Notice2024-27303
Stefan Soloviev, Executor, Estate of Sheldon H. Solow-Continuance in Control Exemption-Colorado Pacific San Luis Railroad LLC
Primary source
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Published
November 21, 2024
Issuing agencies
Surface Transportation Board
Full Text
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<title>Federal Register, Volume 89 Issue 225 (Thursday, November 21, 2024)</title>
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[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92270-92272]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27303]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36795]
Stefan Soloviev, Executor, Estate of Sheldon H. Solow--
Continuance in Control Exemption--Colorado Pacific San Luis Railroad
LLC
By petition filed on August 23, 2024, Stefan Soloviev, Executor,
the Estate of Sheldon H. Solow (the Estate), seeks an exemption under
49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C.
11323-24 to continue in control of Colorado Pacific San Luis Railroad
LLC (CXSL), upon CXSL's becoming a carrier in a related transaction. As
discussed below, the Board will grant the exemption.
Background
According to the petition, the Estate is a noncarrier that
currently controls two rail carriers. The Estate controls Colorado
Pacific Railroad LLC (CXR), a Class III rail carrier, through the
Estate's control of KCVN, LLC (KCVN), a
[[Page 92271]]
noncarrier.\1\ (Pet. 2, 5.) The Estate also controls Colorado Pacific
Rio Grande Railroad LLC (CXRG), a Class III rail carrier.\2\ (Pet. 3.)
The rail carrier the Estate is seeking to control, CXSL, is a wholly
owned subsidiary of Soloviev Investors LLC (Soloviev Investors), which
is controlled by the Estate. (Id. at 2-3.) The exemption here would
allow the Estate to control CXR, CXRG, and CXSL.\3\ (Id. at 5.)
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\1\ According to the petition, CXR is a wholly owned subsidiary
of KCVN. (Pet. 2 n.1.) In a letter filed with the Board on September
16, 2024, the Estate clarified that the Estate and Stefan Soloviev
each own 50% of KCVN. (Estate Letter 1.) Stefan Soloviev is the
executor of the Estate. (Pet. 2-3.)
\2\ See Colo. Pac. Rio Grande R.R.--Acquis. & Operation
Exemption Containing Interchange Commitment--San Luis & Rio Grande
R.R., FD 36656 (STB served Jan. 5, 2023) (granting CXRG authority to
acquire and operate the assets of the San Luis Rio Grande Railroad
(SLRG)); Soloviev ex rel. Solow--Continuance in Control Exemption--
Colo. Pac. Rio Grande R.R., FD 36662 (STB served Feb. 2, 2023)
(granting the Estate authority to continue in control of CXRG).
Subsequently, CXRG received authority to acquire and operate
approximately 1.53 miles of additional SLRG track known as the
Blanca Spur. See Colo. Pac. Rio Grande R.R.--Pet. for Exemption--
Acquis. & Operation of a Line of R.R. in Costilla Cnty., Colo., FD
36694 (STB served Sept. 18, 2023).
\3\ According to the Estate, it is intended that CXR, CXRG, and
CXSL will all eventually be owned and controlled by the Soloviev
Group, a noncarrier corporation headed by Stefan Soloviev. (Pet. 3
n.3.) The petition states that such transition will be accompanied
by the appropriate regulatory filings to the Board. (Id.)
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On August 22, 2024, CXSL filed a verified notice of exemption
pursuant to 49 CFR 1150.31 to acquire and operate a 13-mile line of
railroad owned by the San Luis Central Railroad Company (SLC). See
Colo. Pac. San Luis R.R.--Acquis. & Operation Exemption--San Luis Cent.
R.R., FD 36794 (STB served Sept. 6, 2024). Notice of the exemption was
served and published in the Federal Register on September 6, 2024 (86
FR 72,920).\4\ Upon CXSL's acquisition of SLC's assets, which the
Estate indicates occurred on October 1, 2024, CXSL became a rail
carrier.\5\ As a result, the Estate needs authorization to continue in
control of CXSL.
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\4\ The owners of SLC and Soloviev Investors executed an Asset
Purchase Agreement on July 26, 2024, whereby the track assets and
certain other assets of SLC were to be sold to Soloviev Investors or
``its permitted assignee,'' and Soloviev Investors assigned all of
its rights in the Asset Purchase Agreement to CXSL on July 31, 2024.
See Colo. Pac. San Luis R.R.--Acquis. & Operation Exemption, FD
36794, slip op. at 1.
\5\ The Estate's continuance in control petition in this docket
noted that CXSL's acquisition and operating authority granted in
Docket No. FD 36794 could become effective and that transaction
could close before the Board's decision on the Estate's continuance
in control authority becomes effective. For that reason, the Estate
indicated that it would enter into a voting trust agreement pursuant
to 49 CFR part 1013 to permit CXSL to begin operations immediately
upon receiving acquisition and operating authority, while ensuring
that the Estate does not control CXSL until the continuance in
control authority becomes effective. (Pet. 4.) The acquisition and
operating authority granted in Docket No. FD 36794 became effective
on September 22, 2024. On October 7, 2024, the Estate filed a copy
of its voting trust agreement with the Board, as required by 49 CFR
1013.3(b). The voting trust agreement, which was executed on October
1, 2024, indicates that CXSL exercised its acquisition and operating
authority on the same date. (Voting Trust Agreement 1.)
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The Estate explains that because the SLC rail line acquired by CXSL
connects to the CXRG mainline at Sugar Junction, Colo., the Estate
cannot seek continuance in control authority pursuant to the class
exemption at 49 CFR 1180.2(d)(2). (Pet. 4, 6); see 49 CFR 1180.2(d)(2)
(requiring that the subject line not connect with any other rail lines
in the corporate family). No additional rail carriers connect to the
line that CXSL acquired from SLC. (See Pet., Ex. A.)
In support of its petition, the Estate asserts that its proposed
control of CXSL is part of an overall transaction that is intended to
continue and enhance the rail service provided to shippers along the
former SLC rail line. (Pet. 7.) In particular, the Estate states that
its control would allow farmers along the rail line to increase their
railroad shipments, as some of those shippers are currently shipping by
truck due in part to the inability of SLC to meet their needs. (Id.)
The Estate asserts that its control of CXSL would enable the infusion
of resources and other support necessary to achieve these objectives.
(Id.) Given these circumstances, the Estate argues that exempting it
from the requirements of 49 U.S.C. 11323-24 is consistent with the rail
transportation policy of 49 U.S.C. 10101 (RTP). (Id.)
The Estate also asserts that the transaction is limited in scope,
as it is confined to a 13-mile, stub-ended rail line, and that CXSL
intends to continue rail service and try to expand it. (Id. at 8.) The
Estate also claims that its control of CXSL would not result in an
abuse of market power; instead, it asserts that no shipper along the
CXSL line will lose rail service options because of the transaction and
that efficiencies and improvements through CXSL's connection to CXRG
should enhance existing service and incentivize use of the line by new
shippers. (Id. at 8-9.)
The Estate seeks expedited consideration of its petition. As noted,
supra note 6, the Estate has placed its membership interest in CXSL
into a voting trust until the control authority sought in this docket
becomes effective. The Estate requests expedition to minimize the
length of time the membership interest must remain in the voting trust.
(Id. at 10.)
Discussion and Conclusions
Under 49 U.S.C. 11323(a)(5), prior approval by the Board is
required for the acquisition of control over a rail carrier by a person
that is not a rail carrier but that controls any number of rail
carriers. Under 49 U.S.C. 10502(a), the Board, to the maximum extent
consistent with 49 U.S.C. subtitle IV, part A, must exempt a
transaction or service from regulation if it finds that: (1) regulation
is not necessary to carry out the RTP; and (2) either (a) the
transaction or service is limited in scope, or (b) regulation is not
needed to protect shippers from the abuse of market power.
In this case, an exemption from the prior approval requirements of
49 U.S.C. 11323-25 is consistent with the standards of 49 U.S.C. 10502.
Detailed scrutiny of the proposed transaction through an application
for review and approval under 49 U.S.C. 11323-25 is not necessary to
carry out the RTP. An exemption would promote the RTP by minimizing the
need for federal regulatory control over the proposed transaction, 49
U.S.C. 10101(2), by reducing regulatory barriers to entry, 49 U.S.C.
10101(7), and by facilitating the honest and efficient management of
railroads, 49 U.S.C. 10101(9). Granting the Estate an exemption to
control CXSL would also allow it to make investments in the rail line
and support a more efficient connection between it and the CXRG
mainline; this would facilitate the development and continuation of a
sound rail transportation system with effective competition to meet the
needs of the public, 49 U.S.C. 10101(4), and foster sound economic
conditions in transportation, 49 U.S.C. 10101(5). The exemption would
also promote energy conservation by incentivizing the diversion to rail
of traffic currently moving by truck, 49 U.S.C. 10101(14). Other
aspects of the RTP would not be adversely affected.
Regulation of the transaction is not needed to protect shippers
from an abuse of market power.\6\ Because the line that CXSL has
acquired connects only to CXRG, there is no risk that CXSL may
foreclose interchange with other connecting carriers or that shippers
will otherwise lose access to alternative rail service as a result of
the transaction. And, as noted above, the transaction would enable
improvements that could make the line a more attractive option for rail
users. Moreover, no shipper (or
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any other entity) has objected to this continuance in control
transaction or CXSL's line acquisition authorized in Docket No. FD
36794. Nevertheless, to ensure that the shippers are informed of our
action, we will require the Estate to serve a copy of this decision on
all shippers on the line that was acquired and is now operated by CXSL
within five days of the service date of this decision and certify to
the Board that it has done so.
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\6\ Given this finding, the Board need not determine whether the
transaction is limited in scope. See 49 U.S.C. 10502(a).
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Under 49 U.S.C. 10502(g), the Board may not use its exemption
authority to relieve a rail carrier of its statutory obligation to
protect the interests of its employees. However, 49 U.S.C. 11326(c)
does not provide for labor protection for transactions under 49 U.S.C.
11324 and 11325 that involve only Class III rail carriers. Accordingly,
the Board may not impose labor protective conditions here because all
carriers involved are Class III carriers.
The control transaction is exempt from environmental reporting
requirements under 49 CFR 1105.6(c)(1)(i) because it would not result
in any significant change in carrier operations. Similarly, the
transaction is exempt from the historic reporting requirements under 49
CFR 1105.8(b)(3), because it would not substantially change the level
of maintenance of railroad properties.
The Board also finds the Estate's request for expedited action on
its petition for exemption to be reasonable under the circumstances
and, therefore, the effective date of the exemption will be December 6,
2024. See 49 CFR 1121.4(e) (``Unless otherwise specified in the
decision, an exemption generally will be effective 30 days from the
service date of the decision granting the exemption.''). Petitions for
stay must be filed by November 29, 2024. Petitions to reopen will be
due by December 11, 2024.
It is ordered:
1. Under 49 U.S.C. 10502, the Board exempts the transaction
described above from the prior approval requirements of 49 U.S.C.
11323-25.
2. Notice of this control exemption will be published in the
Federal Register.
3. The Estate shall serve a copy of the decision on all shippers on
the CXSL line and certify to the Board that it has done so, by November
26, 2024.
4. The control exemption will become effective on December 6, 2024.
Petitions to stay must be filed by November 29, 2024. Petitions to
reopen must be filed by December 11, 2024.
Decided: November 18, 2024.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Kenyatta Clay,
Clearance Clerk.
[FR Doc. 2024-27303 Filed 11-20-24; 8:45 am]
BILLING CODE 4915-01-P
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</html>Indexed from Federal Register on November 21, 2024.
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