Notice2025-00068
Carload Express, Inc.-Control Exemption-The Maryland and Delaware Railroad Company
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
January 7, 2025
Issuing agencies
Surface Transportation Board
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 4 (Tuesday, January 7, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 4 (Tuesday, January 7, 2025)]
[Notices]
[Pages 1220-1221]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00068]
=======================================================================
-----------------------------------------------------------------------
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36807]
Carload Express, Inc.--Control Exemption--The Maryland and
Delaware Railroad Company
By petition filed on October 30, 2024, Carload Express, Inc.
(Carload), a noncarrier, seeks an exemption under 49 U.S.C. 10502 from
the prior approval requirements of 49 U.S.C. 11323 to acquire control
of The Maryland and Delaware Railroad Company (MDDE), a Class III rail
carrier, through the purchase of the outstanding equity shares in MDDE
from Old Line Holdings, Inc. (Old Line). As discussed below, the Board
will grant Carload's petition for exemption.
Background
MDDE, a wholly owned subsidiary of Old Line, is a Class III rail
carrier that operates three unconnected rail lines between Delaware and
Maryland: (1) the Centreville/Chesterton Line extending from milepost
1.0 at Townsend, Del., to milepost 34.0 at Centreville, Md., and from
milepost 0.0 (milepost 9.3 on the Centreville segment) at Massey, Md.,
to milepost 18.82 at Worton, Md.; (2) the Seaford Line extending from
milepost 2.3 at Seaford, Del., to milepost 24.24 at Linkwood, Md.; and
(3) the Snow Hill Line extending from milepost 39.0 at Frankford, Del.,
to milepost 65.7 at Snow Hill, Md., which MDDE also owns. (Id. at 3);
see Md. & Del. R.R.--Acquis. Exemption--Snow Hill Shippers Ass'n, Inc.,
FD 33772 (STB served Feb. 24, 2000).
Carload is a noncarrier holding company that currently controls
three Class III rail carriers: two operating in southwestern
Pennsylvania,\1\ and the Delmarva Central Railroad Company (DCR), which
leases or operates approximately 187 miles of rail line on the Delmarva
Peninsula in Delaware, Maryland, and Virginia. (Pet. 1-2.) According to
Carload, DCR operates a rail line that connects with each of the rail
lines operated by MDDE,\2\ and therefore the proposed control
transaction does not qualify for the class exemption under 49 CFR
1180.2(d)(2). (Pet. 1, 3.)
---------------------------------------------------------------------------
\1\ Carload controls Allegheny Valley Railroad Company and
Southwest Pennsylvania Railroad Company. See Carload Express, Inc.--
Continuance in Control Exemption--Delmarva Cent. R.R., FD 36072 (STB
served Dec. 2, 2016); see also Katahdin Railcar Servs. LLC--Change
in Operators Exemption--Ohio Terminal Ry., FD 36487 (STB served Mar.
30, 2021).
\2\ According to Carload, MDDE and DCR connect at Townsend,
Seaford, and Frankford, Delaware. (Pet. 3.)
---------------------------------------------------------------------------
Concurrent with Carload's petition, Old Line filed a verified
notice of exemption to acquire from MDDE and operate an approximately
23.7-mile portion of the Snow Hill Line (Snow Hill South Line).
Verified Notice, Old Line Holding Co.--Acquis. & Operation Exemption--
Line of the Md. & Del. R.R., FD 36806. Notice of the exemption was
served and published in the Federal Register on November 15, 2024 (89
FR 90343). According to the petition, Old Line's acquisition of the
Snow Hill South Line from MDDE would occur immediately prior to
Carload's acquisition of MDDE from Old Line, pursuant to a purchase
agreement dated August 1, 2024. (Pet. 1, 4.) The purchase agreement
also contemplates that DCR would acquire from MDDE the remaining three-
mile portion of the Snow Hill Line (Snow Hill North Line).\3\ (Pet. 4.)
In the petition, Carload explains that the structure of the
transactions ``accommodates certain tax treatment of the Snow Hill
North Line acquisition'' and would divide ownership of the Snow Hill
Line between DCR and Old Line. (Id.) Carload states that, after it
acquires control of MDDE, MDDE would continue operating the
Centreville/Chesterton and Seaford Lines.\4\ (Pet. 4.)
---------------------------------------------------------------------------
\3\ DCR filed a verified notice of exemption for the proposed
acquisition, and notice of the exemption was served and published in
the Federal Register on October 4, 2024 (89 FR 80982). See Delmarva
Cent. R.R.--Acquis. Exemption--Line of the Md. & Del. R.R., FD
36805, slip op. at 1 (STB served Oct. 4, 2024) (noting DCR stated
that it would operate the Snow Hill North Line). According to the
petition, following DCR's proposed acquisition of the Snow Hill
North Line and Old Line's proposed acquisition of the Snow Hill
South Line, ``the current DCR-MDDE interchange at Frankford will be
replaced by a DCR-Old Line interchange at Selbyville.'' (Pet. 4
n.10.)
\4\ Carload states that these lines are owned by the Maryland
Transit Administration and are operated by MDDE pursuant to a
modified certificate of public convenience and necessity. (Pet. 3);
see Md. & Del. R.R.--Modified Rail Certificate, FD 29830 (ICC served
Feb. 9, 1982).
---------------------------------------------------------------------------
According to Carload, upon consummation of the proposed
transaction, the rail operations of MDDE and DCR would be closely
coordinated and MDDE's operations would be supported by Carload and
DCR. (Id. at 5.) Carload states that it does not anticipate service
level changes on the Centreville/Chesterton and Seaford Lines. (Id.)
Carload also states that the proposed transaction would not result in
any shipper losing rail service or existing competitive options. (Id.)
According to Carload, DCR serves as MDDE's sole physical link to the
remainder of the national rail system and all traffic currently moving
over MDDE also moves over DCR's rail line, which would continue after
Carload acquires control of MDDE. (Id. at 3, 5.) Carload also states
that the proposed transaction would not alter the arrangement that, as
handling carriers for Norfolk Southern Railway Company (NSR), MDDE and
DCR do not control pricing on interline traffic with NSR. (Id. at 4-5.)
Carload states that the proposed transaction would ``bring to MDDE
the strengths and resources of an established short-line operator''
while preserving MDDE's current service. (Id. at 7.) Carload further
states that the proposed transaction would permit coordination between
the rail carriers, thereby ``enhancing effective rail management and
the economic benefits of MDDE's service.'' (Id.) According to Carload,
the proposed transaction would not adversely impact competition, as
MDDE and DCR do not serve common industries where they connect. (Id. at
8.) Carload also states that the proposed transaction would not impact
competitive options because all MDDE traffic would continue moving over
DCR's rail line. (Id. at 5, 8.) According to Carload, ``MDDE will
simply be incorporated into the Carload family of short-line
carriers,'' and shippers may benefit from greater efficiencies as a
result. (Id. at 8.)
Carload seeks expedited consideration so that the proposed
transaction--along with all related transactions involving Carload,
DCR, MDDE, and Old Line--can be consummated no later than January 31,
2025. (Id. at 10.) According to Carload, an expedited decision would
allow the parties to avoid multiple closings. (Id.)
Discussion and Conclusions
Under 49 U.S.C. 11323(a)(5), prior approval by the Board is
required for the
[[Page 1221]]
acquisition of control of 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), however, the Board shall, to the maximum extent consistent
with U.S. Code Title 49, subtitle IV, part A, exempt a transaction from
regulation if it finds that (1) regulation is not necessary to carry
out the rail transportation policy (RTP) of 49 U.S.C. 10101, 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 sections 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); ensuring the continuation of a sound rail
transportation system that would continue to meet the needs of the
public, 49 U.S.C. 10101(4); fostering sound economic conditions in
transportation, 49 U.S.C. 10101(5); reducing regulatory barriers to
entry into and exit from the industry, 49 U.S.C. 10101(7); encouraging
efficient management of railroads, 49 U.S.C. 10101(9); and providing
for the expeditious resolution of this proceeding, 49 U.S.C. 10101(15).
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.\5\ MDDE and DCR do not serve common
industries where they connect at Townsend, Seaford, and Frankford.
(Pet. 8.) Further, the common control of MDDE and DCR would not reduce
competitive options for shippers, as all MDDE traffic currently moves
over DCR's line and would continue to do so following Carload's
acquisition of MDDE. (Id. at 5, 8.) Indeed, because DCR is MDDE's
``sole physical link'' to the remainder of the interstate rail network,
there is no risk that Carload may foreclose interchange between MDDE
and other connecting carriers. (Id. at 3, 8 n.12; see also id., Ex. A
(showing MDDE interchanges).) Shippers may also benefit from improved
coordination between MDDE and DCR. Moreover, no shipper (or any other
entity) has objected to the proposed control transaction. Nevertheless,
to ensure that the shippers are informed of our action, we will require
Carload to serve a copy of this decision on all shippers on the
Centreville/Chesterton, Seaford, and Snow Hill North Lines and certify
to the Board that it has done so within five days of the service date
of this decision.
---------------------------------------------------------------------------
\5\ Given this finding, the Board need not determine whether the
transaction is limited in scope. See 49 U.S.C. 10502(a).
---------------------------------------------------------------------------
Under 49 U.S.C. 10502(g), the Board may not use its exemption
authority to relieve a carrier of its statutory obligation to protect
the interests of employees. Section 11326(c), however, does not provide
for labor protection for transactions under sections 11324 and 11325
that involve only Class III rail carriers. Therefore, because all the
carriers involved in the proposed transaction are Class III carriers,
the Board may not impose labor protective conditions.
The control transaction is exempt from environmental reporting
requirements under 49 CFR 1105.6(c)(1)(i) because it will 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 will not substantially change the level of
maintenance of railroad properties.
As indicated above, Carload seeks to be able to consummate this
transaction and other related transactions together by no later than
January 31, 2025. The Board finds that Carload's request is reasonable.
Accordingly, the effective date of the exemption will be January 31,
2025. 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.''). Petitions for stay must be filed by
January 16, 2025. Petitions to reopen will be due by January 27, 2025.
It is ordered:
1. Under 49 U.S.C. 10502, the Board exempts from the prior approval
requirements of 49 U.S.C. 11323-25 Carload's acquisition of control of
MDDE through the purchase of the outstanding equity shares in MDDE from
Old Line.
2. Notice of the exemption will be published in the Federal
Register.
3. Carload shall serve a copy of the decision on all shippers on
the Centreville/Chesterton, Seaford, and Snow Hill North Lines and
certify to the Board that it has done so, by January 7, 2025.
4. The exemption will become effective on January 31, 2025.
Petitions for stay must be filed by January 16, 2025. Petitions to
reopen must be filed by January 27, 2025.
Decided: December 31, 2024.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Zantori Dickerson,
Clearance Clerk.
[FR Doc. 2025-00068 Filed 1-6-25; 8:45 am]
BILLING CODE 4915-01-P
</pre></body>
</html>Indexed from Federal Register on January 7, 2025.
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.