STB REPORT #9 - MAY 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 ENVIRONMENTAL ASSESSMENT STB Docket NO. AB-55(SUB-NO. 559X) CSX Transportation, Inc.--Abandonment Exemption--in Atlanta, Fulton County, GA In this proceeding, CSX Transportation, Inc. (CSXT) has filed a petition in connection with the abandonment of a portion of its Atlanta Terminal Subdivision, Atlanta Service Lane, extending between milepost 4.87 at Memorial Drive to milepost 5.22 at Wylie Street, a distance of 0.35 miles in Atlanta, Fulton County, GA. In its petition, CSXT states that the only shipper on the line, Weyerhaeuser Corporation, shipped 37 carloads of scrap paper via rail from its Memorial Drive facility in 1996 and shipped 19 carloads via rail in 1997. Weyerhaeuser vacated this facility in May 1997 and there have been no shipments on this line since then. CSXT also states that Stein Steel is a rail patron on the line but will not be affected by this abandonment because that industry is served by another rail line. There are no other potential rail patrons on this line between Memorial Drive and Wylie Street. We recommend that no environmental conditions be placed on any decision granting abandonment authority. Based on the information provided from all sources to date, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 1, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-290 (Sub-No. 200X)] Norfolk and Western Railway Company--Abandonment Exemption--in Dickenson and Buchanan Counties, VA Norfolk and Western Railway Company (NW) has filed a notice to abandon 3.34 miles of its line of railroad between milepost CL-13.56 at Duty and milepost CL-16.90 at Clinchfield Coal in Dickenson and Buchanan Counties, VA. The line traverses United States Postal Service Zip Codes 24217 and 24066. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 3, 1998, unless stayed pending reconsideration. NW shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by NW's filing of a notice of consummation by May 4, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: April 23, 1998. Service Date - May 4, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Ex Parte No. 575 REVIEW OF RAIL ACCESS AND COMPETITION ISSUES This proceeding was initiated to examine issues of rail access and competition in today's railroad industry. During two days of informational hearings, and in numerous written statements, we heard the complaints of shippers dependent on rail service that, as a result of consolidation in the industry, their competitive options have been limited, and that available remedies are burdensome, costly, and unresponsive. On April 17, 1998, we issued a decision addressing the concerns that had been raised. We found that, through administrative action, we could examine making it less costly and burdensome for aggrieved parties to obtain access to the regulatory system, and providing the opportunity for shippers with concerns about poor service to obtain service from an alternate carrier. Thus, we began one rulemaking proceeding, and intend to begin another shortly. We decided that the most appropriate way to achieve more effective utilization of smaller railroads in addressing the concerns raised by the shippers would be through discussions within the railroad industry. Thus, we directed railroads to meet and discuss this issue among themselves, and to report back to the Board by May 11, 1998. Finally, we concluded that certain issues -- in particular, issues relating to railroad revenue adequacy, the competitive access rules in general, and formalized railroad/shipper dialogue designed to help carriers find a more systematic way of addressing customer concerns -- would be better addressed at this time in a private-sector rather than governmental forum. Thus, as to revenue adequacy, we directed railroads to meet with shippers with a view toward selecting a panel of three disinterested experts to make recommendations as to an appropriate revenue adequacy standard, and to report back to the Board by May 15, 1998. As to competitive access, because we were convinced that railroads and shippers could, if they tried, find some common ground, we directed them to meet, negotiate, and report back to the Board by August 3, 1998. Finally, we directed railroads to report back to the Board by May 11, 1998, on their progress in establishing formalized dialogue with their shippers and their employees. On April 27, 1998, we received a letter from several shippers and shipper groups asking us to modify our April 17 order in two respects. "First, the Board should reverse the priorities of the revenue adequacy and competitive access issues. Competitive access is, by far, the most urgent matter to shippers. We also believe it will be difficult to reach agreement with the railroads on this issue, and therefore we first request that the order be modified to require the parties to report by May 29, rather than August 3, on whether significant progress is possible. Second, revenue adequacy, while important, is less urgent. Moreover, we question the need for the elaborate and expensive processes set forth in the Board's order. However, we are certainly willing to discuss revenue adequacy issues with the railroads. Indeed, recent pronouncements by railroad executives suggest that progress on the subject may be possible. Accordingly, we also request that the procedures on revenue adequacy ordered by the Board be suspended until shippers and the railroads enter discussions on this issue, and report back to the Board on the progress of these discussions. The deadline for this report should be May 29, 1998." On April 30, 1998, the Association of American Railroads (AAR) responded to the shippers letter. AAR points out that the schedule proposed by the shippers will allow little time for meaningful dialogue and consultation as to the competitive access issue. Although it says that it will participate in further negotiations on revenue adequacy, AAR also expresses its dismay that the shippers have apparently rejected the panel approach, which, as AAR describes it, would replace advocacy and contentiousness with objective economic analysis. At the outset, we will respond to the request that we reverse the priorities of the initiatives we set in motion. Our April 17 order raised several issues, but it did not prioritize among them. The fact that the date for the revenue adequacy report was set earlier than the date for the competitive access report did not reflect a higher priority for the revenue adequacy exercise. The due date for the report on revenue adequacy exercise was set earlier than the due date for the competitive access report merely because it was, and still is, our view that it would be simpler for interested parties to meet and select three unbiased experts than it would be to address and seek to resolve issues such as competitive access. We did not establish a hierarchy of objectives, and we urge all parties to take all of the initiatives in our April 17 order seriously. We also do not believe that our order set forth elaborate and expensive processes regarding revenue adequacy. At the hearings, shippers raised substantial concerns about the current revenue adequacy standards, while the railroads defended the need for a revenue adequacy standard that permits them to earn enough money to attract capital and to invest in needed facilities. Railroad and shipper representatives recommended referring the revenue adequacy question to one or more disinterested expert economists with no preconceived position on the issue, and so we directed railroads to meet with shippers with a view toward selecting a panel of three such experts to make recommendations as to an appropriate standard. Selection of a panel, as we envision it, should be a relatively straightforward exercise. The process from then on would not be an elaborate one, and it would not be particularly expensive overall if all of the parties agreed in advance to support the recommendations of the expert panel rather than to continue to pursue the revenue adequacy issue before the Board, the courts, and whatever other forums the railroad and shipping communities typically address. Nevertheless, as both the shippers and AAR indicate that progress through means other than the 3-expert panel is possible in addressing the revenue adequacy issue, we will give the shippers more time so that they can pursue the issue directly with the railroads. If they cannot reach agreement, however, we urge the parties not to reject, as the shippers apparently have done, the notion that the issue be resolved by a neutral expert or panel of experts. Moreover, given that the next conference is not scheduled until May 21, 1998, we do not believe that a reporting date of May 29, 1998 will provide an adequate opportunity for meaningful progress. Therefore, although we certainly will not preclude any party that wishes to do so from filing an interim report on May 29, 1998, or on any other date it deems appropriate, we request a report on the revenue adequacy issue by August 3, 1998. The shippers ask to shorten the reporting time for the competitive access issue, apparently because of their concern that it will be difficult to reach agreement with the railroads on this issue. We do not understand the shippers logic. At the hearings, shippers raised substantial concerns about the impediments that the existing regulations imposed on their ability to make a competitive access case, while the railroads expressed concern that opening up the competitive access rules could place them on a slippery slope toward total open access, which, in their view, would adversely affect them and the public. Because we were convinced that railroads and shippers could, if they tried, find some common ground on the issue of competitive access, in our May 17 order we directed them to meet, negotiate, and report back to the Board. We recognized that negotiations concerning competitive access might require substantial work, and that is why we did not request a report until August 3, 1998. Shortening the reporting time would send a message that we see little prospect for accommodation on any aspect of the competitive access issue. If that were our view, we would not have directed the railroads to negotiate with the shippers in the first place. Notwithstanding the tenor of the shippers letter, we continue to believe that some common ground can be reached if all parties can put aside their preconceived notions and enter negotiations with an open mind, committed to seeking some common ground rather than immediately assuming that governmental fiat is the only answer or that more litigious avenues must be pursued. Therefore, we continue to urge the parties to negotiate seriously to reach agreement on as many issues related to competitive access as possible. We request a report on August 3, 1998, although, again, we will not preclude any party that wishes to do so from filing an interim report on May 29, 1998, or on any other date it deems appropriate. It is ordered: 1. The shippers requests are governed by this decision. 2. The report on revenue adequacy is due on August 3, 1998, although any party that wishes to do so may file an interim report on May 29, 1998. 3. The report on competitive access is due on August 3, 1998, although any party that wishes to do so may file an interim report on May 29, 1998. Decided: May 4, 1998 Service Date - May 4, 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 In this decision, we are denying a petition for exemption filed by Central Railroad Company of Indiana (CIND or petitioner) to abandon its Shelbyville Line in Indiana. On January 14, 1998, CIND filed a petition 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. Notice of the petition was published on February 2, 1998. Also on that date, the Board served a decision of the Secretary granting, in part, CIND's request for a protective order. Subsequently, in a decision served February 27, 1998, the Secretary denied a motion by CIND seeking an order denying discovery requests filed by certain persons who ship goods over the line or who otherwise have an interest in the proceeding, and who expressed an intent to oppose the petition. Thereafter, in a decision served April 1, 1998, we denied a motion by protestants that we exempt ourselves from the applicable statutory deadline for a decision on the merits, and that we compel certain types of discovery. A joint protest was filed by Decatur County, IN, City of Shelbyville, IN, Shelby County, IN, Consolidated Grain & Barge Co. (Consolidated), Premier Ag Coop (Premier), Greensburg Milling, Inc. (Greensburg Milling), Kolkmeier Bros. Feed & Grain (Kolkmeier), Kova Fertilizer, Inc. (Kova), Lowe's Pellet & Grain Co. (Lowe s), and Knauf Fiber Glass, GmbH (Knauf). The Indiana Department of Transportation (INDOT) filed a protest and a request that any grant of an exemption be made subject to a public use condition. Indiana Lieutenant Governor Joseph E. Kernan, Indiana State Senator Robert N. Jackman, and CIND engineer Robert E. Rosengarn filed letters opposing the petition. Hoosier Rails-to-Trails Council Inc. (Hoosier) filed a request for a public use condition and for the issuance of a notice of interim trail use or abandonment (NITU) under the National Trails System Act. Great Miami, Inc., submitted a notice of an intent to file an offer of financial assistance in the event the petition is granted. The United Transportation Union submitted a request for the imposition of labor protective conditions. CIND replied that it is willing to negotiate a trail use agreement with Hoosier and that it does not oppose INDOT's request for a public use condition, except to the extent that such a condition would prevent CIND from salvaging the line. On April 24, 1998, we received a petition from CIND, reflecting concurrences from the protestants and RailTex, Inc. (RailTex), asking that we hold this proceeding in abeyance. CIND states that it has entered an agreement with RailTex to sell the Shelbyville Line to it. That being the case, CIND recites that . . . in light of this development, CIND, RailTex and Protestants (the Parties ) agree that continuing the abandonment proceeding at this time would be inappropriate. CIND, however, has not requested the withdrawal of its petition for exemption at this time, and indicates that it will seek a decision from the Board on its petition if the acquisition by RailTex has not occurred by June 15, 1998. If CIND did not wish to pursue its petition following its agreement with RailTex, CIND could have withdrawn its petition. This case is subject to a deadline established by Congress. The parties fail to assert, much less demonstrate, that we may grant the relief they seek and still comply with the statute. Nor has CIND shown that our action on its outstanding petition will adversely affect its proposed sale of the Shelbyville Line to RailTex. CIND's system is comprised of an 81-mile line that extends from milepost 0.0, at Cincinnati, OH, to the southeast, to milepost 81.0, near Shelbyville, to the northwest, including a 23-mile southern segment connected to the subject Shelbyville Line. CIND purchased the entire line from Consolidated Rail Corporation in 1991. CIND has trackage rights over Conrail track from Shelbyville, through Indianapolis, IN, to Frankfort, IN, where CIND connects with its affiliate Central Railroad Company of Indianapolis (CERA). Petitioner also interchanges with Toledo, Peoria & Western Railway Corp. (TPW) at Frankfort and with Conrail at Indianapolis and Cincinnati. Petitioner indicates that, when it began operations on the line in 1992, the line generally was in FRA Class 2 condition but that, by November 1994, approximately 30 miles of the Shelbyville Line had deteriorated to FRA Class 1 condition. Petitioner asserts that it had deferred maintenance on the line due to severe financial losses and low traffic density. In 1995, however, CIND returned the 24-mile segment from Sunman (milepost 39.0) to Greensburg (milepost 63.0) to FRA Class 2 status by installing approximately 100 ties per mile. Thereafter, in the spring of 1996, CIND became aware of slippage of the right-of-way, erosion, and other problems between mileposts 23.0 and 39.0. CIND says it made temporary repairs, but, particularly with respect to slippage at milepost 32.8, conditions worsened. In early 1997, CIND embargoed the segment between mileposts 23.0 and 39.0 and advised Shelbyville Line shippers that it would continue to serve them via Shelbyville at increased rates. The embargo and the increased rates are the subject of the pending complaint proceeding. CIND indicates that it seeks to abandon the line because it is not economically feasible to restore service over it. Prior to the embargo, CIND provided service on the line using a two-man crew and a single engine stationed at Greensburg. On Mondays, Wednesdays, and Fridays, CIND operated southbound to its Valley Junction Yard, at milepost 17.0. On Tuesdays, Thursdays, and Saturdays, CIND operated northbound to interchange with Conrail at Shelbyville and with CERA at Hill Yard in Indianapolis. On days that traffic required and time permitted, CIND would switch its customers at Greensburg during northbound operations. Petitioner indicates that, during southbound operations, if time permitted, it would stop to switch Anchor Glass, a shipper situated east of Thatcher, at milepost 23.0. Petitioner does not consider Anchor Glass to be a shipper on the Shelbyville Line. There are five shippers on the Shelbyville Line: Kolkmeier is situated at St. Paul (milepost 73.0), and Premier, Kova, Lowe s, and Greensburg Milling are situated at Greensburg. The last two-named shippers are located on a 1.25-mile long spur that connects with the main line at milepost 63.0. Petitioner notes that Lowe's is at the end of the spur, and Greensburg Milling is located just off the main line. Petitioner states that the spur currently is out of service between the two shippers due to track conditions. It appears, then, that Lowe's cannot currently be served. Petitioner adds that Kova's traffic moves through Greensburg Milling's facilities. CIND provides traffic and revenue data for 1996, the last full year of operations prior to the embargo, and averages for the 3-year period immediately preceding the embargo. Petitioner shows that, in 1996, it handled 648 carloads for the five shippers, from which it derived revenue of $178,017. Petitioner shows the 3-year average to be 770 carloads and $207,784. It points out that volumes have been decreasing. Overhead traffic on the line may be divided into three categories: (1) traffic that moves from or to points on CIND's southern segment and that is interchanged with CERA at Frankfort; (2) traffic that moves from or to CIND's southern segment and that is interchanged with TPW at Frankfort; and (3) traffic interchanged with Conrail. Petitioner states that all of the Conrail traffic that formerly moved over the Shelbyville Line to interchange at Shelbyville or Indianapolis now is interchanged at Cincinnati. Accordingly, neither the revenue nor the expenses from the Conrail traffic are contained in petitioner's computations. Petitioner indicates that the 3-year average of CERA and TPW overhead traffic on the line was 358 carloads and 382 carloads, respectively, contributing revenue of $206,239 and $167,697. For 1996, CERA traffic accounted for 386 carloads and $193,431 in revenue, and TPW traffic represented 420 carloads and $186,848 in revenue. Finally, CIND indicates that it receives $20,000 a year in income from property leases. Combining this income with revenues from local and overhead traffic, then, shows 3-year average revenue of $613,504 a year. CIND estimates that its annual direct operating costs are $560,880, and that its annual costs for property taxes and insurance are $45,639. While the line would be viewed as marginally profitable if one were to consider only these costs, petitioner presents evidence that the costs of necessary rehabilitation and maintenance are very substantial. Based on an engineering inspection and analysis conducted by Richard H. McDonald, CIND indicates that the embargoed segment contains four problem areas that make it unsafe for train operations. The cost to repair the areas to a minimum level of safety according to CIND totals $262,000. An additional $16,000 would be required to repair four areas on the line where erosion has caused damage. Even after the expenditure of $278,000, petitioner argues, neither the embargoed segment nor several other portions of the line would meet FRA Class 1 track standards. CIND estimates that, to bring the line up to such standards, an additional one-time cost of $190,000 for tie replacement and surfacing, and $307,000 for bridge repairs, would be required. Further, CIND argues that, in order for it to be able to efficiently operate over the Shelbyville Line, the track should be repaired to FRA Class 2 standards at an additional cost of $1,395,250. CIND concludes that, to return the line to FRA Class 1 status, the railroad's first year cost of rehabilitation and maintenance would be $602,479, second year cost would be $538,000, and third year cost would be $480,000. In sum, CIND projects first year annual avoidable losses at $595,494, second year at $531,015, and third year at $473,015. CIND asserts that, although the avoidable expenses of operating the line alone support abandonment, it has had Mr. McDonald prepare an estimate of the line's net liquidation value (NLV). Petitioner indicates that the total value of materials in the line is $4,704,000 and removal costs would be $970,000, resulting in an NLV of $3,734,000. Mr. McDonald made no evaluation of the value of the real property underlying the line. However, referring to a 1982 Conrail abandonment proceeding before the Interstate Commerce Commission, petitioner suggests that the value is at least $471,646. Petitioner argues that Board regulation of the abandonment is unnecessary, as the traffic on the line cannot support an economically feasible operation. It asserts that the transaction is limited in scope, as the subject route is less than 58 miles in length, and that abandonment would affect only five shippers who have alternative transportation available. Also, CIND states, no shipper has indicated that any significant increase in traffic could reasonably be expected in the future. Petitioner concludes that there will be no abuse of market power, as the shippers are not dependent on CIND, and the railroad had set rates artificially low to attract business. The protestants include the five shippers named by petitioner and two additional shippers - - Knauf, which operates a fiberglass manufacturing plant immediately north of milepost 81 on the line over which CIND has trackage rights, and Consolidated, which operates a marine terminal at Cincinnati. Protestants also include three local government entities concerned that a loss of rail service will impede development of the area served by the Shelbyville Line. In support of their presentation, protestants submit statements by the general managers of Lowe s, Greensburg Milling, and Premier, the presidents of Kolkmeier and Kova, engineer Jack Braun, transportation consultants Gerald W. Fauth III and James E. Libke, and former CIND General Manager Henry E. Weller. Protestants argue that CIND has grossly understated the revenue attributable to the Shelbyville Line. First, protestants claim that Anchor Glass is a shipper on the line and that, in CIND's operations, the railroad treats Anchor Glass as a main line customer. Protestants indicate that, whereas CIND might claim that it serves Anchor Glass from track that departs from the main line south of milepost 23, the facts are that the CIND line at milepost 23 is a double track, the tracks occupy a common portion of the right-of-way proposed for abandonment, and the segment serving Anchor Glass does not leave the right-of-way until it reaches milepost 23.4. Protestants add that, as CIND's petition recognizes, Conrail, in its abandonment proceedings, described the location of Anchor Glass's predecessor as milepost 23.4. Protestants next contend that CIND improperly has excluded all overhead revenue related to Conrail traffic on the ground that such traffic has been rerouted. Protestants aver that CIND has, in fact, lost and will not retain much of the revenue associated with the Conrail overhead traffic that has been rerouted. Protestants assert that, under Board regulations and precedent, a carrier is required to attribute revenues from overhead traffic to a line to be abandoned to the extent that such traffic will not be retained. Next, the five shippers on the line present evidence that they are willing to make firm and, if necessary, contractual commitments to minimum volumes of increased traffic if they receive reasonable service. The shippers assertedly are positioned to increase their traffic from its present average of 770 carloads to 2,200 carloads annually. Finally, protestants claim that CIND improperly has omitted demurrage revenues from its calculations. Protestants assail CIND's calculations of operating expenses. They assert that significant elements are unsubstantiated by workpapers. These elements include hourly wages for train crews, an overhead additive claimed for train crew wages, car hire expenses claimed for system cars or leased cars, and the claimed cost of leasing a locomotive on a year-round basis. Protestants argue that petitioner's expenses are based on a constructive set of operating conditions that is briefly explained and presented without any supporting witness. The assumptions assertedly present hypothetical operations in their worst light, attributing unnecessarily long and unexplained crew hours to the service contemplated. Protestants vigorously contest the amounts CIND claims are necessary to restore the line to a safe operating condition. Protestants question whether Mr. McDonald, in fact, personally inspected the line, given the facts that he claimed to accomplish the sizable task in only 2 days and has presented no workpapers supporting his inspection and analysis. Even if considered on the merits, protestants contend, Mr. McDonald's conclusions regarding track and bridge rehabilitation are unconvincing. Protestants claim that the line already is largely in FRA Class 2 track condition, with the balance in FRA Class 1 condition. Rehabilitation of the line, where necessary, assertedly can be accomplished for $249,000. Protestants argue that, among other errors, Mr. McDonald has greatly overstated the number of cross tie installations necessary in order for operations over the line to resume. To the extent the line is not now in Class 1 condition, protestants argue, its can attain that status with 700 serviceable ties per mile, not 3,200 as assumed by Mr. McDonald. Protestants also note that some damage was done to the line when fiber optic cable was installed. Claiming that CIND received $547,000 in revenue related to the installation, protestants argue that petitioner should credit the line with as much of that revenue as is necessary to restore the line to the same condition it was in before the installation occurred. Also with regard to claimed expenses, protestants argue that property taxes should be excluded because CIND has not indicated that it intends to sell or dispose of its property following abandonment. Protestants add that insurance costs should also be excluded because CIND has not stated that it intends to scrap the line. Protestants suggest that there are other problems regarding the petition. First, the spur on which Lowe s, Greensburg Milling, and Kova are situated, known as the Westport Industrial Track is, in protestants view, an extension of petitioner's line of railroad . Hence, protestants argue, the segment was improperly excluded from the abandonment request. Protestants argue that the Westport Industrial Track consistently has been treated as a line of railroad, as opposed to a spur exempt from regulation. Protestants assert that CIND specifically included the track in its 1991 line purchase from Conrail, and that CIND daily operates the track as an extension of its main line. Protestants also aver that, if CIND abandons the Shelbyville Line, it will be unable to exercise its trackage rights over the Conrail line between Shelbyville and Frankfort. Thus, according to protestants, there would be an unauthorized de facto abandonment or discontinuance of trackage rights. Protestants argue, then, that CIND must seek authority or an exemption relating to the abandonment or discontinuance of its trackage rights. Finally, protestants argue that the proposed exemption would have a severe, adverse impact on the shipping public. Closing of the line assertedly has caused, and will continue to cause, a diversion of grain traffic from the protesting shippers to competing grain elevators, to the detriment of grain producers. Truck transportation is not considered a viable, permanent substitute for rail service, and shippers do not have access to nearby transloading facilities contrary to CIND's claims. Further, protestants argue, the absence of rail service at Greensburg and St. Paul would harm not only the individual opposing shippers, but also the communities in which they are located and the farmers living and working in those communities. The extensive opposition pleadings raise serious questions about the petition filed by CIND. Taking those questions into account, we cannot make the findings necessary to support the request for relief here. In the circumstances, we will deny the petition for exemption without prejudice to CIND's filing a full abandonment application. Protestants also have raised the issues of the status of the Westport Industrial Track and of CIND's intentions regarding the Conrail line over which it holds trackage rights. Should CIND choose to file an application for abandonment, it should address these matters as well. In summary, on review of the record before us, we conclude that CIND has failed to meet its burden of establishing that continued regulation of the subject abandonment proposal is not necessary to carry out the rail transportation policy, and either that the transaction is limited in scope or that regulation is not necessary to protect shippers from the abuse of market power. The petition for exemption procedure for abandonment is primarily intended to be used to expedite decisions and minimize regulatory burdens in uncontested or noncontroversial proceedings. It should not be used in proceedings like the one before us where detailed analysis of revenues and costs is necessary. CIND should have known that its abandonment proposal would be strenuously opposed, and it should have filed a formal application. If CIND intends to pursue abandonment of its Shelbyville Line, it should file such an application and address the issues raised herein. Our denial of CIND's petition to abandon service over the Shelbyville Line via the exemption process moots labor protection, offer of financial assistance, and environmental issues, including the requests for public use and interim trails use. As such, we will not discuss those requests further. It is ordered: 1. The reply filed by CIND on April 30, 1998, is rejected. 2. The petition for exemption is denied. Decided: May 4, 1998 Service Date - Late Release May 4, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-32 (Sub-No. 83) BOSTON AND MAINE CORPORATION--ABANDONMENT--IN HARTFORD AND NEW HAVEN COUNTIES, CT STB Docket No. AB-355 (Sub-No. 23) SPRINGFIELD TERMINAL RAILWAY COMPANY--DISCONTINUANCE OF SERVICE-- IN HARTFORD AND NEW HAVEN COUNTIES, CT By decision served on April 22, 1998, the Board found that the public convenience and necessity permit applicants Boston and Maine Corporation (B&M) and Springfield Terminal Railway Company (ST) to abandon and discontinue service, respectively, over a line of railroad known as the Canal Branch extending from milepost 14.50 in Cheshire, CT, to milepost 24.00 in Southington, CT, a distance of 9.50 miles, in Hartford and New Haven Counties, CT (the line). The decision authorizing abandonment and discontinuance was scheduled to become effective on May 22, 1998, unless an offer of financial assistance (OFA) was filed on or before May 1, 1998. On May 1, 1998, Dalton Enterprises, Inc. timely filed an OFA to purchase the entire line for $650,240. By letter dated May 1, 1998, applicants filed a reply to Dalton's OFA, challenging Dalton's estimate of the value of the line and the feasibility of its proposal to contract with the Naugatuck Railroad Company to operate the line. An OFA to acquire a line for continued rail service need not be detailed, but an offeror must show that it is financially responsible and that the offer is reasonable. Dalton has submitted a letter from Webster Bank in New Haven, CT, indicating that it has made available to Dalton ample credit required for Dalton to purchase the line. Dalton also submits a copy of its 1996 Federal income tax return. The financial information submitted shows that Dalton is a financially responsible entity. Dalton's offer is substantially less than the Board's finding that the net liquidation value (NLV) of the line is $1,530,240. Dalton explains the disparity by asserting that the real estate and track materials may be worth considerably less than the amount determined by the Board if a segment-by-segment appraisal of the right-of-way is considered and if the costs of restoring at- grade crossings and removing bridges are factored in. Dalton also states that certain sections of the line may be subject to reversionary rights in others and that the lack of marketable title to some portions of the line could have a substantial impact on NLV. Because Dalton, a financially responsible entity, has offered financial assistance, the effective date of the decision authorizing abandonment and discontinuance of the line will be postponed. It is ordered: 1. The effective date of the decision authorizing abandonment and discontinuance of the line is postponed in order to permit the OFA process to proceed. 2. If B&M and Dalton cannot agree on the purchase price of the line, either party may request the Board to establish the terms and conditions of the purchase on or before June 1, 1998. If no agreement is reached and no request is submitted by that date, the Board will serve a decision vacating this decision and allowing the abandonment and discontinuance authorization to become effective. Decided: May 5, 1998 Service Date - Late Release May 5, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-290 (Sub-No. 198X)] Norfolk and Western Railway Company--Abandonment Exemption--in Lynchburg, VA Norfolk and Western Railway Company (NW) has filed a notice to abandon a 0.74-mile line of its railroad between milepost L-0.20 and milepost L-0.94 in Lynchburg, VA. The line traverses United States Postal Service Zip Code 24501. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 4, 1998, unless stayed pending reconsideration. NW shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by NW's filing of a notice of consummation by May 5, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: April 23, 1998. Service Date - May 5, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-402 (Sub-No. 5X)] Fox Valley & Western Ltd.--Abandonment Exemption--in Kewaunee County, WI On April 15, 1998, Fox Valley & Western Ltd. (FVW), filed with the Surface Transportation Board a petition to abandon a line of railroad, known as the Luxemburg- Kewaunee Line, extending from milepost 18.9 near Luxemburg to milepost 35.6 at the end of the line near Kewaunee, a distance of 16.7 miles, in Kewaunee County, WI. The line traverses U.S. Postal Service ZIP Codes 54205, 54216, and 54217, and includes the stations of Casco Junction at milepost 23.3 and Kewaunee at milepost 34.0. FVW is a wholly owned subsidiary of Wisconsin Central Transportation Corporation. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 3, 1998. Decided: April 27, 1998. Service Date - May 5, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-541X] Portland & Western Railroad, Inc.--Abandonment Exemption--In Washington County, OR On April 15, 1998, Portland & Western Railroad, Inc. (P&W) filed with the Surface Transportation Board a petition to abandon three segments of its line of railroad extending: (1) from milepost 20.05 to milepost 21.09, a distance of 1.04 miles; (2) from milepost 21.09 to milepost 21.26, a distance of 0.17 mile; and (3) from milepost 21.50 to milepost 22.0, a distance of 0.5 mile, all located at or near Hillsboro, in Washington County, OR. The lines traverse U.S. Postal Service Zip Code 97124 and include the stations of Merle located near milepost 20.8 and Orenco Junction located near milepost 21.5. Abandonment authority for the segments from milepost 21.09 to milepost 21.26 (0.17 mile) and from milepost 21.50 to milepost 22.09 (0.5 mile) was previously granted to Burlington Northern Railroad Company (ICC served Dec. 5, 1994). Thereafter, P&W filed a notice of exemption to acquire and operate all three segments proposed here to be abandoned (STB served Nov. 24, 1997). In that proceeding, P&W acquired the rail, track materials, and other personal property necessary for rail service and an exclusive rail easement over the underlying property; BNSF retained the real property with the intent to donate the property to the State of Oregon. P&W questions the need to seek abandonment authority for the segments previously abandoned by BNSF because P&W states that it never exercised its authority because of the absence of traffic. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 3, 1998. Decided: April 27, 1998. Service Date - May 5, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-6 (Sub-No. 379X)] The Burlington Northern and Santa Fe Railway Company--Abandonment Exemption--in Garfield and Logan Counties, OK The Burlington Northern and Santa Fe Railway Company (BNSF) has filed a notice to abandon 42.80 miles of its line of railroad between milepost 73.60 near Fairmont and milepost 116.40 near Guthrie including the stations of Douglas at milepost 82.4, Marshall at milepost 88.4, Lovell at milepost 95.1, and Crescent at milepost 102.8, in Garfield and Logan Counties, OK. The line traverses United States Postal Service Zip Codes 73736, 73733, 73056, 73028 and 73044. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 5, 1998, unless stayed pending reconsideration. BNSF shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by BNSF's filing of a notice of consummation by May 6, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: April 29, 1998. Service Date - May 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-55 (SUB-NO.561X) CSX TRANSPORTATION, INC. ABANDONMENT EXEMPTION IN CLARKE COUNTY, GEORGIA In this proceeding, CSX Transportation, Inc. has filed a petition in connection with the abandonment of its railroad line located between Milepost YYA-37.44 at East Athens and Milepost YYA-39.34 at Athens, a distance of approximately 1.9 miles in Clarke County, Georgia. This rail line has been used to transport overhead shipments of fertilizer components and minimal local shipments of grain. In recent years, only the Clarke Milling Company, Inc. has shipped or received freight by rail over the line proposed for abandonment. In 1994 and 1995, Clarke Milling received 38 and 32 carloads of whole grain, respectively, via rail. However, since April 10,1996, there have been no rail shipments either originating or terminating on the line proposed for abandonment. The right of way varies in width from 100 to 200 feet paralleling Oak Street. The line winds through the hilly suburban mixed use area between Athens and East Athens. The Georgia State Historic Preservation Officer (SHPO) has identified the entire 2.34 mile segment of branch line to be abandoned (consisting of the 1.9 mile segment specifically addressed in this application plus the .44 mile of previously abandoned track) as eligible for listing in the National Register of Historic Places. Additionally, the SHPO has indicated that elements of this rail line are located within the boundaries of the National Register-listed Athens Warehouse Historic District. Pending resolution of these issues, we recommend that the following condition be imposed on any decision granting abandonment authority: CSX Transportation shall retain its interest in and take no steps to alter the historic integrity of the right-of-way of the 1.9 mile segment of branch line addressed in this application, until completion of the Section 106 process of the National Historic Preservation Act. CSX Transportation has stated that a portion of the proposed branch line to be abandoned has been impacted by two Georgia Hazardous Site Inventory sites. Specifically, former operations of a nearby manufactured gas plant have impacted soil and ground water on approximately one-tenth of a mile on either side of Milepost YYA-39). Because of the presence of hazardous contamination on the right-of-way, we recommend that the following condition be imposed on any decision granting abandonment authority: CSX Transportation shall not engage in any salvage activities or otherwise dispose of the line until the Surface Transportation Board is notified in writing by CSX Transportation that CSX Transportation has developed, in consultation with the U.S. Environmental Protection Agency: (1) measures approved by EPA to ensure safe salvage operations; (2) any necessary remediation procedures, such as removing or capping portions of the right-of-way, that EPA and CSX Transportation have agreed upon. Based on the information provided from all sources to date, and subject to the recommended conditions, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 6, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-290 (Sub-No. 193X)] Norfolk and Western Railway Company--Abandonment and Discontinuance of Trackage Rights Exemption--in Waynesboro, VA Norfolk and Western Railway Company (NW) has filed a notice to abandon a 0.14-mile line of its railroad between Station 60+00 and Station 67+56 and for discontinuance of trackage rights over a 1.12-mile line of CSX Transportation, Inc. (CSXT), between Station 0+64 and Station 60+00 in Waynesboro, VA. The line traverses United States Postal Service Zip Code 22980. CSXT received abandonment authority for the 1.12-mile segment (ICC served Dec. 16, 1986), subject to the condition that CSXT not consummate the abandonment until NW receives authority or an exemption to discontinue its trackage rights over the CSXT line. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 6, 1998, unless stayed pending reconsideration. NW shall file a notice of consummation with the Board to signify that it has exercised the authority granted abandoned its 0.14-mile line. Pursuant to the same provisions, CSXT shall file a notice of consummation with the Board to signify that it has exercised the authority granted to it to fully consummate abandonment of its 1.12-mile line now that NW has received an exemption to permit it to discontinue trackage rights operation over CSXT's line. If consummation has not been effected by NW's filing of a notice of consummation of abandonment as to its line and by CSXT's filing of a notice of consummation of abandonment as to its line by May 6, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: April 29, 1998. Service Date - May 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33580 CITY OF ROCHELLE, ILLINOIS --OPERATION EXEMPTION-- On April 20, 1998, the City of Rochelle, Illinois filed a verified notice of exemption to assume and commence active operation of approximately 2.06 miles of rail trackage in the City of Rochelle, Illinois. The line is owned by the City, and is being operated by the Rochelle Railroad Co. On April 23, 1998, Rochelle Railroad Co. filed a petition to reject the notice or revoke the exemption. By letter dated April 20, 1998, the City of Rochelle, acting by its counsel, requests that the notice of exemption be withdrawn. In view of the withdrawal, the proceeding will be dismissed. It is ordered: 1. The request to withdraw the notice of exemption is granted and the proceeding in STB Finance Docket No. 33580 is dismissed. Decided: April 30, 1998 Service Date - May 6, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION Docket No. AB-167 (Sub-No. 1165X) CONSOLIDATED RAIL CORPORATION--ABANDONMENT EXEMPTION--IN ST. JOSEPH COUNTY, IN On October 17, 1996, a decision and notice of interim trail use or abandonment (NITU) was served, authorizing a 180-day period for the City of South Bend, IN (City), to negotiate an interim trail use/rail banking agreement with Consolidated Rail Corporation (Conrail) for a 2.0+/- mile portion of its line of railroad known as the Plymouth Industrial Track between milepost 179.00+ and railroad milepost 181.00+, in St. Joseph, IN. At the request of the City, the negotiation period under the NITU was extended by decisions served April 25, 1997, and February 19, 1998. The latest extension expired on April 10, 1998. By letter filed April 10, 1998, the City seeks an additional extension of the negotiation period until June 30, 1998. The City states that Conrail has requested that it perform an appraisal of the right-of-way and that it has finally been able to free up the services of a certified appraiser. The City also renews its concern on the status of title to the right-of-way, which, the City maintains, makes the appraisal a challenging prospect. By letter dated April 30, 1998, Conrail advised the Board that it supports an extension of the trail use negotiation period until June 30, 1998. It is ordered: 1. The negotiating period under the NITU is extended to June 30, 1998. Decided: May 5, 1998 Service Date - May 7, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-391 (Sub-No. 4X) RED RIVER VALLEY & WESTERN RAILROAD COMPANY-- ABANDONMENT EXEMPTION--IN BENSON COUNTY, ND Red Valley & Western Railroad Company (RRVW) filed a notice to abandon an approximately 10.55-mile line of railroad from milepost 79.08, approximately 0.6 miles north of Oberon, to milepost 89.63, in Minnewaukan, in Benson County, ND. Notice of the exemption was served and published in the Federal Register on April 9, 1998. The exemption is scheduled to become effective on May 9, 1998. The Board's Section of Environmental Analysis (SEA) served an environmental assessment (EA) in this proceeding on April 14, 1998. In the EA, SEA states that the National Geodetic Survey (NGS) has identified five geodetic markers that may be affected by the abandonment. NGS requests that it be notified 90 days in advance of any activities that may disturb or destroy the five geodetic markers. Therefore, SEA recommends that a condition be imposed requiring RRVW to consult with the NGS and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. The recommended condition will be imposed. It is ordered: 1. This proceeding is reopened. 2. Upon reconsideration, the exemption of the abandonment of the rail line described above is subject to the condition that RRVW consult with the NGS and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. Decided: May 4, 1998 Service Date - May 7, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-398 (Sub-No. 5X) SAN JOAQUIN VALLEY RAILROAD COMPANY--ABANDONMENT EXEMPTION--IN TULARE AND KERN COUNTIES, CA In the above-entitled proceeding, no environmental or historic preservation issues have been raised by any party or identified by the Section of Environmental Analysis. Accordingly, a Finding of No Significant Impact will be made. It is ordered: 1. Abandonment of the involved rail line will have no significant effect on the quality of the human environment and conservation of energy resources or on historic resources. Decided: April 29, 1998 Service Date - May 7, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33407 DAKOTA, MINNESOTA & EASTERN RAILROAD CORPORATION CONSTRUCTION INTO THE POWDER RIVER BASIN ACTION: Notice of Issuance of Procedural Schedule. SUMMARY: The Board has received public comments on the proposed procedural schedule for issuing a decision on the transportation merits of the application and applicant's reply to those comments, and the Board is issuing a final procedural schedule. This schedule provides for issuance of a decision within 180 days of the effective date of this decision. SUPPLEMENTARY INFORMATION: By decision served March 11, 1998, as corrected, the Board published notice of a construction and operation application filed by the Dakota, Minnesota & Eastern Railroad Corporation (DM&E) and requested comments on a procedural schedule based on one proposed by DM&E for consideration of the transportation issues regarding the application. DM&E seeks authority to construct and operate 280.09 miles of new railroad line, which would extend DM&E's existing rail lines into the Powder River Basin coal fields in northeastern Wyoming, and DM&E also plans several related projects. That decision also required DM&E to cause to be published notices: (1) advising that comments would not be due until the Board establishes a procedural schedule; and (2) after a schedule has been adopted by the Board, setting forth the schedule, including the due date for comments on the merits of the proposed transaction. We received over two hundred comments on the proposed procedural schedule. Comments were filed by landowners, environmental groups, shipper organizations, shippers and receivers (including electric utilities), railroads, government entities, and rail labor unions. We have reviewed all of these comments but, in light of their number, will not mention each comment individually here. For the most part, the parties opposing the proposed schedule state that the original 35- day comment period is insufficient. One group of similar letters (over 50) asks that we allow comments throughout the EIS process. The other time period mentioned most frequently is an increase in the initial public comment period to 180 days. There are also a few suggestions for comment periods of up to 400 days. The rationale for extending the time period for submitting comments is, generally, that the proposal is extensive and that more time is needed to study it and to seek help in asserting the parties positions in opposition. These parties argue that copies of the application are not readily available to many landowners, and that the application set out on the Internet is incomplete. These parties also claim that DM&E has had years to prepare its arguments and that they deserve time to counter these arguments and fully understand the public convenience and necessity claims of DM&E. There are also numerous requests for local hearings and assertions that there is no public need for another rail line to serve the Powder River Basin. There is one specific proposal for an alternative procedural schedule. It is offered by the 777 Ranch. This proposal would significantly extend the due dates for the various pleadings and ultimately postpone the issuance of a decision on transportation issues by slightly more than 9 months, for a total of approximately 15 months until the decision on the transportation issues is made. Numerous parties support the 180 day schedule. These parties emphasize that this schedule is reasonable and provides adequate time for submitting evidence and for informed decision making by the Board. In support of the proposed schedule, DM&E argues that many of the opposing comments appear to be from parties implacably against the project who see delay as a desirable end in itself. DM&E also claims that many of the opposing comments are directed to environmental concerns, while others address the merits of the proposal rather than the amount of time needed to provide adequate opportunity for public participation and for development of a sufficient record on the transportation merits of the application. DM&E adds that it has attempted to ensure the broad availability of the application and that it went well beyond Board regulations in this regard. Turning to the specific requests for lengthening the proposed schedule, DM&E notes that the commenters apparently did not take into account that, after the initial 35-day comment period, there would be a further 80-day period in which to submit transportation evidence and argument in opposition. In addition, DM&E points out that, even before a specific schedule is adopted, interested parties will have already had nearly 2 months since the application was filed to begin preparation of their transportation comments. We have reviewed all the comments received on the proposed procedural schedule and are aware of the concerns parties have raised regarding the amount of time necessary to prepare their cases as well as the desire of DM&E to have an expedited schedule. Balancing these competing concerns, and with fairness to all parties in mind, we have decided to adopt the proposed 180-day procedural schedule for consideration of transportation issues. This schedule will ensure that all parties are accorded due process. As we explained in our previous decision, any approval granted would be conditioned upon consideration of the environmental impacts of the proposed construction. Thus, we will issue a subsequent decision after completion of the EIS process, and only at that point would we allow construction to begin, if appropriate, based on a consideration of the potential environmental impacts of the proposed transaction. We note that many of the pleadings we received in response to our request for comments on the procedural schedule for consideration of transportation issues instead raise concerns with environmental issues. As noted, we will separately address environmental issues in a subsequent decision after completion of the EIS process. Other comments are directed more to the transportation merits of the application than the procedural schedule. As mentioned, our previous decision required DM&E to cause to be published new notices setting forth the schedule we are adopting here and certifying to us that it has done so. We are reiterating that requirement here. Decided: April 30, 1998. Service Date - May 7, 1998 PROCEDURAL SCHEDULE In the following schedule, the term "P" designates the date that the Board issues this procedural schedule and "P + n" means "n" days following that date. P Procedural schedule established by the Board. P + 7 Due date for publication by DM&E of newspaper notice announcing the procedural schedule. P + 20 Due date for notices of intent to participate as a party of record P + 35 Due date for written comments on transportation aspects of the Application. P + 40 Due date for DM&E's replies to written comments on transportation aspects of the Application. P + 70 Board decision ordering hearing under modified procedures. ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT STB Docket NO. AB-290 (SUB-NO. 198X) Norfolk and Western Railway Company--Abandonment Exemption--in Lynchburg, VA In the above entitled proceeding, the Norfolk and Western Railway Company (NW), has filed a notice in connection with the abandonment of a 0.74-mile line of its railroad between milepost L-0.20 and milepost L-094 in Lynchburg, VA. The right-of-way passes through a sparsely populated agricultural area of Southern Virginia. In its application, NW states that there has been no traffic on the line during the past two years. The National Geodetic Survey (NGS), U.S. Department of Commerce, has informed us that 7 geodetic station markers may be affected by the proposed abandonment. NGS requests that it receive not less than 90 days notification in advance of any salvage activities in order to plan for their relocation. NGS also sent a copy of the list and location of the markers to NW. We recommend NGS's request be imposed as a condition to any abandonment authority. The Commonwealth of Virginia, Department of Game and Inland Fisheries, requests that NW use appropriate erosion and sediment control measures, as set forth in the Virginia Erosion and Sediment Control Handbook, 1992, Virginia Department of Conservation and Recreation. These measure should be maintained throughout the project period due to the close proximity of an intermittent stream. Prior to engaging in any salvage activities, we recommend that NW consult with the U.S. Army Corps of Engineers, Norfolk District, to determine if permits are necessary. We recommend the following environmental conditions be placed on any decision granting abandonment authority: (1) The National Geodetic Survey (NGS) has identified 7 geodetic markers that may be affected by the proposed abandonment. Therefore, NW shall notify NGS at least 90 days prior to any salvage activities that may disturb or destroy these markers so that plans may be made for their relocation. (2) The Commonwealth of Virginia, Department of Game and Inland Fisheries requests that NW use appropriate erosion and sediment control measures, as set forth in the Virginia Erosion and Sediment Control Handbook, 1992. (3) Prior to engaging in any salvage activities, we recommend that NW consult with the U.S. Army Corps of Engineers, Norfolk District, to determine if permits are necessary. Based on the information provided from all sources to date, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 8, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT DOCKET NO. AB-290 (Sub. No. 200X) Norfolk and Western Railway Company - Abandonment - Between Duty and Clinchfield Coal, Dickenson and Buchanan Counties, Virginia In the above entitled proceeding, Norfolk and Western Railway Company has filed a notice in connection with the abandonment of its line of railroad between Milepost CL-13.56 at Duty and Milepost CL-16.90 at Clinchfield Coal, a distance of 3.3 miles in Dickenson and Buchanan Counties, Virginia. According to NW, the land use along the right-of-way is 90 percent forest and 10 percent residential. No traffic has moved over the line for two years and none is anticipated. Generally, all agencies responded that there would be minimal environmental impacts associated with abandonment and salvage. However, the Virginia Department of Environmental Quality expressed concern about water quality and air quality during salvage operations. Specifically, if NW performs in-stream salvage during certain conditions, a Virginia Water Protection Permit will be required. NW should employ strict soil and erosion control methods during salvage operations in and around Indian Creek. All wetlands should be avoided. During salvage, NW is required to control fugitive air emissions and any land clearing debris must be disposed of in an approved manner. NW must comply with Virginia open burning and fugitive air emission regulations. To ensure compliance with the Virginia regulations protecting water quality and air quality during salvage operations, we will recommend that a condition be imposed on any decision granting abandonment authority requiring NW to consult with the Virginia Department of Environmental Quality prior to beginning salvage operations. Based on the information provided from all sources to date, we conclude that, subject to the recommended condition, and as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 8, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-492 (SUB-NO. 1X) FILLMORE WESTERN RAILWAY COMPANY ABANDONMENT AND DISCONTINUANCE IN FILLMORE, JEFFERSON, SALINE AND THAYER COUNTIES, NEBRASKA In this proceeding, Fillmore Western Railway Company (FWRY) has filed a petition in connection with the abandonment of its railroad line located generally (a) between Geneva and Bruning, Nebraska (Bruning Line); (b) between East Strang Junction and Tobias, Nebraska, and on to the end of the line at Daykin, Nebraska (Daykin Line); (c)between West Strang Junction and Shickley, Nebraska, for a total distance of 42.20 miles in Fillmore, Jefferson, Saline and Thayer Counties, Nebraska. In its application, FWRY states that the grain shipments on the line have been declining and that the line in now no longer economically viable. FWRY states that there is alternative transportation service available in the area, including several Burlington Northern/Santa Fe Railway Company and Union Pacific Railway Company lines within a 17-mile radius. The National Geodetic Survey (NGS) has informed us that 11 geodetic station markers may be affected by the proposed abandonment. NGS requests that it receive not less than 90 days notification in advance of any salvage activities that may affect the markers in order to plan for their relocation. NGS also sent a copy of the list and location of the markers to FWRY. We will recommend NGS's request as a condition to any abandonment authority. Based on the information provided from all sources to date, and subject to the recommended conditions, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 8, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 78 CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY --CONTROL AND OPERATING LEASES/AGREEMENTS-- CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION On April 23, 1998, APL Limited (APL) filed an appeal requesting that we reverse a ruling issued by Administrative Law Judge Jacob Leventhal on April 17, 1998. In his ruling, Judge Leventhal granted, in part, the petition by CSX to declassify certain portions of the record with respect to a lease agreement between Conrail and APL. CSX's petition sought to change the designation of the material from Highly Confidential to Public. In granting the relief sought by CSX, Judge Leventhal found that, contrary to APL's assertions, the declassified portions of the lease agreement do not contain commercially sensitive material and that CSX's need to use the information in its oral argument outweighs any detriment to APL. CSX replied in opposition to APL's appeal. In 1988, APL and Conrail entered into a 16-year rail transportation contract providing for the movement of intermodal traffic between various points in the Eastern United States, including rail movements between Chicago, IL, and Conrail's South Kearny Yard in Northern New Jersey. In connection with the transportation contract, Conrail also agreed to lease a 20-acre intermodal facility in South Kearny to APL for a term of 24 years at an annual rental of One Dollar ($1.00), payment waived. Under the terms of applicants agreement to acquire Conrail, Conrail's South Kearny Yard is allocated to CSX. APL's Chicago-South Kearny movements are allocated to both CSX and NS, with revenues from the movements pooled between them. In this proceeding, APL takes the position that the Transaction Agreement, insofar as it provides for the succession of CSX and/or NS to the rail transportation contracts of Conrail, where both the shipper and the succeeding carrier will remain bound by the terms of the contract, should not be approved by us, either generally or as applied to APL. According to APL, it should not be bound by the terms of its existing transportation contract with Conrail, but instead should have the opportunity to negotiate new rail service terms with both CSX and NS. In this proceeding, we have delegated broad authority over disputes arising out of the discovery process to Judge Leventhal. Appeals from his decisions will be granted only in exceptional circumstances to correct a clear error of judgment or to prevent manifest injustice. APL's appeal will be denied. Judge Leventhal exercised his discretion by considering all factors, balancing the prejudice to CSX as against the prejudice to APL, and ultimately granting CSX's declassification request. The exercise of such discretion by Judge Leventhal is entirely within the scope of his authority in this proceeding. Because APL has not demonstrated that Judge Leventhal's ruling constitutes a clear error of judgment or manifest injustice, the appeal will be denied. It is ordered: 1. The appeal in APL-21 from Judge Leventhal's April 17, 1998 decision is denied. Decided: May 7, 1998 Service Date - May 8, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 79 CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY --CONTROL AND OPERATING LEASES/AGREEMENTS-- CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION This decision addresses the petition by Cyprus Amax Coal Sales Corporation, filed April 28, 1998, for leave to intervene and file comments. Applicants replied in opposition to Cyprus Amax's petition. Cyprus Amax states that it operates a coal mine, and plans the construction of another facility, in the area served by the former Monongahela Railway Company, which was acquired by Conrail in 1991. In its petition, Cyprus Amax states that it has not previously participated in this proceeding in view of applicants representations that, although NS will have operational control of Conrail's Monongahela coal lines, CSX will have equal access to all current and future facilities in the area. Cyprus Amax contends that applicants inability to negotiate an implementing operating plan for the area forces it to seek intervention at this time and the imposition of operating conditions to protect its interests. Although it is aware of our recent decision denying a similar intervention request by CONSOL Inc., Cyprus Amax avers that, unlike CONSOL, its interests have not been addressed by other parties in this proceeding. Petitioner claims that it should not be penalized for not burdening the Board with filings that appeared unnecessary, given the representations by applicants. Applicants argue that there is no difference between Cyprus Amax's petition to intervene and CONSOL's petition, and it should likewise be denied. According to applicants, Cyprus Amax has made no showing that it was prevented in any way from participating in the proceeding or following the established procedures. Applicants maintain that permitting Cyprus Amax to intervene at this time would seriously compromise the meaning of procedural deadlines and prejudice applicants in their ability to present their case. The petition to intervene will be denied. Cyprus Amax claims that, unlike the situation of CONSOL in Decision No. 77, no affiliate has addressed its interests in this proceeding. However, Cyprus Amax's concerns have been outlined in a verified statement of a Cyprus Amax official appended to the comments and request for conditions of Bessemer & Lake Erie Railroad Company. Those concerns address the same Monongahela coal movements at issue in the instant petition to intervene. Cyprus Amax has failed to show that its position is materially different from that of CONSOL in Decision No. 77. Although we are denying Cyprus Amax's request to intervene, we reiterate that we will assess the proposed acquisition of Conrail in the light of representations made in the application, including applicants stated intention to afford equal access to all facilities in the Monongahela area. It is ordered: 1. The petition to intervene in CYPR-1 is denied. Decided: May 7, 1998 Service Date - May 8, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33583] Wisconsin Central Ltd. and Fox Valley & Western Ltd.--Joint Relocation Project Exemption--In Fond Du Lac, Wisconsin Wisconsin Central Ltd. (WCL) and Fox Valley & Western Ltd. (FVW) have jointly filed a notice of exemption to enter into a project to relocate lines of railroad in Fond Du Lac, WI. Both WCL and FVW are Class II railroads commonly controlled by Wisconsin Central Transportation Company. The transaction was expected to be consummated on or shortly after April 16, 1998, the effective date of the exemption. WCL and FVW own and operate parallel lines of railroad through Fond Du Lac, WI. The joint relocation will reroute operations from, and allow removal of, duplicative rail lines. Under the joint project, WCL and FVW agree to the following transactions: (1) WCL will abandon its line of railroad on FVW Line One between MP-175.85 near Dixie and Morris Street and MP- 178.40 north of Scott Street, a distance of approximately 2.55 miles, and will also abandon its line of railroad on FVW Line Two between MP-145.58 near Guinette and Woodlawn Avenues and MP-146.24 north of Ninth Street where it connects with FVW Line One, a distance of approximately .66 miles, all in Fond Du Lac, WI; (2) FVW will construct a connecting track of approximately 2,430 feet in length between the WCL Line and FVW Line Two in the vicinity of Morris and Dixie Street (This will connect FVW Line Two with the WCL line. FVW Line One is already connected to the WCL line); and (3) WCL will grant FVW trackage rights over the WCL Line between MP-154.87 at Dixie and Farwell Streets and MP-157.24 north of Scott Street, a distance of 2.37 miles. The proposed joint relocation project will simplify rail operations. The notice states that no shippers will be adversely affected by these relocations or lose access to any rail service currently provided by WCL or FVW. It also states that Stock Lumber, Inc., located at MP- 177.78 on FVW Line One, will continue to receive rail service via trackage that FVW is contractually bound to retain after the joint relocation project is completed. Decided: May 4, 1998. Service Date - May 8, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION AND CERTIFICATE OF INTERIM TRAIL USE OR ABANDONMENT Docket No. AB-425 LONE STAR RAILROAD, INC.--ABANDONMENT AND DISCONTINUANCE OF TRACKAGE RIGHTS--IN WICHITA, ARCHER, BAYLOR, KNOX, HASKELL AND JONES COUNTIES, TX By decision served on June 9, 1995, the ICC granted Lone Star Railroad, Inc. authority: (1) to abandon a portion of its line of railroad between milepost 142.8 near Lanius, TX, and milepost 8.0 near Howard, TX; and (2) to discontinue trackage rights over the line of Burlington Northern Railroad Company between milepost 8.0 near Howard and milepost 0.0 at Valley Junction, TX, and from Valley Junction east for 331 feet to the switching point in Sunshine Yard at Wichita Falls, TX, a total distance of 142.86 miles in Wichita, Archer, Baylor, Knox, Haskell and Jones Counties, TX. In the same decision, the ICC granted authority to Southern Switching Company to discontinue service that it performed over the 142.86-mile rail line pursuant to an operating agreement with Lone Star. The grant was subject to the standard employee protective conditions and to a public use condition. The public use condition expired on October 7, 1995. On November 3, 1995, a decision and certificate of interim trail use or abandonment was served, which authorized a 120-day period for the American Trails Association, Inc. (ATA), to negotiate an interim trail use/rail banking agreement with Lone Star for the 128.5-mile portion of the right-of-way between milepost 8.0 in Wichita Falls and milepost 136.5 in North Abilene. On October 16, 1997, ATA requested that the Board partially vacate the NITU for the line segment between milepost 111.27 at the Haskell County-Jones County boundary line and milepost 136.5 at the end of the line near the City of Hawley, a distance of 25.23 miles in Jones County, TX. ATA states that it is the owner of the right-of-way, and requests that the partial vacation be made effective November 1, 1997. ATA's request complies with the Board rule applicable to such modifications. On March 23, 1998, the North Texas Rural Rail Transportation District (NTR) filed a request for its substitution as interim trail operator in lieu of ATA, for the approximately 7-mile portion of the right-of-way between milepost 8 near Howard and milepost 15 in Wichita and Archer Counties, TX. NTR has filed a statement of willingness to assume financial responsibility. On March 26, 1998, ATA filed a statement in support of NTR's request and stated that it had reached an agreement for the transfer of the right-of-way segment to NTR. NTR has made the required showing for the substitution of an interim trail user. Accordingly, NTR's request will be granted. In addition, the certificate of interim trail use will be vacated for the segment of the line between milepost 111.27 and milepost 136.5. It is ordered: 1. This proceeding is reopened. 2. The decision and certificate of interim trial use served November 3, 1995, is modified as requested and vacated with the respect to the line segment between milepost 111.27 at the Haskell County-Jones County boundary line and milepost 136.5 at the end of the line near the City of Hawley, in Jones County, TX, and this line segment may be fully abandoned. 3. As to the segment between milepost 8 near Howard and milepost 15 in Wichita and Archer Counties, TX, NTR is authorized to replace ATA as the new trail user for that approximately 7-mile portion of the right-of-way, effective on the service date of this decision. 4. The new trail user is required 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. 5. Interim trail use/rail banking is subject to the future restoration of rail service and to the new user's continuing to meet the financial obligation for the right-of-way. 6. If the new trail 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. Decided: May 6, 1998 Service Date - May 11, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-33 (Sub-No. 113) UNION PACIFIC RAILROAD COMPANY--DISCONTINUANCE OF TRACKAGE RIGHTS AND ABANDONMENT--IN NATRONA AND CONVERSE COUNTIES, WY On November 12, 1997, a decision and certificate of interim trail use or abandonment was served in the above proceeding, which authorized a 180-day period for the City of Casper, WY to negotiate an interim trail use/rail banking agreement with Union Pacific Railroad Company for portions (between mileposts 590.0 and 599.6 and between mileposts 603.5 and 607.8) of a 17.8- mile line of railroad extending from milepost 590.0 to the end of the line at milepost 607.8 near Casper (Air Base), in Natrona County, WY. The negotiating period is scheduled to expire on May 9, 1998. On May 6, 1998, the City filed a request for an additional 180-day period in which to continue negotiations with the railroad. The City believes that this extension will insure sufficient time for the parties to conclude their negotiations and reach a mutually acceptable final agreement. In a letter filed May 6, 1998, UP states that it agrees with the request. It is ordered: 1. The request to extend the interim use negotiating period is granted. 2. The CITU negotiating period is extended to November 5, 1998. Decided: May 8, 1998 Service Date - May 12, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-167 (Sub-No. 1182X) CONSOLIDATED RAIL CORPORATION--ABANDONMENT EXEMPTION--IN INDIANA COUNTY, PA In the above-entitled proceeding, no environmental or historic preservation issues have been raised by any party or identified by the Section of Environmental Analysis. Accordingly, a Finding of No Significant Impact will be made. It is ordered: 1. Abandonment of the involved rail line will have no significant effect on the quality of the human environment and conservation of energy resources or on historic resources. Decided: May 4, 1998 Service Date - May 12, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION 49 CFR 1146 [STB Ex Parte No. 628] Expedited Relief for Service Inadequacies ACTION: Notice of Proposed Rulemaking. SUMMARY: Pursuant to its decision in Review of Rail Access and Competition Issues, STB Ex Parte No. 575 (STB served Apr. 17, 1998), the Board is instituting a proceeding to solicit comments on proposed rules that would establish expedited procedures for shippers to obtain alternative service from another rail carrier when the incumbent carrier cannot properly serve shippers. The Board requests that persons intending to participate in this proceeding notify the agency of that intent. SUPPLEMENTARY INFORMATION: In STB Ex Parte No. 575, the Board conducted two days of informational hearings, on April 2 and 3, 1998, to examine issues of rail access and competition in today's railroad industry, and the statutory remedies and agency regulations and procedures that relate to those matters. As a result of those hearings, we announced that we would begin a rulemaking proceeding to consider revisions to our rules to provide shippers receiving poor service greater opportunity to obtain service from an additional carrier. While the Board lacks general authority to require an unwilling railroad to permit physical access over its lines to the trains and crews of another railroad, it may direct that result in certain situations: as a condition to the incumbent's merger with another railroad; to serve terminal facilities when it would be in the public interest; or, to serve any facilities for a limited period of time (not more than 270 days) because of the carrier's inability or failure to provide its shippers with adequate service. The Board may also direct an incumbent railroad to afford access indirectly, either by prescribing alternative through routes (requiring the incumbent to interline traffic with another railroad over a designated interchange and thereby create an alternative route and rates for a shipper's traffic) or by requiring reciprocal switching (where, for a fee, the incumbent must switch cars to and from another railroad so that the latter, even though it cannot physically reach a shipper, can constructively offer alternative single-line service). Accordingly, we seek comment on the proposed rules set forth below to provide expedited relief for demonstrated poor service. To address these service issues more effectively, we propose rules under which parties may seek alternative rail service under either the access provisions of sections 11102 and 10705, or the emergency service provisions of section 11123. While section 11123 has typically been used to address regional service emergencies, such as the one recently experienced in the West, we believe it can also be used to afford more localized relief to shippers; that section broadly permits Board intervention to remedy service deficiencies having substantial adverse effects on shippers, or where a rail carrier cannot transport the traffic offered to it in a manner that properly serves the public. Moreover, permitting shippers to proceed either under sections 11102 or 10705, on the one hand, or section 11123, on the other, affords greater flexibility and broadens the potential for regulatory relief. For example, trackage rights access under section 11102(a), while not statutorily limited in duration, is limited to an incumbent railroad's terminal facilities, and therefore is not available for shippers that are not located at or near terminal areas. In contrast, remedies under section 11123(a), although limited to 270 days, are potentially available for shippers located on any part of the incumbent carrier's network; this section also affords the Board more latitude to craft a variety of measures to remedy any particular service situation. Whichever remedies are sought, however, the predicate for relief would be the same: that, over an identified period of time, there has been a substantial, measurable deterioration in the rail service provided by the incumbent carrier. We do not think it necessary or appropriate to propose a list of particular factors or a formulaic weighing of such factors that shippers must use to make that assessment, or to propose a specific test period. Each shipper has its own particular service needs and experiences, and carrier difficulties may vary. Our standard of relief must be flexible enough to permit us to address varying circumstances. Commenters may wish to address this issue. We caution that the proposed rules are not meant to redress minor service disruptions. Access particularly that which would compel physical access by another railroad over an incumbent's lines is a serious remedy with potentially significant operational, safety, and financial consequences for the involved carriers, and we intend that the rules be used to remedy only substantial service problems that cannot readily be resolved by the incumbent railroad. Accordingly, we propose to require shippers to: (1) first discuss and assess with their incumbent carrier whether adequate service can be restored within a reasonable period of time that is consistent with the shipper's needs and, if not, outline in its request for relief why that is the case; and (2) obtain from another railroad the necessary commitment should it be afforded access to meet the shipper's service needs, and describe the carrier's plan to do so safely and without degrading service to its existing customers or unreasonably interfering with the incumbent's overall ability to provide service. The proposed rules include expedited procedures because of the usually urgent nature of serious service problems. Instead of the more time-consuming complaint process, parties may seek relief by petition. We propose that the incumbent carrier be required to reply to such a petition within five business days, and that the shipper, if it wishes to file a rebuttal, be required to do so no more than three business days later. If relief is granted under these rules, once the incumbent carrier can demonstrate that it has restored, or is prepared to restore, adequate service, it may file a petition to terminate that relief. We would discourage an incumbent carrier from filing such a petition too hastily after the Board's order, however, as the objective in a proceeding of this nature is to provide shippers with a needed degree of certainty of adequate rail service. For the same reason, we propose that satisfying the standard for relief under section 11123 ordinarily would establish a presumption that the incumbent's inability to provide adequate service will last beyond the initial 30-day period, and thus will provide the basis for a subsequent order extending relief beyond the initial 30-day period. However, if the incumbent carrier can show that it is prepared to provide adequate service, it may seek to have the relief terminated within the first 30 days. Should the incumbent carrier file a petition to terminate relief, replies are to be filed in five business days, and the carrier may file any rebuttal three business days afterward. The Board will then assess all relevant factors in determining what action would be appropriate. We invite comment on all aspects of this proposal. Decided: May 12, 1998 Service Date - Late Release May 12, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB- 6 (SUB-NO. 379X) Burlington Northern and Santa Fe Railroad Company -- Abandonment Exemption -- in Garfield and Logan Counties, OK In this proceeding, the Burlington Northern and Santa Fe Railroad Company (BNSF) has filed a notice in connection with the abandonment of its railroad line located between MP 73.60 near Fairmont and MP 116.40 near Guthrie, a distance of 42.80 miles in Garfield and Logan Counties, OK. Although the Oklahoma Department of Wildlife Conservation and the Oklahoma Natural Heritage Inventory identified the potential presence of the Bald Eagle and the Least Tern in the project area, the U.S. Fish and Wildlife Service indicated that there would no effect on any Federally listed threatened or endangered species. The Logan County Conservation District and Floodplain Management Board indicated that if BNSF removes rails and ties during salvage activities, these materials, and the heavy equipment used to remove them, must not be stored within the boundaries of the 100-year floodplain. SEA recommends that the following condition be placed on any decision granting abandonment authority: While conducting salvage activities, BNSF shall not store rails, ties, or salvage equipment in the 100-year floodplain. Based on the information provided from all sources to date and subject to the recommended condition, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 13, 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 an application filed January 23, 1998, and supplemented on February 5, 1998, Norfolk and Western Railway Company ( a wholly owned subsidiary of Norfolk Southern Railway Company) seeks adverse discontinuance of limited overhead trackage rights by Grand Trunk Western Railroad Incorporated (GTW) over the entire Riverfront Running Track or Riverfront Track extending from NW's milepost 119.3 (at the former Oasis Yard) and milepost 121.5 (at Smith Street), a distance of between 1.6 miles and 2.2 miles, in Cincinnati, Hamilton County, OH. N&W also seeks exemption from the offer of financial assistance (OFA) provisions. Senator Mike DeWine, of Ohio, the County of Hamilton and NW request expedited consideration. NW filed the application when GTW declined to file, or concur in, a notice of exemption for discontinuance of trackage rights over the Riverfront Track. GTW claims to have assigned the trackage rights to the Indiana & Ohio Railway Company (IORY). We requested IORY to participate in this proceeding, but it has not done so. GTW and IORY indicate that by letter dated January 29, 1998, they invoked arbitration of the assignment of trackage rights pursuant to the terms of the GTW trackage rights agreement. An adverse discontinuance is an application to the Board to find that the public convenience and necessity requires or permits the discontinuance of service by a carrier over a line of railroad, when that application is filed by someone other than that carrier. Such filings are also known as third party applications for abandonment or discontinuance. They are termed adverse applications because they are often, though not always, opposed by the carrier holding authority to operate on the line. In a decision served February 12, 1998, NW was granted a waiver of certain regulations and statutory provisions dealing with notice and filing requirements. Notice of the filing of the application was served on February 12, 1998. On March 10, 1998, GTW filed a verified statement indicating that it did not oppose NW's adverse discontinuance application as it affects only GTW s, or its sucessor s, operational rights, but that GTW will seek to preserve the rights of its successor, IORY, to acquire the Riverfront Running Track. GTW says it will do so either by exercising its right of first refusal pursuant to its trackage rights agreement with NW or by an offer of financial assistance in the concurrently filed abandonment proceeding, STB Docket No. AB-290 (Sub-No. 184X), Norfolk and Western Railway Company--Abandonment Exemption--In Cincinnati, Hamilton County, OH. NW replied on March 25, 1998. NW acquired its interest in the Riverfront Running Track on April 1, 1976, as part of the Final System Plan under the Regional Rail Reorganization Act of 1973 (3R Act). The trackage rights agreement involved here was also entered into on April 1, 1976, between NW and Detroit, Toledo, and Ironton Railroad Company (DTI). In June 1980, GTW acquired control of the DTI, and DTI later merged into GTW in December 1983. As a result, GTW acquired its interest in the agreement (the GTW trackage rights agreement) as the successor to the DTI. The GTW trackage rights agreement is restricted to the movement of overhead traffic over the line for interchange with the Cincinnati, New Orleans and Texas Pacific Railway Company (CNOTP). CNOTP is an NW affiliate whose railroad line connects with the Riverfront Running Track near Smith Street's intersection with Front Street. NW and CNOTP are both subsidiaries of Norfolk Southern Railway Company. They were unaffiliated when GTW's predecessor, DTI, acquired its overhead trackage rights on the line from NW. Access to CNOTP's Gest Street Yard and the CNOTP High Line, which connects the Riverfront Running Track with the Gest Street Yard, is via trackage rights obtained by GTW in 1982 over a line owned by CSX Transportation Inc. (CSXT). However, a derailment of a CSXT train and ensuing fire rendered part of the CNOTP High Line unsafe for continued operations. From that time until now, GTW overhead traffic that would have moved over the Riverfront Running Track under the GTW trackage rights agreement for interchange with CNOTP has instead been detoured and rerouted over an alternate route. In 1995, NW completed construction of the Third Main track along CSXT's right-of-way between Winton Place and Hopple Street, which eased congestion of rail traffic north of Cincinnati and made the unused Riverfront Running Track route unnecessary, even as a backup route for overhead traffic. Due to a damaged bridge on the CNOTP High Line, GTW has been unable to use the line since 1986 for interchange of overhead traffic with the CNOTP, the only permissible purpose under the GTW agreement. NW asserts that the public convenience and necessity require discontinuance of the trackage rights. According to NW, there are no shippers located on or adjacent to the Riverfront Running Track, no local traffic has moved over the line for over two years, and any overhead traffic can be rerouted. Furthermore, they indicate that there is no prospect that any shippers will ever again locate on or adjacent to this line because of the City of Cincinnati's public use projects being constructed on the current railroad right-of-way and adjacent property. Indeed, GTW has not used the line for the only permissible use under the GTW Agreement--interchange of overhead traffic with CNOTP--for more than a decade. Due to damage to the CNOTP High Line, any overhead traffic to CNOTP that might exist cannot use the line and has been rerouted. Moreover, NW asserts that there is no reason to reinstitute service on this long-dormant line, on which no shippers are located. NW and the City of Cincinnati entered into an agreement, the Transition Agreement, dated April 11, 1995. The Transition Agreement provides for the City's acquisition of the Riverfront Running Track once all rail carrier interests have been discontinued and extinguished and NW has abandoned the Line. As part of the same agreement, the City facilitated the construction of a Third Main track on an existing rail line through Cincinnati's Millcreek Valley. The construction of the Third Main made available to NW additional operating capacity and thereby making the Riverfront Running Track unnecessary even as a contingency for future increased capacity. Abandonment of the Riverfront Running Track is an essential component of a 20-year public and private effort to redevelop and revitalize the City of Cincinnati's River Front area. Barriers between the City's central business district and the north bank of the Ohio will be removed by reconfiguring the Fort Washington Way expressway (I-71/U.S. 50); building multi- purpose structured parking lots to replace surface parking lots; and expanding and reconnecting the City's downtown area. Further enhancements to downtown Cincinnati will include Hamilton County's plans to build a new Cincinnati Bengals football stadium; the possibility of a new Cincinnati Reds baseball stadium; a multi-modal passenger transportation center; a possible future commuter rail station; and a regional family-oriented cultural/entertainment district. Discontinuance of trackage rights will allow NW to abandon and remove the Riverfront Running Track, resulting in the culmination of two decades of efforts by the City of Cincinnati and Hamilton County to remove rail traffic from the Riverfront Running Track. In adverse discontinuance proceedings the primary question to be resolved is whether there exists sufficient public interest in operation of the subject line to merit continued oversight by the Board. As the party seeking abandonment, NW has the burden of proof to establish that the public convenience and necessity permit the proposed discontinuance. Here the public convenience and necessity supports the requested grant of discontinuance authority. For the past 11 years, no rail service has been provided on the line. Because of the projected public uses of the railroad right-of-way and surrounding property, there is no public interest in continuing and no likelihood of reactivating rail service on the line. GTW does not oppose the discontinuance of the trackage rights. Also, IORY has not filed any opposition to the termination of the trackage rights. While IORY has not participated in this proceeding, in STB Docket No. AB-290 (Sub-No. 184X), IORY states that, while it is not asserting its right to operate over the Riverfront Running Track as a trackage rights holder, it insists that it has a right to purchase the line as a right of first refusal under the GTW trackage rights agreement. It is unnecessary for us to address whether GTW or IORY is the legal successor to the DTI trackage rights. Any ownership disputes arising from the trackage rights agreement can be resolved elsewhere. Because neither GTW nor IORY has opposed the application, we find that the discontinuance of trackage rights is warranted in that rail service to the public will not be harmed. Clearly, the evidence of record demonstrates that it is in the public interest and the interest of interstate commerce to approve NW's adverse application. NW has also framed its request for exemption to extend to OFAs. Exemptions 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. Because this proceeding involves a discontinuance rather than an abandonment, relief under is limited to subsidizing the carrier's losses for a period not to exceed one year. As noted, GTW has not operated over the line in more than 11 years, and IORY has never operated over the line. NW has shown that the right-of-way is needed for a valid public purpose, i.e., multi- purpose improvements for the City of Cincinnati's downtown area. There are no shippers currently located on the line and no possibility that new shippers would locate on the line in the future. Overhead traffic has either been rerouted or can be rerouted. Thus, there is no overriding public need for continued rail service. On the other hand, imposition of OFA procedures or a public use condition would only delay transfer of the line for important public purposes and may cause the City to incur substantial monetary penalties for delay in completing certain projects. To accommodate the requests for expedition, we will grant an exemption from 49 U.S.C. 10904 and make the decision effective 10 days from the date of service. NW has met its burden of proof, and we will grant its application. Because this is a discontinuance proceeding and not an abandonment, trail use/rail banking and public use provisions do not apply. We find: 1. The present and future public convenience and necessity require and permit the discontinuance of trackage rights by either GTW or IORY over the above-described line of railroad, subject to the employee protective conditions in Oregon Short Line R. Co.-- Abandonment--Goshen, 360 I.C.C. 91 (1979). 2. Discontinuance of the trackage rights will not result in an adverse impact on rural and community development. 3. Because such matters as public use and trail use/rail banking conditions are not appropriate here and because we have exempted the adverse discontinuance from the offer of financial assistance provisions of 49 U.S.C. 10904, we will accommodate the requests for expedition by allowing the discontinuance of trackage rights by either GTW or IORY to become effective on May 23, 1998. 4. This action will not significantly affect either the quality of the human environment or the conservation of energy resources. It is ordered: 1. NW's application for the adverse discontinuance of the trackage rights described above is granted, and the OFA provisions of 49 U.S.C. 10904 are exempted. 2. This decision is effective on May 23, 1998. Decided: May 13, 1998 Service Date - Late Release May 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-33 (SUB-NO.119X) UNION PACIFIC RAILROAD COMPANY -ABANDONMENT EXEMPTION- IN ROCK, GREEN AND DANE COUNTIES, WI (HARVARD SUBDIVISION BETWEEN EVANSVILLE AND MX CROSSING) In this proceeding, the Union Pacific Railroad Company has filed a petition in connection with the abandonment of its railroad line located between milepost 119.0 near Evansville to milepost 134.0 near MX -a crossing of the Wisconsin & Southern Railroad Company ( W&SR ) - a distance of 15.0 miles in Rock, Dane and Green Counties, Wisconsin. One active shipper, Oregon Farm Center, 321 Market Street, Oregon, WI 53575, has used the line for freight shipments of fertilizer. In 1995, the shipper had one carload, in 1996 the shipper has two carloads, and in 1997 the shipper had no carloads. The last shipment of fertilizer to move over the Line was in May 1996. The right-of-way is approximately 15 miles in length and is almost exclusively 100 feet in width with very few exceptions. The right-of-way begins on the southern edge of Madison and passes through the town of Oregon and terminates near Evansville, Wisconsin. The right-of-way is mostly rural and passes through rural agricultural land. The adjacent land is used for pasture and row crops. The topography is flat to gently rolling. The National Geodetic Survey (NGS) has identified 18 geodetic station markers along the rail line 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: The Union Pacific Railroad Co. shall consult with the National Geodetic Survey and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. Based on the information provided from all sources to date, and subject to the recommended condition, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 13, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-55 (Sub-No. 562X)] CSX Transportation, Inc.--Abandonment Exemption--in Rocky Mount, Nash County, NC On April 23, 1998, CSX Transportation, Inc. (CSXT), filed with the Surface Transportation Board a petition to abandon a portion of its Florence Service Lane, North End Subdivision, extending from Valuation Station 4+30 at Falls Road to Valuation Station 36+00 at the end of the track near Earl Street, which traverses U.S. Postal Service ZIP Code 27804, a distance of 0.60 miles, in Rocky Mount, Nash County, NC. CSXT indicates that there are no stations on the line. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 11, 1998. Decided: May 5, 1998. Service Date - May 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-290 (Sub-No. 184X) NORFOLK AND WESTERN RAILWAY COMPANY--ABANDONMENT EXEMPTION-- IN CINCINNATI, HAMILTON COUNTY, OH By petition filed January 23, 1998, and supplemented on February 5, 1998, Norfolk and Western Railway Company (NW) seeks exemption under 49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C. 10903 to abandon a portion of a line of railroad known as the Riverfront Running Track, extending from NW's milepost 119.3 (at the former Oasis Yard) to milepost 120.8 east of Plum Street, a distance of approximately 1.5 miles, in Cincinnati, Hamilton County, OH. In addition, NW seeks to be exempted from the offer of financial assistance (OFA) provisions and the public use provisions. The United Transportation Union (UTU) requests imposition of labor protective conditions. Senator Mike DeWine of Ohio, the County of Hamilton and NW request expedited consideration. Comments were filed by two railroad carriers, Indiana and Ohio Railway Company (IORY) and Grand Trunk Western Railroad, Incorporated (GTW), customers/shippers supporting GTW, and the City of Cincinnati (the City). The two carriers do not oppose NW's abandonment of the Riverfront Running Track. However, they believe that there is a public need for a continued railroad service over the line under a new IORY ownership. IORY wishes to purchase the line under the OFA provisions. Accordingly, IORY and GTW oppose NW's sought exemption from the OFA provisions. On April 15, 1998, NW and Hamilton County filed replies to the comments of IORY. On May 5, 1998, IORY filed supplemental comments and a response to the replies of Hamilton County and NW and the comments of the City. On May 6, 1998, NW filed a motion to strike the supplemental comments and response of IORY. In the interest of deciding this case on the most comprehensive record available, we will deny the motion to strike and will accept and consider all filings. We will grant the requested exemptions, subject to labor protective conditions and an environmental condition. NW acquired the Riverfront Running Track on April 1, 1976, as part of the Final System Plan under the Regional Rail Reorganization Act of 1973 (3R Act). According to NW, abandonment of the Riverfront Running Track will allow the City and Hamilton County to proceed with several Riverfront revitalization projects unhindered by the track structure. An agreement entitled Transition Agreement, dated April 11, 1995, entered into by NW and the City provided for the City's acquisition of the right-of-way once all rail carrier interests were discontinued and extinguished, and NW had abandoned the line. As part of the same agreement, the City agreed to facilitate the construction of the Third Main track on an existing rail line through Cincinnati's Millcreek Valley, to make available to NW additional operating capacity and thereby make the Riverfront Running Track unnecessary even as a contingency for future increased capacity. Discontinuances were sought for all other rail carrier interests. NW's General Manager Western Region, M. D. Manion, certified that no local traffic has originated or terminated on the line for at least two years; that overhead traffic has been rerouted over other lines, and that no formal complaint filed by a user of rail service on the line or a state or local government entity acting on behalf of such user regarding cessation of service over the line either is pending before the Surface Transportation Board or any U.S. District Court or has been decided in favor of the complainant within the two-year period. According to NW, overhead traffic that would have moved over the line has been moving via a detour over an alternate route for over 11 years because a CSX Transportation Inc. (CSXT) train derailment severely damaged a bridge on the railroad line of NW's affiliate--The Cincinnati, New Orleans and Texas Pacific Railway Company (CNOTP) High Line that connects NW's Riverfront Running Track with the interchange point at CNOTP's Gest Street Yard. NW claims that the public convenience and necessity requires abandonment because there are no shippers on the line and no prospect of any locating there, there is no traffic moving over the line, the line is not needed for overhead traffic, and the property is desired for public use. Moreover, because of the location of the line and projected public uses of the railroad right-of- way and surrounding property, NW contends that there is no public interest in continuing and no likelihood of reactivating rail service to any shipper on the line. NW states that abandonment of the Riverfront Running Track is an essential component of a 20-year effort of public and private interests to redevelop and revitalize Cincinnati's Riverfront area. Abandonment will allow barriers between the City's central business district and the north bank of the Ohio to be removed by reconfiguring the Fort Washington Way expressway (I-71/U.S. 50); building multi-purpose structured parking lots to replace surface parking lots; and expanding and reconnecting the City's downtown area. Further enhancements to the downtown will include: Hamilton County's plans to build a new Cincinnati Bengals football stadium; the possibility of a new Cincinnati Reds baseball stadium; a multi-modal passenger transportation center; a possible future commuter rail station; and a regional family-oriented cultural/entertainment district. Abandonment and removal of the Riverfront Running Track will finally permit two decades of efforts by the City to remove rail traffic from Cincinnati's Riverfront. An exemption will allow NW to avoid the expenses of owning and maintaining this redundant rail line and to apply its assets more productively elsewhere on its system, while permitting the City of Cincinnati to realize its plans for a large scale renewal of its downtown area, thereby promoting safe and efficient rail transportation, fostering sound economic conditions, and encouraging efficient management. There is no possibility of shipper abuse because the line has not been used for over 11 years. No shippers are located on the line, and any overhead traffic has been or can be rerouted. There is no opposition to NW's abandonment of the line by shippers or other railroads. NW has also framed its request for exemption to extend to 49 U.S.C. 10904, involving OFAs, and to 49 U.S.C. 10905, involving public use conditions. IORY and GTW oppose an exemption from the OFA provisions. NW has stated that it will not negotiate with any party for the transfer of the line for trail use because it has already agreed to transfer the line to the City. IORY argues that the Board may not use its exemption authority to exempt the OFA provisions because this is a contested case. IORY notes that the Board and its predessor, the Interstate Commerce Commission, have only granted exemption from the OFA provisions where such exemptions are not opposed. IORY also argues that, because section 10904 is a mandatory forced sale provision, the Board may not, through the exemption process, decline to authorize the transfer of a rail line approved for abandonment, if the financial terms of section 10904 are met. IORY states that the Board's authority to exempt a transaction is necessarily limited by its authority to authorize or deny the transaction in the first instance. Consequently, IORY argues, that the Board may not through the exemption process take an action, such as denying an OFA, that it is not otherwise statutorily authorized to undertake. Next, IORY and GTW argue that, even if the Board decides it has jurisdiction to exempt from the OFA provisions, the petition for exemption of the OFA provisions should still be denied because there is an overriding public need for a transportation service provided by IORY over the Riverfront Track. Letters from IORY's customers/supporters express a need for IORY's direct service through Cincinnati over the Riverfront Track. IORY, if it is able to purchase the Riverfront Track, would move traffic to the Consolidated Grain and Barge Company. Consolidated Grain and Barge Company operates two rail-barge facilities on the Central of Indiana (CIND -- an affiliate of IORY) line west of Cincinnati and ships such commodities as grain, fertilizer, salt, pig iron and coal. The shippers indicate that IORY's only access to this barge facility is via an NS switch through the NS Gest Street Yard or a CSXT switch through the CSXT's Queensgate yard in Cincinnati. Because of alleged significant delays in getting traffic through the NS and CSXT yards and because of the NS's and CSXT's alleged exorbitant switching charges, the shippers indicate that they cannot competitively route their traffic over IORY through Cincinnati. In addition, they claim that the NS and CSXT rail lines through Cincinnati are highly congested. The customers/supporters argue that the Riverfront Track is an essential transportation link that would enable IORY to bypass the congested Cincinnati NS and CSXT rail yards, and provide shippers direct rail access through Cincinnati to barge facilities on the Ohio River. GTW argues that its on-line shippers require a direct IORY route over the Riverfront trackage with an interchange with transloading facilities on the CIND. It submits that its shippers do not have access to a rail/barge transloading facility on the Ohio River at Cincinnati other than the one served exclusively by CSXT. It explains that the only other present alternative is through the NS's Gest Street Yard to CIND, but it argues that this option is limited by a 1993 Agreement between GTW and NW (with IORY being the successor to GTW). GTW states that the terms of the agreement were limited to moving grain shipments and the movements were limited to Tuesday and Wednesday, with a minimum of eight hours advance notice of arrival, and with a maximum of four round trips per month--not to exceed one round trip per week. GTW adds that NW has refused to extend the agreement for commodities other than grain, and has refused to eliminate the unacceptable operating restrictions on an interchange between IORY and CIND. IORY also argues that its purchase of the Riverfront Track should be allowed because rail service over the Riverfront Track is not incompatible with the proposed Cincinnati Riverfront redevelopment plan. IORY understands that the redevelopment project provides space for two parallel tracks along the Riverfront to accommodate commuter rail service and that the Southwest Ohio Regional Transit Authority (SORTA) is to be granted the passenger rail operating rights over the Riverfront Track. IORY expresses its belief that freight and commuter rail operations can coexist on the Riverfront trackage. It states that the rail commuter operations along the Cincinnati Riverfront would extend eastward over a rail line IORY recently sold to SORTA and over which IORY will continue to provide rail freight service. IORY states that its proposed rail service over the Riverfront Track would simply extend by about two miles the contemplated sharing of track by IORY and SORTA for joint commuter and freight operations. IORY explains that, as part of the redevelopment project, the Fort Washington Way is to be trenched and is to include a double tracked rail line. IORY indicates that its operations over that route would therefore be below ground level and not disturb the other planned projects. IORY projects that, if it is allowed to purchase the Riverfront Track, it would transport two loaded trains a day over the track. IORY states that it would have great flexibility in the timing of those trains and would work with the City to accommodate the other interests along the Riverfront area. IORY states that, if it is successful in acquiring the Riverfront Track through the OFA process, IORY will fully cooperate with the City and other interested parties to ensure that the project is not impeded and that the future contemplated use of the Riverfront area is not adversely impacted by IORY's freight operations. NW, the City, and Hamilton County replied to GTW and IORY, arguing that exemption of the OFA provisions is justified. NW states that the whole predicate of the GTW and IORY arguments for retention of the track and denial of the OFA exemption is that shippers do not have competitive access to a rail/barge transloading facility at Cincinnati other than one served exclusively by CSXT. However, NW asserts that there are competitive options to rail/barge transloading facilities other than the Riverfront Track. NW states that IORY has failed to disclose that it already serves directly the Queen City River Terminals, Inc. on Kellogg Avenue. NW also notes the existence of a dormant Ohio River Grain Company on Eastern Avenue that IORY could serve if reopened at an allegedly limited expense. In addition, NW indicates that IORY can interchange with NW at McCullough Yard and IORY has a direct operation into CSXT's Queensgates Yard without passing through Gest Street Yard and presumably could make some arrangements with CSXT for interchange with CIND when that carrier moves traffic to and from Queensgates Yard. NW adds that the general congestion has eased at Cincinnati. It disputes IORY's claim that NS has exorbitant switching charges that are a deterrent for IORY using the Gest Street Yard to serve Consolidated Grain and Barge. NW explains that the real problem with operations via CIND to the Consolidated Grain and Barge grain terminal is not the NS intermediate switch charge or operations through Gest Street Yard, but the fact that CIND does not quite reach the terminal. Grain traffic moving via CIND must be trucked across CSXT tracks in order to reach the terminal. This, NW argues, adds cost and time to the service. NW submits, however, that IORY could avoid the added trucking costs, if it shipped grain over CSXT which serves the Consolidated Grain and Barge terminal directly. NW also states that customers willing to export grain via the Ohio River terminals have many options, not just the limited options portrayed by IORY. These customers, according to NW, can ship via the terminals of CF Industries, Cargill Industries, ADM, Consolidated Grain and Barge Riverside, and the Southside Terminal and the Pier Transportation Terminal. Finally, NW indicates that, even if IORY purchased the Riverfront Track, NW has no obligation to repair the CNOTP High Line connection. It adds that, even if that bridge were repaired, the bridge would simply provide IORY with another route for overhead traffic into Gest Street Yard, not a direct connection with CIND, which is the reason given for IORY's current attempts to acquire the Riverfront Running Track. The City responds that there is absolutely no transportation need that supports retention of the Riverfront Track, just as there has been literally no traffic on the line for twelve years. The City states that the retention of rail freight service on the Riverfront Track, which IORY seeks, would jeopardize the feasibility of the redevelopment project. It states that Hamilton County, for example, has explained in its March 9, 1998 letter to the Board that the continuing presence of the Riverfront Track threatens to disrupt the new Bengals stadium and subject the County--and local taxpayers--to significant late penalties. The City argues that, even if construction of various elements of the redevelopment project could be completed if IORY purchased the line, the rail freight operations which IORY seeks to perpetuate would menace and drive away the crowds of pedestrians and visitors that the Riverfront is specifically intended to attract. In addition, the City argues that there are potential safety impacts of operating trains on the Riverfront Track through the central Riverfront area. The City also challenges IORY's argument that IORY's rail service on the Riverfront Track would not be incompatible with the proposed Riverfront redevelopment. The City points out that IORY has never once suggested that freight trains would actually operate on the current site of the Riverfront Track should IORY be allowed to file and consummate an OFA for that track. Rather, the City states that IORY's position in this proceeding is premised entirely on the presumption that IORY's freight operations can and would simply be relocated into the Fort Washington Way trench and onto the commuter rail tracks that IORY asserts will be constructed there. However, the City indicates that there are no existing plans as part of the current reconfiguration of the Fort Washington Way or other Riverfront redevelopment projects to construct a commuter rail or light rail line along the Riverfront. According to the City, the Fort Washington Way reconstruction is designed to accommodate such a transit project should one be pursued in the future, but such decisions are many years away and subject to numerous variables. Richard Mendes, the Deputy City Manager of the City of Cincinnati, indicates that, while the Fort Washington project would accommodate the future construction of a commuter rail line, it quite plainly does not include a double tracked rail line as described in IORY's comments. In addition, Mr. Mendes states that, even if a commuter/light rail line were present along Fort Washington Way, IORY's operations along that line would entail many of the difficulties inherent in freight operation on the current Riverfront Track. Mr. Mendes claims that IORY's statement that such operations would be trenched and not disturb other planned Riverfront projects is untrue. Mr. Mendes states that the redevelopment plans indicate that an at-grade crossing would be required at Broadway--one of downtown Cincinnati's primary north/south thoroughfares, and preliminary location plans show an at-grade crossing at Central Avenue. Mr. Mendes states that these at-grade crossings used by rail freight operators would result in potential safety problems, and delays for vehicles and pedestrians. In this proceeding, we have decided to allow NW to abandon its Riverfront Track, so that the City's Riverfront redevelopment project can proceed. Similarly, in GTW Adverse Discontinuance, served concurrently with this decision, we found that the public convenience and necessity dictated that GTW's trackage rights over the line should be discontinued, so that the line could be abandoned and that the City's Riverfront redevelopment project could proceed. Given these findings, we will not allow our jurisdiction of the OFA provisions to be used to frustrate the operations of the City of Cincinnati and State of Ohio laws. We also will not allow IORY to use the OFA provisions of 10904 to defeat our adverse discontinuance of trackage rights finding and our exemption from section 10903 in this proceeding. As our predecessor agency long held, we believe that, in the exercise of our abandonment jurisdiction, we must consider arguments that there exist overriding public purposes sufficient to justify our withdrawing our jurisdiction where that jurisdiction would operate to defeat a paramount public purpose. In appropriate situations, we will allow the displacement of rail service by other public purposes where the public interest justifies that end. Accordingly, we find that our authority under sections 10903 and 10904 would permit us to deny a petition requesting the Board to establish the conditions of sale and amount of compensation under section 10904, even if the petitioner were a financially responsible person. We find that NW, the City, and the County have shown that the right-of-way is needed for a valid public purpose, i.e., multi-purpose improvements for the City's downtown area. IORY and GTW do not challenge the fact that the City's Riverfront project is needed for a valid public purpose. Presently, the Riverfront Track, the Fort Washington Way expressway (I-71/U.S. 50) and existing surface parking lots serve as barriers between Cincinnati's central business district and the north bank of the Ohio River. As part of a series of planned improvements that will cost nearly $1 billion in public investment, Fort Washington Way will be reconfigured, multi-purpose structured parking lots will replace surface parking lots and, in the absence of the railroad tracks, as well, the riverfront parks will be expanded and reconnected with Cincinnati's downtown. Other components of the Riverfront revitalization include a new Cincinnati Bengals football stadium (to be constructed by Hamilton County), a possible new Cincinnati Reds baseball stadium, a multimodal passenger transportation center and a regional family oriented cultural/ entertainment district, expected to be anchored by the National Underground Railroad Freedom Center (a 125,000 square foot interpretive museum and education center) and a large-screen formal theater for the Cincinnati Museum Center. We also find that there is no overriding public need for continued rail service over the Riverfront Track. The track has not been used for more than 11 years and overhead traffic has been rerouted. No shipper will lose rail service as a result of the abandonment. Arguments that the trackage is needed because of congestion in Cincinnati, excessive switching rates by NW and CSXT, and NW's operating restriction at Gest Street Yard under the 1993 Agreement, are unpersuasive. We have received no complaints that rail service at Cincinnati is inadequate. Nor have we received any complaints that switching charges or any other rail rates are excessive. NW has offered evidence of a number of competitive options to the transloading rail/barge facilities on the Ohio River that were not mentioned by IORY and GTW. It appears that IORY has other alternative options to routing its traffic over CSXT and NS lines. In addition, while GTW attacks the alleged exorbitant switching charges of NS and CSXT, no evidence is presented as to what the costs of IORY would be of providing service over the Riverfront track. CIND's revenue needs and the additional truck costs would have to be accounted for. In addition, the cost of building a new relocated track over the Riverfront area was not discussed by IORY. We are not persuaded that the Riverfront Track would be more efficient and less costly than all other options. IORY's asserted plans to operate overhead grain trains on the Riverfront Track to and from CIND are thus speculative. Only one of the five entities supporting IORY's purchase actually identified potential traffic that would move over the line. However, this traffic would only move if economically feasible. The GTW argument that IORY ownership of the Riverfront Track is necessary because of the operating restrictions imposed under the 1993 Agreement is not persuasive justification given that IORY has apparently alternative direct routes to the Ohio River that are not so restricted. IORY's arguments boil down to a claim that it would be preferable to have three lines rather than two to serve the Cincinnati docks. But that carrier's assertion that there is a public need for rail service on the Riverfront Track is belied by the fact that the line has not carried one pound of freight in more than a decade. IORY's sudden discovery of a demand for its services over this track in light of the Riverfront redevelopment project is neither persuasive nor meritorious. The line is inactive and has remained so for many years. Moreover, we have received a request for expedited action from Hamilton County, supported by Senator DeWine and the NW. Hamilton County stated, on March 9, 1998, that contractors are currently working around the unused track, but they are rapidly approaching the point where construction will have to be delayed until the track can be removed. Part of the Riverfront redevelopment project is a stadium for the Cincinnati Bengals professional football team. Hamilton County states that it is subject to substantial financial penalties if it fails to complete the stadium by August 2000, and that . . . any significant delay in removal of track could result in the imposition of millions of dollars in penalties on the taxpayers of Hamilton County. The facts of this case are such that, in addition to justifying a denial of a request to set terms and conditions under section 10904, the public interest supports exempting NW from the provisions of section 10904. Hamilton County is engaged in a major public works project. Absent an exemption, NW will be unable to promptly consummate the abandonment authority we grant here. For the reasons noted above, we see little or no demand for rail service on the Riverfront Track and a great need to use the property for a nonrail public purpose. Under these circumstances, we can see no basis to deny NW's request to be relieved from the provisions of section 10904. We find that the section 10502 criteria for granting an exemption from the provisions of sections 10904 and 10905 have been met. The transaction is limited in scope because the Riverfront Track is only 1.5 miles long and because no shippers will lose service. No shipper has used this line for more than 11 years and because overhead shippers have competitive routing alternatives, we find no abuse of market power. The requested exemptions will reduce the need for Federal regulatory control over the rail transportation system, reduce regulatory barriers to exit from the industry, and avoid safety concerns inherent with utilizing the Riverfront Track for freight operations. Also, we find IORY's argument, that an exemption does not lie because the OFA provisions are mandatory in nature, to be without merit. There is nothing exceptional in the language of section 10904 that would make it any less susceptible to the Board's exemption authority than any other section of the Act. Many sections direct the Board to do, or not do, something if certain conditions are met or certain circumstances exist. Under IORY's reasoning, any section that was mandatory in nature would be shielded from the exemption process. We believe that Congress did not intend such a limitation on the use of the Board's exemption authority. To the contrary, Congress provided in section 10502 that the Board shall use its exemption authority to the maximum extent consistent with this part. When Congress wished to preclude the use of exemptions with respect to certain sections of the Act, they knew how to do so. The Board is specifically prohibited from granting exemptions with respect to section 11706 and with respect to employee protection in 49 U.S.C. 10502(e) and (g). No such prohibition exists as to section 10904. Accordingly, we find that we have jurisdiction to exempt the abandonment transaction from the OFA provisions of 10904 and similarly from the public use provisions of 10905. Exemptions from sections 10904 and 10905 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. To accommodate the requests for expedition, we will grant an exemption from 49 U.S.C. 10904-05 and make the decision effective on 10 days notice. Having exempted the proposed abandonment from 49 U.S.C. 10904-05, we have eliminated the need to extend the effective date of the abandonment exemption to consider OFAs and requests for public use conditions. In the environmental assessment (EA) served on March 30, 1998, SEA indicated that the National Geodetic Survey (NGS) has identified two geodetic station markers that may be affected by the proposed abandonment. SEA, therefore, recommends that we impose a condition requiring NW to consult with the NGS at least 90 days prior to conducting any activities that would disturb or destroy the markers. Based on SEA's recommendation, which we adopt, we conclude that the proposed abandonment, if implemented subject to the above condition, will not significantly affect either the quality of the human environment or conservation of energy resources. It is ordered: 1. Under 49 U.S.C. 10502, we exempt from the prior approval requirements of 49 U.S.C. 10903-05 the abandonment by NW of the above-described line, subject to: (1) the employee protective conditions in Oregon Short Line R. Co.--Abandonment--Goshen, 360 I.C.C. 91 (1979), and (2) the condition that NW consult with the NGS at least 90 days prior to conducting any activities that would disturb or destroy the noted geodetic station markers. 2. The exemptions will be effective on May 23, 1998. Decided: May 13, 1998 Service Date - Late Release May 13, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-414 (Sub-No. 2X)] Iowa Interstate Railroad, Ltd.--Abandonment Exemption--in Marion County, IA On April 23, 1998, Iowa Interstate Railroad, Ltd. (IAIS) filed with the Surface Transportation Board a petition to abandon its line of railroad extending from milepost 123.5 near Otley to the end of the line at or near milepost 114.80 in Pella, a total distance of 8.70 miles in Marion County, IA. The lines traverse U.S. Postal Service Zip Codes 50214 and 50219, and includes the station at Pella (milepost 114). By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 11, 1998. Decided: May 6, 1998. Service Date - May 13, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-544X] Sea Lion Railroad--Abandonment Exemption--In King County, WA On April 23, 1998, Sea Lion Railroad, a/k/a Adventure Trail, Inc. (SLR) filed with the Surface Transportation Board a petition to abandon a line of railroad between the end of the line at milepost 2.70 and milepost 0.09 in the Ballard District of Seattle, WA, a distance of approximately 3.00 miles, in King County, WA. The line traverses U.S. Postal Service Zip Codes 98107 and 98117. There are no existing rail stations. In addition, SLR seeks exemption from offer of financial assistance procedures and public use conditions. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 11, 1998. Decided: May 8, 1998. Service Date - May 13, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 80 CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY --CONTROL AND OPERATING LEASES/AGREEMENTS-- CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION Oral argument in this proceeding will be held on Wednesday and Thursday, June 3 and June 4, 1998, respectively, at 10:00 a.m., in the Surface Transportation Board Hearing Room, in Washington, D.C. In Decision No. 70, served March 12, 1998, we required parties wishing to participate in the oral argument to notify the Secretary of the Board by April 10, 1998. We received over 65 requests from parties of record wishing to participate in the oral argument. To accommodate the numerous parties, we are extending the oral argument in this proceeding to 2 days. On April 14, 1998, Harry C. Barbin, Esq., attorney for the Former Employees of Consolidated Rail Corporation (Retirees), filed a motion for leave to late file a notice to participate in the oral argument. Mr. Barbin is a party of record and stated that he either did not receive the mailed copy of Decision No. 70 or it was misplaced in his office. Mr. Barbin states that, as soon as he received a copy of Decision No. 70, he filed his motion which was received at the Board on April 15, 1998. No objection to Mr. Barbin's motion has been received. Because the late service of the notice of intent to participate in the oral argument will not unduly complicate or delay this proceeding or its procedural schedule, Mr. Barbin's motion will be granted, and he will be permitted to participate in the oral argument on behalf of the Retirees. On April 8, 1998, Fred Alspach, Councilman of the Wellington, Ohio Village Council (Wellington), filed a request to be heard at the oral argument in conjunction with the 5th Congressional District Representative, Congressman Paul E. Gillmor. Wellington is not a party of record in this proceeding but has been an active participant in the environmental process. Both Wellington and Congressman Gillmor have submitted comments on the draft Environmental Impact Statement. We will permit Wellington to participate in the oral argument. We also received requests from the following non-parties of record or their representatives to participate in the oral argument: (1) Edward G. Banks, Jr., Maryland and Delaware Railroad (M&D RR); (2) Nona J. Cunane, President, Guardian Construction Company (Guardian); (3) Wendell H. Gauthier, attorney for Plaintiffs (Gauthier), In Re: New Orleans Tank Car Leakage Fire Litigation, No. 87-16374, Civil District Court for the Parish of Orleans; (4) Kristopher Michael Klemick, Jersey Shore, PA (Klemick); (5) Thomas J. Moraghan, Toms River, NJ (Moraghan); and (6) CONSOL Inc. (CONSOL), Fritz R. Kahn, attorney. These requests to participate in the oral argument are denied. We will limit participation in the oral argument to parties of record, or to parties that have submitted environmental comments. It is ordered: 1. The Retirees' motion for leave to late file an oral argument participation notice in this proceeding is granted. 2. Wellington's request to participate in the oral argument is granted. 3. The requests of non-parties of record (M&D RR, Guardian, Gauthier, Klemick, Moraghan, and CONSOL) to participate in the oral argument are denied. 4. Time for oral argument is allotted as reflected in the Appendix to the decision. 5. This decision is effective on May 13, 1998. Decided: May 12, 1998 Service Date - May 13, 1998 APPENDIX Time will be allocated to Members of Congress at the beginning of each day or otherwise as needed. Members of Congress will have the option of appearing on either Wednesday, June 3, 1998, or Thursday, June 4, 1998. MEMBERS OF CONGRESS New York: Senator Alfonse M. D Amato Senator Daniel Patrick Moynihan Congressman Jerrold Nadler Congressman Jack Quinn Congressman John J. LaFalce Ohio: Congressman Sherrod Brown Congressman Dennis Kucinich Congressman Ralph Regula Pennsylvania: Senator Arlen Specter Congressman Ron Klink Rhode Island: Senator Jack Reed SCHEDULE OF APPEARANCES Wednesday, June 3, 1998: MEMBERS OF CONGRESS TIME ALLOTTED PRIMARY APPLICANTS CSX Corporation, CSX Transportation, Inc., 60 minutes Norfolk Southern Corporation, Norfolk Southern (Primary Applicants Railway Company, Conrail Inc. and Consolidated will have a total of Rail Corporation of 150 minutes, but will reserve 90 minutes for rebuttal) FEDERAL GOVERNMENT PARTIES U.S. Department of Justice 10 minutes U.S. Department of Transportation 15 minutes Total 25 minutes BROAD SHIPPER INTERESTS The National Industrial Transportation League 5 minutes The Fertilizer Institute 5 minutes Chemical Manufacturers Association 5 minutes Society of the Plastics Industry, Inc. 5 minutes Total 20 minutes SPECIFIC SHIPPER INTERESTS AK Steel Corporation 5 minutes APL Limited 5 minutes ARCO Chemical Company 5 minutes ASHTA Chemicals Inc. 5 minutes Eastman Kodak Company 5 minutes Joseph Smith & Sons, Inc. 5 minutes Millennium Petrochemicals Inc. 4 minutes Citizens Gas & Coke Utility 3 minutes Total 37 minutes COAL Centerior Energy Corporation [First Energy Corp.] 5 minutes Consumers Energy Company 5 minutes Eighty-Four Mining Company 5 minutes Niagara Mohawk Power Corporation 5 minutes Orange and Rockland Utilities, Inc. 5 minutes Potomac Electric Power Company 5 minutes American Electric Power Service Corporation 3 minutes Total 33 minutes PASSENGER AND COMMUTER INTERESTS AMTRAK (National Railroad Passenger Corporation) 10 minutes American Public Transit Association 5 minutes Metro-North Commuter Railroad 5 minutes Northern Virginia Transportation Commission & Potomac and Rappahannock Transportation Commission (VRE) 5 minutes Southeastern Pennsylvania Transportation Authority 5 minutes Total 30 minutes OTHER RAILROADS Illinois Central Railroad Company 7 minutes Ann Arbor Railroad 5 minutes New England Central Railroad, Inc. 5 minutes Bessemer & Lake Erie Railroad Company 5 minutes Housatonic Railroad Company 5 minutes Livonia, Avon & Lakeville Railroad Corporation 5 minutes Philadelphia Belt Line Railroad Company 5 minutes Reading, Blue Mountain & Northern Railroad Company 5 minutes New York & Atlantic Railway 5 minutes Gateway Western Railway Company 3 minutes Total 50 minutes NEW YORK/NEW JERSEY State of New York 10 minutes New York City Economic Development Corporation 5 minutes Erie-Niagara Rail Steering Committee 5 minutes Genesee Transportation Council 4 minutes Southern Tier West Regional Planning and Development Board 2 minutes The Port Authority of New York and New Jersey 5 minutes Total 31 minutes CHICAGO Wisconsin Central, Ltd. 5 minutes Elgin, Joliet & Eastern Railway Company, Transtar, Inc., and I&M Rail Link 5 minutes Illinois International Port District 5 minutes Total 15 minutes Thursday, June 4, 1998: MEMBERS OF CONGRESS TIME ALLOTTED INDIANAPOLIS City of Indianapolis, Indiana 5 minutes Indiana Southern Railroad 5 minutes Indianapolis Power & Light Company 5 minutes Total 15 minutes OHIO The Attorney General, State of Ohio, The Ohio Rail Development Commission, and The Public Utilities Commission of Ohio 10 minutes Wheeling & Lake Erie Railway Company 5 minutes Wyandot Dolomite, Inc. 4 minutes Stark Development Board 4 minutes Martin Marietta Materials, Inc. 4 minutes National Lime & Stone Company 4 minutes Total 31 minutes OTHER STATE GOVERNMENTS Delaware Department of Transportation 5 minutes State of Vermont 5 minutes Total 10 minutes ENVIRONMENTAL AND SAFETY ISSUES Four City Consortium--(The Cities of East Chicago, IN; Hammond, IN; Gary, IN; and Whiting, IN 10 minutes City of Cleveland, Ohio 10 minutes The Cities of Bay Village, Rocky River and Lakewood, Ohio 5 minutes Wellington, Ohio Village Council 4 minutes Tri-State Transportation Campaign 3 minutes American Trucking Associations 3 minutes Total 35 minutes LABOR Allied Rail Unions, Transportation Communications International Union, International Association of Machinists and Aerospace Workers, and United Railway Supervisors Assn. 25 minutes United Transportation Union 15 minutes Brotherhood of Locomotive Engineers--Consolidated Rail Corporation--General Committee of Adjustment 5 minutes Brotherhood of Locomotive Engineers, Division 227 5 minutes New York State Legislative Board, United Transportation Union Union 5 minutes Retirees--Former Employees of Conrail 3 minutes Total 58 minutes PRIMARY APPLICANTS 90 minutes (rebuttal) Total Time Allocated 540 minutes ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33389 THE LAND CONSERVANCY OF SEATTLE AND KING COUNTY --ACQUISITION AND OPERATION EXEMPTION-- THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY STB Docket No. AB-508X THE LAND CONSERVANCY OF SEATTLE AND KING COUNTY --ABANDONMENT EXEMPTION--IN KING COUNTY, WA STB Docket No. AB-6 (Sub-No. 380X) THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY --ABANDONMENT EXEMPTION--IN KING COUNTY, WA In this decision, we are denying petitions filed by The Land Conservancy of Seattle and King County (TLC) and The Burlington Northern and Santa Fe Railway Company (BNSF) for reconsideration of our decision served September 26, 1997, in the above-mentioned acquisition proceeding. There, we: (1) granted a petition by the United Transportation Union (UTU) for revocation of an exemption granted to TLC to acquire and operate a 12.45-mile rail line; and (2) ordered TLC immediately to reconvey the line to BNSF. At the same time, we are granting a request to reinstate the abandonment exemption filed in The Land Conservancy of Seattle and King County Abandonment Exemption In King County, WA, STB Docket No. 508X, but substituting BNSF for TLC, in view of our determination in the acquisition proceeding that title was never appropriately passed to TLC. Because of the substitution, we will give the BNSF proceeding a new docket number, AB-6 (Sub-No. 380X). We will also grant the petition for abandonment exemption, subject to standard employee protective conditions and an environmental condition. On April 15, 1997, TLC, a noncarrier, filed a notice of exemption to acquire and operate a rail line owned by BNSF in Finance Docket No. 33389. The line extends between milepost 7.30, near Redmond, and milepost 19.75, at Issaquah, in King County, WA. The exemption became effective on April 22, 1997, and the transaction was consummated on that date. As noted, in a decision served September 26, 1997, the Board granted UTU's petition for revocation of the exemption and ordered TLC immediately to reconvey the line to BNSF. The decision was effective on its service date. Thereafter, in a decision served October 22, 1997, the Chairman denied TLC's request to stay the September 26 decision because the decision had already gone into effect. However, to avoid disruption that could be caused by immediate enforcement of the Board's order to reconvey pending the consideration of administrative appeals, the Chairman ordered the reconveyance requirement held in abeyance pending resolution of the petitions to reconsider the September 26 decision. TLC and BNSF filed their petitions for reconsideration on October 7 and 17, 1997, respectively. On October 27, 1997, The Redmond-Issaquah Railroad Preservation Association (RIRPA) filed a petition for leave to intervene and for leave to file a reply, accompanied by a reply to TLC's petition; on November 5, 1997, RIRPA filed a petition for leave to file a reply, accompanied by a reply to BNSF's petition. On October 28, 1997, The National Association of Reversionary Property Owners (NARPO) filed a reply to the petitions for reconsideration. On October 30, 1997, Cascade Bicycle Club (Cascade) filed a comment in support of the petitions for reconsideration. On November 5, 1997, UTU filed a reply in opposition to the petitions. On November 6, 1997, however, UTU filed a Notice of Withdrawal of its Petitions to Revoke and Withdrawal of Opposition to Petitions to Reopen. In a decision served September 29, 1997, the Board dismissed TLC's abandonment exemption petition in Docket No. AB-508X. TLC subsequently filed a petition in that proceeding requesting the Board to rehear and reinstitute the proceeding and to hold the dismissal in abeyance pending action in the acquisition exemption proceeding. In the October 22 decision in the acquisition proceeding, the Chairman indicated that the Board would defer action on the request. Before Docket No. AB-508X was dismissed, the public was given notice and an opportunity to participate. No shippers or community interests opposed the abandonment request. Moreover, the Board's environmental staff conducted an appropriate environmental review. Thus, we have the information we need to reinstate and conclude the abandonment exemption proceeding at this point, although we will substitute BNSF for TLC, because, as discussed below, title was never appropriately passed to TLC, and we will give the BNSF proceeding a new docket number in light of the substitution. UTU seeks to withdraw its petition to revoke, which is what had precipitated our examination of the acquisition transaction and our subsequent issuance of the decision revoking it. UTU also seeks to withdraw its reply in opposition to the petitions for reconsideration of the revocation decision. The union requests that we strike the latter pleading. In support of its requests, UTU indicates that BNSF now has agreed with the union to ensure protection of the two employees UTU believes are affected by the acquisition and abandonment exemption proceedings. The union indicates that this agreement has alleviated any concerns it has regarding labor protection and the transactions. UTU now supports reinstitution of the acquisition exemption and also supports favorable treatment of TLC's abandonment exemption petition. UTU will be permitted to withdraw from the proceedings, and its reply to the petitions for reconsideration will be stricken. While UTU has changed its position regarding revocation of the acquisition exemption, its petition to revoke will remain in the record. RIRPA requests leave to intervene and to file replies to the petitions for reconsideration. RIRPA states that it was formed for the purpose of acquiring the subject Redmond - Issaquah line for continued rail operations. RIRPA is a party to the abandonment exemption proceeding, in which it has filed a pleading in opposition to TLC's requested exemption concerning offers of financial assistance (OFA). RIRPA wants to participate in the acquisition exemption proceeding to bring to the Board's attention its interest in acquiring the subject line for rail operations under section 10904, and to advance its position that the Board's September 1997 revocation decision in the acquisition case was in accordance with the statutory scheme. RIRPA has demonstrated a legitimate interest in the acquisition proceeding. It therefore will be granted leave to intervene and to participate. NARPO complains that, although it sent letters to the Board requesting to be placed on the service list and to be informed of decisions in the acquisition proceeding, TLC and BNSF have failed to serve it with copies of their pleadings seeking stay and reconsideration of the Board's revocation decision. NARPO contends that it was thus denied the opportunity to participate in the matter of the stay requests, and it seeks recision of the October 22, 1997 acquisition decision. The request to rescind will be denied. Ordering the reconveyance requirement held in abeyance pending our decision here avoided disruption while we considered the petitions for reconsideration and replies. NARPO is confused regarding the difference between being a party of record and simply being included on a list for service of decisions. Being placed on the service list, as NARPO requested, did not make NARPO a party of record with a right to be served with pleadings and to participate in the proceeding. However, we note that the Board's Office of the Secretary and Office of Congressional and Public Services have now clarified the situation for NARPO, and NARPO has become a party of record in the acquisition proceeding. NARPO also alleges that BNSF, in its petition to reopen, deliberately falsified a document. Specifically, NARPO complains that, whereas BNSF submitted portions of its agreement for the transfer of the subject line to TLC, BNSF deleted the portion of a page that would have shown the amount that TLC agreed to pay for the line. NARPO has submitted the missing matter to which it refers and, in addition, material in the agreement concerning an Internal Revenue Service Form 8283 (Donee Acknowledgment Form). NARPO contends that BNSF might have withheld certain pages from its exhibit so as not to disclose a plan to gain a large charitable tax deduction by virtue of its sale of the line. BNSF submitted portions of its transfer agreement intended to support its argument that the parties' agreement was drafted so as to require TLC to provide any rail service that might be required on the line. BNSF was not required to divulge the sale price or the income tax consequences of the sale. Further, as NARPO has obtained and submitted the information that is of concern to it, no one has been prejudiced by the omission. In our September 26 decision in STB Finance Docket No. 33389, we considered evidence suggesting that TLC never intended to provide service over the line it had acquired on April 22, 1997. Specifically, we examined letters dated May 1 and May 5, 1997, and newspaper articles apparently published May 2, May 8, and June 25, 1997, that strongly suggested a pre-existing plan by TLC to decommission the line and sell it to King County, WA, for development of a hiking and biking trail. We further noted that, on June 11, 1997, less than 2 months after acquiring the line, TLC filed its petition for exemption to abandon it. Considering the record as a whole, we found that TLC never had any intention of providing rail service on the line. We found that, rather, TLC had put into effect a plan to convert the line to trail use as soon as possible following acquisition. We concluded that TLC's actions constituted a misuse of our procedures, which envision that a party that acquires an active rail line does so to continue to provide rail service. In the circumstances, in order to protect the integrity of our processes, we revoked the acquisition exemption and ordered TLC to reconvey the line to BNSF. In its petition for reconsideration, TLC argues that it fully complied with the formal requirements of the class exemption regulations. It asserts that section 1150.31 neither sets forth any particular intent or ability a party must have to provide rail service nor a minimum operating period. TLC adds that the regulations have no minimum capitalization or service requirements. TLC claims that it was and is fully prepared and economically able to provide rail service. Petitioner indicates that, prior to acquiring the subject line, it contracted with an operator (The name of the prospective operator is Sammamish Transportation Company) on a stand-by basis, to operate over the line in the event there was a demand for rail service. Petitioner states that it has $250,000 available to cover service requests and management functions on the corridor. This amount assertedly is enough to enable TLC to provide rail service on an FRA-excepted track basis, which is the same status under which BNSF provided service prior to an embargo of the line. BNSF embargoed the line for safety reasons in August 1996 and no traffic moved over the line thereafter. As indicated in the September 26 decision, BNSF believed that the cost of restoring the line was substantial and unjustifiable. However, BNSF never sought abandonment or discontinuance authority with respect to the line. Petitioner indicates that, despite its readiness to provide service on demand, it has received only one tariff inquiry (from Lakeside Industries). According to TLC, although it promptly responded with a rate quote, including a quote from the connecting railroad (BNSF), the shipper never followed up. TLC adds that it hired a consulting firm to estimate the costs of rehabilitating the line, including sidings, in order to serve Lakeside. TLC agrees that it must be prepared to provide rail service if it acquires a line under the Board's acquisition exemption regulations. However, it argues, if no service is currently requested, it is not inconsistent with TLC's common carrier obligation to endeavor to preserve the line for possible future rail reactivation under the rail banking statute, and to use it as a trail in the meantime. Petitioner contends that this case is similar to the Board's decision in STB Finance Docket No. 33390 (STB served June 27, 1997) (Roaring Fork). In that case, a shipper sought stay and revocation of an acquisition exemption on the basis of allegations that the acquiring railroad (RFRHA) had neither the ability nor the intention to operate the line, and that the acquisition was, in essence, an unauthorized abandonment. The Board denied the requests, finding that the evidence was undisputed that RFRHA planned to preserve the line either through contract operation or, if there was no service demand, through rail banking. TLC claims that its intent here is the same as that of RFRHA, and that the Board should find, as it did in Roaring Fork, that the transaction falls squarely under the class exemption. TLC argues further that, if the Board determines that the class exemption is not applicable, it should alternatively grant TLC an individual exemption under 49 U.S.C. 10502. In support, TLC addresses the statutory criteria and contends that the facts warrant a grant of such an individual exemption in that there is shipper support for the transaction, rail labor will not be harmed, and its purpose is to preserve the rail corridor. TLC proposes a third option. To alleviate any concern that the transaction might have been part of a scheme to avoid the imposition of labor protective conditions, TLC proposes that BNSF retain trackage rights over the subject line. According to TLC, BNSF employees would be protected by the Board's imposition of conditions when BNSF discontinues those trackage rights. In its petition, BNSF argues that, from the inception of the acquisition transaction, it took steps to assure that its purchaser would be in a position to resume rail service if necessary. BNSF indicates that TLC represented that it had the resources to discharge a common carrier obligation, and that it would put itself in a position to do so by contracting with an operator and repairing the line if service was requested. Petitioner points out that the parties' transfer agreement was drafted so as to expressly require TLC to provide any rail service that might be needed. BNSF adds that it had ascertained that the transfer was fully supported by King County, which represented that it would work with TLC. BNSF states that under these circumstances it was confident that, with the participation of the county, all legal requirements for continued service would be fulfilled. BNSF avers that it was interested in transferring the line to a noncarrier in order to reduce the regulatory burdens of an unproductive asset and to rationalize its system. Petitioner states that it also was concerned that NARPO might seek to obstruct any abandonment/rail banking process respecting the line, so petitioner sought to transfer the line to a noncarrier that was willing and able not only to discharge a common carrier obligation but also to litigate with NARPO. (Prior litigation with NARPO in connection with BNSF's effort to discontinue service and rail bank its Terry Avenue Line in Seattle had gone all the way to the Supreme Court.) In BNSF's view, then, TLC's use of the class exemption was consistent with the RTP goal of reducing regulatory burdens. In this vein, BNSF avers that reconveyance would cost it some $15.6 million in additional taxes, and it argues that public policy requires the Board to choose the course of action that minimizes the cost to carriers. BNSF contends that there is another policy reason why the Board should allow the acquisition exemption to remain in effect. The railroad asserts that there are numerous cases where, as here, future demand for rail service on a particular line is in doubt. In such cases, petitioner argues, a sale to a party such as TLC, which is prepared to provide service to the extent required but is also prepared to go forward with rail banking if no demand materializes, is in the best interest of all parties. BNSF argues that the alternative compelled by the Board's revocation decision is abandonment by the selling railroad, which assures that service will not be continued in the near future regardless of potential shipper need. BNSF supports the option of granting TLC an individual exemption. As does TLC, BNSF addresses the statutory criteria and concludes that such a grant is warranted. As another option, BNSF suggests that the Board eliminate the reconveyance requirement and partially revoke the acquisition exemption for the purpose of imposing labor protective conditions to benefit those BNSF employees who may be affected by the transfer transaction or subsequent abandonment by TLC. Petitioner asserts that, by imposing labor protective conditions as suggested, the Board can insure that the integrity of its processes is not undermined. Cascade supports the petitions for reconsideration. It asserts that TLC was prepared to provide rail service on request and that, in the circumstances, it is not true that the class exemption was misused or that the transaction was a ruse. This commenter asserts that TLC appropriately moved to rail bank the corridor after the remaining shipper on the line confirmed no interest in service. Cascade believes that TLC and BNSF are attempting to preserve the rail corridor intact in accordance with governing law. RIRPA replies that representations regarding TLC's willingness to respond to service requests ring hollow. RIRPA asserts that TLC assured itself before the acquisition that shippers who were active on the line before the embargo would not request service. When there was an unexpected service request by Lakeside, RIRPA claims, TLC and BNSF quoted rates so high as to assure that no service ever would have to be provided. RIRPA contends that there never was any doubt that TLC's plan was to make the line available to King County for trail use. RIRPA asserts that BNSF's stated intention to avoid litigation over an OFA clearly is no justification for BNSF's actions in this proceeding. RIRPA asserts that it has a statutory right to file an OFA under section 10904. RIRPA contends that BNSF is strongly motivated to avoid an OFA because a sale of the line for continued rail use would jeopardize the $15.6 million in tax savings the railroad realized as a result of its donation of most of the alleged $41.7 million market value of the line to TLC. Under OFA procedures, RIRPA notes, BNSF would have to justify its alleged market value of the line. RIRPA believes that BNSF lacks merchantable title to most of the involved real estate, and that the fair market value of BNSF's property is a very small fraction of what the railroad claims in tax savings. RIRPA further argues that the Board's revocation decision is not unfair to BNSF, but merely makes BNSF comply with the settled statutory scheme. RIRPA contends that it is well settled that OFAs take precedence over rail banking/trail use, and that it is BNSF's circumvention of abandonment and the OFA process in favor of conveyance for rail banking/trail use that contravenes the statutory scheme. RIRPA asserts that, in view of TLC's lack of intent to reinstitute rail service on the line, TLC's proposed petition for an acquisition exemption would be no less a misuse of Board procedures than TLC's use of the class exemption. RIRPA further asserts that TLC's suggestion that the Board partially revoke the exemption in order to impose labor protective conditions misses the point. RIRPA avers that the actions of BNSF and TLC are objectionable because they abused Board processes, not simply because they evaded the imposition of labor protective conditions. NARPO maintains that it is clear that TLC never intended to conduct rail operations on the subject line, and asserts that the provisions of the transfer agreement do not negate the facts that have come to light since the April 1997 acquisition. NARPO points out that TLC did not hire a consultant to determine rehabilitation costs until July 1997, some three months after the acquisition. NARPO argues that a prudent railroad that really intended to operate would have obtained the figures before spending $1.5 million for a railroad right-of-way. NARPO next points out that BNSF quoted Lakeside a rate of $1,361 per car of rock aggregate for the 80-mile trip from Chehalis to Redmond, WA, and that TLC quoted it a rate of $1,400 for the last 12 miles from Redmond to Issaquah. NARPO considers the quotes outrageous and so high as to discourage the potential shipper. NARPO argues that another indicium of TLC's intent never to operate the line is its request for exemption from the OFA procedures in the abandonment exemption proceeding. NARPO notes that this is a strong indication of TLC's intent to convert the line to a nonrail use. NARPO asks why BNSF could not have filed for an abandonment exemption itself, with no more effort than that expended in selling the line to TLC. In NARPO's view, the answer is found in an examination of BNSF's charitable tax donation scheme. BNSF allegedly has engaged in tax law machinations to realize substantial tax savings by virtue of the involved transaction. Finally, regarding petitioners' argument that they complied with the class exemption regulations, and their offer to accept labor protective conditions, NARPO asserts that they are missing the point: the concern here is that TLC never had any intention to operate a railroad. We will deny the requests for reconsideration. In our September 26 decision revoking the acquisition exemption, we found that the facts supported the conclusion that TLC never had any intention of continuing rail service on the subject line. We stated that TLC had put into effect a plan to convert the line to trail use as soon as possible following its acquisition of the line and that where, as here, an acquiring noncarrier initiates abandonment proceedings within days after consummating the acquisition of a line and there are no extenuating circumstances, our processes are being abused. Petitioners have not demonstrated that our findings constituted material error warranting reconsideration of our prior decision. The fact that BNSF and UTU have arrived at a settlement that, as we understand it, provides labor protection for the employees working on the line as if BNSF had sought to abandon the line eliminates one of our objections to the procedure employed here. However, other objections remain, which are discussed below. TLC would have us find that compliance section 1150.31 is sufficient to qualify a noncarrier for the exemption. TLC correctly observes that our regulations do not contain any provisions regarding intent. But that does not mean that we should ignore the purpose of the class exemption regulations, as petitioner would have us do. As we stated in the September 26 decision, [t]he policy underlying the governing acquisition exemption procedures is to support the continued operation of rail lines in lieu of abandoning them. In the circumstances of this proceeding, TLC's filing for abandonment less than 2 months after acquiring a line under the class exemption procedures contravenes that policy. Roaring Fork does not support TLC's position. There, the facts supported a finding that the railroad's intent was to provide rail service, later if not sooner. Here, the facts indicate that TLC intended to build a trail as soon as possible following its acquisition of the line. TLC's protestations that it was and is prepared to provide rail service are unconvincing. A carrier that actually intended to provide service would not wait to hire a consultant to calculate rehabilitation costs until after the railroad had acquired the line and had filed for an abandonment exemption and a request for a NITU to permit interim trail use/rail banking. TLC has offered no credible explanation as to why, if it was prepared to provide service, it took action to abandon the line almost immediately after acquiring it. TLC asserts that no demand for service developed. But TLC gave it no chance to develop. The petition for exemption from the OFA procedures, the request for issuance of a NITU, and King County's statement of willingness in the abandonment exemption proceeding support the inescapable conclusion that the acquisition was merely intended as a step toward converting what had once been an active rail line into a trail. We will not allow our processes to be manipulated in this manner. The fact that interim trail use/rail banking would preserve this line for reactivation does not mean that we should allow our class exemption process to be used where TLC, from the beginning, sought to use the property as a trail and for rail banking, not for active rail service. BNSF's assertions that it believed TLC would comply with all legal requirements, and that the parties' transfer agreement was drafted so as to expressly require that TLC would provide any service that might be required on the line, do not refute our conclusions regarding TLC's intent. And BNSF's arguments regarding policy goals seem at best self-serving. From all appearances, TLC and BNSF have attempted to manipulate our class exemption procedures for their own benefit. They cannot now be heard to complain that they will suffer some loss or inconvenience by virtue of our looking beyond the formal requirements of our class exemption regulations and considering the purpose of the regulations, which is to assure orderly and expeditious processing of notices by noncarriers to acquire and operate rail lines. Finally, we reject petitioners' argument that we should consider individually exempting the acquisition transaction under section 10502. The request would have us ignore the basis for the revocation decision - the finding that TLC planned to convert the line to interim trail use/rail banking rather than to operate it and that TLC misused our procedures to further its plan. The use of an individual acquisition exemption procedure to accomplish petitioners' goal would be no less objectionable than the use of the class exemption procedures. In sum, we conclude that petitioners have failed to establish any basis for reconsideration of our prior decision in the acquisition exemption proceeding. Accordingly, we will deny their petitions seeking such relief. As a result, title was never appropriately passed to TLC. However, given all the circumstances regarding this matter, we will not at this time order TLC to reconvey the subject line to BNSF. Rather, consistent with our view of the public interest as it relates to the future use of the subject line, we will attempt to give effect to the intent of the parties to the transaction (TLC and BNSF) under our procedures. As discussed in the next section, our perception of how best to accommodate the public interest in view of what has taken place, while at the same time protecting our processes, is to reinstate the abandonment exemption proceeding filed by TLC involving this line, substitute BNSF for TLC (because title was never properly passed to TLC), give the BNSF proceeding a new docket number in light of the substitution, and determine, based on the evidence already before us, whether the criteria for an abandonment exemption have been met. No one will be prejudiced by this approach. The public already has been given notice and an opportunity to participate in Docket No. AB-508X. No shippers or community interests opposed the abandonment exemption request. Moreover, inasmuch as abandonment authority is permissive, BNSF need not exercise the abandonment exemption we will grant if for some reason BNSF wants or intends to provide rail service on this line. BNSF also has indicated that it does not object to the imposition of labor protective conditions on the acquisition. We assume it will have no problems with the imposition of labor protection here. Finally, should BNSF decide to exercise the abandonment exemption and the OFA process does not result in the sale of the line, reconveyance of the line would not appear to be necessary. There is ample evidence in these consolidated proceedings to show that BNSF intends permanently to cease operating over this line. As noted, BNSF embargoed the line for safety reasons in August 1996, and no traffic has moved over it since that time. BNSF believes that the cost of restoring the line is substantial and unjustifiable. A consultant's study appended to TLCs' petition for reconsideration of our acquisition exemption decision estimates that the cost to rehabilitate the line to Federal Railroad Administration (FRA) Class 1 track condition for 3 years with moderate maintenance would be approximately $665,000. This shows that a substantial amount of restoration would be required to make the line operable. Also, appended to TLC's petition for reconsideration is a letter from Darigold, the sole shipper on the line in recent years. Darigold not only does not oppose abandonment, it supports termination of service on the line. We also have been given no information to suggest that prospects for anything more than de minimis traffic on the line now or in the future exists-- certainly not enough to cover rehabilitation, maintenance, and operating costs. In addition, it is apparent that the community would not be adversely affected, as King County has supported TLC's efforts to abandon the subject line. In short, granting this exemption will foster sound economic conditions and encourage efficient management by permitting the rationalization of a redundant rail line. The line totals only some 12.45 miles. In the past 3 years there have been only two shippers on the line, and only one has averaged more than a handful of cars. Darigold, the major shipper, supports the termination of service, and the other shipper has indicated no opposition. SEA served an environmental assessment (EA) on August 11, 1997, and requested comments. Following the receipt of comments, SEA recommended that the following condition be imposed on any grant of abandonment authority: The Land Conservancy and King County shall consult with the National Geodetic Survey and provide it with 90 days' notice prior to disturbing or destroying any geodetic marker. SEA concluded that, as conditioned, the proposed abandonment would not significantly affect the quality of the human environment. We agree with SEA's analysis and will adopt SEA's conclusions in this proceeding and impose the environmental condition SEA recommended. Assuming that BNSF decides to exercise the abandonment exemption authority granted here, any person desiring rail service to be continued will have the opportunity to file an OFA under section 10904 and the Board's regulations. (TLC's request that we grant an exemption from 49 U.S.C. 10904 is denied. We indicate below, however, the skepticism with which we will view any OFA that may be filed. The request for an exemption from 49 U.S.C. 10905 also is denied.) However, it should be noted that the facts that caused us to find in the acquisition exemption proceeding that TLC never had any intention of providing rail service on this line make it highly unlikely that any future acquisition proceeding involving this line would survive review by us. The offer of financial assistance process envisions that a party that acquires a rail line continue to provide rail service. Where that is not the case, we will not allow our jurisdiction to shield a railroad, or any other party seeking relief before us, from the legitimate processes of Federal, state, or local law. Given the circumstances surrounding this case, we advise the public and all the parties that have participated in these proceedings that we intend to carefully review the substance as well as the form of any OFA that should be filed involving this line. Specifically, because the information now before us shows that this line is not currently being used for rail service and that there is no apparent demand for rail service, any entity filing an OFA should be prepared to submit not only evidence of its financial responsibility, but also evidence of a public need for continued rail service. Similarly, anyone challenging an OFA should be prepared to address why the OFA is not bona fide. We will not tolerate abuse of the OFA procedures either by proponents or opponents of an OFA. We find: A. In STB Finance Docket No. 33389: 1. The petitions for reconsideration are denied. 2. The requirement that TLC reconvey the subject line to BNSF is held in abeyance. 3. This action will not significantly affect either the quality of the human environment or the conservation of energy resources. B. In STB Docket No. AB-508X and STB Docket No. AB-6 (Sub-No. 380X): 1. The abandonment exemption proceeding is reinstated. 2. BNSF is substituted for TLC, and the abandonment exemption is granted, subject to (a) the employee protective conditions in Oregon Short Line R. Co.--Abandonment-- Goshen, 360 I.C.C. 91 (1979), and (b) the condition that BNSF shall consult with the National Geodetic Survey and provide it with 90 days' notice prior to disturbing or destroying any geodetic marker. 3. Abandonment of the line will not have a serious, adverse impact on shippers and/or rural and community development. 4. The right-of-way may be suitable for other public purposes. 5. As conditioned, this action will not significantly affect either the quality of the human environment or the conservation of energy resources. It is ordered: A. In STB Finance Docket No. 33389: 1. UTU is granted leave to withdraw from this proceeding, and its reply to the petitions to reopen, filed November 5, 1997, is stricken. 2. RIRPA is granted leave to intervene and to participate in this proceeding. 3. The petitions for reconsideration are denied. 4. The requirement that TLC reconvey the subject line to BNSF is held in abeyance. B. In STB Docket No. AB-508X and STB Docket No. AB-6 (Sub-No. 380X): 1. BNSF is granted an exemption to abandon the above-described 12.45-mile line subject to the conditions specified above. 2. The petitions for exemption from 49 U.S.C. 10904 and 10905 are denied. 3. By May 26, 1998, BNSF must notify the Board whether it is going to exercise its abandonment authority. Also, BNSF must, within 5 days of the service date of this decision, serve a copy of the decision on the parties to these proceedings and on all shippers who have used the line in the last 5 years, and certify to the Board that it has done so. 4. Requests for a public use condition under 49 U.S.C. 10905 (49 CFR 1152.28) or for a trails use condition under 16 U.S.C. 1247(d) (49 CFR 1152.29) must be filed by June 2, 1998. 5. BNSF must promptly provide interested persons the information they require in order to formulate an OFA to acquire or subsidize the subject line. C. In all proceedings: 1. These proceedings are consolidated. 2. This decision will be effective 30 days after its service date. Decided: May 13, 1998 Service Date - Late Release May 13, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-32 (Sub-No. 86X)] Boston and Maine Corporation--Abandonment Exemption--in Middlesex County, MA [STB Docket No. AB-355 (Sub-No. 24X)] Springfield Terminal Railway Company--Discontinuance of Service Exemption--in Middlesex County, MA Boston & Maine Corporation (B&M) and Springfield Terminal Railway Company (ST) have filed a notice for B&M to abandon and ST to discontinue service over a 1.82-mile line of railroad known as the Watertown Branch from milepost 5.85 (Engineering Station 87+90) to milepost 7.67 (Engineering Station 184+25) in Middlesex County, MA. The line traverses United States Postal Service Zip code 02172. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 13, 1998, unless stayed pending reconsideration. B&M shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by B&M's filing of a notice of consummation by May 14, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: May 6, 1998. Service Date - May 14, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-57 (SUB-NO. 40X) SOO LINE RAILROAD COMPANY -- ABANDONMENT EXEMPTION -- IN HENNEPIN COUNTY, MINNESOTA In this proceeding, Soo Line Railroad Company (SOO) has filed a petition in connection with the abandonment of its railroad line located between Milepost 423.59, near the eastern edge of Cedar Avenue, and Mileposts 423.26 and 423.21, near the eastern edge of Hiawatha Avenue (State Highway 55), a distance of 1.0 mile in Minneapolis, Hennepin County, Minnesota. The line actually consists of two legs of a wye , known as the Hiawatha/Cedar Avenue Wye. If the exemption becomes effective, and all rights for all railroads to operate over the line are extinguished, SOO will be able to salvage track, ties and other railroad appurtenances and to dispose of the right-of-way. However, at this time, the Twin Cities and Western Railroad Company (TCW) also operates over the line under overhead trackage rights (i.e., the rights exclude the movement of traffic which either originates or terminates on the line), but has not requested authority to discontinue those rights. On December 23, 1992, SOO sold the underlying right-of-way of the line to the Hennepin County Regional Railroad Authority (HCRRA) and received a grant back of an easement for continued rail operations on the line until operations of both SOO and TCW are relocated to another line, known as the Kenilworth Route, over which both SOO and TCW have trackage rights. This relocation of operations must take place no later than July 1, 1998. Abandonment of the wye tracks will allow the Minnesota Department of Transportation (MDOT) to upgrade Hiawatha Avenue and avoid restoration of two railroad crossings over the street, which is a main highway artery to and from downtown Minneapolis. The line traverses an urban industrial area. According to SOO, there is one shipper on the line, and service will continue to be provided to that shipper. The U.S. Environmental Protection Agency (EPA), the Minnesota Pollution Control Agency (MPCA) and the Hennepin County Administrator (HCA) have expressed concerns that salvaged materials be properly disposed of and that contaminants, if any are present, be removed from the right-of-way. In view of the comments received from EPA, MPCA, and HCA, we recommend that if the authority sought is granted, the following condition be imposed: SOO shall remove all salvaged materials and contaminants from the right-of-way and dispose of unuseable materials and contaminants in accordance with state and local regulations. Based on the information provided from all sources to date and subject to the recommended condition, we conclude that, as currently proposed, abandonment of the line will not significantly affect the quality of the human environment. Therefore, the environmental impact statement process is unnecessary. Service Date - May 14, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION 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 By petition filed January 23, 1998, Bootheel Rail Properties, Inc. (BRP) and Bootheel Regional Rail Corporation (BRRC) (collectively, petitioners) jointly seek an exemption to permit BRP to abandon, and BRRC to discontinue service over, a 17.27-mile line of railroad known as the Hayti-Kennett Branch, extending from milepost 212.73, near Hayti, MO, to milepost 230.00, near Kennett, MO, in Pemiscot and Dunklin Counties, MO. We will grant the exemption, subject to an historic preservation condition and a National Geodetic Survey (NGS) consultation condition. In May 1996, BRP acquired the line from Burlington Northern Santa Fe Corporation (BNSF), and BRRC became the operator of the line. Local traffic moving to and from the line in the past several years consisted of inbound shipments of building materials and fertilizer, and outbound shipments of cotton seed oil. Because the line is stub-ended, no overhead traffic has moved over the line. In 1994 and 1995, there was an average of less than 300 carloads of traffic moving to and from the line annually. In 1996, the volume of traffic decreased to 78 carloads, 33 of which were handled by BNSF prior to BRRC becoming the operator. Only 45 carloads of traffic moved over the line during BRRC's first 6 months of operations (from May through October 1996), and no traffic has moved over the line since October 31, 1996. There are four shippers on the line. All are located at Kennett. They are Osceola Products Company (Osceola), Riggs Supply Company (Riggs Supply), Kennett Fertilizer, and ARI Industries, Inc. (ARI). According to BRRC, since May 1996, Osceola shipped 40 carloads of cotton seed oil, Kennett Fertilizer received 1 carload of fertilizer, and Riggs Supply and ARI each received 2 carloads of building materials. BRRC states that, after it became the operator of the line, its officials met with the shippers to discuss the low level of traffic on the line. BRRC states that, to make the line economically viable, the shippers were asked to substantially increase the level of their rail shipments, to guarantee BRRC minimum volumes, or to pay surcharges on their rail traffic. According to BRRC, all of the shippers refused. Thereafter, Osceola, the largest shipper on the line, informed BRRC that it would no longer be shipping by rail and has subsequently diverted all of its traffic to trucks. The other shippers also notified BRRC that they were satisfied with their current truck service and that they had no plans for future rail service. BRRC states that, upon BRP abandoning the line, it will discontinue service and go out of business. BRRC's data show an avoidable loss from operations of $77,180 ($21,210 in revenues and $98,390 in costs) during the last eight months of 1996. BRRC estimates the cost of rehabilitating the line to FRA Class 1 standards at $950,695 and normalized maintenance costs at $51,810. According to petitioners, alternative transportation service is available over an extensive highway network in the area. The City of Kennett is located on U.S. Highway 412 and State Highways 84 and 25, and Interstate Highways 55 and 155 are nearby. Truck and barge transportation services are also available. The four shippers on the line have not objected to the proposed abandonment and discontinuance, have not used rail service since October 1996, and appear to have adequate transportation alternatives available to them. Nevertheless, to ensure that the shippers are informed of our decision, we will require petitioners to serve a copy of this decision on each shipper within 5 days after the service date of this decision, and to certify to the Board that they have done so. In the EA, SEA indicated that: (1) the Missouri State Historic Preservation Office has not completed its evaluation of the potential impact that the proposed abandonment/discontinuance will have on historic resources; and (2) NGS has identified two geodetic station markers along the rail line and requests 90 days notice to plan relocation of any markers that may be disturbed or destroyed. Based on SEA's recommendations, we conclude that the proposed abandonment and discontinuance, if implemented as conditioned, will not significantly affect either the quality of the human environment or the conservation of energy resources. It is ordered: 1. Under 49 U.S.C. 10502, we exempt the abandonment of BRP's entire line described above, and the discontinuance of service thereover by BRRC, from the prior approval requirements of 49 U.S.C. 10903, subject to the conditions that BRP and BRRC: (1) shall retain their interest in and take no steps to alter the historic integrity of all sites and structures on the right-of-way 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; and (2) shall consult with the National Geodetic Survey (NGS) and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. 2. Petitioners must serve a copy of this decision on the line's shippers within 5 days after the service date of this decision, and certify to the Board that they have done so. 3. Provided no OFA has been received, this exemption will be effective on June 13, 1998. 4. BRP shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by BRP's filing of a notice of consummation by May 14, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: May 12, 1998 Service Date - Late Release May 14, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION Finance Docket No. 32112 CLARK SHORTLINE RAILROAD COMPANY -- ACQUISITION AND OPERATION EXEMPTION -- INDIANA PORT COMMISSION Finance Docket No. 32113 SOUTHWIND SHORTLINE RAILROAD COMPANY -- ACQUISITION AND OPERATION EXEMPTION -- INDIANA PORT COMMISSION Finance Docket No. 32114 INDIANA PORTS RAILROAD HOLDING CORPORATION -- CONTINUANCE IN CONTROL EXEMPTION -- CLARK SHORTLINE RAILROAD COMPANY AND SOUTHWIND SHORTLINE RAILROAD COMPANY We are denying petitions to revoke the exemptions in these proceedings. The Indiana Port Commission (IPC) is a state agency that administers three public ports in the State of Indiana. Through its subsidiary, Indiana Ports Railroad Holding Company (IPRHC), IPC organized three shortline railroads to acquire and operate terminal track located at the ports. Each of the port lines had previously been owned by IPC and had been operated as an exempt spur or terminal track. Acquisition and operation proposals were concurrently filed on July 21, 1992, as notices of exemption, together with a related continuance in control exemption notice. The notices of exemption were served on August 13, 1992. The first notice of exemption was filed in Finance Docket No. 32104 by Burns Harbor Shortline Railroad Company (BHSL) proposing to acquire and operate 5.27 miles of rail line in Burns International Harbor, Porter County, IN. At that time, the line was operated by Consolidated Rail Corporation under agreement with IPC. BHSL filed on July 21, 1992, a related petition for exemption in Finance Docket No. 32105, to cover a proposed extension of its line over tracks of Conrail to connect directly with other carriers. The second notice of exemption was filed in Finance Docket No. 32112 by Clark Shortline Railroad Company (CLSL) proposing to acquire and operate a 32,110-foot line at the Clark Maritime Centre, Clark County, IN (Clark Centre). The line was then operated by Conrail, CSX Transportation, Inc. (CSXT), and MG Rail, Inc. (MGRI), under agreements with IPC. The third notice of exemption was filed in Finance Docket No. 32113 by Southwind Shortline Railroad Company (SWSL) proposing to acquire and operate a 33,012-foot line in Southwind Maritime Centre, Posey County, IN (Southwind Centre). At the time, the line was operated by CSXT. A related notice of exemption was filed in Finance Docket No. 32114 by IPRHC proposing to continue in control of BHSL, CLSL and SWSL upon each becoming a carrier under its respective notice of exemption. Conrail opposed the proposals in Finance Docket Nos. 32104, 32105, and 32114. BLE, which opposed all proposals, filed petitions to revoke the exemptions in Finance Docket Nos. 32112 and 32113. On June 15, 1993, BHSL filed petitions asking permission to withdraw the notice of exemption in Finance Docket No. 32104 and the petition for exemption in Finance Docket No. 32105. On the same date, IPRHC filed a petition asking permission to amend the notice of exemption in Finance Docket No. 32114 to delete reference to BHSL as a railroad over which IPRHC seeks to remain in control. Conrail and BLE did not object to these requests. On June 25, 1993, decisions were served granting the petitions to withdraw and amend. There remains to be resolved BLE's petitions to revoke the exemptions in Finance Docket Nos. 32112 and 32113. BLE has questioned whether the ICC had jurisdiction to exempt these transactions. The union asserts that IPC did not conduct rail operations or hold itself out to perform rail operations and, thus, is not a rail carrier. Because each of the lines was operated by a carrier (Conrail, CSXT or MGRI), BLE asserts that IPC may not unilaterally displace the existing operator. Furthermore, BLE submits that no other carrier may obtain the right to operate through an exemption from 49 U.S.C. 10901. BLE also contends that IPC, through IPRHC, created the short line railroads to circumvent IPC's commitments to the operating carrier and that carrier's employees. Finally, BLE maintains that, because IPRHC is creating rail subsidiaries, 49 U.S.C. 11343 governs, rather than 49 U.S.C. 10901. CLSL and SWSL replied that: (1) the line each prospective carrier is acquiring is a line of railroad; (2) each prospective carrier will serve enough shippers to be a railroad; and (3) each prospective carrier will hold itself out to be a railroad. CLSL and SWSL also cited cases where the ICC asserted jurisdiction over rail carriers seeking to serve marine terminals. Responding to assertions that the current operators will be displaced, CLSL and SWSL contended that current operators could possibly continue to serve each facility, either as contract operators or through trackage rights. In a decision served October 28, 1997, we asked whether the transactions here have gone forward and whether CLSL and SWSL acquired the lines and assumed the status of common carrier railroads. We noted that rail operations at the Clark Centre and the Southwind Centre apparently have not changed, and that the tracks at these ports are still being operated by Conrail, CSXT, and MGRI as terminal track. In view of these circumstances, we indicated that a decision on issues raised in BLE's petitions might not be required. Accordingly, we directed the parties to show cause why the Board should not vacate the exemptions in these proceedings and dismiss these proceedings. On November 25, 1997, IPC, IPRHC, CLSL and SWSL (jointly, applicants) responded to our show cause order. BLE did not respond. In their response, applicants state that we incorrectly believed that the transactions had not gone forward. In support, they submitted a verified statement from Donald W. Miller, Jr., Port Director of the Clark Centre, who testifies that CLSL acquired the lines within the Clark Centre pursuant to the exemption. Mr. Miller says that the CLSL is operating as a rail carrier in the Clark Centre, and rail service is being performed by MGRI under contract. He states that cars are handled by MGRI for the account of CLSL and are interchanged with the Louisville & Indiana Railroad Company (LIRC) on designated interchange tracks. Apparently, LIRC purchased Conrail's lines serving the Clark Centre as part of its purchase of 115 miles of Conrail's lines known as the Louisville Cluster. Applicants also submitted a verified statement from Donald R. Snyder, Port Director of the Southwind Centre, who testifies that SWSL acquired the lines within the Southwind Centre. He states that SWSL is conducting operations as a rail carrier, and rail service is being performed by two operators, apparently under contract. According to Mr. Snyder, cars within the Southwind Centre are handed for SWSL's account by the two operators and are interchanged with CSXT on designated interchange tracks. In addition, several industries in the port facility are being switched directly by CSXT. Mr. Snyder indicates further that IPC has negotiated leases with two grain companies that are building new soybean processing plants at the Southwind Centre. The new industries are expected to generate between 7,000 and 10,000 carloads annually. To accommodate the increased traffic, Mr. Snyder states that SWSL plans to add storage track and to reorder switching arrangements within the port. When the plants begin operating, Mr. Snyder says that SWSL expects that the new facilities will be served for SWSL's account by the two current operators or another shortline operator that would be engaged to perform rail operations. We may revoke an exemption when we find that regulation is needed to carry out the rail transportation policy set forth at 49 U.S.C. 10101a (now 10101). As the party seeking revocation, BLE has the burden of proving that regulation of the transaction is necessary or that the notices of exemption in these proceedings contain false or misleading information. As we noted, BLE has not submitted any additional evidence or argument on the issues raised in its petition to revoke, or indicated whether it continues to oppose the transactions. In its petition to revoke, BLE has questioned whether the transactions were subject to the ICC's (and now the Board's) jurisdiction. Addressing this issue, applicants assert that CLSL and SWSL did not intend to become line haul carriers, but both made it clear that they proposed to become port terminal switching railroads. In support, they again cite cases wherein the ICC asserted jurisdiction over rail carriers seeking to serve marine terminals. Applicants assert that CLSL and SWSL intend to be rail carriers and part of the national rail system. Even though both carriers have elected to have operators perform their port operations, that fact should not, in their view, undermine their status as carriers subject to the Board's jurisdiction. The record before us shows that IPC formed CLSL and SWSL, as subsidiaries of IPRHC, to acquire track and to operate as railroads subject to our jurisdiction, to provide service to shippers at the Clark Centre and Southwind Centre, and to hold themselves out as common carriers. Even though CLSL and SWSL have contracted with operators who actually perform rail service, CLSL and SWSL have the residual common carrier obligation to provide service at the respective facilities. These factors, which BLE does not dispute, supported the ICC's jurisdiction over the transactions and permitted it to issue the notices of exemption to CLSL and SWSL. Moreover, the proposed operations by CLSL and SWSL are comparable to rail operations at other government-owned port facilities that have been authorized. BLE was concerned that employees of Conrail, CSXT and MGRI could lose their jobs if those operators were displaced by CLSL and SWSL. Yet, as applicants noted, LIRC (which acquired Conrail's lines at Clark Centre) and CSXT continue to serve industries within the respective port facilities and have not been replaced. Also, MGRI continues to operate under contract with CLSL at Clark Centre. Moreover, we note that BLE has not replied to our recent order or otherwise indicated continued interest in this proceeding. Accordingly, we will deny the petitions to revoke. It is ordered: 1. BLE's petitions to revoke the notices of exemption in Finance Docket No. 32112 and Finance No. 32113 are denied. 2. This decision is effective on June 13, 1998. Decided: May 5, 1998 Service Date - May 14, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-103 (Sub-No. 13X)] The Kansas City Southern Railway Company--Abandonment Exemption--in Webster Parish, LA The Kansas City Southern Railway Company (KCS) has filed a notice of exemption to abandon a 1.70-mile line of its railroad between milepost 46.78 at the Arkansas-Louisiana State Line and milepost 48.48 approximately 200 feet south of Vine Street in Springhill, Webster Parish, LA. The line traverses United States Postal Service Zip Code 71075. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 14, 1998, unless stayed pending reconsideration. KCS shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the line. If consummation has not been effected by KCS's filing of a notice of consummation by May 15, 1999, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: May 6, 1998. Service Date - May 15, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-534 (Sub-No. 1X) LAKE STATE RAILWAY COMPANY--ABANDONMENT EXEMPTION--IN ALPENA COUNTY, MI On November 18, 1997, a decision and notice of interim trail use or abandonment (NITU) was served, authorizing a 180-day period for the Michigan Department of Natural Resources (MDNR) to negotiate an interim trail use/rail banking agreement with Lake State Railway Company (Lake State) for an 8-mile line of railroad between milepost 0.0 near Alpena, and milepost 8.0 near Hillman, in Alpena County, MI. The 180-day period under the NITU is scheduled to expire on May 15, 1998. On May 5, 1998, MDNR filed a request for an additional 180-day period in which to continue negotiations with the railroad. By letter filed May 11, 1998, Lake State also request an extension of the NITU for an additional 180 days. The parties state that negotiations are continuing and expect to complete an agreement within the 180 days. It is ordered: 1. The negotiating period under the NITU is extended to November 11, 1998. 2. The decision is effective on its service date. Decided: May 14, 1998 Service Date - May 15, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION Finance Docket No. 31974 MOUNTAIN LAUREL RAILROAD COMPANY ACQUISITION AND OPERATION EXEMPTION CONSOLIDATED RAIL CORPORATION Petitioner, the Brotherhood of Maintenance of Way Employees (BMWE), requests revocation of an exemption from the requirements of 49 U.S.C. 10901, notice of which was served and published on January 29, 1992, for Mountain Laurel Railroad Company (MLRR), a noncarrier, to acquire from Consolidated Rail Corporation and operate the Low Grade Cluster (Cluster), 127.75 miles of rail line in Cameron, Clarion, Clearfield, Elk, and Jefferson Counties, PA, and imposition of the labor protective conditions set forth in New York Dock Ry. Control Brooklyn Eastern Dist., 360 I.C.C. 60 (1979) (New York Dock). BMWE, in essence, argues that MLRR was not independent of its rail carrier affiliates and that the provisions of 49 U.S.C. 11343 should accordingly apply to the transaction. In the alternative, BMWE requests that, even if the transaction is found to fall under section 10901, exceptional circumstances should be found to have existed, requiring that the exemption be revoked in part and that labor protective conditions be imposed. MLRR filed a reply. A supplemental petition to reopen by BMWE and a reply by MLRR were subsequently filed. The revocation requests will be denied. The Cluster primarily consists of 104 miles of rail line extending easterly from Lawsonham, milepost 6.00, to Driftwood, milepost 110.00, via Brookville, Reynoldsville, and Du Bois, and an additional 23.75 miles of branch line also extending easterly from milepost 104.25, at Piney, to the point of connection with the Lawsonham-Driftwood line at milepost 128.00, near Brookville. The 23.75-mile branch line is known as the Piney Branch. MLRR was incorporated under Pennsylvania law in November 1991 as a wholly owned subsidiary of the Arthur T. Walker Estate Corporation (Walker). It became a Class III rail carrier on or about December 31, 1991, when the instant transaction was consummated. All of Walker's stock was owned by Dumaines, a New Hampshire trust that controlled Bangor and Aroostook Railroad Company, a Class II rail carrier, through a controlling interest in Amoskeag Company. Walker and Dumaines were exempted under 49 U.S.C. 10505 from the prior approval requirements of 49 U.S.C. 11343-45, subject to New York Dock labor protective conditions, to continue in control of MLRR upon its becoming a rail carrier. Walker is also the sole shareholder of two other Class III rail carriers: Pittsburg & Shawmut Railroad Company (P&S), which connects with MLRR at Brookville; and Red Bank Railroad Company (RBKR), which connects with MLRR at Lawsonham. P&S is described as having been formed in 1903 as the Brookville and Mahoning Railroad, and as owning and operating approximately 88 miles of rail line in western Pennsylvania, between Brockway to the north and Freeport (just outside of Pittsburgh) to the south and three small branch lines totaling approximately 8.3 miles of additional track. Brookville, the site of P&S's connection with MLRR and former connection with Conrail, is 20.9 miles south of Brockway. RBKR is described as operating under lease from Shannon Transport, Inc. (Shannon ), a 12.5-mile rail line between Sligo and the connection with MLRR at Lawsonham. RBKR's lease was to continue on a year-to-year basis after 1995. In 1996, Pittsburg & Shawmut Railroad, Inc., a noncarrier subsidiary of Genesee & Wyoming, Inc. (GWI) (which at the time controlled 10 other rail carriers), acquired from Walker, for operation as a single rail carrier, the rail lines owned by P&S and MLRR and, with Shannon's consent, the rail line leased by RBKR. Operations were to commence on or about April 25, 1996. The sale evidently was consummated in April 1996. As a result, MLRR and Walker no longer have an interest in the lines involved in the acquisition and operation transaction that is the subject of the instant proceeding. In STB Docket No. AB-487 (Sub-No. 3X) (STB served Jan. 14, 1998), we authorized (by exemption), subject to conditions, the abandonment of the Piney Branch (which was described in that proceeding as being 23.80 miles in length). MLRR also has connections with Conrail at Driftwood, Buffalo & Pittsburgh Railroad, Inc. (B&P), a GWI subsidiary, at Falls Creek, near Du Bois, and CSX Transportation, Inc., through its connection with B&P. The Cluster allegedly was being considered by Conrail for abandonment because of the shriveling market for its primary commodity, bituminous coal, and the deteriorated condition of its track. MLRR states that it was formed for the sole purpose of acquiring the Cluster. To that end, MLRR asserts that it was separately organized to insulate Walker and P&S from the financial risk of acquiring and operating a marginal line that had economic potential but was in immediate need of substantial rehabilitation. Additionally, it was Walker's objective to employ the underutilized managerial experience, personnel, and assets of its carrier affiliates to increase MLRR's efficiency. To finance the transaction, MLRR obtained a loan of $200,000 for initial working capital from Walker in January 1992. This loan was repaid 4 months later with the proceeds from a 5- year $6.5 million loan that MLRR obtained from S&T Bank (S&T) of Indiana, PA, for: (1) the initial acquisition ($1 million) and rehabilitation ($4.329 million) costs; (2) the purchase of six locomotives, various other pieces of equipment, and supplies ($954,000); and (3) working capital ($217,000). The collateral for the loan included the Cluster, which allegedly had an estimated $4 million net liquidation value, and 283 coal hopper cars that P&S pledged and in which Walker subordinated its respective security interest. And, following a one-third decline in coal traffic along with a corresponding revenue loss in 1993, P&S and RBKR, respectively, in the absence of other independent sources of funding, loaned MLRR $1 million and $130,000, interest free, for additional working capital. In regard to these loans, Mr. Michael Holben, assistant treasurer of MLRR, P&S and RBKR, notes that intercompany loans are a cheaper source of funds than bank financing, and that P&S has made similar loans to Walker's non-railroad subsidiaries. According to MLRR, the Walker Family's total liability in connection with the transaction was limited to the loan guarantee and the interest free loans. It states that P&S is not obligated to provide it additional financial support; that neither Walker nor P&S have an equity contribution at stake in its success; and that it fully repaid the loan from RBKR and has drawn down to approximately $749,000 the outstanding balance on P&S's $1 million loan. MLRR claims that P&S's assets were never really at risk because the rehabilitation caused its asset value to exceed $7 million whereas its outstanding debt basically did not exceed $2.5 million (a $1.8 million balance owed S&T and the $749,000 balance owed P&S). MLRR attributes the lower debt to a $3.5 million funding agreement with the Commonwealth of Pennsylvania, that allegedly was imminent from the outset, and asserts that P&S neither was a party to the agreement nor had assets exposed in connection with it. The agreement, negotiated with the Pennsylvania Department of Transportation (PennDOT), was entered into in February 1994 and obligated MLRR to operate the Cluster at FRA Class 1 standards for the period commencing on July 1, 1993, and extending through December 31, 1996. In return, MLRR was to receive up to 50% funding, not to exceed $3.5 million, for certain acquisition and maintenance expenses. Following Pennsylvania's execution of the agreement and the receipt of an inspection report, MLRR was to, and on March 18, 1994, did, receive the initial $1.2 million payment. A second $1.2 million payment, received on August 1, 1994, was applied, along with the first, to the S&T loan. As a result, S&T released P&S from its pledge of hopper cars. The final $1.1 million payment was expected in July 1995 and was also to be applied to the S&T loan leaving a balance of approximately $749,000. Additional financial transactions within the Walker family included: (1) MLRR's agreement by a vote of its Board of Directors in 1992, to guarantee a bank loan to permit P&S to purchase and refurbish 300 open top hopper cars; and authorization by the Walker Board, in November 1993, for P&S to pledge, and Walker to subordinate its security interest in, certain rail hopper cars to collateralize a low-interest loan from Clearfield County Industrial Development Authority (Clearfield) to help MLRR fund the construction of a 2-mile rail spur and siding for hauling fly ash. The construction project apparently was terminated in August 1994 when MLRR determined that it was not economically feasible. MLRR states that neither P&S nor Walker guaranteed any of its potential post-closing liabilities, including those related to assigned contracts, personal injury, property damage, and the condition (environmental and otherwise) of the transferred assets. Nor did P&S assume liability for any costs arising out of the normal course of operations, including those related to freight loss and damage, personnel injury, property damage, and potential environmental liabilities. MLRR notes that under its loan agreement with S&T, it is even prohibited from directly or indirectly entering into any agreement or transaction with any affiliate, including P&S, the guarantor of its loan, on less favorable terms than might be obtained from other, unaffiliated persons or entities. Consistent with the stated objective of reducing financial risk and enhancing economic viability, MLRR elected directors, appointed officers, and hired its own, separate work force. Like RBKR, its Board of Directors consisted of four of P&S's five directors, and it shared the same officers with RBKR and P&S. MLRR's officers and directors held their own meetings, separate and apart from those of its affiliates. Because all of their officers and other management personnel, including clerical employees, were on P&S's payroll, MLRR and RBKR each paid P&S a management fee to cover the services provided. Otherwise, when employees of one rail carrier affiliate worked for another, the carrier receiving service was billed, and paid the carrier whose employees were used, the direct payroll cost plus a standard overhead additive that was also charged to third parties; the carrier whose employees were used, in turn, compensated those employees for work they performed. MLRR denies that it was dependent on P&S for maintenance work. It states that the bulk of its track rehabilitation was done by an unaffiliated contractor in 1992 and 1993 and that it used the same contractor to pick up various scrap and unused sidings in 1994. According to MLRR, this contractor and others were eager for work, but it refrained from hiring them or expanding its own maintenance-of-way (MOW) work force in an effort to avoid duplication and furloughs, and to increase the opportunities for full employment, within the Walker family. MLRR's own work force included six MOW employees who also worked for P&S and RBKR, if needed, and were compensated in the same manner used by MLRR for P&S's MOW employees. When MLRR needed additional MOW help, it would first request P&S employees; P&S, in turn, would offer the work to those of its MOW employees who did not have regular assignments, and they were free to decline. Otherwise, MLRR used outside contractors. MLRR did not employ its own operating personnel. Instead, its train crews were employed by P&S and worked for MLRR on a contractual basis. When working for MLRR, they performed MLRR work exclusively and, as a result, crews were changed when the three affiliates interchanged trains. As assertedly was the case with all other employee arrangements, MLRR paid P&S's payroll cost plus the standard additive for overhead. This arrangement had been negotiated with UTU and apparently stemmed from P&S not having enough work for its own full time operating employees and the likelihood that MLRR similarly would not have enough work for its own full time train crews. MLRR and RBKR used P&S's single dispatcher until all three carriers contracted out their expanding need for dispatching to B&P in 1992. In 1993, the cost of using B&P for dispatching caused P&S to fill its vacant dispatcher position. MLRR hired three dispatchers and a clerk who also served as a relief dispatcher, and the management fee it paid P&S was reduced as a consequence. For greater economy and efficiency, MLRR also used, and bore the full cost for using, services, equipment, supplies, and facilities made available by its affiliates. For example, MLRR purchased fuel from the same Brookville and Kittanning facilities used by P&S and RBKR and used MOW equipment that P&S purchased and stored on its own property. Each carrier affiliate was charged only for the materials it used. In the case of fuel, the accounting was by vehicle number or employee name. MLRR purchased, paid for, and operated six locomotives, which bore its name and colors. The locomotives were serviced at P&S's locomotive shop in an arm's length arrangement; MLRR paid for all services performed as specified on P&S's invoices. Charges for light repairs and general maintenance were based on tons of coal hauled by the particular locomotive and charges for heavy repairs were based on actual labor costs and included charges for additives and parts. MLRR did not own MOW equipment or rolling stock. When heavy equipment was needed, it hired outside contractors (as it did with the initial rehabilitation) or leased equipment and operators from P&S or third parties. MLRR used P&S's self-propelled MOW equipment, which it describes as underutilized, and paid P&S a monthly rental charge covering approximately half the maintenance expenses. MLRR and P&S also used the same radio frequency for on-track equipment communication. For rolling stock, MLRR relied on connecting carriers (P&S, Conrail, and Lake Erie, Franklin & Clarion Railroad Company); car leasing companies; utility customers; and other suppliers who made cars available without charge in return for any per diem earned beyond MLRR's line. MLRR paid for all the supplies it used and the services it received, whether provided by its own or other employees, out of its own accounts with its own funds. It maintained three separate bank accounts, a separate payroll, and separate books and records; handled its own debts; and apparently was regarded as a separate substantive entity. MLRR had a separate payroll tax account for Federal withholding and paid its own portion of the taxes assessed and paid under the consolidated Federal tax return used by all of Walker's corporate entities. Because Pennsylvania does not permit consolidated returns, MLRR was separately assessed and separately paid its own taxes on corporate net income, capital stock, public utility realty, and utilities gross receipts. MLRR also had a separate payroll tax account for Pennsylvania withholding. MLRR claims that it was recognized, registered, and regulated as a distinct and separate entity by, and had its own separate accounts with, such government agencies as the Pennsylvania Public Utility Commission (PAPUC), PennDOT, Federal Railroad Administration (FRA), and Railroad Retirement Board. FRA assessed MLRR separate users fees and registered it separately on the Hazardous Materials Register. PAPUC assessed P&S and MLRR separate charges and assigned them separate inspectors. MLRR also registered its motor vehicles with Pennsylvania under its own name. Contrasting itself to P&S, a line-haul carrier that participated in setting rates, MLRR states that it was set up to act primarily as a switching carrier for Conrail. Under a preexisting agreement, its bituminous coal traffic moved under Conrail's Joint Trainload Coal Tariff; MLRR received a short line allowance based on Conrail's line-haul rates, and Conrail produced the revenue waybills. On its own, separate and apart from P&S, MLRR entered into seven rail transportation contracts for various commodities and published its own tariffs. Aside from the funding agreement with Pennsylvania, MLRR states that it entered into various other contracts on its own, separate and apart from P&S and the other Walker companies, and was treated as a separate entity by other railroads. While the car accounting for P&S and MLRR was handled by Rail Management, Inc., it was done individually for each carrier under separate car hire processing agreements. MLRR received its own per diem and freight account statements and was solely responsible for making payments under them. Similarly, MLRR and P&S had separate car hire agreements, and negotiated their own car charges, with Conrail. In seeking reopening, BMWE does not allege that the notice of exemption contained false or misleading information. Rather, it argues in the alternative that: (1) P&S, and not MLRR, acquired and operated the Cluster and, as a consequence, that the transaction was between P&S and Conrail and that New York Dock labor protective conditions were therefore mandatory under 49 U.S.C. 11343 and 11347; or (2) exceptional circumstances existed under 49 U.S.C. 10901 that would justify the imposition of labor protection for the seven positions Conrail abolished. MLRR filed a motion to strike a portion of BMWE's supplemental brief contending that it constituted a reply to a reply. It also moved to strike three verified statements, contending that the two made by Messrs. Tim D. Brosius and Leonard L. Thompson, Jr., are not based on information obtained during discovery, and that the one made by Ms. John is irrelevant and hearsay. BMWE responded. In the interest of a complete record and in view of the fact that MLRR has fully responded and will not be prejudiced, we will deny the motion to strike the challenged verified statements. Arguing that BMWE's petition to revoke should be dismissed, MLRR contends that it justifiably relied on the silence following RLEA's boiler plate letter requesting labor protective conditions here and in the related control proceeding in deciding that it could safely proceed with the transaction, subject only to the normal business risk that the income generated would fail to recover its investment. MLRR contends that petitions to revoke ordinarily are filed within 2 months after notices of exemption are published or are preceded by objections in one form or another, if a longer time is involved. In MLRR's view, BMWE, as a member of RLEA, acted in a misleading and egregious manner because it failed to follow up RLEA's boiler plate letter with a petition to revoke until December 28, 1993, resulting in a delay of 2 years to [challenge facts that allegedly] existed from the very first day, or offer a reasonable explanation for the delay. MLRR argues that serious damage will result if revocation is granted. According to MLRR: (1) it expended over $4.0 million to rehabilitate the line and incurred $6.5 million in debt primarily as a result; (2) it is solely responsible for labor protection under the purchase agreement with Conrail; (3) Conrail is not obligated to repurchase the Cluster or in any way liable to indemnify it for any labor protection that may be imposed; (4) it lacks the resources to pay labor protection; and (5) it would not have closed on the transaction and commenced rehabilitation if there was any indication that the transaction subsequently would be undone. While specific time limits are not applicable to the filing of petitions to reopen and revoke, the time elapsed is relevant, and, depending on the facts of the case, concerns for administrative finality, repose, and detrimental reliance must be balanced with those factors that support reopening and revocation, particularly when the challenged exemption pertains to a transaction that cannot readily be undone, as MLRR alleges here. We will deny the motion to strike BMWE's reply in the interest of a complete record, and will otherwise refrain from ruling on the merits of MLRR's argument because we find no merit to BMWE's petition to revoke. An exemption may be revoked, in whole or in part, when the application of a provision of subtitle IV of Title 49 to a person, class, or transportation is necessary to carry out the rail transportation policy of 49 U.S.C. 10101a. The burden of proof is on the petitioner who must articulate reasonable, specific concerns under the revocation criteria. When, as here, an exemption has become effective, a revocation request is treated as a petition to reopen and revoke and must state in detail whether revocation is supported by material error, new evidence, or substantially changed circumstances. Labor interests have standing to question the appropriate level of labor protection in a petition to revoke. The acquisition and operation of a rail line by a noncarrier is governed by 49 U.S.C. 10901 and has been exempted from regulation as a class. Under section 10901, the ICC retained discretion to impose labor protection, and it outlined a three-part exceptional circumstances test to determine when protective conditions are warranted. In many proceedings, however, where a noncarrier subsidiary of a person controlling one or more carriers sought to acquire an active rail line, labor interests urged the ICC to pierce the corporate veil, find the transaction a sham structured solely to avoid mandatory labor protection, and impose New York Dock labor protective conditions. The ICC, with the approval of the courts, uniformly rejected requests to disregard the status of a noncarrier subsidiary simply because it would become part of a family of affiliated carriers, so long as there was shown to be a legitimate business reason for the corporate structure chosen. Additionally, it expressly declined to adopt a presumption that whenever a noncarrier subsidiary of an entity, that is not a carrier, but that controls carriers, seeks to purchase an entire rail line, the subsidiary is necessarily one and the same as the parent. Observing that such a presumption would conflict with all of its line sale precedent, the ICC stated that it consistently refused to pierce the corporate veil when the dealings between the holding company and the subsidiary have been at arms length and there has been evidence of indicia of independence of the subsidiary. To determine whether a transaction was a sham structured solely to avoid labor protection, the ICC developed and applied a two-part test to ascertain (1) whether the noncarrier subsidiary was created to purchase the line for legitimate and substantial business reasons (e.g., insulation from financial risk, preservation of service, or time constraints) and not solely to avoid labor protection; and (2) whether the indicia of independence established that the noncarrier subsidiary was sufficiently independent of its parent or affiliated carriers. From the beginning, the indicia of independence analysis primarily relied on financial considerations. Operational aspects were relied on as well, but for additional support; they were not conclusive standing alone. BMWE contends that the evidence of record would demonstrate that MLRR is the alter ego of Walker and P&S. BMWE maintains that financial considerations are the easiest to manipulate, and, as a consequence, it contends that they are entitled to little, if any, weight. Unless an acquiring entity is shown to be financially dependent and, therefore, the alter ego of its corporate affiliates, BMWE would have the indicia of independence focus on operational considerations and would make them dispositive, particularly where the lines of the new entity and its corporate affiliates connect. In BMWE's view, such a focus would be more in line with the ICC's jurisdiction, which it describes as being based on how railroads function as providers of rail transportation services, and would demonstrate how the new carrier will discharge its rail common carrier obligation. BMWE's argument, that the indicia of independence test is weakest where the lines of the new entity and its corporate affiliates connect, was basically rejected in 1988 when the ICC refused to adopt an RLEA proposed test that would have considered the new acquiring entity a carrier and the transaction governed by 49 U.S.C. 11343 if its lines connected with those of its corporate affiliates (what BMWE refers to as hybrid transactions). According to BMWE, the reweighted analysis is based on an impermissible and judicially unsanctioned statutory construction and, in any event, may not be applied here. We disagree. Both ICC and judicial precedent demonstrate that operational considerations were never entitled to equal, much less greater, weight. In a long line of cases, a number of which received judicial sanction, the ICC consistently relied on financial independence as the primary factor in an analysis of the new entity's indicia of independence. The ICC's emphasis on financial independence was specifically based on two of the earliest decisions involving the class exemption. They relied exclusively on business purpose and financial considerations in finding the respective noncarrier subsidiaries independent, and not alter egos, of their parents, and they were judicially affirmed in language equally devoid of references to anything but financial considerations. Subsequently, that decision was affirmed by the 7th Circuit. Accordingly, BMWE has failed to establish a basis for departing from the alter ego test. The evidence of record amply demonstrates that from both a financial and operational standpoint, MLRR acquired and operated the Cluster as an independent entity and not as the alter ego of P&S or Walker. It is not disputed that MLRR was formed to acquire and operate the Cluster for two business purposes: (1) to insulate Walker and its affiliates, particularly P&S and RBKR, from the inherent business risks and potential liabilities of a new carrier operating a marginal rail line; and (2) to use the underutilized managerial experience, manpower, equipment, and other facilities of its affiliates. These business objectives do not conflict with MLRR's statements and, in any event, insulating corporate affiliates has routinely been accepted and recognized as a legitimate and substantial business reason. BMWE does not contend otherwise and, instead, focuses its petition to revoke primarily on the indicia of independence analysis. BMWE contends that MLRR was financially dependent on Walker and its affiliates. It argues that MLRR's financial integration with Walker and P&S was so extensive that it could not be considered an independent noncarrier entity for purposes of the class exemption. BMWE acknowledges that corporate affiliates may provide start-up financial support but claims that the permissible bounds of financial support were exceeded because Walker was the sole source for MLRR's initial capitalization and because the S&T loan (that P&S guaranteed in its entirety with rail cars in which Walker subordinated its security interest) extended well beyond start-up to embrace extensive rehabilitation. Additionally, it contends that MLRR's post-acquisition financial arrangements reinforced the extent of the financial dependence and shared financial risk that, BMWE maintains, characterized the Walker family. Specifically, it refers to: (1) the consolidated manner used by the Walker Board of Directors to consider capital expenditures with some listed as benefitting specific carriers and others as applying to the benefit of all three carriers; (2) the no interest capital advances made to MLRR; and (3) the assumption of each other's financial risks as manifested by the authority given P&S to pledge rail cars as collateral for new construction by MLRR and MLRR's guarantee of a bank loan to P&S for purchasing and refurbishing rail cars. In numerous cases, the ICC stated that the parents and affiliates of acquiring noncarrier subsidiaries can offer financial support without compromising their financial independence. Indeed, the ICC found that it was customary for parents to supply money for start-up expenses and initial capital as well as specific loan guarantees. The ICC recognized, as MLRR argues here, that the absence of an earnings history makes it difficult for new entities to obtain independent financing and that loan guarantees from corporate affiliates are less costly and more secure. To establish the independence, it was crucial to show that the acquiring noncarrier subsidiary had assumed full responsibility for its operating decisions, profits, debts, and risk of loss. The role of the corporate parent and affiliates could not extend beyond being mere investors; they could not subsidize the new subsidiary or accept the financial risk for the ongoing enterprise. The evidence of record here shows only that: (1) the Walker family advanced initial capital, as is customary; (2) the initial capital was immediately returned when long term, independent financing was secured; (3) the long term financing, and thus the purchase, was made possible through a fairly typical loan guarantee, the only one given; and (4) the Walker family supplied capital infusions at critical times in the early life of the new carrier. There is nothing of record to suggest that, in the creation of a new, independent entity, these actions were improper or extended beyond reasonable bounds. Nor does the fact that the loan guarantee (as opposed to equity contributions) extended to necessary rehabilitation establish that the Walker family improperly subsidized the new entity or accepted greater exposure to the risk of operations, particularly since Pennsylvania was funding the bulk of the rehabilitation and the receipt of funds was imminent. To the contrary, the record establishes that MLRR was solely responsible for its own operations and any ensuing profits or losses. The Walker family limited its risk of exposure to a single short lived loan guarantee and the loan of working capital; it was not exposed to any of the risks, liabilities, or obligations entailed in MLRR's operation of the Cluster, and, as a result, creditors would have had to look elsewhere. BMWE argues that MLRR lacks managerial as well as operational independence. Thus, BMWE characterizes MLRR as merely the eastern half of a single, integrated P&S-MLRR-RBKR system and, as such, contends that it is unable to function as a rail carrier or meet its common carrier obligations without the support of P&S and Walker. BMWE has not established that MLRR cannot function independently, and the record suggests otherwise. Moreover, it is settled that the types of operational and managerial factors BMWE relies on carry little weight when applied to families of short line carriers, particularly when financial independence is established. The ICC repeatedly found operational independence in cases where the acquiring carrier and its affiliates shared officers, directors, and offices. Indeed, we have also observed that closely held corporations controlled by one person or a small group of people typically have common officers and directors. Walker's rail carrier subsidiaries basically have the same officers and directors, but they convene meetings for each carrier, separate and apart from their affiliates, the decisions they make represent the best interest of the individual carrier they are representing (e.g., MLRR's decision not to go forward with the construction project sought by Clearview), and the compensation they receive when working for affiliates is paid by the affiliates through the management fee paid to P&S. Similarly, the ICC consistently recognized that short line operators commonly contract for operational and administrative services with their parent firms . . . [stating that such] arrangements by themselves do not establish a lack of independence, at least where services are purchased in arm s-length arrangements. Indeed, it was recognized that these contractual arrangements are intended to achieve a more efficient utilization of equipment and personnel than [each of the participants] could achieve on its own. While it is not disputed that rail employees were cross-utilized by the Walker carriers, the accountability and independence of the individual carriers were preserved. MLRR's decision to hire few employees and, instead, rely on the employees of its affiliates and outside contractors when necessary, was not unusual or unreasonable within the context of a shortline family. MLRR has established that its management fee to P&S covered the cost of the clerical assistance it received and, at the same time, accounted for the services its employees provided to P&S and RBKR. Otherwise, MLRR established that it reimbursed its affiliates for the services of their employees at a level commensurate with what would have been charged by third parties, and that, when the Walker carriers received services from employees of their affiliates, precautions were taken (e.g. changing train crews when the carriers interchanged trains) to ensure that the employees served only one carrier at any one time and the proper carrier was held accountable. The evidence of record demonstrates that MLRR served its on-line customers under its own name with its own marks and locomotives; held itself out, and was accepted widely, as an independent carrier, by such entities as other carriers, governmental entities, and financial institutions; negotiated, entered into, and was solely responsible for its own contracts; and handled its own obligations with its own accounts and resources using its own books and records. While the Walker family used a consolidated Federal tax return, the filing of a consolidated return, as recognized by BMWE, does not nullify the separate legal existence of affiliated corporations. Little significance may be attached to the fact that MLRR serviced its locomotives at P&S's facilities in view of the arm's length arrangement that governed. MLRR did not have its own car fleet, but this is characteristic of many new shortline and regional rail carriers. Moreover, MLRR published its own tariffs, entered into rail transportation contracts on its own, while acting primarily as a switching carrier for Conrail, and operated within the boundaries of its own lines. Overall, it appears that all operating arrangements within the Walker family of carriers, whether for services, supplies, or the use of facilities, were fully accounted for and based on arm's length terms and charges that preserved each carrier's identity and independence. The evidence of record establishes that MLRR was formed for a substantial and valid business purpose, and the indicia of independence establish that MLRR was not an alter ego of Walker and P&S and that the transaction was not a scheme developed solely to avoid labor protection. Rather, the evidence of record shows an attempt to acquire and operate a rail line that was rapidly becoming an abandonment candidate, without exposing the corporate parent and affiliates to a real risk of failure. MLRR's affiliates provided: (1) start-up funding, a loan guarantee, and a cash infusion, but did not otherwise expose themselves to liability; and (2) operational assistance that was fully accounted for and at arm's length to ensure that MLRR remained operationally independent. Under the three-part exceptional circumstances test, the ICC stated that labor protection may be imposed in transactions governed by 49 U.S.C. 10901 if: (1) there was a misuse of its rules or precedent; (2) existing labor contracts specified that line sales were subject to procedural or substantive protection; or (3) injury to affected employees was unique and disproportionate to the gains achieved for the local transportation system, and the injury could be compensated for without causing termination of the transaction or substantially undoing the prospective benefits of its existing policy for other communities or locales. Because there is no evidence of record to suggest, and BMWE has not alleged, misuse of the ICC's rules or precedent, and there is no labor contract under which this line sale would be subject to procedural or substantive protection, our analysis must focus on whether there was unique and disproportionate injury to Conrail's employees. According to Mr. Tredent, Vice Chairman of the Pennsylvania Federation of the BMWE: (1) seven persons, all headquartered at Reynoldsville, a point approximately in the middle of the Lawsonham-Driftwood line, were originally assigned to the Cluster's permanent MOW force; (2) Conrail posted a notice on December 16, 1991, abolishing the seven positions, effective at the end of the tour of duty on December 30, 1991; and (3) three other positions were relocated to Clearfield prior to the abolition of the seven MOW positions. However, BMWE has not quantified the effect of these actions or even suggested that the resulting injury was unique or disproportionate to the benefits achieved. None of the employees filed comments, and none of the other operating unions or crafts representing Conrail's employees joined in the petition to revoke. On the other hand, the evidence of record shows that 4 of the 7 MOW employees [Mr. C. W. Hollobaugh (24 years of service), Mr. T. A. Hollobaugh (25 years of service), Mr. M. H. Bailey, Jr. (31 years of service), and Mr. R. G. Smay (23 years of service)] exercised their seniority and were reassigned to other positions, and that MLRR hired 4 MOW employees, 2 of whom were furloughed Conrail MOW employees, and 4 additional P&S MOW employees. Accordingly, BMWE has failed to demonstrate that exceptional circumstances exist that would justify partial reopening and revocation of the exemption to discretionarily impose labor protective conditions. It is ordered: 1. BMWE's request for leave to late-file a reply to MLRR's motion to strike is granted, and MLRR's motion to strike portions of BMWE's supplemental petition to revoke is denied. 2. BMWE's petition to revoke is denied in all respects. 3. This decision is effective on its service date. Decided: May 13, 1998 Service Date - May 15, 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 on February 11, 1998, the Board ordered Union Pacific Railroad Company (UP), the respondent in this proceeding, and the Brotherhood of Maintenance of Way Employes (BMWE) to submit supplemental statements addressing certain concerns arising from BMWE's appeal of the October 15, 1997 Arbitration Award. A procedural schedule was established for the simultaneous filing of supplemental statements and of replies. By decisions served on March 2, March 26, and April 7, 1998, the parties previous requests for extensions of time in which to file supplemental statements and responses were granted. As a result of the most recent extension of time, supplemental statements were due on May 11, 1998, and replies were due on May 21, 1998. On May 8, 1998, UP and BMWE filed a joint motion for a fourth extension of time to file opening supplemental statements. The parties state that they have reached a tentative agreement in principle that would dispose of the issues in this case and that also would implement the consolidation of maintenance-of-way forces in UP's Eastern Territory, which is independent of BMWE's appeal of the October 15, 1997 Arbitration Award. The parties state that a 45-day extension is now required for the agreement to be reduced to writing and for BMWE to subject the written agreement to its ratification processes. If BMWE does ratify the agreement, the parties state that the consolidation of maintenance-of-way forces throughout the UP system will have been accomplished by the parties voluntarily, without the need for further arbitration or review by the Board. The motion will be granted. . It is ordered: 1. The parties supplemental statements are due June 25, 1998. 2. The parties responses are due July 7, 1998. Decided: May 14, 1998 Service Date - May 15, 1998 ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33566 CITY OF TACOMA AND BELTLINE DIVISION OF TACOMA PUBLIC UTILITIES CHANGE IN OPERATOR EXEMPTION TACOMA EASTERN RAILWAY COMPANY On February 16, 1998, the City of Tacoma (City),WA, filed a verified notice of exemption for a change in operators for the Beltline Division of Tacoma Public Utilities to operate approximately 131.5 miles of City rail line in Pierce, Thurston, and Lewis Counties, WA: (1) between milepost 2192.0, at Tacoma, and milepost 17.7, at Chehalis; and (2) between milepost 2192.0, at Tacoma, and milepost 64.2, at Morton. The lines had been operated previously by Tacoma Eastern Railway Company. Notice of the exemption was served on March 31, 1998, and was published in the Federal Register on the same date. The exemption is scheduled to become effective on May 18, 1998. On April 8, 1998, the Tacoma Eastern Railway Company (TE) filed a protest and petition for rejection of the exemption. On April 24, 1998, TE filed a petition to stay the effective date of the exemption. By letter filed May 8, 1998, the City, acting by its counsel, requests that the notice of exemption be withdrawn. In view of the withdrawal, the proceeding will be dismissed. The withdrawal of the notice of exemption renders the protest and petition for rejection and the petition for stay moot. It is ordered: 1. The request to withdraw the notice of exemption is granted and the proceeding in STB Finance Docket No. 33566 is dismissed. 2. The protest and petition for rejection and the petition for stay are dismissed as moot. 3. This decision is effective on its date of service. Decided: May 14, 1998 Service Date - May 15, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33588] Knoxville & Holston River Railroad Co., Inc. Acquisition and Operation Exemption Norfolk Southern Railway Company Knoxville & Holston River Railroad Co., Inc. (KHRR), a noncarrier, has filed a verified notice to acquire from Norfolk Southern Railway Company (NS) and operate 2 lines of track in the State of Tennessee as follows: (1) the North Belt/River Extension, extending from milepost 67.1CG (former) = 0.4RFE, in Knoxville, to the end of the line in Marbledale, a distance of approximately 15.18 miles; and (2) the K&A Belt (formerly the South Knoxville Spur), extending from milepost 0.1, in Knoxville, to the end of the line, also in Knoxville, a distance of approximately 3.8 miles. In addition, KHRR will also acquire incidental overhead trackage rights on 4 segments of NS's trackage in Knoxville as follows: (1) from milepost 0.0C to milepost 3.0C; (2) from milepost 130.0A to milepost 132.4A; (3) from milepost 0.0KA to milepost 1.1KA; and (4) approximately 0.1-mile between NS's K&A Line and its K&A Belt. The transaction is scheduled to be consummated on or after May 7, 1998. Decided: May 6, 1998. Service Date - May 15, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33589] Gulf & Ohio Railways Holding Co., Inc. Continuance in Control Exemption Knoxville & Holston River Railroad Co., Inc. Gulf & Ohio Railways Holding Co., Inc. has filed a notice of exemption to continue in control of the Knoxville & Holston River Railroad Co., Inc. (KHRR), upon KHRR's becoming a Class III railroad. The transaction is/was scheduled to be consummated on or after May 7, 1998. This transaction is related to STB Finance Docket No. 33588, Knoxville & Holston River Railroad Co., Inc. Acquisition and Operation Exemption Norfolk Southern Railway Company, wherein KHRR seeks to acquire and operate 2 lines of track and incidental overhead trackage rights from the Norfolk Southern Railway Company. Applicant controls eight existing Class III railroads: Albany Bridge Company, operating in the State of Georgia; Georgia & Florida Railroad Co., Inc., operating in the States of Georgia and Florida; Gulf & Ohio Railways, Inc., operating in the State of Mississippi and Georgia; Lexington & Ohio Railroad Co., Inc., operating in the State of Kentucky; Live Oak, Perry & Georgia Railroad Company, Inc., operating in the States of Georgia and Florida; Piedmont & Atlantic Railroad, Inc., operating in the State of North Carolina; Rocky Mount & Western Railroad Co., Inc., operating in the State of North Carolina; and Wiregrass Central Railroad Company, Inc., operating in the State of Alabama. Gulf & Ohio Railways, Inc., operates in the State of Mississippi under the trade name of Mississippi Delta Railroad and in the State of Georgia under the trade name of Atlantic & Gulf Railroad. Applicant states that: (i) the rail lines to be operated by KHRR do not connect with any railroad in the corporate family; (ii) the transaction is not part of a series of anticipated transactions that would connect KHRR's lines with any railroad in the corporate family; and (iii) the transaction does not involve a Class I carrier. Therefore, the transaction is exempt from prior approval requirements. Decided: May 6, 1998. Service Date - May 15, 1998 ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33592] Providence and Worcester Railroad Company Corporate Family Transaction Exemption Connecticut Central Railroad Company Providence and Worcester Railroad Company (P&W) and Connecticut Central Railroad Company (CCCL), Class III railroads, have jointly filed a verified notice of exemption. The exempt transaction is a merger of CCCL into P&W. CCCL is a wholly owned subsidiary of P&W. CCCL operates in the State of Connecticut, and P&W operates in the States of Connecticut, Massachusetts, Rhode Island and New York. The earliest the transaction can be consummated is May 12, 1998, the effective date of the exemption (7 days after the notice of exemption was filed). The proposed merger is intended to provide more efficient service to shippers. Moreover, because of P&W's multiple connections to other carriers, it can provide customers on CCCL's lines with price and source competition not previously enjoyed by them. This is a transaction within a corporate family of the type specifically exempted from prior review and approval under 49 CFR 1180.2(d)(3). The parties state that the transaction will not result in adverse changes in service levels, significant operational changes, or a change in the competitive balance with carriers outside the corporate family. Decided: May 8, 1998. Service Date - May 15, 1998 ============================================================ Comments or questions about this compilation should be directed to Paul Moore at 71367.1057@Compuserve.com. ============================================================