Notice2023-24854
CSX Transportation, Inc.-Acquisition and Operation-Rail Line of Meridian & Bigbee Railroad, L.L.C.
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 9, 2023
Effective
November 3, 2023
Issuing agencies
Surface Transportation Board
Abstract
The Surface Transportation Board (Board) is accepting the primary application (Application) filed October 6, 2023, by CSX Transportation Inc. (CSXT), and accepting for consideration two related filings. The Application seeks Board approval for CSXT to acquire and operate the assets comprising the rail line of Meridian & Bigbee Railroad, L.L.C. (MNBR) that runs approximately 93.68 miles between the cities of Burkville, Ala., and Myrtlewood, Ala., in Lowndes, Dallas, Wilcox and Marengo Counties (the Eastern Line). This proposal is referred to as the "Proposed Transaction." The related filings are notices of exemption seeking Board approval of transactions involving trackage rights of other carriers (Related Transactions).
Full Text
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<title>Federal Register, Volume 88 Issue 216 (Thursday, November 9, 2023)</title>
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[Federal Register Volume 88, Number 216 (Thursday, November 9, 2023)]
[Notices]
[Pages 77403-77409]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-24854]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36727]
CSX Transportation, Inc.--Acquisition and Operation--Rail Line of
Meridian & Bigbee Railroad, L.L.C.
AGENCY: Surface Transportation Board.
ACTION: Decision No. 1; Notice of acceptance of primary application;
Notice of acceptance of related filings for consideration; Issuance of
procedural schedule.
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SUMMARY: The Surface Transportation Board (Board) is accepting the
primary application (Application) filed October 6, 2023, by CSX
Transportation Inc. (CSXT), and accepting for consideration two related
filings. The Application seeks Board approval for CSXT to acquire and
operate the assets comprising the rail line of Meridian & Bigbee
Railroad, L.L.C. (MNBR) that runs approximately 93.68 miles between the
cities of Burkville, Ala., and Myrtlewood, Ala., in Lowndes, Dallas,
Wilcox and Marengo Counties (the Eastern Line). This proposal is
referred to as the ``Proposed Transaction.'' The related filings are
notices of exemption seeking Board approval of transactions involving
trackage rights of other carriers (Related Transactions).
DATES: The effective date of this decision is November 3, 2023. CSXT is
directed to supplement its Application as discussed in this decision by
November 21, 2023. Any person who wishes to participate in this
proceeding as a Party of Record must file, no later than November 27,
2023, a notice of intent to participate. All comments, protests,
requests for conditions, and any other evidence and argument in
opposition to the Application and related filings, including filings by
the U.S. Department of Justice (DOJ) and the U.S. Department of
Transportation (DOT), must be filed by December 11, 2023. Responses to
comments, protests, requests for conditions, other opposition, and
rebuttal in support of the Application or related filings must be filed
by January 8, 2023. See Appendix (Procedural Schedule). A final
decision in this matter will be served no later than 45 days after the
date on which the evidentiary proceedings conclude, subject to the
completion of environmental review. Further procedural orders, if any,
would be issued by the Board.
ADDRESSES: Any filing submitted in this proceeding should be filed with
the Board via e-filing on the Board's website. In addition, one copy of
each filing must be sent (and may be sent by email only if service by
email is acceptable to the recipient) to each of the following: (1)
Secretary of Transportation, 1200 New Jersey Avenue SE, Washington, DC
20590; (2) Attorney General of the United States, c/o Assistant
Attorney General, Antitrust Division, Room 3109, Department of Justice,
Washington, DC 20530; (3) CSXT's representative, Peter W. Denton,
Steptoe & Johnson LLP, 1330 Connecticut Ave. NW, Washington, DC 20036;
(4) AGR's and MNBR's representative, Justin J. Marks, Clark Hill PLC,
1001 Pennsylvania Ave. NW, Suite 1300 South, Washington, DC 20004; and
(5) any other person designated as a Party of Record on the service
list.
FOR FURTHER INFORMATION CONTACT: Jonathon Binet at (202) 245-0368. If
you require an accommodation under the Americans with Disabilities Act,
please call (202) 245-0245.
SUPPLEMENTARY INFORMATION: CSXT seeks the Board's prior review and
authorization pursuant to 49 U.S.C. 11323-25 and 49 CFR part 1180 to
acquire from MNBR and operate the Eastern Line. (Appl. 1.) The Eastern
Line consists of two segments totaling approximately 93.68 miles: (1)
extending from milepost XXB 189.00 near Burkville to milepost XXB
222.00 at Western Junction, a distance of about 30.22 miles; \1\ and
(2) extending from a connection with the first segment at Western
Junction, milepost OOR 716.25 to milepost ORS 779.71 near Myrtlewood, a
distance of about 63.46 miles. (Id.) The Eastern Line includes Selma
Yard, at Selma, Ala., and the following stations: Myrtlewood, Linden,
Thomaston, Safford, Orville, Beloit, Selma, Industrial Lead, Tyler,
Benton, Whitehall, and Burkville. (Id.) Two other carriers, Alabama
Gulf Coast Railway LLC (AGR) and Norfolk Southern Railway (NSR) connect
with the Eastern Line. AGR's line connects to the Eastern Line at
Linden, Ala. (Id. at 5.) AGR operates over an approximately 10-mile
portion of the Eastern Line between Linden and Myrtlewood to
interchange traffic with MNBR.\2\ (Id.) NSR connects to the Eastern
Line at Selma, where it interchanges traffic with MNBR. (Id. at 12.)
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\1\ The Board notes that, for the Burkville-Western Junction
segment, the difference between the milepost numbers is 33 but the
claimed distance of the segment is 30.22 miles. CSXT is directed to
confirm that 30.22 miles is the correct distance of this segment or
to provide a correction. CSXT shall submit this information by
November 21, 2023 when it submits the supplemental information
discussed below.
\2\ AGR and MNBR are both controlled by Genesee & Wyoming Inc.
(GWI). See Genesee & Wyo. Inc.--Control--RailAmerica, Inc., FD
35654, slip op. at 3 n.7 (STB served Dec. 20, 2012).
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Prior to 2003, CSXT and its predecessors owned and operated the
Eastern Line. (Id. at 2.) In 2003, CSXT entered into a Land Lease
Agreement (2003 Agreement) with M&B Railroad, L.L.C. (M&B), which was
later renamed MNBR,\3\ whereby CSXT: (1) sold to M&B the tracks, rails,
ties, ballast, other track materials, switches, crossings, bridges,
culverts, crossing warning devices and any and all improvements or
fixtures affixed to the Eastern Line (Assets); (2) leased to M&B for a
20-year term the real property underlying the Eastern Line; and (3)
granted M&B incidental overhead trackage rights over approximately 14
miles of CSXT trackage between the eastern end of the Eastern Line at
Burkville and Montgomery, Ala., to effectuate interchange between M&B
and CSXT at CSXT's S and N Yard and Chester Yard at Montgomery. (Id.)
The 2003 Agreement will expire at the end of its 20-year term, on
November 14, 2023, thereby ending MNBR's leasehold interest. (Id.) The
2003 Agreement provides that CSXT may reacquire the Assets from MNBR
upon expiration of MNBR's leasehold interest. (Id.) The parties have
entered an agreement for CSXT to reacquire the Assets from MNBR
(Transaction Agreement).\4\ (Id. at 2-3.) Because MNBR's lease is set
to expire during this proceeding, CSXT and MNBR have agreed to extend
the 2003 Agreement until the first to occur of: (1) the closing date of
the transactions contemplated under the Transaction Agreement; or (2)
the ``Drop Dead Date,'' as defined in the Transaction Agreement. (Id.)
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\3\ GWI acquired control of M&B in 2005 and later changed its
name to MNBR. See Genesee & Wyo. Inc.--Control Exemption--Rail
Partners, L.P., FD 34708 (STB served June 24, 2005).
\4\ The Transaction Agreement is attached to the Application as
Exhibit 2.
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In Docket No. AB 1335X, MNBR filed a verified notice of exemption
under the
[[Page 77404]]
class exemption at 49 CFR part 1152, subpart F, to discontinue overhead
trackage rights along an approximately 14-mile rail line extending
between milepost XXB189 near Burkville, Ala., and Montgomery Yard in
Montgomery, Ala. In Docket No. FD 36724, Alabama Gulf Coast Railway LLC
(AGR) filed a verified notice of exemption to acquire overhead trackage
rights from CSXT over approximately 9.5 miles of the Eastern Line
running between milepost 59.9 at Linden, Ala., and milepost 50.4 near
Myrtlewood.\5\
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\5\ This decision embraces the following dockets: Alabama & Gulf
Coast Railway--Trackage Rights Exemption--CSX Transportation, Inc.,
Docket No. FD 36724; Meridian & Bigbee Railroad--Discontinuance of
Incidental Overhead Trackage Rights--in Lowndes & Montgomery
Counties, Ala., Docket No. AB 1335X.
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The Board finds that the Application is complete and that the
Transaction is a minor transaction based upon the preliminary
determination that the Proposed Transaction's anticipated contribution
to the public interest in meeting significant transportation needs
clearly outweighs any potential anticompetitive effects. 49 CFR
1180.2(b), (c). The Board makes this preliminary determination based
solely on the evidence presented in the Application. The Board
emphasizes that this is not a final determination and may be revisited
or rebutted by subsequent filings and evidence submitted into the
record for this proceeding. The Board also adopts a procedural schedule
for consideration of the Application and directs CSXT to file certain
supplemental information.
Finally, an Environmental Assessment (EA) will be prepared to
comply with the Board's obligations under the National Environmental
Policy Act, 42 U.S.C. 4321-4370m-11 (NEPA), and related environmental
laws.\6\
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\6\ The Board is required to accommodate the requirements of
NEPA in its decision-making. Therefore, the Board will not issue a
final decision on the merits of the Application until the
environmental review is complete, including preparation of an EA and
opportunity for public comment and participation during the EA
process. See Environmental Matters section below.
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CPKC Transaction. In addition to the Eastern Line, MNBR owns and
operates a rail line that connects to the Eastern Line at Myrtlewood
and extends west to Meridian, Miss. (Western Line), where it connects
with Canadian Pacific Railway Company (CPKC). (Id. at 3.) CPKC has
filed an application seeking Board authority to acquire and operate
over the Western Line (CPKC Transaction). CPKC Appl. 2, Oct. 6, 2023,
Canadian Pac. Kan. City Ltd.--Acquis. & Operation--Certain Rail Line of
Meridian & Bigbee R.R. in Lauderdale Cnty., Miss., & Choctaw & Marengo
Cntys., Ala., FD 36732 et al. MNBR serves local traffic on the Eastern
Line and the Western Line and operates over the two rail lines to move
overhead traffic between CSXT at Montgomery \7\ and CPKC at Meridian.
(Appl. at 3.) The Proposed Transaction contemplates CSXT taking over
MNBR's operations on the Eastern Line and MNBR ceasing all operations
on the Eastern Line. (Id.) The CPKC Transaction contemplates CPKC
acquiring and operating over the Western Line but MNBR continuing to
provide local service on the Western Line. CPKC Appl., Ex. 2, Retained
Trackage Rights Agreement, art. 2.1, Oct. 6, 2023, Canadian Pac. Kan.
City Ltd., FD 36732 et al. If both the Proposed Transaction and the
CPKC Transaction are consummated, overhead traffic between Meridian and
Montgomery will be directly interchanged between CSXT and CPKC at
Myrtlewood, eliminating MNBR as an intermediate carrier for this
overhead traffic. (Appl. at 13.)
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\7\ As noted above, MNBR operates between Burkville (the eastern
end of the Eastern Line) and Montgomery pursuant to overhead
trackage rights.
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CSXT states that the Proposed Transaction and the CPKC Transaction
are not contingent on each other ``in that the [Proposed] Transaction
could proceed regardless of whether the CPKC Transaction is
consummated.'' (Id. at 6.) According to CPKC, the CPKC Transaction is
contingent on CSXT acquiring and resuming operations on the Eastern
Line. CPKC Appl. 2, Oct. 6, 2023, Canadian Pac. Kan. City Ltd., FD
36732 et al. CSXT asks that the Board examine the Proposed Transaction
independently of the CPKC Transaction. (Id. at 8.) The Board declines
to do so for purposes of this decision. CSXT states only that the
Proposed Transaction ``could proceed'' if the CPKC Transaction is not
consummated, not that it necessarily will do so. Thus, it is not clear
that the Proposed Transaction is in fact independent of the CPKC
Transaction. Moreover, because the CPKC Transaction is specifically
dependent upon consummation of the Proposed Transaction, the CPKC
Transaction, and the effects that flow from it, would themselves be
effects of the Proposed Transaction and must therefore be considered in
determining whether the Proposed Transaction is minor or significant
under 49 CFR 1180.2.
Financial Arrangements. According to CSXT, no new securities would
be issued in connection with the Proposed Transaction. (Id. at 22.)
CSXT states that the purchase price would be paid from cash on hand.
(Id.)
Passenger Service Impacts. CSXT states that there are no current
passenger or commuter operations on the Eastern Line and there would be
no impact on commuter or other passenger service. (Id., 22-A, V.S.
Adams 15.)
Discontinuances/Abandonments. CSXT states that it does not
anticipate abandoning any rail lines as a result of the Proposed
Transaction. (Id., Ex. 15, Operating Plan 17.) As noted above, MNBR
seeks Board authority to discontinue trackage rights over CSXT's line
between Burkville and Montgomery if the Proposed Transaction is
approved.
Public Interest Considerations. CSXT asserts that if the Board
approves the Proposed Transaction and the CPKC Transaction, it will
create a direct CSXT-CPKC interchange at Myrtlewood, which will result
in more efficient movement of existing CSXT-CPKC interchange traffic
between the Eastern United States (CSXT) and the Western U.S. and
Mexico (CPKC) without any reduction in competition. (Appl. 13.) CSXT
claims the Proposed Transaction is an end-to-end transaction that will
not result in any loss of competitive options available to MNBR-served
shippers. (Id. at 11-12.) According to CSXT, the largest traffic group
on the Eastern Line is overhead traffic to or from CSXT on which MNBR
functions as a bridge carrier and that the Proposed Transaction will
simply shift the interchange point for this traffic from Montgomery to
Myrtlewood. (Id. at 13, Ex. 22-B, Reishus V.S. 11.) CSXT further states
that most local traffic on MNBR today moves to CSXT and such movements
will be unaffected by the CSXT Transaction. (Id., Ex. 22-A, V.S. Adams
13.) In addition, CSXT states that the short line carriers that connect
to the Eastern Line (MNBR and AGR) will not lose a connecting
alternative. (Id. at 11.) It contends that the CSXT network fails to
reach locations or regions served by AGR or reached through CPKC at
Meridian (or involving Western Line shippers) and cannot plausibly
provide competing single-line service for existing interline traffic
with these carriers; hence, it has no incentive to foreclose those
shippers' use of AGR and CPKC for interchange service. (Id., Ex. 22-B,
V.S. Reishus 13.) CSXT notes that local shippers today have the ability
to move on MNBR to interchange with NSR at Selma and that NSR and CSXT
compete at a variety of locations across the eastern United States.
(Id., Ex. 22-A, V.S. Adams 11, Ex. 22-B, V.S. Reishus 13.) However,
CSXT states that MNBR's shippers use this option only for a small
volume of traffic and CSXT
[[Page 77405]]
is committing to keeping the gateway with NSR at Selma open on
commercially reasonable terms and asking the Board to impose this
commitment as a condition to approval of Proposed Transaction. (Id.,
Ex. 22-A, V.S. Adams 13.) CSXT further states that one MNBR shipper
currently moves traffic both to NSR at Selma and to CSXT at Montgomery.
(Id.) According to CSXT, it will commit to that customer to continue to
provide service to NSR at Selma at current rates, subject to reasonable
cost escalation, for five years and on commercially reasonable terms
thereafter. (Id., Ex. 22-A, V.S. Adams 13-14.)
CSXT claims that the Proposed Transaction will have public benefits
that are ``large, important, and obvious.'' (Appl. 14-15.) CSXT states
that for the traffic that currently moves to or from CSXT, eliminating
MNBR as an intermediate carrier will reduce costs and streamline the
movement of traffic. (Id., Ex. 22-A, V.S. Adams 4.) In addition, CSXT
states that certain CSXT-CPKC traffic is interchanged at less efficient
gateways--such as New Orleans, La., Brookwood, Ala., and East St.
Louis, Mo.--and that it projects that a portion of this traffic will be
diverted to the new CSXT-CPKC Myrtlewood gateway if both the Proposed
Transaction and the CPKC Transaction are approved. (Id. at 13.) CSXT
further claims that establishing a new, more efficient gateway between
CSXT and CPKC at Myrtlewood will allow each carrier to compete more
effectively with other carriers and modes in the region and create
redundancy in the southern portion of CSXT's network that will give
CSXT a greater ability to respond to unexpected network problems. (Id.
at 13, 16.)
Additionally, CSXT states that once the transaction is consummated,
it will make significant investments in the track, roadbed, bridges,
warning devices, and wayside detectors on the Eastern Line, which will
increase safety, reliability, and train speeds. (Id. at 15.) In
addition, CSXT claims that acquisition of the Eastern Line will support
CSXT's ongoing efforts to attract new industrial development to its
rail network and will give CSXT's shippers expanded transportation
options, which CSXT hopes will lead to further rail traffic growth.
(Id.)
Time Schedule for Consummation. CSXT seeks to consummate the
Proposed Transaction on or soon after the effective date of a Board
decision authorizing the Proposed Transaction, subject to the
completion of any required labor implementing agreements. (Id. at 20.)
CSXT anticipates that the Related Transactions will be consummated
concurrently with the Proposed Transaction. (Id.)
Environmental Impacts. According to CSXT, the Proposed Transaction
will have no adverse impacts on the environment. (Id., Ex. 4, Env't
Info. 8.) CSXT projects that if the Proposed Transaction and the CPKC
Transaction are both consummated, there will be increases in gross ton
miles and yard activity that exceed the Board's thresholds for
environmental review on the Eastern Line and on the Burkville-
Montgomery segment, but that there will be no additional trains as a
result of the transactions in the next five years. (Id., Ex. 4, Env't
Info. 6-7, Ex. 22-A, V.S. Adams 14.) CSXT asserts that improvements in
train speeds will counteract any effect of increases in train length.
(Id. at Ex. 22-A, V.S. Adams 14.) CSXT also claims that the Proposed
Transaction will have environmental benefits because the planned
infrastructure improvements will result in increasing safety,
reliability, and train speeds and will remove truck traffic from
congested highways. (Id., Ex. 4, Env't Info. 9.) For the reasons
discussed below, an EA will be prepared because the Board's thresholds
for environmental review will be exceeded if the Proposed Transaction
and the CPKC Transaction are both consummated. See Environmental
Matters section.
Historic Preservation Impacts. According to CSXT, under 49 CFR
1105.8(b)(1), the Proposed Transaction and the Related Transactions are
exempt from historic preservation reporting requirements. CSXT states
that rail operations will continue on the Eastern Line and the
Burkville-Montgomery segment, and that further approval will be
required to abandon any service. CSXT further states that there are no
plans to dispose of or alter properties subject to Board jurisdiction
that are fifty years old or older. Therefore, based on the current
record, no historic review is required.
Labor Impacts. CSXT asserts that the Proposed Transaction will not
have any adverse impact on labor. (Id., Ex. 22-A, V.S. Adams 15.) CSXT
states that it will be employing more people on the Eastern Line as a
result of the Proposed Transaction. (Id., Ex. 22-A, V.S. Adams 16.)
According to CSXT, CSXT, and MNBR will not integrate any of their
forces and CSXT employees will assume the responsibility for
maintaining, dispatching, and operating CSXT trains over the Eastern
Line. (Id. at 25.) CSXT further states that it understands that MNBR
intends to abolish seven transportation positions, four engineering
positions, and one mechanical position as a result of the Proposed
Transaction. (Id. at 26.) According to CSXT, in addition to possible
employment with CSXT, MNBR, or other GWI-controlled carriers may have
other positions for employees who currently occupy these positions.
(Id.) In addition, CSXT states that AGR employees will continue to
operate AGR trains over the Eastern Line between Linden and Myrtlewood
as they do today pursuant to a new trackage rights agreement with CSXT.
(Id.)
CSXT is requesting that the employee protective conditions
established in New York Dock Railway--Control--Brooklyn Eastern
District Terminal, 360 I.C.C. 60, aff'd New York Dock Railway v. United
States, 609 F.2d 83 (2d Cir. 1979), as modified by Wilmington Terminal
Railroad--Purchase & Lease--CSX Transportation Inc., 6 I.C.C.2d 799,
814-26 (1990), aff'd sub nom. Railway Labor Executives' Association v.
Interstate Commerce Commission, 930 F.2d 511 (6th Cir. 1991), be
imposed on the Proposed Transaction to address any adverse impact to
current employees. (Appl. at 26.)
Related Filings. In connection with the Related Transactions, MNBR,
and AGR each filed a notice of exemption.\8\
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\8\ Also, on October 6, 2023, CSXT filed a motion for protective
order in Docket No. FD 36727, which was granted by decision served
on October 11, 2023.
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MNBR Discontinuance: In Docket No. AB 1335X, MNBR filed a verified
notice of exemption under the class exemption at 49 CFR part 1152,
subpart F, to discontinue overhead trackage rights along an
approximately 14-mile rail line extending between milepost XXB189 near
Burkville and Montgomery Yard in Montgomery. MNBR states that it does
not intend to consummate its discontinuance authority unless and until
CSXT consummates the Proposed Transaction. If consummated, MNBR and
CSXT will interchange traffic at Myrtlewood, rather than at Montgomery.
According to MNBR, its proposed discontinuance qualifies for the
Board's two-year out-of-service class exemption procedures because it
seeks to discontinue overhead trackage rights and has not provided any
local service within the past two years. However, another carrier,
CSXT, has been providing local service over the same line during that
two-year period. In Austin Area Terminal Railroad--Discontinuance of
Service Exemption--in Bastrop, Burnet, Lee, Llano, Travis, and
Williamson Counties, Tex., AB 578X (STB served Nov. 3, 2023), the Board
recently reaffirmed that to qualify
[[Page 77406]]
for the two-year-out-of-service class exemption a carrier must certify
that no local traffic has moved over the line for two years, not just
its own traffic. Accordingly, the Board upheld a prior decision that
rejected a verified notice because the required certification
concerning the absence of local traffic on the line was deficient. Id.
at 1. The Board noted, however, that carriers may petition the Board
for individual exemptions under 49 U.S.C. 10502(a) and granted on its
own motion an individual exemption authorizing the discontinuance. Id.
at 4-5.
Although, per Austin Area Terminal Railroad, MNBR may not proceed
under the Board's two-year out-of-service class exemption procedures,
during consideration of the broader Proposed Transaction, the Board
will nonetheless consider whether to grant an individual exemption for
this discontinuance authority on its own motion. To that end, MNBR may
supplement the record in Docket No. AB 1335X with any additional
information and argument it would like the Board to consider in
determining whether the proposed discontinuance meets the exemption
standard of 49 U.S.C. 10502(a). Any supplement filed by MNBR in Docket
No. AB 1335X will be due by November 21, 2023.
AGR Trackage Rights. In Docket No. FD 36724, AGR filed a verified
notice of exemption under 49 CFR 1180.2(d)(7) to acquire overhead
trackage rights from CSXT over approximately 9.5 miles of rail line
running between milepost 59.9 at Linden, and milepost 50.4 near
Myrtlewood. AGR states that it intends to consummate the transaction
either on the effective date of its notice or upon the consummation of
the Proposed Transaction, whichever occurs later. AGR intends to use
its overhead trackage rights for the interchange of traffic with MNBR,
CSXT, and other carriers at Myrtlewood.
Primary Application and Related Filings. The Board finds that the
Proposed Transaction would be a ``minor transaction'' under 49 CFR
1180.2(c), and the Board accepts the Application because it is in
substantial compliance with the applicable regulations governing minor
transactions. See 49 U.S.C. 11321-26; 49 CFR part 1180. Additionally,
the Board is also accepting for consideration the related verified
notice of exemption filed in Docket No. FD 36724,\9\ which is also in
compliance with the applicable regulations. As discussed below, the
Board will require CSXT to supplement the record and reserves the right
to require further supplemental information as necessary to complete
the record.
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\9\ Additionally, as discussed above, MNBR's verified notice of
exemption in Docket No. AB 1335X does not qualify for the class
exemption procedures under which it was filed; however, the verified
notice will be accepted as evidence bearing on consideration of
whether to grant MNBR an individual exemption on the Board's own
motion.
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When a transaction does not involve the merger or control of two or
more Class I railroads, its classification will differ depending upon
whether the transaction would have ``regional or national
transportation significance.'' 49 U.S.C. 11325. Under 49 CFR 1180.2, a
transaction that does not involve two or more Class I railroads is to
be classified as ``minor''--and thus not having regional or national
transportation significance--if a determination can be made that
either: (1) the transaction clearly will not have any anticompetitive
effects, or (2) any anticompetitive effects will clearly be outweighed
by the transaction's anticipated contribution to the public interest in
meeting significant transportation needs. A transaction not involving
the control or merger of two or more Class I railroads is to be
classified as ``significant'' if neither of these determinations can be
made.
The Board finds the Proposed Transaction to be a ``minor
transaction'' because it appears from the face of the Application that
the efficiency and other public interest benefits would clearly
outweigh the potential anticompetitive effects of the transaction.
Shippers that are currently served by MNBR would be served by CSXT
post-transaction and this service could become more efficient due to
the elimination of MNBR as an intermediate carrier and the upgrades to
the line planned by CSXT. These upgrades could also improve the safety
of operations over the Eastern Line. In addition, CSXT has committed to
keeping the Selma gateway open for interchange with NSR on commercially
reasonable terms and, for the one shipper on the Eastern Line that
currently connects to both CSXT and NSR, CSXT has committed to keep
current rates in place for five years. The Proposed Transaction, in
combination with the CPKC Transaction, would create a direct connection
between CSXT and CPKC at Myrtlewood. This new East-West Class I
connection, along with the infrastructure upgrades planned by CSXT and
CPKC, could provide a more efficient route for existing and future
traffic moving between the eastern and southeastern United States and
the southwestern United States and Mexico, potentially providing both
economic and environmental benefits. Diverting existing traffic to the
new Myrtlewood gateway from congested gateways such as New Orleans
could also improve the efficiency of operations at those existing
gateways.\10\ Moreover, adding a new East-West Class I gateway will
provide redundancy in the national network and could reduce the
economic impact of future outages in other areas (e.g., if rail
infrastructure in the New Orleans area becomes unusable for a prolonged
period due to flooding). There is a potential that traffic currently
interchanged with other carriers may be diverted to the Myrtlewood
interchange post-transaction (as discussed in the section below), and
this has implications for competition, including a potential increase
in competition to the benefit of shippers. The Board finds, at least
preliminarily, that the potential risks of anticompetitive effects are
clearly outweighed by the Proposed Transaction's anticipated benefits.
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\10\ CSXT has broadly represented that ``no gateways would be
closed'' to shippers as a result of the transactions. (CSXT Reply 7,
Oct. 27, 2023 (replying to a request filed by NSR, discussed
below).) CSXT states that there are no commercial agreements between
CSXT and CPKC that would force a rerouting of traffic and that the
creation of the new Myrtlewood gateway would simply give shippers a
new competitive option to route traffic through Myrtlewood instead
of moving through other congested locations. (Id.) It also states
that ``[t]hose gateways would remain fully open, but shippers would
now have an efficient alternative to them.'' (Id.)
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For these reasons, based on the information provided in the
Application, the Board finds the Proposed Transaction to be a minor
transaction under 49 CFR 1180.2(c). This determination should not be
read to mean that the proposed Transaction is insignificant or of
little importance. Indeed, after the record is fully developed, the
Board will conduct a careful review before making a final determination
as to whether the Proposed Transaction would substantially lessen
competition, create a monopoly, or restrain trade, and whether any
anticompetitive effects would be outweighed by the public interest. See
49 U.S.C. 11324(d)(1)(2). The Board may also consider imposing
conditions on the Proposed Transaction.
Supplemental Information. The Board notes that the Proposed
Transaction, in conjunction with the CPKC's Transaction, may result in
shifts to traffic flows, including traffic currently interchanged with
a third-party carrier. (See e.g., Appl., Ex. 22-A, V.S. Adams 6 (``[I]f
CPKC also acquires the Western Line and upgrades it, the substantially
[[Page 77407]]
improved efficiency of the line between Meridian and Montgomery . . .
is expected to significantly increase the amount of traffic that can be
diverted to the Eastern Line in overhead traffic.''); CPKC Appl., App.
3, Wahba V.S. 5-7, Oct. 6, 2023, Canadian Pac. Kan. City Ltd., FD 36732
et al. (describing potential diversion of premium automotive traffic
moving between KCSM-served locations in Mexico and CSXT-served
locations on the East Coast, but interchanged with a bridge carrier at
Laredo and at East St. Louis, Memphis, and New Orleans, to direct CPKC-
CSXT interchange at Myrtlewood).) To assist the Board in its
consideration of the Proposed Transaction and in making the
determination of what--if any--conditions might be warranted, CSXT will
be directed to supplement its Application with certain additional
information by November 21, 2023. See 49 CFR 1180.4(c)(2)(v) (``The
applicant shall submit such additional information to support its
application as the Board may require.'').\11\
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\11\ On October 25, 2023, NSR filed a request (NSR's Request)
for the Board to consolidate this proceeding with the proceeding
regarding the CPKC Transaction and hold the consolidated proceeding
in abeyance, including the Board's determination of whether to
designate the transactions as minor or significant, until such time
that CSXT and CPKC provide certain additional information, primarily
regarding the potential effects of changes in CPKC-CSXT traffic
flows on other traffic. On October 27, 2023, CSXT filed a reply.
CSXT does not oppose embracing the two cases in one proceeding but
argues the Board should not require the parties to file a
consolidated application. (CSXT Reply 6 n.3, Oct. 27, 2023.) CSXT
further argues that its application is complete and that the issues
raised by NSR can be addressed through the comment process required
by the procedural schedule. (Id. at 7.) On October 31, 2023,
Illinois Central Railroad Company filed in support of NSR's request
for consolidation. For the reasons given above, the current record
supports a minor designation. The Board will not order the parties
to submit a consolidated application at this time, though as
discussed below, the Board's Office of Environmental Analysis (OEA)
has determined that it is appropriate to prepare one EA to encompass
both the Western Line and the Eastern Line. The Board may further
address the consolidation issue in a subsequent decision.
Additionally, the Board will not hold the proceedings in abeyance,
as the Board is requiring CSXT to supplement the record as discussed
further in this decision.
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Specifically, in its reply to NSR's Request, CSXT broadly claims
that ``[n]o gateways would be closed as a result of either
transaction'' and that previously-used gateways ``would remain fully
open.'' (CSXT Reply, 7, Oct. 27, 2023; see also supra note 9.)
Moreover, CPKC specifically argues that ``[f]or traffic from CSXT
origins that might use the new Myrtlewood routing, CSXT would not be
obtaining a longer haul than it could realize via other gateways like
New Orleans, Memphis, or East St. Louis, and thus there is no
conceivably applicable theory of foreclosure.'' (CPKC Reply 5 n.3, FD
36732, Oct. 27, 2023.) The Board appreciates these statements.
Nevertheless, CSXT will be directed to more fully explain its position
that no gateway ``would be closed,'' and describe in detail what it
means when it says that all previously-used gateways will ``remain
fully open.'' \12\ In addition, to help the Board evaluate the argument
made by CPKC regarding certain CSXT gateways, CSXT should also address
whether, and to what extent, the Proposed Transaction will give it the
ability and incentive to avoid existing interline routing arrangements
with carriers other than CPKC, and which may require interchange at New
Orleans, Memphis, or East St. Louis (as well as Chicago or any other
interchange location) for traffic from certain CSXT origin areas, so
that it may move that traffic via a longer haul through the CPKC-CSXT
interchange at Myrtlewood. See, e.g., <a href="https://www.up.com/customers/shortline/interline_agree/index.htm">https://www.up.com/customers/shortline/interline_agree/index.htm</a>.
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\12\ The Board notes that CPKC states that there is not ``some
secret overarching agreement between CPKC and CSXT that has not been
put before the Board and that somehow implicates the competitive
landscape.'' (CPKC Reply 5-6, FD 36732, Oct. 27, 2023.)
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Additionally, in its supplement, to further inform the Board's
analysis, CSXT shall provide a list of all origination/destination
areas,\13\ including gateways, for the projected diverted and new
traffic; identify any interchange partners participating in current
movements of this traffic as well as projected diverted and new
movements (if applicable); \14\ and provide the associated volumes by
origination/destination areas for projected diverted and new traffic.
The Board recognizes that CSXT was recently involved in a transaction
that required the production of substantial information about its
network and the markets it serves. Some of the work involved with that
production may be relevant to the Proposed Transaction, potentially
lowering the burden on CSXT of producing the information requested
here, which the Board recognizes goes beyond what is generally required
for a minor transaction under 49 CFR 1180.4 (and therefore, not
necessarily applicable to future minor transactions).
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\13\ Origination/destination areas may be as broad as a state or
group of states. CSXT shall provide a justification for its
definition of the state or region whatever grouping metric it uses
for its analysis, and it shall specify the gateway(s) used by
traffic for the origination or destination areas.
\14\ Information should include the total count of cars
interchanged categorized by two-digit Standard Transportation
Commodity Code and broken out by interchange partner.
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To assist the Board in evaluating the Proposed Transaction, in
conjunction with CPKC's proposed acquisition of the Western Line, CSXT
will be directed to provide additional operational information. As NSR
notes, the Application does not include an analysis of the potential
operational impacts to shippers or Amtrak passengers on rail segments
outside the Eastern Line and Western Line. (NSR Reply 12-13.)
Accordingly, the Board directs CSXT to detail any impacts anticipated
on other rail operations, including (1) potential impacts on any
passenger rail operations that involve crossing the Eastern Line, and
(2) delays that may be occasioned because a line is scheduled to handle
increased traffic due to route consolidations or traffic diversions.
Additionally, CSXT shall provide a description of the effect of any
deferred maintenance or delayed capital improvements on the subject
lines and associated equipment. This should include the schedule for
eliminating such deferrals, details of general system rehabilitation
(including rehabilitation relating to the transaction, such as proposed
yard and terminal modifications), and how these activities will lead to
service improvements or operating economies anticipated from the
transaction.
Procedural Schedule. CSXT is directed to supplement its Application
as discussed in this decision by November 21, 2023. Any person who
wishes to participate in this proceeding as a Party of Record must file
a notice of intent to participate no later than November 27, 2023; all
comments, protests, requests for conditions, and any other evidence and
argument in opposition to the Application, including filings by DOJ and
DOT, must be filed by December 11, 2023; and responses to comments,
protests, requests for conditions, and other opposition on the
transportation merits of the Transaction must be filed by January 8,
2024.\15\ The Board is required to issue ``a final decision by the 45th
day after the date on which it concludes the evidentiary proceedings,''
49 U.S.C. 11325(d)(2), and will do so here, subject to the
[[Page 77408]]
completion of environmental review.\16\ The Board reserves the right to
adjust the schedule as circumstances may warrant. The adopted
procedural schedule is in Appendix to this decision.
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\15\ CSXT proposes a round of briefs due on the same day that
the evidentiary record is statutorily required to close. (Appl. 26);
see also 49 U.S.C. 11325(d)(2). CSXT however provides no explanation
as to the intent or necessity of these additional briefs, which are
not contemplated by the governing statute or the Board's
regulations. See 49 U.S.C. 11325(d)(2); 49 CFR 1180.4(e)(2).
Accordingly, the Board has not included the proposed briefs in the
procedural schedule adopted here.
\16\ This notice will be published in the Federal Register on
November 9, 2023, and all subsequent deadlines will be calculated
from this date. Deadlines for filings are calculated in accordance
with 49CFR 1104.7(a).
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Notice of Intent To Participate. Any person who wishes to
participate in this proceeding as a Party of Record must file with the
Board, no later than November 27, 2023, a notice of intent to
participate, accompanied by a certificate of service indicating that
the notice has been properly served on the Secretary of Transportation,
the Attorney General of the United States, and CSXT's representative.
If a request is made in the notice of intent to participate to have
more than one name added to the service list as a Party of Record
representing a particular entity, the extra name(s) will be added to
the service list as a ``Non-Party.'' Any person designated as a Non-
Party will receive copies of Board decisions, orders, and notices but
not copies of official filings. Persons seeking to change their status
must accompany that request with a written certification that they have
complied with the service requirements set forth at 49 CFR 1180.4 and
any other requirements set forth in this decision.
Discovery. Discovery may begin immediately. The parties are
encouraged to resolve all discovery matters expeditiously and amicably.
Environmental Matters. NEPA requires that the Board take
environmental considerations into account in its decision-making. Under
the Board's environmental regulations, an acquisition under 49 U.S.C.
11323 generally requires the preparation of an EA where certain
thresholds would be exceeded. See 49 CFR 1105.6(b)(4). The thresholds
for assessing environmental impacts from increased rail traffic on rail
lines in acquisitions are an increase in rail traffic of at least 100%
(measured in gross ton miles annually) or an increase of at least eight
trains per day. 49 CFR 1105.7(e)(5). For air quality impacts, rail
lines located in areas classified as being in ``nonattainment'' areas
under the Clean Air Act (42 U.S.C. 7401-7671q) are also assessed if
they would experience an increase in rail traffic of at least 50%
(measured in gross ton miles annually) or an increase of at least three
trains per day. 49 CFR 1105.7(e)(5)(ii).
In its Application, CSXT submitted environmental information,
including estimated volume increases on the Eastern Line by track
segment (Exhibit 4). The estimated volume for each segment includes
transaction-related projections for five years (through 2029), as well
as no-action projections (traffic including increases that would occur
without the Proposed Transaction). CSXT presented two scenarios for its
traffic projections. The first scenario assumes that the Proposed
Transaction would occur without the CPKC Transaction. CSXT expects that
this scenario would not produce significant changes to the existing
traffic because the same number of trains currently operated by MNBR
and CSXT over the Eastern Line would be operated by CSXT post-
transaction. In the second scenario, CSXT assumes that both the
Proposed Transaction and the CPKC Transaction would occur at the same
time. CSXT states that the second scenario would result in an increase
in gross-ton miles of 100%. (Appl., Ex. 4, Env't Info. 7.) According to
CSXT, the Proposed Transaction would result in improved efficiency and
potential traffic diversions from truck to more environmentally
favorable rail. (Appl., Ex. 4, Env't Info. 9.)
The NEPA Process. OEA has reviewed the data provided by CSXT,
including its traffic projections through 2029. Based on the current
record, neither the 8-trains-per-day nor 3-trains-per-day thresholds
for environmental review will be exceeded as a result of the Proposed
Transaction. However, because there will be an increase in gross-ton
miles in excess of 100% on the line segments involved in the Proposed
Transaction under CSXT's second scenario, the gross-ton mile threshold
will be exceeded and therefore, OEA will prepare an EA. See 49 CFR
1105.7(e)(5)(i); 1105.10(b). For expediency and efficiency, OEA will
prepare one EA to encompass both the Eastern Line (including the
Burkville-Montgomery segment) and the Western Line because these
transactions involve contiguous sections of the same rail line; indeed,
both CPKC and CSXT (under scenario two) provided volume forecasts
showing exceedance of the gross ton mile thresholds based on each
transaction being authorized and implemented. (Appl., Ex.4, Env't Info.
6-7; see also CPKC Appl., Ex. 4, Env't Info. 38, Oct. 6, 2023, Canadian
Pac. Kan. City Ltd., FD 36732 et al.) In addition, the environmental
impacts from both transactions are expected to be very similar and both
applications were filed at the same time, allowing the environmental
review of the two transactions to proceed simultaneously.
The EA process will address potential environmental impacts of
activities associated with both the Western Line and the Eastern Line,
including changes in rail line traffic and rail yard activity changes.
OEA will prepare a Draft EA and issue it for public comment. Following
the close of the comment period, OEA will prepare a Final EA. The Final
EA will address the comments received on the Draft EA, present OEA's
final conclusions regarding the potential environmental impacts of the
transactions, and set forth OEA's final recommendations to the Board,
including recommended environmental mitigation measures.\17\ The Board
then will consider the entire record, including the record on the
transportation merits, the Draft EA, the Final EA, and all public
comments received. In its final decision, the Board will decide whether
the Proposed Transaction should be authorized and, if so, what
conditions, including environmental mitigation conditions, to impose.
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\17\ The Board's general practice has been to mitigate only
impacts resulting directly from a proposed transaction, and not to
require mitigation for existing conditions and existing railroad
operations. See 49 CFR 1180.1(f)(1).
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Historic Review. The Board's regulations provide that historic
review normally is not required for acquisitions where there would be
no significant change in operations and properties 50 years old and
older would not be affected. See 49 CFR 1105.8. CSXT states that rail
operations would continue on the Eastern Line and that there are no
plans to dispose of or alter properties that are fifty years old or
older. (Appl., Ex. 4, Env't Info. 1.) Therefore, based on the current
record, no historic review is required.
Service on Parties of Record. Each Party of Record will be required
to serve upon all other Parties of Record, within 10 days of the
service date of this decision, copies of all filings previously
submitted by that party (to the extent such filings have not previously
been served upon such other parties). Each Party of Record will also be
required to file with the Board, within 10 days of the service date of
this decision, a certificate of service indicating that the service
required by the preceding sentence has been accomplished. Every filing
made by a Party of Record after the service date of this decision must
have its own certificate of service indicating that all Parties of
Record on the service list have been served with a copy of the filing.
Members of the United States Congress and Governors are not Parties of
Record and need not be served with copies of filings, unless
[[Page 77409]]
any Member or Governor has requested to be, and is designated as, a
Party of Record.
Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices on those persons who are
designated on the service list as a Party of Record or Non-Party. All
other interested persons are encouraged to obtain copies of decisions,
orders, and notices via the Board's website at <a href="http://www.stb.gov">www.stb.gov</a>.
Access to Filings. Under the Board's rules, any document filed with
the Board (including applications, pleadings, etc.) shall be promptly
furnished to interested persons on request, unless subject to a
protective order. 49 CFR 1180.4(a)(3). The Application and other
filings in this proceeding will be furnished to interested persons upon
request and will also be available on the Board's website at
<a href="http://www.stb.gov">www.stb.gov</a>. In addition, the Application may be obtained from CSXT's
representative at the address indicated above.
This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
It is ordered:
1. The Application filed in Docket No. FD 36727 and the related
verified notice of exemption filed in Docket Nos. FD 36724 are accepted
for consideration.
2. CSXT shall file the supplemental information described above by
November 21, 2023.
3. The filing in Docket No. AB 1335X is accepted to the extent
discussed above. MNBR may file supplemental evidence and argument in
support of an individual exemption in that docket by November 21, 2023.
4. The parties to this proceeding must comply with the procedural
schedule shown in the Appendix to this decision and the procedural
requirements described in this decision.
5. NSR's request to hold this proceeding in abeyance is denied.
6. This decision is effective on November 3, 2023.
Decided: November 3, 2023.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz. Board Member Schultz, joined by Board Member Fuchs, concurred
with a separate expression.
BOARD MEMBER SCHULTZ, with whom BOARD MEMBER FUCHS joins, concurring:
I agree that this Proposed Transaction should be classified as
minor and that the record at this stage of the proceeding indicates
that any anticompetitive effects of the Proposed Transaction will
clearly be outweighed by the Proposed Transaction's anticipated
contribution to the public interest in meeting significant
transportation needs. On this record, I would not order CSXT to submit
this extensive amount of supplemental information at this stage in the
proceeding. While the Board has the authority to require the filing of
supplemental information, the better course here would have been to
assess whether any supplemental information is necessary after full
analysis of all comments and requests for conditions and again after
responses to those comments and requests, when the Board would benefit
from the full views of shippers, railroads, and the broader public.
Jeffrey Herzig,
Clearance Clerk.
Appendix
Procedural Schedule
October 6, 2023--Application filed.
November 3, 2023--Board notice of acceptance of application
served.
November 21, 2023--CSXT's supplemental information due.
November 27, 2023--Notices of intent to participate in this
proceeding due.
December 11, 2023--All comments, protests, requests for
conditions, and any other evidence and argument in opposition to the
application, including filings of DOJ and DOT, due.
January 8, 2024--Responses to comments, protests, requests for
conditions, and other opposition due. Rebuttal in support of the
application due.
TBD--Record closes.
No later than 45 days after close of the record--Date by which a
final decision will be served.\1\
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\1\ 49 U.S.C. 11325(d)(2) provides that the Board must issue its
final decision within 45 days of the close of the evidentiary
record. However, under NEPA, the Board may not issue a final
decision until after the required environmental review is complete.
In the event the environmental review process is not able to be
concluded in sufficient time for the Board to meet the 45-day
provision in section 11325(d)(2), the Board will issue a final
decision as soon as possible after that process is complete.
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30 days after service--Board's decision becomes effective.
[FR Doc. 2023-24854 Filed 11-8-23; 8:45 am]
BILLING CODE 4915-01-P
</pre></body>
</html>Indexed from Federal Register on November 9, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.