Notice2024-26469
Patrick O. Regan-Acquisition of Control-Faribault Transportation Service, Inc., Minnesota Coaches, Inc., Marschall Line, Inc., Rehbein Transit Co., Inc., Minn-Dakota Coaches, Inc., Voyageur Bus Company, Inc., and Ready Bus Company, Inc.
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Published
November 14, 2024
Effective
December 31, 2024
Issuing agencies
Surface Transportation Board
Abstract
Patrick O. Regan (Applicant) filed an application seeking authority to acquire control of Faribault Transportation Service, Inc. (FTS), through a corporate reorganization in which Applicant would become the majority shareholder in MNC Holding Company, a new entity created to serve as a holding company for FTS and other motor carriers and noncarrier entities. Applicant also seeks after-the-fact authority for several already-consummated transactions that ultimately resulted in Applicant's acquisition of control of six passenger motor carriers: Minnesota Coaches, Inc., Marschall Line, Inc., Rehbein Transit Co., Inc., Minn-Dakota Coaches, Inc., Voyageur Bus Company, Inc., and Ready Bus Company, Inc. (collectively, Affiliated Carriers). The Board is tentatively approving and authorizing these transactions. If no opposing comments are timely filed, this notice will be the final Board action.
Full Text
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<title>Federal Register, Volume 89 Issue 220 (Thursday, November 14, 2024)</title>
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[Federal Register Volume 89, Number 220 (Thursday, November 14, 2024)]
[Notices]
[Pages 90208-90211]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26469]
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SURFACE TRANSPORTATION BOARD
[Docket No. MCF 21123]
Patrick O. Regan--Acquisition of Control--Faribault
Transportation Service, Inc., Minnesota Coaches, Inc., Marschall Line,
Inc., Rehbein Transit Co., Inc., Minn-Dakota Coaches, Inc., Voyageur
Bus Company, Inc., and Ready Bus Company, Inc.
AGENCY: Surface Transportation Board.
ACTION: Notice Tentatively Approving and Authorizing Finance
Transaction.
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SUMMARY: Patrick O. Regan (Applicant) filed an application seeking
authority to acquire control of Faribault Transportation Service, Inc.
(FTS), through a corporate reorganization in which Applicant would
become the majority shareholder in MNC Holding Company, a new entity
created to serve as a holding company for FTS and other motor carriers
and noncarrier entities. Applicant also seeks after-the-fact authority
for several already-consummated transactions that ultimately resulted
in Applicant's acquisition of control of six passenger motor carriers:
Minnesota Coaches, Inc., Marschall Line, Inc., Rehbein Transit Co.,
Inc., Minn-Dakota Coaches, Inc., Voyageur Bus Company, Inc., and Ready
Bus Company, Inc. (collectively, Affiliated Carriers). The Board is
tentatively approving and authorizing these transactions. If no
opposing comments are timely filed, this notice will be the final Board
action.
DATES: Comments must be filed by December 30, 2024. If any comments are
filed, Applicant may file a reply by January 13, 2025. If no opposing
comments are filed by December 30, 2024, this notice shall be effective
on December 31, 2024.
ADDRESSES: Comments, referring to Docket No. MCF 21123, may be filed
with the Board either via e-filing on the Board's website or in writing
addressed to: Surface Transportation Board, 395 E Street SW,
Washington, DC 20423-0001. In addition, send one copy of comments to
Applicant's representative: Edward Fishman, Hogan Lovells US LLP,
Columbia Square, 555 Thirteenth Street NW, Washington, DC 20004.
FOR FURTHER INFORMATION CONTACT: Brian O'Boyle at (202) 245-0364. If
you require an accommodation under the Americans with Disabilities Act,
please call (202) 245-0245.
SUPPLEMENTARY INFORMATION: According to the application,\1\ Applicant,
a noncarrier, seeks to acquire control of FTS, which is currently owned
by Garrett O. Regan. Applicant characterizes his proposed acquisition
as a ``corporate reorganization,'' that, if approved and consummated,
would result in Applicant becoming the majority shareholder of MNC
Holding Company, and Garrett O. Regan becoming a minority shareholder
in MNC Holding Company, together with certain other minority
shareholders.\2\ (Appl. 3.) \3\
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\1\ Applicant originally filed the application on August 30,
2024, but it then filed a supplement on October 15, 2024. Therefore,
for purposes of determining the procedural schedule and statutory
deadlines, the filing date of the application is October 15, 2024.
See 49 CFR 1182.4(a).
\2\ More information about the proposed corporate structure and
ownership can be found in the application. (See Appl., Ex. 3.)
\3\ The application does not have page numbers. The page numbers
cited in this decision refer to the PDF page numbers of the
application.
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Applicant states that FTS has its principal place of business in
Faribault, Minn., and provides student transportation service,
including general and special education transportation, to and from
school on a regular schedule, as well as school bus charter service for
extracurricular activities and other special trips. (Id. at 4; Suppl.
1-2.) Applicant states that, on limited occasions, FTS's school bus
charter service involves trips from Minnesota into Wisconsin and other
neighboring states (depending on the location of those activities
involving the school bus customers served by FTS). (Suppl. 2.) FTS
operates approximately 66 power units and employs approximately 88
drivers. (Appl. 4.) \4\
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\4\ Applicant indicates that FTS has two wholly owned
subsidiaries, PEM Transportation, LLC, and Harmony Transit, LLC,
which Applicant states are both intrastate passenger carriers not
subject to the Board's jurisdiction. (Appl. 4 n.1.)
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Applicant also seeks after-the-fact authorization for his
acquisition of control of six motor carriers through six previously
consummated transactions. Applicant states that, if approval is
granted, each of these carriers would be brought under control of MNC
Holding Company, with Applicant as the majority shareholder and other
minority shareholders of the carriers becoming minority shareholders of
MNC Holding Company. (Id. at 5.) Applicant describes the transactions
for which he seeks after-the-fact authority as follows.
Minnesota Coaches, Inc., Marschall Line, Inc., and Rehbein Transit
Co., Inc.
[[Page 90209]]
According to the application, in 1994, Applicant founded and
incorporated Family Bus Service, Inc. (Family Bus), a noncarrier, which
is the parent company of three passenger motor carriers providing
interstate service: Minnesota Coaches, Inc. (Minnesota Coaches),
Marschall Line, Inc. (Marschall Line), and Rehbein Transit Co., Inc.
(Rehbein).
Family Bus purchased 100% ownership of Minnesota Coaches from RECO,
Inc., a corporation owned by Applicant and his siblings (though the
date of the transaction is not given). (Id. at 9.) Minnesota Coaches
has its principal place of business in Hastings, Minn., and operates in
its name and through the assumed names Hasting Bus Company, Big River
Bus Company, and Big River Tours. (Id. at 10.) Minnesota Coaches
provides school bus service that includes general and special education
transportation to and from school on a regular schedule, and school bus
charter service for extracurricular activities and special trips,
which, on limited occasions, involve transportation between Minnesota
and neighboring states including Wisconsin. (Id. at 10-11; Suppl. 3.)
Minnesota Coaches also offers motorcoach contract service for
universities, sports teams, and other business, as well as event
specific charter services for weddings, conventions, and other events,
concentrated primarily in the Minneapolis, Minn., St. Paul, Minn., and
the surrounding Twin Cities area, as well as some interstate operations
primarily in Wisconsin, Iowa, Illinois, and Missouri. (Suppl. 3, 4.)
Minnesota Coaches operates approximately 196 power units and employs
approximately 174 drivers. (Appl. 10.)
In 1994, Family Bus became the sole shareholder of Marschall Line,
which was founded in 1971 by the Marschall family. (Id. at 9.)
Applicant states that Marschall Line has its principal place of
business in Farmington, Minn. (Id. at 11.) Marschall Line, operating in
its name and through the assumed name Mid-County Bus Company, provides
school bus transportation services, which includes general and special
education transportation to and from school on a regular schedule, and
school bus charter service for extracurricular activities and special
trips. (Id.; Suppl. 4-5.) Applicant states that, on limited occasions,
the school bus charter service involves trips from Minnesota into
Wisconsin and other neighboring states. (Suppl. 5.) Marschall Line
operates approximately 110 power units and employs approximately 118
drivers. (Appl. 11.)
In 2012, Family Bus acquired the assets of Rehbein Transit, Inc.,
from the Rehbein family and formed the subsidiary, Rehbein. (Id. at
10.) Applicant states that Rehbein, whose principal place of business
is in Circle Pines, Minn., provides school bus services that include
general and special education transportation to and from school on a
regular schedule, and school bus charter service for extracurricular
activities and special trips. (Id. at 12; Suppl. 5.) Applicant states
that, on very limited occasions, the school bus charter service
involves trips from Minnesota into Wisconsin or other neighboring
states. (Suppl. 5.) Rehbein operates approximately 97 power units and
employs approximately 91 drivers. (Appl. 12.)
Minn-Dakota Coaches, Inc. In 1997, Applicant acquired control of
Minn-Dakota Coaches, Inc. (Minn-Dakota), from August L. Fitch, William
H. Barber, and Bonnie L. Barber. (Id. at 14.) Applicant controls Minn-
Dakota through his control of Ottertail Transportation, Inc., and
Ottertail Coaches, Inc. (Id. at 13.) \5\ According to Applicant, Minn-
Dakota, whose principal place of business is in Fergus Falls, Minn.,
provides school bus transportation service that includes general and
special education transportation to and from school on a regular
schedule, and school charter service for extracurricular activities and
special trips. (Id. at 15-16; Suppl. 6.) Applicant notes that some of
these trips involve transportation between Minnesota and neighboring
states including North Dakota. (Suppl. 6.) Applicant states that Minn-
Dakota also offers motorcoach contract service for universities, sports
teams, and other business, as well as event specific charter services
for weddings, conventions, and other events in the Fergus Falls area,
with some motorcoach services conducted out of state, mostly within
North Dakota and South Dakota, but a limited amount of activity in Iowa
and Wisconsin, and the remainder spread out nationally based on
customer demand for special event service. (Id. at 6-7.) Applicant
states that Minn-Dakota operates approximately 14 power units and
employs approximately 34 drivers. (Appl. 15.)
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\5\ In 1997, Applicant and Michael R. Clark, a noncarrier,
founded and incorporated Ottertail Transportation, Inc., which is
65% owned by Applicant and 35% owned by Michael R. Clark. (Appl.
13.) Ottertail Transportation, Inc., a noncarrier, acquired
Ottertail Coaches, Inc., an intrastate motor carrier, which is the
parent company to Minn-Dakota Coaches, Inc. (Id.) In 2006, Applicant
and Michael R. Clark founded and incorporated Ottertail Trucking,
Inc., a motor carrier of property, as a wholly owned subsidiary of
Ottertail Transportation, Inc. (Id. at 15 n.7.) According to
Applicant, Ottertail Trucking, Inc., is not subject to Board
jurisdiction. (Id.)
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Voyageur Bus Company, Inc. In 1992, Applicant and Michael J. Krois
(Krois), a noncarrier, acquired Metropolitan School & Charter Bus
Service, Inc., from Donald B. Regan. (Id. at 17.) In 2005, Applicant
and Krois founded and incorporated Metro Bus Service, Inc., a
noncarrier, and changed the name of Metropolitan School & Charter Bus
Service, Inc., to Voyageur Bus Company, Inc., (Voyageur), which became
a subsidiary of Metro Bus Service, Inc.\6\ (Id. at 16-17.) According to
Applicant, Voyageur has its principal place of business in Duluth,
Minn., and provides school bus transportation service that includes
general and special education transportation to and from school on a
regular schedule, and school charter service for extracurricular
activities and special trips, with some trips on occasion involving
transportation between Minnesota and neighboring states. (Suppl. 7-8.)
Voyageur Bus also offers motorcoach contract services for universities,
sports teams, and other business, as well as event specific charter
services for weddings, conventions, and other events in the greater
Duluth area. (Id. at 8.) Voyageur Bus's motorcoach services are
conducted primarily in Minnesota, with some operations in Wisconsin,
Iowa, Illinois, or other states across the U.S. based on customer
demand for special event service. (Id.) Applicant states that Voyageur
operates approximately 118 power units and employs approximately 125
drivers. (Appl. 18.) Applicant further notes that Voyageur also
operates a fleet of motorcoaches owned by Lake Superior Motorcoaches,
Inc., a noncarrier subsidiary of Metro Bus Service, Inc., through a
revenue-sharing arrangement. (Id. at 17 n.8 & 18.)
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\6\ Applicant states that Krois owns 50% of Metro Bus Service,
Inc., but does not have a controlling interest in any passenger
motor carrier other than Voyageur. (Appl. 16.)
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Ready Bus Company, Inc. In 2013, Applicant, Garrett O. Regan, and
Casey O. Regan acquired the school bus assets of Ready Bus Line Company
through River Bluff Bus Company, a corporation founded and incorporated
in November 2013. (Id. at 19.) In December 2013, River Bluff Bus
Company was renamed Ready Bus Company, Inc. (Ready Bus). (Id. at 18.)
Applicant is the controlling shareholder of Ready Bus, which is 50%
owned by Applicant, 25% owned by Garrett O. Regan, and 25% owned by
Casey O. Regan. (Id. at 18-19.) Applicant states that Ready Bus
[[Page 90210]]
operates motorcoaches owned by River Bluff Motorcoach, Inc., a
noncarrier that is 50% owned by Applicant.\7\ (Id. at 19 n.9.)
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\7\ River Bluff Motorcoach, Inc. (RBM), a noncarrier, was
founded and incorporated in November 2013, and acquired the
motorcoach operating assets of Ready Bus Line Company. (Appl. 19.)
Applicant states that RBM is 50% owned by Applicant and 10% each
owned by Garrett O. Regan, Casey O. Regan, Troy J. Nelson, Mike
Karlen, and Tom Severson. (Id.)
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According to Applicant, Ready Bus, whose primary place of business
is in Rochester, Minn., provides school transportation service that
includes general and special education transportation to and from
school on a regular schedule, and school charter service for
extracurricular activities and special trips. (Id. at 21; Suppl. 9.)
Applicant notes that, on limited occasions, some of these trips involve
transportation between Minnesota and neighboring states including
Wisconsin, depending on the location of the customer activity. (Suppl.
9.) Ready Bus also offers motorcoach contract service for universities,
sports teams, and other business, as well as event-specific charter
services for weddings, conventions, and other events with service in
Minnesota, Wisconsin, and neighboring states. (Id.) According to the
application, most of the motorcoach service (outside of Minnesota and
Wisconsin) is regionally concentrated in Iowa, Illinois, Missouri, and
Indiana, and the remainder is spread out nationally based on customer
demand for special event service. (Id. at 10.) Applicant states that
Ready Bus operates approximately 59 power units and employs
approximately 56 drivers. (Appl. 21.) \8\
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\8\ Further information about these motor carriers, including
U.S. Department of Transportation (USDOT) numbers, motor carrier
numbers, and USDOT safety fitness ratings, can be found in the
application. (See Appl. 26; id., Ex. 1.)
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Under 49 U.S.C. 14303(b), the Board must approve and authorize a
transaction that it finds consistent with the public interest, taking
into consideration at least (1) the effect of the proposed transaction
on the adequacy of transportation to the public, (2) the total fixed
charges resulting from the proposed transaction, and (3) the interest
of affected carrier employees. Applicant has submitted the information
required by 49 CFR 1182.2, including information demonstrating that the
proposed transaction is consistent with the public interest under 49
U.S.C. 14303(b), see 49 CFR 1182.2(a)(7), and a jurisdictional
statement under 49 U.S.C. 14303(g) that the aggregate gross operating
revenues of the involved carriers exceeded $2 million during the 12-
month period immediately preceding the filing of the application, see
49 CFR 1182.2(a)(5). (See Appl. 22.)
Acquisition of FTS. Applicant states that his proposed acquisition
of FTS would be consistent with the public interest, as it would not
result in any significant changes to the nature or scope of the
operations that are conducted by FTS or any of the other motor carriers
of passengers in the corporate family. (Id. at 23; Suppl. 17.)
Applicant asserts that the acquisition would allow him to make
strategic decisions regarding the operational, asset management, and
safety compliance needs of FTS based on his years of experience in the
school bus market and strong track record of managing successful school
bus providers. (Suppl. 16-17.)
Applicant asserts that there would be no negative impact on
competition as a result of his acquisition of FTS. Applicant states
that FTS is exclusively a school bus service provider that only
occasionally crosses state lines. (Id. at 10-11.) According to
Applicant, FTS does not compete for school bus contracts against the
Affiliated Carriers, which each serve distinct school district
communities within Minnesota. (Id. at 10 (stating that FTS provides
service primarily in the City of Faribault and surrounding areas); see
also id. at 13-15 (describing which school districts the other carriers
at issue here serve.) Moreover, Applicant asserts that the existing
school district contracts with FTS are subject to competitive bid
procedures and that there is substantial competition for such school
transportation services in the relevant service area from national
providers and from local competitors. (Id. at 10-11, 17.)
Applicant states that his acquisition of control of FTS would not
affect fixed charges, as he would obtain control of FTS through a
corporate reorganization that would not involve any external financing.
(Appl. 24; Suppl. 17.) Applicant asserts that there would be no
material effect on employee or labor conditions at FTS, as there are no
plans for employee layoffs or reductions in staff at FTS as a result of
the proposed restructuring transaction, nor plans for adverse changes
to existing FTS employee benefits. (Appl. 25; Suppl. 18.)
Historical Acquisitions of Affiliated Carriers. Applicant contends
that the historical acquisitions of control of the Affiliated Carriers
were consistent with the public interest because those transactions
enabled him to strengthen the depth and quality of service provided by
each of the Affiliated Carriers, based on Applicant's track record in
the bus industry and the opportunity to more efficiently use the
assets, resources, and management experience of the affiliated
companies. (Suppl. 18.) Applicant contends that the acquisitions did
not result in any adverse changes to the nature or scope of the
operations that are conducted by those Affiliated Carriers; rather, the
transactions contributed to an overall increase in the available
motorcoach and school bus service capacity in the relevant service
areas, as Applicant has continued to invest over time in equipment,
operating personnel, and other resources to support the business
activities of these Affiliated Carriers. (Id.)
Applicant argues that there has been no negative impact on
competition, as these Affiliated Carriers do not compete with each
other today and generally did not compete directly with each other at
the time of the respective acquisitions by Applicant, due to the nature
of the services they each provide in their respective service areas.
(Id. at 11.) Moreover, Applicant asserts that the Affiliated Carriers
have faced (and continue to face) substantial competition in each of
the relevant markets from national, regional, and local bus operations,
as well as intermodal competition from motor vehicles, passenger train,
and passenger aviation service. (Id. at 12, 19.) Applicant notes that
two of the carriers subject to the application, Marschall Line and
Rehbein, are exclusively school bus service providers that only
occasionally provide interstate charter service. (Id. at 13.) Applicant
asserts that these two carriers compete for different school bus
contracts, do not serve the same student population, and compete in
markets with substantial competition from national and local bus
transportation providers. (Id. at 13-14.) Applicant states that
Minnesota Coaches, Ready Bus, Minn-Dakota, and Voyageur, all of which
provide both school bus and motorcoach services, also do not directly
compete, have served different service areas, operate their assets out
of different geographic terminals, and face intense competition from
other bus transportation providers. (Id. at 14-16 (describing the
different areas served and other entities with whom these four carriers
compete for both school bus and motorcoach service).)
Applicant asserts that, while limited debt financing was used to
acquire some of the Affiliated Carriers, the historical acquisitions
did not result in fixed charges that adversely affected the
[[Page 90211]]
ability of those carriers to continue to provide safe and quality
transportation service. (Id. at 19.) Applicant states that he has no
outstanding debts related to these transactions, has minimal overall
debts, and was able to pay down acquisition debt promptly following the
relevant acquisitions. (Appl. 24; Suppl. 19.)
Applicant states that the historical acquisitions of control of the
Affiliated Carriers have not had any material adverse effect on
employee or labor conditions. Applicant asserts that, since those
acquisitions, there have not been any mass layoffs or substantial
employee restructurings, and no adverse changes to wage and benefit
arrangements have been implemented. (Suppl. 20.)
Based on Applicant's representations, the Board finds that the
acquisition of FTS is consistent with the public interest and should be
tentatively approved and authorized. The Board also finds that the
historical acquisitions of control of the Affiliated Carriers are
consistent with the public interest and should be tentatively approved
and authorized after the fact. If any opposing comments are timely
filed, these findings will be deemed vacated and, unless a final
decision can be made on the record as developed, a procedural schedule
will be adopted to reconsider the application. See 49 CFR 1182.6. If no
opposing comments are filed by the expiration of the comment period,
this notice will take effect automatically and will be the final Board
action in this proceeding.
This action is categorically excluded from environmental review
under 49 CFR 1105.6(c).
Board decisions and notices are available at <a href="http://www.stb.gov">www.stb.gov</a>.
It is ordered:
1. The proposed acquisition of FTS is approved and authorized,
subject to the filing of opposing comments.
2. The acquisitions of the Affiliated Carriers are approved and
authorized after the fact, subject to the filing of opposing comments.
3. If opposing comments are timely filed, the findings made in this
notice will be deemed vacated.
4. This notice will be effective December 31, 2024, unless opposing
comments are filed by December 30, 2024. If any comments are filed,
Applicants may file a reply by January 13, 2025.
5. A copy of this notice will be served on: (1) the U.S. Department
of Transportation, Federal Motor Carrier Safety Administration, 1200
New Jersey Avenue SE, Washington, DC 20590; (2) the U.S. Department of
Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW,
Washington, DC 20530; and (3) the U.S. Department of Transportation,
Office of the General Counsel, 1200 New Jersey Avenue SE, Washington,
DC 20590.
Decided: November 7, 2024.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Aretha Laws-Byrum,
Clearance Clerk.
[FR Doc. 2024-26469 Filed 11-13-24; 8:45 am]
BILLING CODE 4915-01-P
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