It appears that NW has made an effort to comply with the abandonment regulations. Accordingly, NW's petition for waiver is granted. It is ordered: 1. NW's petition is granted to the extent described above. Decided: February 10, 1998 Service Date: February 12, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-167 (Sub-No. 1180X)] Consolidated Rail Corporation--Discontinuance of Trackage Rights Exemption-- in Cincinnati, Hamilton County, OH Consolidated Rail Corporation (Conrail) has filed a notice of exemption under 49 CFR 1152 Subpart F--Exempt Abandonments and Discontinuances of Trackage Rights, for the discontinuance of trackage rights over Norfolk and Western Railway Company's entire Riverfront Running Track, extending from a Point A near the Oasis Block Station to Point B in the southern line of Front Street near its intersection with Smith Street, a distance of approximately 1.5 miles, in Cincinnati, Hamilton County, OH. The line traverses United States Postal Service ZIP Codes 45202 and 45203. There are no stations on the line. Conrail had acquired the trackage rights pursuant to the Final System Plan under the Regional Rail Reorganization Act of 1973. Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will be effective on March 14, 1998, unless stayed pending reconsideration. Decided: February 6, 1998 Service Date: February 12, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-290 (Sub-No. 184X)] Norfolk and Western Railway Company--Abandonment Exemption--In Cincinnati, Hamilton County, OH On January 23, 1998, Norfolk and Western Railway Company (NW) filed with the Surface Transportation Board (Board) a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903-10905 to abandon a segment of a line of railroad known as the Riverfront Running Track, between Oasis and Plum Street, a distance of approximately 1.5 miles, in Cincinnati, Hamilton County, OH. The line traverses U.S. Postal Service Zip Codes 45202 and 45203. There are no stations on the line. NW seeks exemptions from the offer of financial assistance (OFA) provisions of 49 U.S.C. 10904 and the public use provisions of 49 U.S.C. 10905. Exemptions from 49 U.S.C. 10904-05 have been granted from time to time, but only when the right-of-way is needed for a valid public purpose and there is no overriding public need for continued rail service. By issuance of this notice, the Board is instituting an exemption proceeding pursuant to 49 U.S.C. 10502(b). A final decision will be issued by May 13, 1998. Decided: February 6, 1998. Service Date: February 12, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-290 (Sub-No. 190X) NORFOLK SOUTHERN RAILWAY COMPANY --ABANDONMENT EXEMPTION-- IN FAYETTE COUNTY, AL EXEMPTION PURSUANT TO 49 U.S.C. 10502 FROM THE PROVISIONS OF 49 U.S.C. 10904(e) By decision served December 29, 1997, the Board granted the Norfolk Southern Railway Company (NSR) an exemption under 49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C. 10903 to abandon a line of railroad known as the Berry-Belk Line, extending from milepost 862.8 at Berry, AL, to milepost 884.9 at or near Belk (Covin), AL, a distance of 22.1 miles in Fayette County, AL. The exemption was scheduled to become effective on January 28, 1998, unless an offer of financial assistance (OFA) was filed with NSR and the Board by January 8, 1998. On January 8, 1998, the City of Fayette, AL (City), filed an OFA to purchase a 7.2-mile segment of the line, from milepost 884.9 to milepost 877.7. By decision served January 13, 1998, the City was found financially responsible, and the effective date of the exemption authorizing abandonment of the segment from milepost 884.9 to milepost 877.7 was postponed to permit the OFA process to proceed. The exemption authorizing abandonment of the remainder of the line became effective on January 28, 1998, as scheduled. Also, as set out in that decision, the parties were given until February 9, 1998, either to reach an agreement on the purchase price for the line or for either party to file a request that the Board establish the terms and conditions of the purchase. Finally, the decision provided that, if no agreement was reached by the parties, and no request to set terms and conditions was made by February 9, a decision would be served vacating the January 13 decision and allowing the abandonment authorization for the entire line to become effective. On February 9, 1998, the City filed a request for an extension of the OFA negotiating period for 30 days, until March 11, 1998, to allow NSR to compile all necessary information, to allow the City to thoroughly review that information, and to allow the parties to negotiate voluntarily the terms of a possible purchase. NSR's statement of support for the extension request was included with the City's request. The Board cannot grant an extension to the 30-day OFA negotiating period, as it is subject to a statutory deadline. On our own motion, however, we will treat the City's request as one for exemption under 49 U.S.C. 10502 from the provisions of 49 U.S.C. 10904(e) and for relief from the related regulatory requirements at 49 CFR 1152.27(g). Under section 10502, we must exempt a transaction or service from a provision of law when we find that: (1) regulation is not necessary to carry out the rail transportation policy of 49 U.S.C. 10101; and (2) either (a) the transaction or service is of limited scope, or (b) regulation is not needed to protect shippers from the abuse of market power. It is ordered: 1. Under 49 U.S.C. 10502, we exempt this proceeding from the requirements of 49 U.S.C. 10904(e) and grant relief from the related regulatory requirements at 49 CFR 1152.27(g), and extend the deadline to March 11, 1998, for the parties to reach an agreement or for a party to request the Board to establish the conditions and amount of compensation. Decided: February 11, 1998 Service Date: February 12, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-503 (Sub-No. 1X)] Bootheel Rail Properties, Inc.--Abandonment Exemption--in Pemiscot and Dunklin Counties, MO [STB Docket No. AB-502 (Sub-No. 1X)] Bootheel Regional Rail Corporation--Discontinuance Exemption--in Pemiscot and Dunklin Counties, MO On January 23, 1998, Bootheel Rail Properties, Inc. (BRP) and Bootheel Regional Rail Corporation (BRRC) filed with the Surface Transportation Board (Board) a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903 for BRP to abandon and BRRC to discontinue service over a line of railroad known as the Hayti-Kennett Branch, extending from milepost 212.73, near Hayti, MO, to milepost 230.00, near Kennett, MO, a distance of 17.27 miles in Pemiscot and Dunklin Counties, MO. The line traverses U.S. Postal Service ZIP Codes 63851, 63857, 63871, and 63827. There are no agency stations located on the line. By issuance of this notice, the Board is instituting an exemption proceeding pursuant to 49 U.S.C. 10502(b). A final decision will be issued by May 13, 1998. Decided: February 5, 1998. Service Date: February 12, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-532X] The Cincinnati Terminal Railway Company (Indiana & Ohio Railway Company, Successor)--Discontinuance of Service Exemption--In Cincinnati, Hamilton County, OH [The Cincinnati Terminal Company was merged into IORY in a transaction that was the subject of a notice of exemption in STB Finance Docket No. 33530 (STB served Jan. 9, 1998). We have accepted the notice of exemption as filed with an amended caption to reflect CTER's merger into Indiana and Ohio Railway Company because no party will be prejudiced and because the lease had terminated while CTER was still the party in interest.] The Cincinnati Terminal Railway Company (CTER) has filed a notice of exemption under 49 CFR 1152 Subpart F--Exempt Abandonments and Discontinuances, to discontinue service under a lease that has been terminated. The lease was limited to certain overhead movements over a line of railroad owned by the Norfolk and Western Railway Company (NW) that traveled the entire Riverfront Running Track, extending between Survey Station 84+ 80+/- and Survey Station 4+ 20 +/- (former milepost LM-119 + 1756 feet +/-), a distance of approximately 1.5 miles, in Cincinnati, Hamilton County, OH. The lease, dated June 24, 1994, became effective on July 1, 1994, and was later terminated by NW on May 31, 1996, effective July 1, 1996. The line traverses United States Postal Service Zip Codes 45202 and 45203. There are no stations on the line. Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will be effective on March 14, 1998, unless stayed pending reconsideration. Decided: February 6, 1998. Service Date: February 12, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-55 (Sub-No. 554X) CSX TRANSPORTATION, INC.--ABANDONMENT EXEMPTION-- IN JASPER COUNTY, SC AND CHATHAM COUNTY, GA CSX Transportation (CSXT) filed a notice of exemption under 49 CFR 1152 Subpart F-- Exempt Abandonments to abandon approximately 14.20 miles of its line of railroad from milepost SHC-497.59, near South Hardeeville, SC, to milepost SHC-505.05, and from milepost SH- 505.05 to milepost SH-510.06, at North Savannah, GA, and the Hutchison Island Spur from milepost SHB-509.93 to milepost SHB-511.66, in Jasper County, SC, and Chatham County, GA. Notice of the exemption was served and published in the Federal Register on November 24, 1997. By decision served December 23, 1997, the exemption was made subject to the conditions that CSXT consult with the Savannah District and the Charleston District of the U.S. Army Corps of Engineers prior to commencing any salvage operations involving the Broad River Bridge and retain its interest in and take no steps to alter the historic integrity of all sites and structures on the right-of-way in Georgia that are 50 years old or older until completion of the section 106 process of the National Historic Preservation Act, 16 U.S.C. 470f. By petition filed January 12, 1998, and amended on February 5, 1998, the Jasper County Council (JCC), a political subdivision, late-filed a request for the issuance of a notice of interim trail use (NITU), under the National Trails System Act, 16 U.S.C. 1247(d) (Trails Act), and for a public use condition under 49 U.S.C. 10905, in order to negotiate with CSXT for the portion of the right-of-way from milepost SHC-497.59, near South Hardeeville, to milepost SHC-510.6, near the Georgia state line, a distance of 12.47 miles in Jasper County, SC. Also on January 26, 1998, the United States Department of the Interior late-filed a request for a public use condition on the right-of-way. On January 26, 1998, CSXT informed the Board that it had consummated abandonment of the 14.20-mile line of railroad effective January 10, 1998. Consummation of the abandonment ended the Board's jurisdiction over the line. Therefore, the Board no longer has jurisdiction to impose a NITU or a public use condition. It is ordered: 1. The requests for issuance of a notice of interim trail use/rail banking and for issuance of a public use condition are denied. Decided: February 10, 1998 Service Date: February 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33429 BURLINGTON NORTHERN SANTA FE RAILWAY COMPANY v. AMERICAN TRAIN DISPATCHERS DEPARTMENT BROTHERHOOD OF LOCOMOTIVE ENGINEERS By motion jointly filed on January 27, 1998, the parties request that this complaint be dismissed and that the proceeding be terminated. The motion is granted. It is ordered: 1. The complaint is dismissed, and the proceeding is terminated. Decided: February 12, 1998 Service Date: February 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33501 DOUGLAS M. HEAD, KENT P. SHOEMAKER AND CHARLES H. CLAY CONTINUANCE IN CONTROL EXEMPTION RUTLAND LINE, INC. By decision served January 7, 1998, the Surface Transportation Board (Board) exempted from the prior approval requirements of 49 U.S.C. 11323-25 the continuance in control by Douglas M. Head, Kent P. Shoemaker and Charles H. Clay (Petitioners) of the Rutland Line, Inc. (RLI). Notice of the exemption was published in the Federal Register the same day at 63 FR 922. The exemption was scheduled to become effective on February 6, 1998. RLI was scheduled to become a Class III rail carrier upon consummation of its acquisition transaction that was the subject of the notice of exemption in STB Finance Docket No. 33500 (STB served Nov. 21, 1997). RLI acquired approximately 23 miles of rail line from The Burlington Northern and Santa Fe Railway Company (BNSF), extending from milepost 42.67, at Geneseo Junction, ND, to milepost 65.60, at the North Dakota/South Dakota border (Subject Line). RLI also acquired BNSF's interest in certain spur trackage and real estate at Hankinson and Lidgerwood, ND. In addition, RLI obtained incidental operating rights to operate overhead rail freight services on BNSF's lines from milepost 212.32, at Breckenridge, MN, to milepost 195.6, at Aberdeen Line Junction, MN, and from milepost 0.00, at Aberdeen Line Junction, to milepost 0.60, at BN Junction, MN (Overhead Operating Rights). Further, BNSF also assigned to RLI its operating rights under a July 5, 1955 agreement from BNSF milepost 0.60, at BN Junction, to CPRS milepost 205.6, at Hankinson, and its operating rights under a September 18, 1959 agreement from CPRS milepost 205.6, at Hankinson, to BNSF milepost 42.67, at Geneseo Junction (Assigned Operating Rights). RLI is controlled through stock ownership by Petitioners. RLI's stock was placed in an irrevocable voting trust. In addition, Petitioners currently control through stock ownership three other Class III common carriers by rail: Twin Cities & Western Railroad Company (TCW); Red River Valley & Western Railroad Company (RRVW); and Minnesota River Bridge Company (MRBC). TCW, RRVW, and MRBC are hereinafter collectively referred to as Affiliates. On January 26, 1998, Petitioners filed a letter of clarification with respect to their petition for exemption filed on October 24, 1997 (Petition for Exemption). Petitioners observed that the statement in the Petition for Exemption, at 13, that no shippers are currently located on the line being acquired by RLI is only true with respect to the Overhead Operating Rights and that there are actually 2 shippers located on the Subject Line (the 23-mile line in North Dakota acquired by RLI) and 3 shippers located on the line over which RLI acquired Assigned Operating Rights. Petitioners assert that the facts, as clarified, should not affect the Board's market power analysis in connection with the conclusion that an exemption is appropriate, but Petitioners request a Board determination to that effect. Petitioners also request expedited action so that, if our action is favorable, petitioners will be able to dissolve the voting trust as soon as possible. Petitioners request will be granted. The presence of shippers located on the acquired Subject Line and on the line over which Assigned Operating Rights were acquired does not affect the Board's previous conclusion and finding that the transaction would not result in the abuse of market power. While estimates indicate that these 5 shippers will ship between 600 and 700 carloads a year via RLI and that an additional shipper that is constructing facilities on the Assigned Operating Rights line will also ship via RLI, Petitioners continue to maintain that each of the Affiliates is a corporate entity separate from RLI, and that any business dealings between RLI and the Affiliates will be the result of arms-length negotiations between the parties. There is no reason to believe that any shipper would be disadvantaged by the proposed continuance in control. We find that the transaction, as clarified, qualifies for exemption from the prior approval requirements of 49 U.S.C. 11323-25. It is ordered: 1. This proceeding is reopened for our consideration of the facts as corrected by Petitioners. 2. The Board's conclusion in the decision served on January 7, 1998, is affirmed. The proposed continuance in control is exempt from the prior approval requirements of 49 U.S.C. 11323-25. Decided: February 9, 1998 Service Date: February 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33514 BUFFALO & PITTSBURGH RAILROAD, INC.--TRACKAGE RIGHTS EXEMPTION--CONSOLIDATED RAIL CORPORATION On November 17, 1997, Buffalo & Pittsburgh Railroad, Inc. (B&P) filed a notice of exemption under 49 CFR 1180.2(d)(7) to exempt its acquisition of approximately 83.47 miles of bridge trackage rights from Consolidated Rail Corporation (Conrail). B&P's bridge trackage rights extend between Buffalo and Carrollton, NY, and allow B&P to shift overhead traffic from a parallel line in need of rehabilitation. The notice of exemption was served and published on December 4, 1997. On November 20, 1997, Samuel J. Nasca, New York State Legislative Director for United Transportation Union (NY-UTU), filed a petition to stay, reject, and/or revoke the notice of exemption. NY-UTU contends that we should reject or revoke the exemption because B&P had sought the trackage rights as a condition to the proposed acquisition of Conrail in STB Finance Docket No. 33388 and that, accordingly, the trackage rights must be considered in the larger control proceeding still pending before us. Although conceding that B&P subsequently reached a settlement with applicants in STB Finance Docket No. 33388 and withdrew its request for conditions, NY-UTU maintains that B&P's trackage rights cannot now be separated from the overriding control proceeding where B&P could have pursued these trackage rights in the absence of an agreement with Conrail. If we do not summarily reject or revoke the exemption, NY-UTU argues that B&P's exemption should be stayed on the grounds that time is not of the essence, rail employees may be injured if the transaction is not stayed, and a stay is necessary to preserve our jurisdiction over features of the Conrail control transaction, such as B&P s acquisition of the involved trackage rights. B&P responds that NY-UTU failed to show that a stay is warranted or that revocation or rejection of the exemption is necessary to carry out the rail transportation policy. B&P maintains that its overhead trackage rights will have little, if any, impact on rail operations or competition, service to shippers, or rail employees in the area. Under 49 U.S.C. 10502(d), we may revoke an exemption if we find that regulation is necessary to carry out the rail transportation policy of 49 U.S.C. 10101. Petitions to revoke must be based on reasonable, specific concerns demonstrating that reconsideration of the exemption is warranted. The party seeking revocation has the burden of proof that regulation of the transaction is necessary. Our inquiry when revocation of an exemption is sought is similar to the analysis for determining if exemption is proper at the outset of a proceeding, i.e., whether regulation of the transaction is necessary to carry out the rail transportation policy of section 10101. This analysis focuses on the sections of the rail transportation policy related to the underlying statutory section from which the exemption is sought. The Board's predecessor, the Interstate Commerce Commission (ICC), has adopted this interpretation when considering petitions to revoke an exemption pursuant to section 10505(d) [recodified as 10502(d)]. As discussed below, we find that NY-UTU has failed to demonstrate that the exemption should be revoked. Contrary to what seems to be the basis of NY-UTU's claim, B&P's trackage rights were not sought as part of a responsive application. B&P's request for trackage rights between Buffalo and Carrollton was, however, included in that carrier's comments and request for conditions in STB Finance Docket No. 33388. B&P has never been considered a responsive applicant in that proceeding. The class exemption at 49 CFR 1180.2(d)(7) is designed to apply to trackage rights arrangements entered into voluntarily and not to nonconsensual trackage rights requests sought in responsive applications. Because Conrail has agreed to grant trackage rights to B&P, B&P s notice of exemption qualifies for the class exemption for trackage rights. Nothing in our consolidation or exemption rules prevents a party from withdrawing a request to have conditions imposed on an unwilling consolidation applicant, and instead entering into a voluntary arrangement and pursuing Board approval for the arrangement through an available class exemption designed precisely to cover such voluntary trackage rights arrangements. A review of B&P's trackage rights, moreover, clearly shows that they are not in any way conditioned upon the outcome of the CSX/NS/CR proceeding. B&P indicates that the trackage rights are a mutually beneficial business arrangement between B&P and Conrail that will permit B&P to move overhead traffic from its line requiring substantial rehabilitation to Conrail's high capacity line. Although NY-UTU argues that B&P's trackage rights may affect patterns of commerce in the CSX/NS/CR case and prejudice the outcome there, the ICC has found that bridge trackage rights, while enhancing the tenant operator's efficiency, do not adversely affect service to shippers or competitive relationships among railroads. A similar conclusion is warranted here. Moreover, the fact that B&P has entered into settlement agreements with CSX and NS eliminates any basis for concern that these trackage rights would be objectionable to or interfere with the proposed operations of those carriers if their proposed control application is approved. Although B&P's exemption became effective on November 24, 1997, NY-UTU's petition, to the extent it continues seeking to stay the effectiveness of the exemption, will be denied. NY- UTU has made no showing of irreparable harm and indeed has not met any of the applicable criteria for granting a stay. It is not apparent how rail employees would be injured in the absence of a stay, particularly since B&P's exemption has been conditioned upon the labor protection in Norfolk and Western Ry. Co.--Trackage Rights--BN, 354 I.C.C. 605 (1978), as modified in Mendocino Coast Ry., Inc.--Lease and Operate, 360 I.C.C. 653 (1980). It is ordered: 1. The petition to reject, revoke, and/or stay is denied. 2. This decision is effective March 15, 1998. Decided: February 9, 1998 Service Date: February 13, 1998 ============================================================ Comments or questions about this compilation should be directed to Paul Moore at 71367.1057@Compuserve.com. ============================================================