STB REPORT #19 - OCTOBER 1 - 15, 1998 ****************************************************************************** A compilation of decisions and notices published by the Surface Transportation Board. Includes information on track abandonments, ownership changes and trackage rights agreements. Condensed for readability. The full text is available at www.stb.dot.gov/ ****************************************************************************** SURFACE TRANSPORTATION BOARD DECISION IN THE MATTER OF AN OFFER OF FINANCIAL ASSISTANCE 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) filed a notice of exemption 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. Notice of the exemption was published in the Federal Register on May 6, 1998. The exemption was scheduled to become effective on June 5, 1998, provided no formal expression of intent to file an offer of financial assistance (OFA) was filed. By petition filed May 18, 1998, the Oklahoma Department of Transportation (ODOT) filed a request for issuance of a notice of interim trail use (NITU), and for a public use condition, in order to negotiate with BNSF for acquisition of the right-of-way for use as a trail. By letter dated June 1, 1998, BNSF indicated its agreement to a trail use condition. Also on May 18, 1998, the Oklahoma Department of Transportation (ODOT) timely filed a notice of intent to file an offer of financial assistance (OFA). The filing of the notice of intent automatically stayed the effective date of the exemption until June 15, 1998. By decision served June 2, 1998, the Board held the requests for issuance of a notice of interim trail use and for issuance of a public use condition in abeyance pending completion of the OFA process. On June 5, 1998, BNSF filed a request for a 60-day extension to permit it to develop and submit the required information/and or otherwise complete voluntary negotiations for the transfer of the line. BNSF stated that it had provided some data to ODOT, but had not provided all of the requested information in view of time constraints and ongoing negotiations. ODOT did not object and supported the extension. On August 6, 1998, ODOT filed a notice of intent to proceed with interim trail use and rail banking. ODOT stated that, in the event that the parties were unable to reach an agreement under a NITU by September 1, 1998, it would like the Board to issue a procedural schedule for filing an OFA. ODOT stated that BNSF had not provided all of the information that it requested. By letter filed August 7, 1998, BNSF stated that it and ODOT had reached an agreement in principle on the terms of a transfer of the right-of-way and anticipated executing an interim trail use/rail banking agreement in the near future. BNSF also concurred in the request for relief by ODOT. By decision served August 14, 1998, the proceeding was reopened and the request for issuance of a notice of interim trail use was held in abeyance and BNSF and ODOT were given the opportunity to negotiate an interim trail use/rail banking agreement for the right-of-way. In the same decision, BNSF was directed to provide ODOT with the requested information to enable ODOT to file an OFA. The time period for ODOT to file its OFA was extended to October 1, 1998, and the effective date of the exemption was postponed until October 11, 1998. By facsimile submission received on September 29, 1998, ODOT seeks an extension of the OFA period until October 20, 1998. ODOT states that the extension request has the consent of BNSF and that it is continuing to negotiate with BNSF for an interim trail use/rail banking agreement, but has not been able to finalize an agreement. The extension request will be granted and the time for filing an OFA will be extended to October 20, 1998. The exemption effective date will be further postponed to October 30, 1998-- 10 days after the due date for filing an OFA. It is ordered: 1. The time for offerors to file an offer of financial assistance is tolled until October 20, 1998. 2. The effective date of the exemption is further postponed until October 30, 1998. Decided: September 29, 1998 Service Date - October 1, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-55 (Sub-No. 562X) CSX TRANSPORTATION, INC.--ABANDONMENT EXEMPTION--IN ROCKY MOUNT, NASH COUNTY, NC By decision served on August 11, 1998, the Board exempted the abandonment by CSX Transportation, Inc. (CSXT), of a 0.60-mile 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, in Rocky Mount, Nash County, NC, subject to environmental and standard employee protective conditions. The exemption was scheduled to become effective on September 10, 1998, unless stayed by the Board or unless a formal offer of financial assistance (OFA) was filed by August 21, 1998. On August 21, 1998, New Southern of Rocky Mount, Inc. (NSRM), timely filed an OFA to purchase the line for $17,477.28. By decision served on August 26, 1998, NSRM was found to be financially responsible and the effective date of the decision authorizing abandonment of the line was postponed to permit the financial assistance process to proceed. The August 26 decision also noted that, on or before September 21, 1998, either party could request that the Board establish terms and conditions for the sale of the line if no agreement was reached during negotiations. By letter filed on September 21, 1998, CSXT advised the Board that CSXT and NSRM have agreed on the purchase price and that they will advise the Board when the transaction is consummated. The sale will be approved and the petition for exemption will be dismissed. It is ordered: 1. Under 49 U.S.C. 10904, NSRM is authorized to acquire the line described above. 2. Under 49 U.S.C. 10904 and 49 CFR 1152.27(f)(2), the petition for exemption is dismissed effective on the date the sale is consummated. Decided: September 28, 1998 Service Date - October 1, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 94 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 STB Finance Docket No. 33388 (Sub-No. 75) NEW ENGLAND CENTRAL RAILROAD, INC.--TRACKAGE RIGHTS-- CSX TRANSPORTATION, INC. On September 21, 1998, New England Central Railroad, Inc. (NECR) filed a petition for the Board to set one term of a trackage rights arrangement or to provide clarification with respect to the transaction we authorized in Decision No. 89, served July 23, 1998. In Decision No. 89, we approved, subject to conditions, the application by CSX Corporation and CSX Transportation, Inc. (collectively CSX), and Norfolk Southern Corporation and Norfolk Southern Railway Company (collectively NS) for: (1) the acquisition of control of Conrail Inc., and Consolidated Rail Corporation (collectively Conrail); and (2) the division of Conrail's assets by and between CSX and NS. In that decision, we also approved NECR's responsive application insofar as it seeks trackage rights between Palmer, MA, and West Springfield, MA. We required CSX and NECR to negotiate the details of such trackage rights and, if negotiations are not fully successful, to submit separate proposals no later than September 21, 1998. In its petition, NECR indicates that, because the parties are close to reaching an agreement on all but one aspect of the trackage rights arrangement, it is presently asking for the Board's assistance only on that one matter. NECR also seeks a waiver of the September 21, 1998 deadline for bringing disputes to the Board in the event the parties are unable to agree on other aspects of the arrangement. By letter dated September 21, 1998, CSX submitted a status report on its negotiations with NECR, and addressed the issue raised by NECR. Referring to the issue as extraneous, CSX states that it believes that all necessary trackage rights agreement terms have been or will shortly be agreed upon. According to CSX, the parties are still negotiating two items, which they hope to resolve without Board intervention. CSX therefore requests that the Board extend the Decision No. 89 deadline for concluding these trackage rights negotiations by 30 days to permit the parties to resolve those issues. CSX indicates its understanding that NECR concurs in this request. We find the requests to extend the Decision No. 89 deadline to allow the parties to complete negotiations to be reasonable. We will grant a 30-day extension of the September 21, 1998 deadline. It is ordered: 1. The deadline set forth in Decision No. 89, Ordering Paragraph 64, is extended 30 days to October 21, 1998. If any of the terms of the trackage rights arrangement between Palmer, MA, and West Springfield, MA, are not resolved through negotiations between CSX and NECR, the parties must submit separate proposals no later than October 21, 1998. Decided: September 30, 1998 Service Date - October 1, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 95 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 In Decision No. 89, in addition to approving the primary application, we imposed a condition requiring CSX to meet with Illinois Central Railroad Company (IC) to attempt to resolve their dispute regarding dispatching of the Leewood-Aulon line in Memphis, TN, and to advise the Board no later than September 21, 1998, of the status of their negotiations. In correspondence filed September 23, 1998, CSX states that representatives of CSX and IC were scheduled to meet in Memphis on September 22, 1998, in an effort to resolve the dispute, and that they anticipate further discussions concerning this matter. In view of the ongoing discussions, CSX requests that the date for the status report be extended until October 21, 1998. The extension request is reasonable and will be granted. It is ordered: 1. The request for a 30-day extension of the September 21, 1998 deadline for submitting a status report regarding dispatching of the Leewood-Aulon line is granted and the due date is now October 21, 1998. Decided: September 30, 1998 Service Date - October 1, 1998 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33658] The New York & Ogdensburg Railway Company, Inc.--Lease and Operation Exemption-- Ogdensburg Bridge & Port Authority The New York & Ogdensburg Railway Company, Inc. (NYOG), a noncarrier, has filed a verified notice of exemption to lease from the Ogdensburg Bridge & Port Authority (OBPA) and operate approximately 32.0 miles of rail line. The rail lines to be leased are two connecting lines: (1) between milepost 0.0 at Ogdensburg, NY, and milepost 25.2 at Norwood, NY; and (2) between milepost 0.0 at Norwood, NY, and milepost 6.8+/- at Norfolk/Raymondville, NY. NYOG will become a Class III rail carrier. By this notice of exemption, NYOG and OBPA are giving notice of their mutual intent to effect a change in operators on the subject rail lines. Common carrier service of the rail lines is currently provided by the St. Lawrence & Raquette River Railroad (SLRR) pursuant to Finance Docket No. 31653 (served May 17, 1990). NYOG has supplied evidence of SLRR's desire to terminate its operations over the line and to facilitate transfer to a new service provider prior to the end of September 1998. Decided: September 24, 1998. Service Date - October 1, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-55 (Sub-No. 565X) CSX TRANSPORTATION, INC.--DISCONTINUANCE EXEMPTION--IN FREDERICK COUNTY, MD On September 3, 1998, CSX Transportation, Inc. (CSXT) filed a verified notice of exemption to discontinue service over a 0.93-mile line of railroad known as the Frederick Secondary Track owned by the Maryland Department of Transportation, State Railroad Administration, between a point 257 feet north of 8th Street (valuation station 3597+88), and a point of junction with CSXT's line, south of Carroll Creek (valuation station 3647+04.6), in Frederick County, MD. By letter filed September 23, 1998, CSXT requests permission to withdraw its notice of exemption. CSXT states that service on the line at issue is being provided by CSXT pursuant to a modified certificate of public convenience and necessity. The former Baltimore and Ohio Railroad Company, predecessor to CSXT was granted a modified certificate of public convenience and necessity by the Interstate Commerce Commission to operate over the line. (ICC served May 13, 1982). Therefore, CSXT does not need to obtain authorization from the Board to discontinue these operations. CSXT has provided notice of its intention to discontinue operations over the line effective November 17, 1998. Accordingly, the request to withdraw the notice of exemption will be granted. It is ordered: 1. CSXT's request for permission to withdraw its notice of exemption is granted. 2. The proceeding is dismissed. Decided: September 29, 1998 Service Date - October 2, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-303 (Sub-No. 18X) WISCONSIN CENTRAL LTD.--ABANDONMENT EXEMPTION IN POLK COUNTY, WI By decision and notice of interim trail use or abandonment (NITU) served on March 13, 1998, a 180-day period was authorized for the Wisconsin Department of Natural Resources (WisDNR) to negotiate an interim trail use/rail banking agreement with Wisconsin Central Ltd. (WCL) for a 15.25-mile line of railroad known as the Dresser-Amery Line, between milepost 47.83 in Dresser and milepost 63.08 in Amery, in Polk County, WI. The 180-day negotiating period expired on September 9, 1998. On September 4, 1998, WisDNR filed a motion for an extension of the negotiating period for 180 days. WisDNR states that, while negotiations are currently continuing in good faith between WisDNR and WCL, more time is needed to finalize negotiations. WisDNR also states that WCL is agreeable to an extension of time to continue negotiations and has authorized WisDNR to file the motion. Accordingly, the NITU negotiating period will be extended for a period of 180 days from September 9, 1998, or until March 8, 1999. It is ordered: 1. WisDNR's request to extend the NITU negotiation period is granted. 2. The NITU negotiating period is extended until March 8, 1999. Decided: September 29, 1998 Service Date - October 2, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33556 Decision No. 11 CANADIAN NATIONAL RAILWAY COMPANY, GRAND TRUNK CORPORATION, AND GRAND TRUNK WESTERN RAILROAD INCORPORATED--CONTROL--ILLINOIS CENTRAL CORPORATION, ILLINOIS CENTRAL RAILROAD COMPANY, CHICAGO, CENTRAL AND PACIFIC RAILROAD COMPANY, AND CEDAR RIVER RAILROAD COMPANY We consider, in this decision: the petition (the CPR-7 petition) for modification of the procedural schedule, filed September 28, 1998, by Canadian Pacific Railway Company, Delaware and Hudson Railway Company, Inc., Soo Line Railroad Company, and St. Lawrence & Hudson Railway Company Limited (referred to collectively as CPR), Norfolk Southern Railway Company (NSR), Rubicon Inc., Uniroyal Chemical Company, Inc., and Vulcan Chemicals; the compendium (the CPR-7 compendium) of discovery requests, responses, and discovery-related pleadings submitted in support of the CPR-7 petition; the undesignated letter (the CPR-7 supplement) intended to supplement the CPR-7 petition, filed September 29, 1998; the petition (the CPR-8 petition) for waiver of service of the CPR-7 compendium, filed September 29, 1998, by petitioners; the CSX-8 request for an extension of the procedural schedule, filed September 30, 1998, by CSX Corporation and CSX Transportation, Inc. (referred to collectively as CSX); the BNSF-5 response to the CPR-7 petition, filed September 30, 1998, by The Burlington Northern and Santa Fe Railway Company (BNSF); the UP-5 response to the CPR-7 petition, filed September 30, 1998, by Union Pacific Railroad Company (UP); the undesignated letter (the KCS letter) in the nature of a response to the CPR-7 petition and the CPR-7 supplement, filed September 30, 1998, by Kansas City Southern Railway Company (KCS); the undesignated letter, filed October 1, 1998, by Occidental Chemical Company in support of a 30-day extension of the procedural schedule; the letter filed October 1, 1998, by the Brotherhood of Maintenance of Way Employes (BMWE), opposing modification of the procedural schedule; and the CN/IC-25 reply to the CPR-7 petition and the CPR-7 supplement, filed October 1, 1998, by Canadian National Railway Company (CNR), Grand Trunk Corporation (GTC), Grand Trunk Western Railroad Incorporated (GTW), Illinois Central Corporation (IC Corp.), Illinois Central Railroad Company (ICR), Chicago, Central & Pacific Railroad Company (CCP), and Cedar River Railroad Company (CRRC). The CPR-7 Petition. The CPR-7 petition seeks a 30-day extension (until November 12, 1998) of the due date for evidentiary submissions in response to the primary application, and a corresponding adjustment of the remaining dates contained in the procedural schedule. Petitioners cite the following: the decision of CN and IC to construct their application in a manner that obscures the effects of the proposed CN/IC transaction by, among other things, inextricably intermingling in the application's merger-impact studies and public-benefits estimates the combined effects of both the CN/IC transaction (which is subject to Board review) and the recent strategic Alliance between applicants and KCS (which applicants are said to claim is not part of the transaction before the Board); the intransigent and improper resistance by applicants and KCS to petitioners legitimate attempts to obtain discovery of needed information about the competitive and other effects of the proposed CN/IC transaction and, importantly, about the relationship of the CN/IC/KCS Alliance and Access agreements to the CN/IC transaction, and applicants inexcusable delay in producing relevant workpapers underlying their merger-impact studies; the inability of the parties, due to the unavailability of Administrative Law Judge Harfeld in scheduling an immediate hearing, to obtain a prompt resolution of the dozens of outstanding discovery disputes engendered by the stonewalling tactics of applicants and KCS; the resulting inability of the parties to arrange a feasible, realistic deposition schedule for applicants witnesses that will allow petitioners and other interested parties adequate time to obtain and review the relevant documents before the depositions take place; and other procedural delays that are directly attributable to applicants own strategy or are beyond the control of the parties. Petitioners insist that adherence to the current procedural schedule, particularly in light of applicants conduct, would reward discovery abuse and prevent the development of a complete evidentiary record necessary to a sound Board decision on the application. The CN/IC/KCS Alliance is a 15-year marketing alliance that is already under way. The CN/KCS Access agreement, which IC will join if the CN/IC transaction is approved by the Board and implemented by applicants, involves the granting of certain haulage and trackage rights. The CPR-7 Supplement. The CPR-7 supplement seeks an order temporarily suspending the procedural schedule pending the final resolution of all outstanding discovery disputes and a ruling on the CPR-7 petition. Petitioners state that, on the first day (September 28, 1998) of the 2-day hearing held by Judge Harfeld, Judge Harfeld indicated: that he intends to grant the motions filed by various parties to compel applicants and KCS to produce documents and information relating to the CN/IC/KCS Alliance; and that he intends to grant petitioners motion to require applicants to produce complete unredacted copies of the Alliance and Access agreements. Petitioners further state that, during the September 28th hearing: applicants also agreed to produce additional documents and information to which they previously had objected (this material apparently relates to the consideration and review of the proposed CN/IC transaction and the Alliance by applicants Boards of Directors). Petitioners add: that, in response to Judge Harfeld's statement that additional documents and information to be produced under his rulings should be produced by Friday, October 2, 1998, several opposing parties indicated that they needed the relevant documents (particularly Alliance-related materials) in order to take meaningful depositions of applicants witnesses, who applicants propose to make available on Friday, October 2, 1998; and that, in response to these concerns, Judge Harfeld stated his view that an extension of the current procedural schedule is clearly warranted. The CPR-8 Petition. The CPR-8 petition seeks a waiver of the service rule for the approximately one-inch thick CPR-7 compendium. The CSX-8 Request. The CSX-8 request seeks a 30-day extension (until November 12, 1998) of the due date for evidentiary submissions in response to the primary application, and a corresponding adjustment of the remaining dates contained in the procedural schedule governing this proceeding. CSX indicates: that Judge Harfeld's rulings in the 2-day discovery conference (held September 28 and 29, 1998) require applicants to produce documents and information in response to numerous requests; that, given that applicants have a right to appeal Judge Harfeld's discovery rulings to the Board, CSX (and other opposition parties) face the very real possibility that they will obtain no meaningful discovery from applicants prior to the current due date (October 13, 1998) for evidentiary submissions in response to the primary application; and that, even if no appeals are filed, the discovery documents clearly will not be produced in time for CSX (and other opposition parties) to prepare for depositions of applicants witnesses, which are scheduled over this week and next. The BNSF-5 Response. BNSF urges approval of the CPR-7 petition. The parties to this proceeding, BNSF contends, must be afforded a reasonable opportunity to develop a full evidentiary record through discovery. The UP-5 Response. UP agrees that the present schedule does not allow sufficient time for the parties to make any meaningful use of the discovery that CN/IC and KCS have been ordered to produce. UP does not join in the CPR-7 petition, however, because, in UP's view, a modification of the procedural schedule will ultimately serve no purpose. The CN/IC application, UP claims, is fundamentally deficient; it fails to describe the effects of the CN/IC transaction as distinct from the effects of the CN/IC/KCS Alliance. The transaction that is actually before us, UP insists, is not the CN/IC transaction presented in the CN/IC application; it is, rather, a three-way CN/IC/KCS common control (or pooling) transaction. UP therefore insists that the CN/IC application must be re-filed (and this, apparently, is what UP intends to argue when it submits its evidence and arguments in opposition to the CN/IC application). The KCS Letter. KCS urges denial of the CPR-7 petition, which (KCS claims) represents nothing more than an attempt by CPR and NSR (major competitors of CN, IC, and KCS) to stall, delay, and otherwise obstruct the procompetitive benefits of the proposed transaction. KCS adds: that petitioners delayed in propounding their discovery; that petitioners chose not to avail themselves of discovery guidelines that would have shortened the time frames available for response; and that petitioners, having waited until the last minute to file discovery, now seek to extricate themselves from their self-inflicted bind by asking the Board to delay the entire transaction. Occidental Letter. Occidental generally supports other parties requests to extend the procedural schedule in this proceeding by 30 days. BMWE Letter. BMWE generally opposes other parties requests to modify the procedural schedule. The CN/IC-25 Reply. Applicants, urging denial of the CPR-7 petition and the CPR-7 supplement, contend: that they have neither improperly resisted discovery nor engaged in dilatory discovery tactics; that blame for the delays that have occurred should be assigned to CPR and NSR, which neglected to initiate their discovery requests in a timely manner; that CPR and NSR are attempting to use the regulatory process to forestall the new competition promised by the CN/IC transaction and to chill the competition they are already facing from the CN/IC/KCS Alliance; and that even a 1-month delay in approving the CN/IC transaction could mean a loss of more than $10 million in public benefits. Applicants add: that Judge Harfeld did not state that an extension of the procedural schedule is clearly warranted; that, even if applicants decide to appeal Judge Harfeld's orders, they will produce documents and allow testimony pending appeal, without prejudice to seeking a ruling that such evidence cannot be used if the Board decides the appeal in applicants favor; that, because all parties have made plans based on the current deposition schedule, it would be enormously disruptive and prejudicial to change that schedule; and that, if CPR and NSR suffer any actual, demonstrable prejudice, they can seek other relief (e.g., they can seek to supplement their October 13th submissions for good cause shown). We will grant a 2-week extension (to October 27, 1998) of the due date (previously set as October 13, 1998) for the submission of comments, protests, etc., in opposition to the primary application. We caution and urge applicants and all parties to avoid discovery disputes where possible and to use the discovery process properly for obtaining necessary information and not as a litigation tactic. To the extent Judge Harfeld is called upon to resolve any further discovery disputes, we urge all parties to work cooperatively with the Judge so that he may resolve issues promptly as they arise. We recognize that some of the discovery controversy relates to the CN/IC/KCS Alliance. Applicants have brought the Alliance into the case in their primary application, and have argued, in essence, that the benefits of the CN/IC transaction include certain benefits flowing from the CN/IC/KCS Alliance, but we are not today resolving the extent of the relevance of the Alliance. Nor are we prejudging our assessment of UP's anticipated argument that the transaction that is actually before us is a three-way CN/IC/KCS transaction and not a two-way CN/IC transaction. We encourage all parties to this proceeding to cooperate in good faith in fulfilling their discovery obligations. We also encourage all parties to bring to our attention, as early as possible, problems similar to those we address in this decision. Clearly, the parties to this proceeding knew, prior to September 28th, that there was a delay in scheduling a discovery conference. We hope that the parties to this proceeding will endeavor to avoid such delays in the future. Although all parties may bear a portion of the responsibility for the present situation, we will not countenance stalling tactics of any sort. It is ordered: 1. The CPR-8 petition for waiver of service of the CPR-7 compendium is granted. 2. The dates in the procedural schedule are modified as indicated in the Appendix to this decision. Decided: October 2, 1998 Service Date - Late Release October 2, 1998 APPENDIX: REVISED PROCEDURAL SCHEDULE October 27, 1998 All comments, protests, requests for conditions, and any other evidence and argument in opposition to the primary application due, including filings of the U.S. Department of Justice (DOJ) and the U.S. Department of Transportation (DOT). Inconsistent and responsive applications due. November 17, 1998 Notice of acceptance (if required) of inconsistent and responsive applications published in the Federal Register. December 11, 1998 Response to comments, protests, requested conditions, and other opposition due. Response to comments of DOJ and DOT due. Rebuttal in support of primary application and related application due. Response to inconsistent and responsive applications due. January 11, 1999 Rebuttal in support of inconsistent and responsive applications due. February 19, 1999 Briefs due, all parties (not to exceed 50 pages for applicants and not to exceed 25 pages for all other parties). March 22, 1999 Oral argument (close of record). March 29, 1999 Voting conference (at Board's discretion). May 25, 1999 Date of service of final decision. ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33556 Decision No. 10 CANADIAN NATIONAL RAILWAY COMPANY, GRAND TRUNK CORPORATION, AND GRAND TRUNK WESTERN RAILROAD INCORPORATED CONTROL ILLINOIS CENTRAL CORPORATION, ILLINOIS CENTRAL RAILROAD COMPANY, CHICAGO, CENTRAL AND PACIFIC RAILROAD COMPANY, AND CEDAR RIVER RAILROAD COMPANY In Decision No. 7 in this proceeding, served September 18, 1998, we granted petitions for waiver or clarification with respect to anticipated responsive applications by, among other rail carriers, CSX Corporation and CSX Transportation, Inc. (CSXT) (collectively CSX). By request filed September 21, 1998 (designated as CSX-7), CSX seeks permission to file an amended description of its responsive application. Applicants replied on September 24, 1998. We noted in Decision No. 7 that CSX anticipated filing a responsive application seeking overhead trackage rights over CN lines between Sarnia, Ontario, and Port Huron, MI; overhead trackage rights over CN's Shore Line Subdivision between Detroit, MI, and Toledo, OH; and trackage rights over the lines of IC to serve customer facilities in Decatur, IL, and Memphis, TN, that CSX currently serves through reciprocal switching provided by IC. We allowed CSX to amend its petition for waiver or clarification to include a request that its responsive application be considered a minor transaction and we found that CSX was proposing three separate minor transactions. In its instant pleading, CSX states that it has decided not to pursue its request for trackage rights between Detroit and Toledo. CSX seeks to further amend its description of its responsive application to include a request for trackage rights over The Kansas City Southern Railway Company (KCSR) between the point of interchange between CSX and KCSR in New Orleans and milepost 814 on KCSR's Baton Rouge-New Orleans line. CSX states that its amendment is based on further analysis of the competitive implications of the so-called CN-IC-KCSR alliance and the Board's decision in Finance Docket No. 32530 to hold in abeyance KCSR's application for approval to construct a 9-mile build-in from milepost 814 on KCSR's Baton Rouge-New Orleans line to the industries at Geismar, LA, on the ground that KCSR will be able to access Geismar through the new alliance. CSX asserts that KCSR's participation in the alliance may reduce the scope of head-to-head competition between IC and KCSR that industries in the Geismar industrial area anticipated from the KCSR build-in prior to the formation of the alliance. CSX maintains that the trackage rights it intends to seek over KCSR would allow CSX to serve industries in Geismar via a build-in similar to that contemplated by the KCSR construction application in Finance Docket No. 32530, thereby assuring that there is no loss of competitive rail options at Geismar stemming from the alliance and the CN-IC control transaction. CSX also requests that, if it is permitted to amend its description of its responsive application, the Board continue to treat its proposed responsive application as a minor transaction. Applicants oppose CSX's request. They contend that, because the information CSX relies on to justify its amendment was available to CSX well before applicants filed their primary application, CSX has failed to show good cause for making such a substantial change in its description of its responsive application. If we grant CSX's amendment request, applicants maintain that CSX's proposed trackage rights over KCSR at Geismar would constitute a significant transaction, rather than the minor transaction designation sought by CSX. KCSR also filed a reply in opposition to CSX's request on September 29, 1998, on the grounds that: (i) the petition was filed out of time and in violation of the Board's procedural schedule; (ii) the relief it seeks represents an impermissible request that the Board impose trackage rights over the lines of a nonapplicant carrier; and (iii) the relief it seeks will unduly prejudice KCS. If the pleading is not rejected, KCSR seeks denial of those aspects of CSX-7 that affect KCSR. While CSX has not, in our view, offered a very persuasive explanation as to why it should be permitted to make a late amendment, it does not appear that applicants or KCSR will be procedurally prejudiced by granting CSX's request to amend its description of its responsive application. We will, therefore, grant CSX's request to amend its description of its responsive application. We caution, however, that we will not permit the filing of amendments and errata sheets significantly altering the evidence and conclusions contained in earlier submissions, as such filings may curtail the ability of other parties to respond fully and adequately within the time frames we have established. We cannot, however, accede to petitioner's request to designate its proposed trackage rights over KCSR a minor transaction. In Decision Nos. 7 and 8 in this proceeding, served September 18, 1998, we concluded that descriptions of responsive applications that included similar trackage rights proposals in connection with service to Geismar, LA, were not minor. Here, as in those instances, petitioner's presentation is insufficient to support a minor transaction designation. Accordingly, CSX's amendment describing trackage rights between New Orleans and milepost 814 will be considered a significant transaction. It is ordered: 1. The CSX-7 request to amend the description of responsive application in CSX-3 and CSX-5 is granted. 2. CSX's amendment describing trackage rights between New Orleans and milepost 814 will be considered a significant transaction. Decided: October 2, 1998 Service Date - Late Release October 2, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33642 (Sub No. 1) KYLE RAILROAD COMPANY--ACQUISITION AND OPERATION-- OMAHA PUBLIC POWER DISTRICT By petition filed July 31, 1998, Kyle Railroad Company (KR) requests that the Board permit the acquisition and operation of certain rail lines exempted in STB Finance Docket No. 33642 to extend only until December 31, 2003. On July 27, 1998, KR filed a notice of exemption under the Board's class exemption procedures. The notice covered the agreement by Omaha Public Power District (OPPD) to temporarily authorize KR's acquisition and operation of approximately 56.75 miles of rail line between milepost 56.30 at Collegeview, and milepost 6.10 at Arbor, in Lancaster and Otoe Counties, NE. The exemption became effective and was scheduled to be consummated on or shortly after August 4, 1998. Because Board authorization of the acquisition and operation agreement covered by the exemption in STB Finance Docket No. 33642 would normally remain in effect indefinitely, petitioner seeks revocation of the exemption to the extent necessary to allow the involved transaction to expire on December 31, 2003, as agreed to by the parties. Limiting the term of the acquisition and operation is consistent with the limited scope of the transaction previously exempted. This action will have no adverse impact on shippers on the line, as OPPD is the principal shipper on the line and the other shippers will be served efficiently and effectively by KR, a seasoned short line operator. Therefore, we will grant the petition. It is ordered: 1. Under 49 U.S.C. 10502, we exempt the acquisition and operation of rail lines described in STB Finance Docket No. 33642, as discussed above, permitting them to expire on December 31, 2003. 2. Notice will be published in the Federal Register on October 2, 1998. 3. This decision is effective on November 1, 1998. 4. Petitions to reopen must be filed by October 22, 1998. Decided: September 29, 1998 Service Date - October 2, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD Finance Docket No. 32760 [Decision No. 81] 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 In Decision No. 44, we approved, subject to various conditions, the common control and merger of the rail carriers controlled by Union Pacific Corporation (Union Pacific Railroad Company and Missouri Pacific Railroad Company) and the rail carriers controlled by Southern Pacific Rail Corporation (Southern Pacific Transportation Company, St. Louis Southwestern Railway Company, SPCSL Corp., and The Denver and Rio Grande Western Railroad Company). The conditions we imposed included, among many others, the terms of the UP/SP-BNSF settlement agreement. With respect to the UP/SP-BNSF agreement, we concluded that the agreement was sufficient (with certain modifications) to address the competitive harms of an unconditioned UP/SP merger because the BNSF agreement will permit BNSF to replace, to a large extent, the competitive service that is lost when SP is absorbed into UP. The common control authorized in Decision No. 44 was consummated on September 11, 1996. In this decision, we address: BNSF's petition, filed August 4, 1998, for enforcement of a merger condition with respect to that carrier's access to a transloading facility at or near San Antonio, TX; UP's reply thereto filed August 20, 1998; BNSF's petition for leave to file a reply to applicants reply; and UP's reply to BNSF's petition for leave. As part of the UP/SP-BNSF settlement agreement, BNSF gained the right to serve all existing and future transload facilities at specified 2-to-1 points, including San Antonio, TX. The scope of BNSF's access was further defined by the settlement agreement, which provides that the locations referenced in the settlement agreement include all areas within the present designated switching limits of the location. The effective date for determining the relevant switching limits is the September 25, 1995 date of the UP/SP-BNSF settlement agreement. At issue here is BNSF's access to South Texas Liquid Terminal, Inc. (STL Terminal), a transload facility located on a former Missouri-Kansas-Texas Railroad Company (MKT) line at MKT's Travis Yard that is used by shippers such as Archer Daniels Midland Company (ADM) to transfer corn syrup from rail cars to trucks. According to BNSF, STL Terminal is an existing transload facility that, pursuant to UP's tariff in effect on September 25, 1995, is within the San Antonio switching limits and is therefore open to access by BNSF. In May 1997, petitioner states that UP initially identified STL Terminal as accessible to BNSF as a 2-to-1 transload facility and that BNSF subsequently listed STL Terminal in its quarterly progress reports as a new customer accessible as a result of the merger. UP, however, did not list the facility in its July 1997 and January 1998 lists of customers to which BNSF gained access. After BNSF asked UP to include the facility in its lists, UP advised BNSF in April 1998 of its position that the facility was outside the San Antonio switching limits. By that time, BNSF had executed a contract to move freight to STL Terminal, and volumes had begun to move under that contract. UP also advised shipper ADM that BNSF did not have access to STL Terminal, that BNSF would be billed line haul charges for the movement to STL Terminal, and that ADM should discontinue shipping via BNSF to STL Terminal. BNSF maintains that a 1976 MKT timetable reveals that Travis Yard was within the San Antonio switching limits and that a UP switching tariff shows that the Travis Yard milepost was within the applicable range for the San Antonio switching district. UP's switching tariff defines the San Antonio switching limits on three UP lines as: (1) between mileposts 255.97 and 267.80 on the Palestine line of the Missouri Pacific Railroad Company (MP); (2) between San Antonio on the north and milepost 4.1 on the south on MP's Corpus Christi line; and (3) between milepost 1028.55 on the north and milepost 1038.5 on the south on the former MKT line. Under description (3), Travis Yard at milepost 1030.3 on the former MKT line would be situated within the San Antonio switching district. Petitioner argues that it is entitled to serve STL Terminal because references to the MKT milepost location of the facility remained in UP's tariff until well after the effective date of BNSF's settlement agreement with UP. BNSF maintains that its current access to a 2-to-1 shipper, Fite Distribution Services Company, located further from central San Antonio than STL Terminal provides additional support for its position. UP, however, has convincingly responded that BNSF gained access to Fite, not because it was situated within the San Antonio switching limits, but because Fite was a genuine 2-to-1 shipper specifically listed in UP's tariff as a customer open to reciprocal switching. In contrast, STL Terminal is not listed in UP's switching tariff. In addition to confirming its access to STL Terminal, BNSF asks us to require UP to provide a list of switching limits for all 2-to-1 points as set forth in UP tariffs, along with copies of those tariffs, and to impose a continuing duty on UP to provide BNSF with lists of any changes to mileposts defining the switching limits. UP contends that the tariff item designating the San Antonio switching limits was obsolete on September 25, 1995, because the MKT mileposts referred to in the UP tariff item had been removed and new mileposts has been erected. UP indicates that at least 5 years before the parties entered into their settlement agreement, UP replaced and recalibrated the mileposts along the former MKT line on which the STL Terminal is located. UP states that new mileposts have been physically installed along the line, and these recalibrated mileposts were shown on UP's track charts then in effect. According to UP, under the milepost system as it existed at the time of the settlement agreement, and as it exists today, STL Terminal is located between mileposts 254.40 and 254.00, which places it outside San Antonio switching limits. UP maintains that BNSF's request to require UP to list all switching limits and keep BNSF informed of any milepost changes would confuse rather than clarify access issues and would unduly burden UP. BNSF has shown to our satisfaction that STL Terminal was within the switching limits of San Antonio as of September 25, 1995. Under the parties settlement agreement, the geographic limits within which BNSF may serve existing and new transload facilities at San Antonio and other 2-to-1 points are to be determined by reference to designated switching districts in effect on September 25, 1995, when the agreement was executed. As demonstrated by BNSF, an MKT timetable establishes the milepost corresponding to the Travis Yard where STL Terminal was located. BNSF has also shown that, according to UP's switching tariff, the Travis Yard milepost was in the applicable range for the San Antonio switching district. The fact that UP changed the MKT milepost designations before the effective date of the parties settlement agreement does not undermine BNSF's showing. The San Antonio switching limits were not obsolete on that date and were not canceled until June 1998, some 2.5 years after the execution of the settlement agreement. Applicable tariff regulations at the time of the parties agreement mandated the application of tariffs on file with our predecessor, the Interstate Commerce Commission. If we were to adopt UP's position, BNSF and its potential customers would not be able to ascertain whether they were within a particular switching district by means of publicly available information, but instead would have to be privy to data readily accessible only to UP's operating personnel. The information UP adduces here to support its position that the former MKT milepost designation for San Antonio's switching limits was obsolete is a case in point. As BNSF points out, such track chart data are generally not available to UP's competing carriers, nor to UP's shippers. UP maintains, nonetheless, that BNSF should have known that the MKT mileage ranges were inapplicable because documents produced in negotiating access on behalf of another shipper on the very same MKT line revealed that the former mileposts had been reconfigured. However, even if BNSF may have had a basis for determining that the mileposts had been changed, the process for identifying points accessible to BNSF should not depend on such a restricted source of information. Although we agree with BNSF that STL Terminal was situated within San Antonio's switching limits at the relevant time for ascertaining BNSF's access, we will not require UP to list all of its switching limits and keep BNSF informed of any milepost change within the switching limits. These additional filing requirements would be unduly burdensome and unnecessary, and BNSF points to no other specific access dispute that would support its request. If a dispute about switching limits should arise in the future, UP has stated that it will provide BNSF access to the relevant UP tariffs. We believe that UP's assurances of cooperation are sufficient at this time to address BNSF's concerns. Also, while we have here resolved the issue of whether STL Terminal is within the San Antonio switching limits despite the fact that the issue had not been arbitrated by the parties, any further disputes between BNSF and UP arising under their settlement agreement should be arbitrated under the provisions of that agreement before bringing the matter to us to resolve. It is ordered: 1. The BN/SF-85 petition for leave to file a reply is granted. 2. The BN/SF-84 petition for enforcement of merger condition is granted to the extent set forth in this decision. Decided: September 30, 1998 Service Date - October 5, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION Docket No. AB-3 (Sub-No. 123X) MISSOURI PACIFIC RAILROAD COMPANY--ABANDONMENT EXEMPTION-- IN PETTIS COUNTY, MO On September 29, 1995, a decision and notice of interim trail use or abandonment (NITU) was served in the above proceeding, which authorized a 180-day period for the State of Missouri Department of Natural Resources (MDNR) to negotiate an interim trail use/rail banking agreement with Missouri Pacific Railroad Company (MP) for a 2.16-mile segment of rail line between milepost 226.84, near Sedalia, and the end of the line at milepost 229.0, in Pettis County, MO. Extensions of the negotiating period were granted by decisions served April 5, 1996, September 27, 1996, April 18, 1997, September 23, 1997, and March 27, 1998. The negotiating period was scheduled to expire on September 20, 1998. By letter filed September 15, 1998, MDNR requests a 90-day extension of the negotiating period. MDNR states that the parties have reached an agreement in principle regarding conveyance of the portion of the right-of-way between milepost 227.053 and milepost 229.0, and that MDNR has executed a donation and sale contract. MP states that the portion of the line between milepost 226.84 and milepost 227.053 will not be conveyed to MDNR. MP further states that this portion was scheduled to be abandoned effective September 20, 1998. MDNR further states that the parties are continuing to negotiate in good faith to consummate a conveyance/acquisition of the segment of rail line for use as a hiking and biking trail. MDNR adds that an extension is needed to allow railroad management staff additional time to execute the pending donation and sale contract. MP, by letter filed on the same date, agrees to an extension of the NITU. It is ordered: 1. The request to extend the interim trail use negotiating period is granted. 2. The NITU negotiating period is extended to December 19, 1998. Decided: October 1, 1998 Service Date - October 6, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-545 SOUTH ORIENT RAILROAD COMPANY, LTD. ABANDONMENT AND DISCONTINUANCE OF TRACKAGE RIGHTS BETWEEN SAN ANGELO AND PRESIDIO, TX On June 18, 1998, South Orient Railroad Company, Ltd. (SORC), filed an application seeking authority to discontinue service over and abandon the San Angelo-Presidio line extending from milepost 722 near Mertzon station south of San Angelo to milepost 945.3 at Alpine Junction and from milepost 956.7 at Paisano Junction to the end of the line at milepost 1029.1 on the International Bridge near Presidio, a distance of approximately 296.4 miles; and to discontinue its trackage rights over the Union Pacific Railroad Company's (UP) line extending from milepost 945.3 at Alpine Junction to milepost 956.7 at Paisano Junction, a distance of 11.4 miles, for a total distance of approximately 307 miles in Brewster, Crane, Crockett, Irion, Pecos, Presidio, Reagan, Tom Green, and Upton Counties, TX. Notice of the filing of the application was published in the Federal Register on July 8, 1998. SORC filed a supplement to its application on July 29, 1998. The supplement concerns a recent embargo placed on the portion of the line between milepost 1002.9 near Casa Piedra to the end of the line at Presidio. The embargo was necessitated by a fire that damaged a bridge located one mile south of Casa Piedra. The South Orient Rural Rail Transportation District (SORRTD), a political subdivision of the State of Texas responsible for preserving essential rail transportation services, filed a motion to dismiss the application and, in the alternative, a protest. Protests also were filed by the Texas Department of Transportation (TxDOT); the Texas Comptroller of Public Accounts, John Sharp (Comptroller); the Railroad Commission of Texas (RCT); Ferrocarril Mexicano, S.A. de C.V. (Ferromex); Mining Hard Rock Inc. (Hard Rock); and jointly by DinoSoil, Inc. (DinoSoil) and Geronimo Properties, Inc. (Geronimo). Comments opposing the abandonment were filed by the Texas Department of Economic Development (TDED); Ferrocarriles Nacionales De Mexico (Ferrocarriles); the City of Presidio (City); Congressman Henry Bonilla; Congressman Charles W. Stenholm; Texas State Senator Jeff Wentworth; Presidio Appraisal District (Appraisal District); Presidio Independent School District (Independent School District); Garl Boyd Latham; and Elizabeth R. Covos. A request for issuance of a certificate of interim trail use (CITU) was filed by Rails to Trails Conservancy (RTC), and a protest opposing the imposition of a public use or trail use condition was filed by Walter D. Noelke. SORC filed a reply. In addition, waiver requests to file rebuttal to SORC's reply, along with rebuttal statements, were filed by Ferromex and SORRTD. SORC replied to each of these rebuttal statements. Upon review of the record, we conclude that the motion to dismiss should be denied and that the public convenience and necessity is best met by not granting an abandonment but rather approving the discontinuance of SORC's service over the San Angelo-Presidio line and the discontinuance of SORC's trackage rights over the UP line, subject to standard employee protective conditions. Motion to Dismiss. SORRTD argues that the abandonment application should be dismissed because SORC does not own the line, and, therefore, lacks standing to abandon it. TxDOT owns the right-of-way, and SORRTD owns the track, ties, and other track materials. Although SORRTD acknowledges that, on December 30, 1991, it entered into a lease arrangement with SORC that contained an option that would allow SORC to purchase SORRTD's interest in the line after 2 years, SORRTD argues that SORC never exercised the option, and, in any event, the option could not be exercised without SORRTD's Board of Directors adopting an order declaring the property surplus and not needed. Therefore, SORRTD asserts that, at best, SORC holds an unexercised option to purchase the track and related materials in order to preserve rail operations over the line. The motion to dismiss will be denied. The San Angelo-Presidio line was originally part of a 381.9-mile line that was transferred from The Atchison, Topeka and Santa Fe Railway Company (ATSF) in two parts: (1) the right-of-way and other fixed assets were sold to SORRTD; and (2) an exclusive permanent easement and all rights to operate over the line were granted to SORC. SORRTD's acquisition of the fixed assets of the 381.9-mile line was found not subject to the Interstate Commerce Commission's jurisdiction because SORC would retain sufficient ability to provide unrestricted freight service as a rail common carrier and would not be subject to restrictions on abandonment or operational control. Thus, we conclude that SORC is the proper party to seek abandonment or discontinuance authority to extinguish its common carrier obligation to operate the line and also to discontinue its trackage rights operation over the UP line. SORC states that only three of the seven shippers located on the line are active. SORC identifies the active shippers as Belding Farms, Big Lake Gas, and Unimin. Border Mines , DinoSoil, South Orient Partners, and an unidentified company are the inactive shippers on the line. Traffic for these shippers during 1997, the base year, amounted to 276 carloads, consisting predominately of sand and sodium hydroxide. Other commodities handled were oil, bentonite, fertilizer and phosphate, glass, molasses, and sodium sulfur. SORC also handled 857 carloads of overhead or bridge traffic during this period. In addition, 20 UP trains containing a total of 865 carloads were moved over the line in detour service. SORC's estimate of revenues and costs for the forecast year is based on the movement of 280 carloads originating or terminating on the line, as well as 1,132 carloads of overhead traffic (984 for other rail carriers and 148 for SORC stations not on the line subject to abandonment). SORC estimates forecast year revenues of $815,474, based on those traffic levels plus a small amount of other demurrage revenue and other miscellaneous revenue. The forecast year figures do not include any detour traffic from UP. Ferromex estimates forecast year revenues of $1,111,835 but includes $151,536 in revenue for UP detour trains in its forecast year figure of $181,987 under the revenue item consisting of all other revenue and income, which was SORC's base year figure for that revenue item. Ferromex also increases freight revenue originated or terminated on the line, plus bridge traffic (other than UP detour trains) from $779,489 to $929,848. This increase is based on the difference between actual freight revenues and the unaudited income statement for SORC during 1997. In its reply, SORC contends that the actual freight revenue figures are correct because the income statement includes approximately $700,000 of revenue from prior years that was not correctly invoiced until 1997. We find that Ferromex has overstated the revenues for the forecast year by including both revenues from traffic moved in prior years but recorded in 1997 and revenues from UP detour trains, even though no detour traffic is currently moving over the line. Therefore, we accept SORC's revenue projections for the forecast year. Protests regarding the line's potential to transport significant shipments of humate, a natural fertilizer, were filed by Hard Rock, DinoSoil, and Geronimo. SORC did not include estimates for any of these protestants in its forecast year traffic. Hard Rock states that it owns extensive, recently discovered deposits of humate, bentonite, and zeolite in Brewster and Presidio Counties, and has invested over $1 million in preparation of mining and distributing these products domestically and internationally. It anticipates tendering approximately 40 carloads a day, or over 10,000 carloads a year, of humate to SORC at Alpine. Assertedly, Hard Rock has entered into lease agreements with SORC, and its affiliate, Bristol Real Estate, covering spur track and other rail property, to handle these shipments. Specifically, Hard Rock states that it has leased a spur line from SORC at Alpine, purchased 15 acres of rail front property on the Fort Davis highway, and leased a spur track extending from SORC's main line to Hard Rock's facility at Plata in Presidio County. Hard Rock projects that its 1999 income for the Alpine plant will be approximately $10 million and that it expects to transport 100,000 tons of material from its plant. Hard Rock asserts that UP has refused its request to provide rates and service at Alpine. Geronimo, a property holding company, states that it has acquired title to and leases on certain properties containing large deposits of humate in Brewster County and that DinoSoil, the company created to market and distribute the humate, has leased a rail site on SORC's line in Alpine. Assertedly, DinoSoil has spent in excess of $400,000 to develop domestic and international markets for humate during the past 2 years. It is apparently ready to begin shipping traffic and, based on its current contracts, DinoSoil anticipates that by May 1999, it will be shipping 76 covered hopper cars via SORC every other day, which would amount to 13,680 carloads annually. Both Geronimo and DinoSoil state that they also have obtained leases on a UP rail site at Alpine, but have been unable to negotiate rates or car pick-up schedules with UP. Due to the lack of dependable forecasting by UP, DinoSoil submits that it intends to conduct most, if not all, of its rail shipping via the SORC rail site. In reply, SORC states that the protestants identify only six specific sources of new traffic on the line. SORC asserts that these traffic prospects are speculative: four of the six future shippers Hirschfield, Texas Tank, Twin Mountain, and Kasberg were unable to provide any estimate of anticipated rail movements via the line; two other future shippers DinoSoil and Hard Rock provide carload estimates but have not made any commitments to ship via the line, and it is not clear to SORC that their traffic would move south over the Presidio gateway. Furthermore, with respect to DinoSoil and Hard Rock, SORC states that their statements indicate that both companies intend to truck their product to Alpine, where they have direct rail access to UP. We agree with SORC that, in these circumstances, this new traffic projected to begin moving over the line in the future should not be included in our restatement of forecast year revenues and costs. SORC shows an avoidable loss from operations of $720,043, based on its estimate of avoidable costs totaling $1,535,517, which are all on-branch avoidable costs. Avoidable costs are costs that applicant will cease to incur if it abandons and discontinues service over the line. On-branch avoidable costs are shown for: (1) maintenance of way and structures; (2) transportation expenses (consisting of trackage rights fees to UP, crew costs, and fuel and communications expenses); and (3) maintenance of equipment, general and administrative expense, car hire costs, return on value and holding gains for locomotives, and deadheading expenses. No off-branch avoidable costs are shown. Maintenance-of-Way and Structures (MOW). SORC did not provide specific normalized maintenance costs, and rather relied instead on an estimate of approximately $2,500 per mile for a total of $748,776, which represents the normalized maintenance levels necessary to maintain the line at Federal Railroad Administration (FRA) Class 1 safety standards. SORC submits that this is a very conservative estimate because the track is Class 2 or 3 and is maintained at that level. While we agree with SORC that normalized maintenance costs at FRA Class 2 or 3 might be somewhat higher depending on the traffic density of the line, for the purposes of this proceeding, we will accept SORC's estimate of $748,776. Other On-branch Costs. SORC argues that other expenses are also higher than those projected by Ferromex. We agree. Ferromex significantly reduced SORC's projected costs for maintenance of equipment, transportation, and general and administrative expenses. G&A expense, as calculated by Ferromex, is based on the 15% allocation factor, and fails to take into account actual costs. Absent cost data based on actual train runs and mileage, we cannot accept Ferromex's figures. SORC appears to have followed acceptable procedures for allocating these expenses. SORC's calculation of maintenance of locomotives and transportation expenses is reasonable given the number of trips planned for the forecast year. Thus, we accept SORC's estimates for these cost items. SORC states that the line is presently classified as FRA Class 2 and 3 track, with most of the FRA Class 3 track on the north end of the line and most of the FRA Class 2 track on the south end of the line. Speed limits are 25 m.p.h. and 30 m.p.h., respectively. The condition of the line is generally good. However, the track at the south end contains 70 miles of 90-pound rail rolled in 1919 and 75 miles of 70-pound rail rolled in 1912. According to SORC, the rail would not be adequate to handle the type and volume of heavy overhead carload traffic necessary to justify retention of the line. SORC estimates that it would cost approximately $37 million ($19 million and $18 million, respectively) to replace the existing 70- and 90-pound rail with more suitable, new rail of a higher weight. SORC states that there has been no significant tie replacement or surface work done on the line since 1982, and, thus, the ties on the line are in uniformly poor condition. Moreover, at least half of the ties on the southern segment of the line are the original ties from that segment's 1929-1930 construction. According to SORC, only 9% of the ties would be suitable for reuse. The line currently has 11 speed restrictions to 10 m.p.h. because of the poor tie and track surface conditions and SORC anticipates that there will be more slow orders in the future without tie renewals. There are many bridges on the line, most of which are old, short timber trestles. SORC estimates that the repair and maintenance work required in the next 2 years will be approximately $60,000-$100,000. Although SORC does not show any rehabilitation expenses in its revenue and cost data, it does discuss rehabilitation in its application. It contends that a minimal program to replace one of every five ties (624 ties per mile for a total of 185,000) and perform associated surfacing would cost approximately $11 million and that, without rehabilitation, operation of the line would likely cease by the year 2000 or shortly thereafter. We reject SORC's claim that replacement of all 70-pound and 90-pound rail is a necessary part of rehabilitation. We do not accept SORC's replacement of light rail based on its assumption that heavier rail is needed should additional traffic develop. There is no evidence that the condition of the rail is limiting traffic on the line. Because SORC admits that the light weight rail can support the line's current traffic and speeds, we see no need to upgrade the entire line. We agree with SORC that additional ties and surfacing would help in prolonging the rail's life. However, SORC has not provided data to support its figure of $11 million for ties and surfacing. Without detailed data showing costs and the rationale for replacing one in every five ties, we reject SORC's rehabilitation estimate. We accept SORC's bridge repair estimate that $60,000 to $100,000 will be needed to be spent in the next 2 years. Because SORC did not finalize a cost, we accept its most conservative estimate of $120,000 ($60,000 a year for 2 years). In our restatement of the revenue and cost data, we have placed this expense under rehabilitation because it is not a recurring item. Our analysis of the evidence indicates that for the forecast year, total revenue attributable to the line would be $815,474. Total avoidable costs would be $1,535,517, resulting in a forecast year operating loss of $720,043. The record also shows that rehabilitation costs of $120,000 are required to bring the line into conformity with FRA Class 1 standards. As noted above, applicant identifies seven shippers as significant users on the line, but of these, only three are active users Belding, Big Lake, and Unimin. None of these shippers has filed a protest to the abandonment and discontinuance. SORRTD argues that SORC's application for abandonment should be denied on the ground that abandonment of the line is not required or permitted by the future public convenience and necessity. According to SORRTD, SORC's portrayal of the line as incapable of generating sufficient local and overhead traffic to permit it to earn a profit, is baseless and misleading. SORRTD contends that SORC is aware of several potential sources of traffic that would cause operations over the line to be profitable, e.g. DinoSoil, Geronimo, and Hard Rock. In addition, SORRTD cites other sources of potential traffic, namely Hirschfeld, Texas Tank, Twin Mountain, and Kasberg. SORRTD also argues that authorization of the abandonment of the line and the resultant closure of the Presidio gateway would violate the North American Free Trade Agreement's (NAFTA) goal of facilitating the cross-border movement of goods, because the Presidio gateway is the only rail crossing for almost 500 miles along the U.S-Mexico border. SORRTD avers that, given the advantages that the Presidio gateway offers over the other four rail gateways between Mexico and Texas, it makes no sense to permit the abandonment of this vital rail link. Even though this link may have been underutilized in the past, SORRTD argues that this fact has no bearing on the future potential of the line. SORRTD submits that Ferromex is one of two entities that are ready and able to negotiate an arrangement with SORC and SORRTD to guarantee future rail operations over the line. If we were to grant the abandonment, Ferromex (or presumably another carrier) would have to rebuild the entire line, which would compromise its ability to provide cross-border service. While it opposes abandonment, SORRTD states that it does not object to SORC being authorized to discontinue service. However, because the trackage rights over UP's line between Alpine Junction and Paisano Junction are crucial to any future operations over the line, SORRTD objects to SORC being authorized to discontinue service over that segment. TxDOT argues that the line is important not only to rural and sparsely populated areas through which the line runs, but also to the commerce between Mexico and the United States. It states that the line serves as a critical link between the Mexican railroad lines to the south and the United States railroad system to the north and that it is interested in preserving this rail gateway as a means of serving the future transportation needs of the State. TxDOT, like SORRTD, is not opposed to SORC's discontinuance of service on the line. The Comptroller, who is the chief fiscal and revenue official for Texas, states that research and analysis conducted by staff members indicate that the proposed abandonment will have a negative economic impact in the region served by the line. According to the results of a survey of 34 shippers along SORC's line from Presidio to Fort Worth that was conducted between July 17 and July 24, 1998, five employers indicated that they would reduce employment because of the proposed abandonment, eliminating 73 jobs. Other possible impacts include: the relocation of 15 to 20 jobs; the diversion of 150,000 pounds of scrap into local landfills as a result of a San Angelo scrap processor declining business because of the additional cost of shipping its low value, high bulk commodity; and generally increased operating costs that could result in local companies losing business. The RCT states that the line is an integral part of a potentially very important through route that extends from the Dallas/Fort Worth areas to the Mexican port of Topolobompo, which in the future may prove to be an uncongested alternative to the ports of Los Angeles/Long Beach and Oakland/San Francisco. According to the RCT, Presidio is a future gateway that holds significant promise for efficient routing of cross-border rail traffic as the northwestern part of Mexico becomes heavily industialized over the next 20 years and begins to ship huge volumes of manufactured goods to the United States. The RCT asserts that the line proposed for abandonment is a valuable segment of the North American rail system that must be preserved and that to allow the Presidio gateway to be closed would be economically short-sighted and contrary to NAFTA. Hard Rock, Geronimo and DinoSoil express concern that the proposed abandonment will greatly affect the future of their businesses and the Brewster County economy. They state that they recently established facilities in Alpine and that the line was an integral factor in determining the location of these facilities. They state that the growth of their businesses will benefit the economics of the counties and create jobs. Ferromex is a newly privatized Mexican railroad that is owned and controlled by Grupo Ferroviario Mexicano, S.A. de C.V. Grupo Ferroviario Mexicano, S.A. de C.V. is owned by Grupo Mexico, S.A. de C.V. (74%), Constructoras ICA, S.A. de C.V. (13%), and UP (13%). Ferromex connects with SORC at Ojinaga/Presidio and is opposed to the proposed abandonment for the reason that the line provides a vital link between Ferromex and the rail system in the United States and thus is an important means for moving burgeoning commerce between the two countries fostered by NAFTA. It states that the interchange between Ferromex and SORC ended on June 23, 1998, when SORC's bridge 1003.9 was damaged by fire. Ferromex claims that SORC has refused to make repairs and, as a result, it has had to reroute 85 cars to other less direct gateways and presumably, an equal number of southbound cars have had to be rerouted. Ferromex claims that SORC cites the mishap as a further justification for the abandonment of the line. It argues that such bootstrapping should not be countenanced Ferromex states that it is confident of the growth of traffic on the line, especially because of NAFTA. It first began serving the Ojinaga/Presidio gateway in late February 1998, and during its first 3 months of operations, it interchanged with SORC 217 carloads of freight and nearly equal the number of empty cars. The company's confidence in the potential of the Ojinaga/Presidio gateway for the movement of Mexico-U.S. traffic is reflected in its decision to acquire the Topolobompo-Chihuahua-Ojinaga line. Ferromex's planning staff made a projection of the traffic potential on the Chihuahua-Ojinaga line for movement via the Ojinaga/Presidio gateway, which shows that approximately 2,250 additional cars annually originating on the Chihuahua-Ojinaga line would move via Ojinaga/Presidio annually. It states that the Presidio- San Angelo line provides the most direct route between the port of Topolobompo and the city of Chihuahua to Dallas/Fort Worth, and points beyond. Ferromex states that it is ready, willing, and able to operate the line or arrange for a third party to conduct service and is prepared to negotiate with SORRTD to become the line's new operator. TDED is a Texas agency charged with the responsibility for planning and implementing the state's business development and tourism programs. Its duties include assistance with exporting products and services to international markets, assistance with business and community economic development programs, and promotion and development of tourism within the State. According to TDED, the abandonment of the line would be detrimental to the economic interests of the State of Texas and the potential for future growth of trade and tourism between Mexico and the United States, as NAFTA becomes fully operational. TDED states that in addition to alleviating the strain on cross-border traffic, the San Angelo-Presidio line could eventually open a new gateway to the Pacific for Texas by providing train service to the Mexican port city of Los Mochis on the Gulf of Cortez. Finally, TDED opines that there may be the potential for passenger service transportation, including tourism, particularly between Alpine and Presidio. The City acknowledges the financial situation of SORC and that traffic on the line is not sufficient to continue operations. The City states that, although the line is unprofitable now, it may become profitable in the future as rail and motor carrier traffic pick up through the Presidio/Ojinaga area. The City expresses its concern about the future of the line and the physical track and states that, if the line is sold for scrap, there is no future for the line. The Independent School District submits a resolution on behalf of the Board of Trustees of the Presidio Independent School District opposing the proposed abandonment. It states that Presidio County is one of the poorest and most geographically isolated counties in Texas and that the abandonment would have a devastating economic impact on an already improvished economy for Presidio and its residents, especially the children and their future in this community. The Appraisal District submits a resolution on behalf of the local taxing entities of Presidio County opposing the proposed abandonment. It states that Presidio County is one of the poorest and geographically isolated counties in Texas and that the abandonment would have a devastating economic impact on an already impoverished area. Ferrocarriles, on behalf of the Mexican government, opposes the abandonment. It expresses concern that, if economic relationships between Mexico and the United States are to thrive under the NAFTA regime, it is critical that rail transportation, as well as other modes of transportation, be maintained at levels that can meet the demands of shippers in both countries. It states that it would be adverse to the interest of both nations to permit the abandonment of the Presidio/Ojinaga interchange point and the scrapping of a line that forms an essential link between the Mexican and the United States railroad systems. General comments in opposition to the abandonment were filed by Congressmen Henry Bonilla and Charles W. Stenholm. They state that the Presidio/Ojinaga gateway is one of only five rail gateways along the Texas-Mexico border and that preservation of the line is essential to the economic stability of Presidio and west Texas. They also state that, in recent years with the passage of NAFTA, the line has served as a critical facilitator of cross-border trade. State Senator Jeff Wentworth opposes the proposed abandonment and states that continued service on the line is important not only to the economy of the region, but also to the commerce between Mexico and the United States that NAFTA intended to facilitate. Garl Boyd Latham is a private citizen who asserts that the abandonment of the line would be a mistake. He states that, if after considering the record, the Board allows the removal of track between San Angelo and Alpine, it should retain the route from Paisano Junction to the Mexican border. Mr. Latham states that, with the continued interest in Texas/Mexico trade, we should not allow abandonment of one of only three trans-Texas railroad routes at the same time that there are serious ongoing discussions about building a new interstate freeway (69 through east Texas) to help handle NAFTA traffic. Elizabeth R. Covos is a resident of the area served by SORC and states that she is opposed to the proposed abandonment. She contends that continued service on the line is important not only to the economy of the region, but also to the commerce between Mexico and the United States that NAFTA was intended to facilitate. According to SORC, shippers who use its services for the movement of overhead traffic to and from Mexico will have numerous other options, including service from UP and The Burlington Northern and Santa Fe Railway Company via the El Paso gateway, and, to a lesser extent, via the Eagle Pass, Laredo, and Brownsville gateways. Shippers on the line will continue to have access to rail service from SORC at San Angelo and from UP at Alpine. SORC submits that local shippers also have effective motor carrier service available because U.S. Route 67 parallels the entire length of the line, Interstate 10 bisects the line and provides direct access to Fort Stockton, as does U.S. Route 285, and Alpine is located on U.S. Route 90. All other locations on the line are served by at least one additional U.S. or Texas state route. The statutory standard governing an abandonment or discontinuance is whether the present or future public convenience and necessity permit the proposed abandonment or discontinuance. We must balance the potential harm to affected shippers and communities against the present and future burden that continued operations could impose on the railroad and on interstate commerce. The Board must determine whether the burden on the railroad from continued operation is outweighed by the burden on the shippers and public parties from the loss of rail service. This involves a question of whether, and to what degree, shippers will be harmed if rail service is no longer available. The fact that shippers are likely to incur some inconvenience and added expense is insufficient by itself to outweigh the detriment to the public interest of continued operation of uneconomic and excess facilities. Protestants must show that the harm to shippers and communities outweighs the demonstrated harm to the railroad and interstate commerce by continued operation of the line. In determining whether to grant or deny an abandonment or discontinuance application, we consider a number of factors, including operating profit or loss, other costs the carrier may experience (including opportunity/economic cost), and the effect on shippers and communities. No one factor is conclusive. As we discussed in connection with the motion to dismiss, there is some question about whether SORC's option to purchase the track is viable. While the question does not affect our jurisdiction to consider the application, it does impact opportunity costs, which the parties have addressed at length. If there is no state law impediment to SORC's exercise of the option, then it is extremely valuable, giving SORC the right to acquire, at minimal cost, track materials which it values at over $15 million. If it has no such right, then it has no opportunity costs. While opportunity costs are important when forecast year operating losses are marginal, the record here shows that continued operation of the line will impose a substantial economic burden on SORC, involving a forecast year operating loss of $720,043. Thus, it is obvious that, even without considering opportunity costs, SORC cannot continue to operate the line without incurring heavy losses. In deciding to grant a discontinuance and deny abandonment, we have considered a number of factors, including the potential harm to shippers. We note that none of the three active users of the line has appeared in opposition. However, two potential shippers, Hard Rock and DinoSoil, have presented evidence of possible substantial future traffic for the line. Hard Rock estimates that it would ship 40 carloads a day via SORC; DinoSoil projects shipping 76 carloads every other day. Although they have made no firm commitment of a specific amount of traffic they would ship over SORC, Hard Rock and DinoSoil both have made investments in rail facilities at Alpine, which they state they intend to use to tender traffic to SORC. In addition, SORRTD has submitted verified statements from four additional shippers who state that their businesses are expanding and that they would tender traffic to SORC. While this evidence falls short of assuring us that substantial traffic will be shipped over the line in the near future, it weighs in favor of keeping the track in place. We have also considered the legitimate concerns of protestants about the effect of an abandonment on the local communities, the larger region, and the free trade objectives of NAFTA. We are extremely concerned about maintaining adequate rail facilities and infrastructure. We are also mindful of our responsibility to ensure that our actions foster the goal of North American economic integration embodied in NAFTA. In light of the shippers evidence of potential traffic, the protestants concerns that the line remain intact, and Ferromex's willingness to operate the line, we have decided that the public convenience and necessity is best met by approving discontinuance of SORC's service over the San Angelo-Presidio line and the discontinuance of SORC's trackage rights over UP's line. This will permit SORC to curtail the avoidable losses projected by continued operation, while allowing SORRTD to continue to explore the possibility of substituting Ferromex or another carrier as operator of the line. If traffic projections do not come to fruition, SORC can of course seek abandonment in the future. By contrast, if the abandonment were approved and consummated and were the line to be salvaged, there would be no possibility (without incurring the costs of reconstructing the line) that SORC or a new operator could serve the shippers if the forecasted need for service proves accurate. In these circumstances, approval of abandonment of the San Angelo-Presidio line is not warranted at this time. Any financially responsible person (and all government agencies are deemed to be financially responsible) may file an offer of financial assistance (OFA) to subsidize the losses of the existing operator. In permitting SORC to discontinue operations over the line, including its trackage rights operations over the 11.4-mile segment owned by UP, we recognize that, unless service is continued by virtue of an OFA, there is a potential issue of access by a new service operator over the UP-owned segment. Should a replacement operator be found, we expect UP to be cooperative in facilitating the necessary access so that service over the entire line at issue in this proceeding is possible. SEA indicated: (1) that the U.S. Department of Commerce, National Geodetic Survey (NGS) has identified 172 geodetic station markers along the rail line that may be affected by abandonment and requests that it be notified 90 days in advance of any activities that may disturb or destroy these markers so that plans can be made for their relocation; and (2) that, based on information available at this time, it appears that the Texas Historical Commission (SHPO) and the U.S. Army Corps of Engineers, Fort Worth District, (the Corps) have not completed their review. Therefore, SEA recommends that we impose conditions on any grant of abandonment authority requiring that SORC shall: (1) notify NGS and provide it with 90 days notice prior to disturbing or destroying any geodetic markers so that plans can be made for their relocation; (2) retain its interest in and take no steps to alter any sites and structures on the line that are 50 years old or older until completion of the section 106 process of the National Historic Preservation Act; and (3) not undertake any salvage activities until the Corps has completed its review and the Board has modified or removed this condition as a result of the Corps review. RTC requests issuance of a CITU pursuant to the National Trails System Act, to enable it to acquire that portion of the right-of-way between milepost 722 south of San Angelo near Mertzon Station and milepost 945.3 at Alpine Junction and between milepost 956.7 at Paisano Junction and milepost 1029+767 feet at the end of the line near Presidio Station for interim trail use as recreation and transportation facilities. While the right-of-way may be suitable for other public purposes, we have approved only discontinuance of service and discontinuance of trackage rights. The potential use of the right-of-way for rail purposes will preclude other public uses, including use as a trail. We find: 1. The present or future public convenience and necessity permit the discontinuance of service over the San Angelo-Presidio line and the discontinuance of trackage rights over the UP line, as described above, subject to the employee protective conditions in Oregon Short Line R. Co. Abandonment Goshen, 360 I.C.C. 91 (1979). 2. Discontinuance of service over the line and the discontinuance of trackage rights will not have a serious, adverse impact on rural and community development. 3. As conditioned, this action will not significantly affect either the quality of the human environment or the conservation of energy resources. It is ordered: 1. SORRTD's motion to dismiss the application is denied. 2. Ferromex's and SORRTD's petitions for leave to file replies to SORC's reply are denied and their tendered replies and SORC's further reply are rejected. 3. The discontinuance of service and the discontinuance of trackage rights over the above-described lines is granted subject to the conditions specified above. 4. The request for issuance of a CITU is denied. 5. Provided no OFA has been received, this decision will be effective November 5, 1998. Decided: October 5, 1998 Service Date - Late Release October 6, 1998 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33653] Port of Benton--Acquisition and Operation Exemption--U.S. Department of Energy Rail Line in Richland, WA The Port of Benton, a noncarrier, of Richland, WA, has filed a notice of exemption to acquire the rail line assets of the U.S. Department of Energy (DOE) to operate a rail line approximately 17 miles long known as the Hanford Site Rail System, Southern Connection, extending from milepost 46, at the junction with Union Pacific rail line in Kennewick, WA, to milepost 29, at the DOE Hanford Site, connecting with the Hanford Site Rail System, Northern Connection (north of the City of Richland). The transaction is expected to be consummated on October 1, 1998. Decided: September 29, 1998. Service Date - October 6, 1998 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33659] Toledo, Peoria & Western Railway Corporation--Corporate Family Transaction Exemption-- Marksman Corporation Toledo, Peoria & Western Railway Corporation (TPW Railway), a Class III rail common carrier, has filed a notice of exemption to lease, by assignment, 17 miles of rail line from Marksman Corporation (Marksman), a Class III rail carrier, between milepost 183 near Monterey, IN, and milepost 199 near North Judson, IN (the Rail Line). The Rail Line is now leased from J.K. Lines, Inc., by Marksman. Marksman owns 100% of the capital stock of TPW Railway. TPW Railway plans to operate as well as lease the Rail Line. The earliest the transaction could be consummated was September 17, 1998. The purpose of the transaction is to simplify the arrangements for the operation of the Rail Line. Prior to filing the notice, TPW Railway already performed operations on the Rail Line on behalf of Marksman pursuant to an unwritten agreement with Marksman. Assignment of the lease to TPW Railway will allow it to assume common carrier responsibilities in conjunction with its other rail operations. Decided: September 29, 1998. Service Date - October 6, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-167 (Sub-No. 1164X) CONSOLIDATED RAIL CORPORATION ABANDONMENT EXEMPTION IN ERIE COUNTY, NY STB Docket No. 42028 BUFFALO CRUSHED STONE, INC. v. R.J. CORMAN RAILROAD COMPANY/ALLENTOWN LINES, INC. AND R.J. CORMAN COMPANIES In this decision, we are denying a petition to revoke in STB Docket No. AB-167 (Sub-No. 1164X) and dismissing a complaint in STB Docket No. 42028. By notice of exemption in STB Docket No. AB-167 (Sub-No. 1164X), which was published in the Federal Register on July 23, 1996, Consolidated Rail Corporation (Conrail) invoked the class exemption to abandon 5.10 miles of railroad lines in Erie County, NY, consisting of the 4.5-mile Walden Running Track between mileposts 414.00 and 418.50 (herein, the Walden Line) and the .06-mile JD Industrial Track (JD Line) between mileposts 0.00 and 0.60. On August 19, 1996, R.J. Corman Railroad Company/Allentown Lines, Inc. (RJCN) filed an offer of financial assistance (OFA) to acquire the Walden Line and the JD Line from Conrail. In a decision served September 30, 1996, the Board issued a decision approving RJCN's purchase of the lines for continued rail service. RJCN is a rail carrier that is controlled by Richard J. Corman, who also controls other short line railroads. Mr. Corman also owns several noncarrier companies, including R.J. Corman Company/Material Sales (Material), which operates a rail material supply business. Mr. Corman's corporate family is designated as the R.J. Corman Companies (Corman). Material operates material yards in Gary, IN; Celina and Dover, OH; Northeast, Tyrone and Allentown, PA; and South Bethlehem, NY, and it has a sales and marketing office in Bridgeville, PA. The Allentown material yard is served by RJCN. The Celina, Dover and Tyrone yards are served by other railroads affiliated with RJCN. On March 9, 1998, Buffalo Crushed Stone, Inc. (BCS) filed a petition seeking to vacate Conrail's notice of exemption claiming that the notice contains false or misleading information. BCS also seeks to revoke the transfer of the line to RJCN under the OFA procedures. The eastern end of the Walden Line runs through BCS's Wehrle Drive stone quarry at Bowmansville, NY. BCS contends that Conrail's notice of exemption falsely certified that no local traffic had moved over the lines for at least two years. BCS submitted copies of waybills showing that Conrail moved 3 carloads of crushed stone from BCS's quarry over the Walden Line on October 25, 1994. These movements occurred during the 2-year period for which Conrail had certified that no local traffic had moved on the line. BCS asserts that Conrail's notice of exemption should, therefore, be declared void. Furthermore, BCS maintains that the authorization for the sale of the lines to RJCN should be revoked because that transaction was predicated on Conrail's improperly filed notice of exemption. If authorization for the sale is not revoked on that basis, BCS asserts that the Board should still vacate the authorization granted RJCN to acquire the lines because, allegedly, RJCN has not provided service as required. BCS submitted a verified statement from Joseph S. Laraiso, BCS's Executive Vice President, to support its contention that BCS tried unsuccessfully to obtain rail service from RJCN. According to Mr. Laraiso, in October 1997, BCS received requests for 15 carloads of ballast from two customers located on Conrail's lines in Buffalo. Mr. Laraiso states that BCS asked both Conrail and RJCN to provide cars to BCS and to quote rates for these movements which amounted to 3 miles. Mr. Lariaso indicates that Conrail quoted a price of $325 per carload to deliver ballast from BCS's quarry to one customer and a price of $450 per carload to deliver ballast to the other customer. Mr. Laraiso noted that Conrail's rate quote did not include RJCN's charges to use the Walden Line. Mr. Laraiso states that RJCN submitted a tariff quoting a rate of $950 per car to permit Conrail to operate over the Walden Line to move the shipments. In addition, Mr. Laraiso asserts that RJCN demanded that BCS prepay the charges in full before Conrail would be allowed to pick up the shipments. Mr. Laraiso claims that RJCN's quoted rate is unreasonably high. As a result, he states that BCS lost the sales because it was unable to quote a reasonable delivered price for the ballast. Mr. Lariaso also avers that the Walden Line could not have been used because portions of the track have been removed and grade crossings at Harris Hill Road and Sonwil Drive have been paved over. He notes that Conrail had indicated it could not provide cars for the requested movements because the Harris Hill Road grade crossing was blocked. In its response, Conrail acknowledges that it handled six carloads on the Walden Line in 1994 and that it erred when it certified that there had been no local traffic moved within 2 years. It claims that the error was inadvertent, and that the certification was made in good faith. Conrail maintains, however, that the notice and subsequent sale of the lines to RJCN should not be vacated. Conrail asserts that it has been brought into BCS's dispute with RJCN only because of a technical deficiency in the notice of exemption. According to Conrail, BCS is not claiming that it would have opposed Conrail's abandonment, if it had realized that traffic moved over the lines during the 2-year period. Rather, Conrail claims that BCS is seeking to void the abandonment exemption as a means of removing RJCN as the operating rail carrier. In Conrail's view, voiding the abandonment would not address BCS's asserted need for rail service. If the abandonment were voided, Conrail states that it would reinstitute abandonment proceedings and likely obtain abandonment authorization either through a petition for exemption or an application. Conrail submitted a verified statement from Mr. Charles Samul, Conrail's Manager of Line Sales, indicating that shortly after Conrail filed its notice of exemption, he was contacted by BCS's attorney who asked whether Conrail was willing to sell the line to BCS. According to Mr. Samul, Conrail would have considered any bona fide offer to purchase. Mr. Samul states that BCS was mainly concerned about being able to cross the track to access one of its quarries. Conrail further asserts that BCS took no part in the abandonment proceeding and the OFA process when Conrail negotiated the sale of the line to RJCN. Conrail claims that BCS was aware of the proposed abandonment and apparently was not concerned about the prospect that rail service would be discontinued or provided by another carrier. According to Conrail, permitting BCS a second opportunity to oppose the abandonment and sale of the line almost two years after it filed for abandonment would be grossly unfair to Conrail and RJCN, who assertedly relied on BCS's silence when RJCN acquired the line. Conrail further claims that permitting BCS to come forward at this time would undermine the Board's abandonment procedures by giving any party the opportunity to undo consummated abandonments and OFA transactions. Conrail further claims that BCS's delay in filing its petition is egregious. Conrail maintains that the Board should leave the abandonment exemption intact but fashion a remedy that would serve BCS's interests without undoing this transaction, which is now more than a year old. Conrail submitted a new petition for exemption and requests that, if the Board decides to void the notice of exemption, the petition be approved, thereby preserving the sale of the line to RJCN. In its response, RJCN submitted a verified statement of its former president, M.W. Grubb. Mr. Grubb testifies that, before acquiring the lines from Conrail, his predecessor, Thomas R. Hammerstone, met with BCS to discuss RJCN's planned acquisition of the line. According to Mr. Grubb, RJCN made arrangements to lease BCS property for Material to use for a material yard. RJCN intended to serve Material and would also serve BCS and any other shipper which located on the line at competitive rates. According to Mr. Grubb, BCS was primarily interested in gaining access to its quarry on the eastern portion of the line. Mr. Grubb stated that RJCN indicated it would grant BCS an easement or other rights to enter and cross the rail line and would consider selling the property to BCS. Mr. Grubb noted that BCS did not seek to enter into a transportation contract with RJCN and did not indicate that it was concerned about rail service or rate matters. He indicates that BCS's primary concern at that time was the land use issues associated with the line. Mr. Grubb states that Material began operating the material yard shortly after RJCN acquired the lines from Conrail. According to Mr. Grubb, Material received three carloads of traffic in January 1997 and one carload in March 1997. He states that, on March 11, 1997, Material was sent a letter from the Town of Lancaster stating that the material yard was operating in violation of Town Approvals and threatening fines and imprisonment for further violations. Contending that BCS was responsible for the permitting requirements, RJCN and Material requested that BCS resolve the Town's objections. According to Mr. Grubb, BCS attempted to correct the situation, but the permits that it ultimately obtained did not allow Material to successfully operate the material yard on the leased site. Mr. Grubb states that Material closed the facility and relocated its material sales yard to Erie, PA, in May 1997. Mr. Grubb maintains that BCS has never shipped any traffic while RJCN owned the line. He acknowledges that RJCN provided BCS with a rate quote for a movement of ballast from the BCS Werhle Road quarry to two locations in the Buffalo area. He states that BCS did not tender traffic in response to the rate quote and has not asked for any additional quotes or tendered any traffic since that time. Mr. Grubb states that RJCN inspected the property in November of 1996 and 1997 and determined that the line was in safe condition for rail operations. According to Mr. Grubb, RJCN temporarily paved over the Harris Hill Road grade crossing, in response to local complaints. He states that, on November 17, 1997, the grade crossing was reopened to rail traffic, although none has been tendered. RJCN disputes BCS's claim that RJCN removed the Sonwil Drive grade crossing. He states that RJCN was not aware of the crossing's removal and will re-install the crossing when and if necessary to reach a rail customer on the relevant portion of the lines. RJCN asserts that voiding Conrail's abandonment exemption would be unjustified and unfair and would undermine the class exemption process for abandonments. Even if the Board finds that remedial action is somehow necessary or desirable for Conrail's abandonment exemption, RJCN argues that there is no reason why that action should undo RJCN's long-since consummated purchase of the line under the OFA procedures. RJCN further indicates that its lease of BCS property for a material yard is involved in a court action filed by BCS on October 7, 1997, against RJCN, Material, and Corman. RJCN says that BCS's suit states that BCS agreed that it would: (1) not oppose Conrail's abandonment and Corman's purchase of the lines; (2) offer to lease a 7-acre parcel of land adjacent to the right-of- way for use as a material yard and; (3) obtain, at its expense, all government permits for use of the land, and that it would improve the parcel, at Corman's expense. BCS alleges that Corman agreed that, in exchange, it would: (1) sell BCS the portion of the track and right-of-way running across BCS property; (2) allow BCS undisturbed use and unlimited access across the right-of- way by easement until BCS acquires the property; (3) provide rail transportation to BCS; (4) lease the 7-acre parcel for use as a material yard; and (5) give BCS the right of first refusal of any interest in the entire trackage acquired from Conrail. BCS further alleges that Material closed the yard and abandoned the leased parcel and that RJCN has cut off rail access to BCS. BCS claims actual damages of $100,000, anticipated damages of $20 million and punitive damages of $10 million. On April 29, 1998, BCS replied to Conrail's request to convert its notice of exemption into a petition for exemption and to Conrail's request that we grant the petition. BCS asserts that Conrail has not presented sufficient evidence to show that the line was unprofitable or that the abandonment was in the public interest. BCS further claims that granting the exemption retroactively would also harm BCS. BCS asserts that Conrail did not offer it the opportunity to purchase the line, despite its alleged desire to do so. In support, BCS submitted a supplemental statement by Mr. Laraiso indicating that, when Conrail was considering RJCN's OFA, an official of Conrail had stated that Conrail would not consider an offer by BCS to acquire the line. BCS asserts that, as a result of Conrail's statements and RJCN's assurances that it would provide service, BCS did not file an OFA or oppose Conrail's exemption request. BCS disputes that it intentionally delayed discovering facts to support its petition to revoke the exemption. BCS asserts that it first learned that Conrail filed the notice of exemption on August 5, 1996, three days after the deadline for filing an OFA. Further, BCS states that it relied on statements by Conrail that the line would be sold to another carrier and that it also relied on RJCN's assurance that it would provide rail service. As a result, BCS states that it did not have reason to investigate its records or seek to revoke the exemption. BCS asserts that it investigated the matter only after RJCN's assurances were assertedly determined to be worthless and misleading. BCS argues further that Conrail should not be granted a retroactive exemption, but should be required to submit sufficient information to justify granting the exemption and that BCS should be allowed the opportunity to contest the abandonment exemption. If the abandonment exemption were subsequently granted, BCS asserts that it should be given the opportunity to file an OFA to acquire the line. On March 6, 1998, BCS also filed a complaint against RJCN and Corman in STB Docket No. 42028, alleging that RJCN and Corman refused to serve BCS under rates and conditions equivalent to those offered to other similarly situated shippers, and by discriminated against BCS. The discrimination alleged is that RJCN and Corman demanded that BCS prepay all rates, which allegedly were so high that they precluded service, and, as an apparent prerequisite for BCS receiving rail service, forced BCS to sell a parcel of real estate to Corman for nominal consideration. BCS further charges that RJCN and Corman refused to provide service on the Walden Track on reasonable demand for the 2-year period required. BCS alleges further that RJCN and Corman violated section 11101(a) by blocking access to the Walden Track. As relief, BCS requests that the Board require that RJCN grant BCS trackage rights over the Walden Track to enable BCS to obtain common carrier service from a carrier of its choice to serve its quarry at Bowmansville. BCS also seeks damages for lost sales resulting from RJCN's alleged refusal to provide common carriers service. RJCN filed an answer to the complaint on April 10, 1998. On April 17, 1998, RJCN filed a motion to dismiss the complaint. In its motion to dismiss, RJCN asserts that BCS's complaint involves the proposed movement of crushed stone, a commodity which has been exempted from the Board's rate jurisdiction. RJCN contends that BCS must first seek to revoke the exemption before the Board could even consider its complaint. RJCN further asserts that BCS's complaint about rate reasonableness is defective because it does not allege that RJCN has market dominance over the transportation of crushed stone from BCS's quarry. RJCN further disagrees that it refused to provide service to BCS, claiming that it offered to provide rail service, but that BCS elected not to use that service because it believed rates were too high. RJCN also asserts that BCS's complaint improperly included as parties every RJCN affiliate, including its noncarrier individual owner. RJCN asserts that the complaint should be narrowed to actions taken by RJCN, and should not include RJCN's carrier and noncarrier affiliates who are far removed from the Walden line. Responding to RJCN's motion to dismiss, BCS states that even though the commodities it proposed to ship are exempt, RJCN still has a common carrier obligation to provide service and that RJCN has failed to provide service. BCS presented an additional statement from Mr. Laraiso, who submitted photographs showing that the grade crossings at Harris Hill Road and Sonwil Drive have not been repaired as claimed by RJCN. Mr. Laraiso indicates that RJCN does not have locomotives or equipment near the line and argues that RJCN could not provide service even if requested. He states further that RJCN has made no effort to generate traffic or solicit new business and has not established any facilities to make rail service available, or to provide rail service to any other shipper. Mr. Laraiso suggests that RJCN may be holding the line for salvage. These actions allegedly prevent BCS from using rail service. He claims that BCS is losing business opportunities, and notes that BCS has made preliminary market studies showing potential customers that can receive products by rail. BCS states that the line is not available if BCS needed to move mining machinery or other nonexempt commodities on the line. BCS further asserts that it is not challenging the reasonableness of RJCN's rates per se, but rather, is asserting that RJCN is using unreasonable rate demands as a means of avoiding its obligation to move traffic on the Walden Track. These facts, which BCS claims must be presumed to be true, support the complaint. BCS further states that RJCN should submit evidence to clarify the identities and involvements of its affiliates with the Walden Line. RJCN's surreply addresses the status and condition of the Harris Hill Road grade crossing, which assertedly is on the portion of the Walden Line that would be used to operate trains to and from BCS's Wehrle Drive quarry. A verified statement from William H. Wilson, RJCN Roadmaster, reaffirms that RJCN repaired the crossing on November 17, 1997. He indicates, however, that a recent inspection confirms that the crossing was covered again with a light covering of asphalt. He states that the repaving of the crossing occurred after November 17, 1997, and was not performed with RJCN's knowledge or direction. He indicates further that RJCN made inquiries from local and county authorities but was unable to find out who repaved the crossing. Mr. Wilson states that, if a request for rail service is made, RJCN crews can reopen the crossing in one day. Petition to Vacate and Revoke. When it is shown that a carrier falsely certifies that no traffic moved on a line, the notice of exemption is normally declared void and the notice is vacated. No previous cases, however, involved a subsequent sale pursuant to an offer of financial assistance. Were we to revoke the exemption as requested by BCS, our action would not only adversely affect Conrail, but it would also negate a purchase by an innocent third party, RJCN, which invoked section 10904 in the good faith belief that, if it complied with the statutory standards and procedures, it would acquire the line. To hold otherwise would not only work unjustifiable injury to bona fide purchasers such as RJCN, but also would undermine section 10904. Purchasers acquiring lines under that provision would have to worry that their rights to the lines they acquire might be abrogated months and perhaps years later because of some defect in the underlying abandonment. Our practice of revoking abandonments authorized pursuant to the class exemption is predicated on the need to maintain the integrity of the applicable regulations. But that purpose is not served when upholding the class exemption can only be achieved at the expense of derogating section 10904 of the statute. BCS also claims that RJCN refused to provide common carrier service over the Walden Track. The facts of record do not support this allegation. The record indicates that RJCN acquired the Walden Line to provide rail service to its affiliate, Material, at its material yard which was to locate on the line. RJCN was also willing to handle any additional traffic generated by BCS or other potential customers. Material began operating the material sales yard and began receiving rail traffic in January 1997. Because of a local permitting problem, Material subsequently closed the facility and relocated its material sales yard in March 1997. Since then, the line has not been used for rail service. Had Material remained on the line, it appears that the line would still be actively operated. But there is nothing in the record to indicate that BCS would have used the line. In any event, the record indicates that RJCN was and is ready and able to provide rail service to BCS and other shippers on the Walden Line, if service were or is requested. In addition, the party seeking revocation, BCS, was also the party tendering the shipments to Conrail during the two-year period prior to the filing of the notice of exemption. BCS thus had actual knowledge of the fact that shipments had moved during that period, but did not challenge the notice in a timely fashion. While we need not decide whether that fact, standing alone, would suffice to deny the petition to revoke the exemption, it does support our decision to deny the petition. Because we are denying the petition to revoke, we need not decide Conrail's petition for exemption to abandon the line. Motion to Dismiss Complaint. In considering a motion to dismiss, we construe the factual allegations in a light most favorable to the complainant. We may dismiss a complaint when we determine that it does not state reasonable grounds for investigation and action. In our view, BCS's complaint fails to state reasonable grounds for Board action, even if the alleged facts are presumed to be true and are considered in the light most favorable to BCS. BCS claims that it is a shipper seeking rail service, but the facts of record indicate differently. As we noted, the record shows that BCS has not shipped any traffic on the line in more than 3 years. Its last shipment was moved on November 15, 1994. The only traffic that RJCN handled on the line were the four shipments moved for Material in January and March, 1997. The record shows that BCS asked for a rate quote from RJCN and received a rate quote tariff from RJCN, but there is nothing in the record indicating that BCS tendered traffic to move on the line at that time. Nor is there evidence that BCS discussed with RJCN using the line. We cannot find that one rate quote provided to a previously inactive shipper amounts to a refusal to provide service. Even though the line is currently inactive, RJCN continues to have a common carrier obligation to provide rail service upon request. That obligation continues until appropriate abandonment authority is granted. The line at issue is physically separate from other RJCN lines and the lines of other affiliated carriers. Given that the line is inactive, RJCN need not keep equipment or employees located near the line. However, RJCN acknowledges that it continues to have a common carrier obligation to provide service and indicates that it will provide service if requested. There is no indication in the record that the line is physically unable to carry traffic. Rather, RJCN's evidence shows that the line has been inspected and has been determined to be safe to operate. BCS has shown that the grade crossing at Harris Hill Road, which is on the portion of the line serving BCS's quarry, is currently paved over. However it does not appear that RJCN is responsible for the current blockage. In any event, the grade crossings can be restored quickly if rail service is resumed on the line. Moreover, BCS does not question the quality of the remainder of the line. We also agree with RJCN that, before we could consider BCS's complaint alleging that the rate quoted by RJCN was unreasonable, BCS must first petition to revoke the exemption which applies to rail shipments of crushed stone. Even though BCS states that it is not seeking a rate prescription or challenging the reasonableness of the quoted rate, we first have to reassert jurisdiction over the rate before we can address BCS's objections to the quoted rate. Thus, BCS must show that revocation of the exemption is warranted. We note that BCS has also alleged in its complaint that RJCN has attempted to require BCS to purchase a parcel of land adjacent to the track as a prerequisite for receiving rail service. This issue is being litigated in the court suit brought by BCS against RJCN, Material and Corman. We see no need to address this matter here. Nor do we need to address the question of whether Corman's affiliates are proper parties here. Finally, in its requested relief, BCS has asked that we require RJCN to grant it trackage rights so that BCS could either obtain common carrier service from another carrier or operate common carrier service itself. Ordinarily, we have no jurisdiction to compel a rail carrier to acquire or grant trackage rights to another carrier. While we can impose trackage rights as a condition to a rail consolidation or in a terminal area, these circumstances are not present here. We find that we lack jurisdiction to grant BCS trackage rights relief here. Having considered the record, we find that the complaint does not state reasonable grounds for Board action. Therefore, we will grant RJCN's motion to dismiss the complaint. It is ordered: 1. BCS's petition to revoke the notice of exemption is denied. 2. RJCN's motion to dismiss the complaint in STB Docket No. 42028 is granted. Decided: September 28, 1998. Service Date - October 7, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION AND NOTICE OF INTERIM TRAIL USE OR ABANDONMENT STB Docket No. AB-550X R.J. CORMAN RAILROAD COMPANY/ALLENTOWN LINES, INC.-- ABANDONMENT EXEMPTION--IN LEHIGH COUNTY, PA R.J. Corman Railroad Company/Allentown Lines, Inc. (RJCN) filed a notice of exemption to abandon a 1.945-mile line of railroad known as the Barber's Quarry Industrial Track between milepost 93.144 in the vicinity of Union and 3rd Streets in Allentown and milepost 95.089 in the vicinity of Lawrence Street and Lehigh Parkway in the township of Salisbury, Lehigh County, PA. Notice of the exemption was published in the Federal Register on September 8, 1998. The exemption is scheduled to become effective on October 8, 1998. The Board's Section of Environmental Analysis (SEA) has issued an environmental assessment (EA), served September 18, 1998. In the EA, SEA indicates that the National Geodetic Survey (NGS) has identified two geodetic station markers that may be affected by the proposed abandonment. NGS states that it must be notified 90 days in advance of any activities that would disturb or destroy these markers. Therefore, SEA recommends that a condition be imposed requiring RJCN to consult with the NGS and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers. SEA also indicates that the right-of-way may be suitable for other public use following abandonment. By petition filed September 14, 1998, the County of Lehigh, PA (County) filed a request for issuance of a notice of interim trail use (NITU) for the entire line under the National Trails System Act, and for a public use condition so that it could negotiate with RJCN for acquisition of the right-of-way for use as a recreational trail. The County requests that RJCN be prohibited from disposing of the corridor, other than the tracks, ties and signal equipment, except for public use on reasonable terms, and that RJCN be barred from removing or destroying any trail-related structures, such as bridges, trestles, culverts and tunnels, for a 180-day period from the effective date of the abandonment exemption. The County states that it needs the full 180- day period to review title information, complete a trail plan, and commence negotiations with RJCN. The County submitted a statement indicating its willingness to assume financial responsibility for the 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 payment of taxes for, the right-of-way, and acknowledged that the use of the right-of-way for trail purposes is subject to future reactivation for rail service. By letter filed September 24, 1998, RJCN indicated its willingness to negotiate with the County for interim trail use and public use for a period of 90 days. A NITU will be issued. The parties may negotiate an agreement during the 90-day period prescribed below. If the parties reach a mutually acceptable final agreement, no further Board action is necessary. If no agreement is reached within 90 days, RJCN may fully abandon the line. As an alternative to interim trail use under the Trails Act, the right-of-way may be acquired for public use as a trail. To justify a public use condition, a party must set forth: (i) the condition sought; (ii) the public importance of the condition; (iii) the period of time for which the condition would be effective; and (iv) justification for the imposition of the period of time requested. The County has satisfied these requirements and, therefore, a 90-day public use condition will be imposed commencing with the effective date of the exemption. Because section 10905 permits a maximum of 180 days from the effective date of the exemption for a pubic use condition, should a resolution not be reached through negotiations within the 90-day period, the County may request an extension of up to 90 additional days for the public use condition. When the need for interim trail use/rail banking and public use is shown, it is the Board's policy to impose both conditions concurrently, subject to the execution of a trail use agreement. If a trail use agreement is reached on a portion of the right-of-way, RJCN must keep the remaining right-of-way intact for the remainder of the 90-day period to permit public use negotiations. Also, a public use condition is not imposed for the benefit of any one potential purchaser, but rather to provide an opportunity for any interested person to acquire the right-of- way that has been found suitable for public purposes, including trail use. Therefore, with respect to the public use condition, RJCN is not required to deal exclusively with the County, but may engage in negotiations with other interested persons. It is ordered: 1. This proceeding is reopened. 2. Upon reconsideration, the notice of exemption served and published in the Federal Register on September 8, 1998, exempting the abandonment of the line described above is modified to the extent necessary to implement interim trail use/rail banking as set forth below, subject to the conditions that RJCN shall: (a) consult with the NGS and provide NGS with 90 days notice prior to disturbing or destroying any geodetic markers; and (b) keep intact the right- of-way underlying the track, including bridges, trestles, culverts and tunnels (but not track or track materials), for a period of 90 days from the October 8, 1998 effective date (until January 6, 1999), to enable any state or local government agency, or other interested person to negotiate the acquisition of the line for public use. If an interim trail use/rail banking agreement is executed before the expiration of the 180-day period specified above, the public use condition will expire to the extent the trail use/rail banking agreement covers the same line. 3. If an interim trail use/rail banking agreement is reached, it must require the trail user to assume for the term of the agreement, full responsibility for management of, for any legal liability arising out of the transfer or use of (unless the user is immune from liability, in which case it need only indemnify the railroad against any potential liability), and for the payment of any and all taxes that may be levied or assessed against the right-of-way. 4. Interim trail use/rail banking is subject to the future restoration of rail service and to the user's continuing to meet the financial obligation for the right-of-way. 5. If interim trail use is implemented, and subsequently the user intends to terminate trail use, it must send the Board a copy of this decision and notice and request that it be vacated on a specified date. 6. If any agreement for interim trail use/rail banking is reached by January 6, 1999, interim trail use may implemented. If no agreement is reached by that time, RJCN may fully abandon the line. Decided: October 5, 1998 Service Date - October 7, 1998 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33662] The Burlington Northern and Santa Fe Railway Company--Trackage Rights Exemption--Omaha Public Power District Omaha Public Power District (OPPD), a noncarrier, has agreed to grant local trackage rights to The Burlington Northern and Santa Fe Railway Company (BNSF) over OPPD's rail line, between milepost 56.3 in Collegeview and milepost 6.0 in Arbor, a distance of approximately 50.3 miles in Otoe and Lancaster Counties, NE. On September 28, 1998, BNSF filed a petition for exemption in STB Finance Docket No. 33662 (Sub-No. 1), wherein BNSF requests that the Board permit the proposed local trackage rights arrangement described in the present proceeding to expire on December 31, 1998. That petition will be addressed by the Board in a separate decision. The transaction is scheduled to be consummated on or shortly after October 1, 1998. The purpose of the trackage rights is to permit BNSF using its own trains and crews to use OPPD's line through the end of the calendar year, at which time Kyle Railroad Company will assume operations over the line. Decided: September 30, 1998. Service Date - October 7, 1998 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION AND NOTICE OF INTERIM TRAIL USE OR ABANDONMENT STB Docket No. AB-33 (Sub-No. 114X) UNION PACIFIC RAILROAD COMPANY--ABANDONMENT EXEMPTION-- IN WASHBURN COUNTY, WI By decision and notice of interim trail use or abandonment (NITU) served on January 16, 1998, a 180-day period was authorized for the Wisconsin Department of Natural Resources (WisDNR), acting through the Wisconsin Department of Transportation (WisDOT) to negotiate an interim trail use/rail banking agreement with Union Pacific Railroad Company (UP) for UP's 12.68-mile line of railroad known as the Hayward Industrial Lead, extending from milepost 83.32 near Trego to milepost 96.0 near Hayward Junction, in Washburn County, WI. By decision served July 13, 1998, the negotiation period under the NITU was extended an additional 180 days until January 11, 1999. By letter filed on September 14, 1998, UP and WisDNR/DOT advised the Board that the easterly .8-mile segment of the right-of-way from milepost 95.2 to milepost 96.0 is not subject to negotiations because the segment is subject to acquisition for railroad purposes by Wisconsin Central Limited. On September 21, 1998, the Washburn County Transit Commission (WCTC) filed a request for issuance of a NITU pursuant to the National Trails System Act, so that it can negotiate with UP for the portion of the line extending from milepost 83.32 to milepost 95.2. WCTC has submitted a statement of willingness to assume financial responsibility for the right- of-way and acknowledged that use of the right-of-way as a trail is subject to future reconstruction and reactivation of rail service. By letter dated October 2, 1998, UP states that it is willing to negotiate with WCTC for trail use until January 11, 1999. The Washburn County Board created WCTC for the purpose of preserving the Hayward Industrial Lead for future transportation use. WCTC is in the process of negotiating with UP to acquire the line for active rail use but should negotiations fail, WCTC would like the option to negotiate an interim trail use/rail banking agreement with UP for the development of pedestrian trails and bikeways. Inasmuch as UP is willing to negotiate trail use, a NITU will be issued to WCTC, as an additional party qualified to negotiate with UP, with the trail use negotiati