Notice2026-22090
Channel Pacific Railroad-Operation Exemption-In West Sacramento, Yolo County, Cal.
Primary source
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Published
October 29, 2026
Issuing agencies
Surface Transportation Board
Full Text
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<title>Federal Register, Volume 91 Issue 208 (Thursday, October 29, 2026)</title>
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[Federal Register Volume 91, Number 208 (Thursday, October 29, 2026)]
[Notices]
[Pages 68221-68224]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22090]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36932]
Channel Pacific Railroad--Operation Exemption--In West
Sacramento, Yolo County, Cal.
On May 12, 2026, Channel Pacific Railroad (CHPR), a noncarrier,
filed a verified notice of exemption under 49 CFR 1150.31 to operate
approximately 2,132 feet of track (the Line) located in a terminal
facility (the Facility) in West Sacramento, Yolo County, Cal. Notice of
CHPR's exemption was served and published in the Federal Register on
May 28, 2026 (91 FR 31318) (May 28 Notice), and the notice became
effective on June 11, 2026.
On July 31, 2026, the City of West Sacramento, Cal., and the
Sacramento-Yolo Port District (together, the Sacramento-area Government
Entities or SGEs) filed a petition to reject the verified notice,
revoke the exemption, or declare the exemption void ab initio (the
Petition).\1\ CHPR filed a reply to the Petition on August 20, 2026
(Reply). For the reasons discussed below, the Board will decline to
institute a revocation proceeding and deny the Petition. Pursuant to 49
U.S.C. 10502(d), the Board's decision will be published in the Federal
Register.
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\1\ The Petition is styled both as a petition ``to reject or
revoke exemption,'' (Pet. 1), and a petition ``to revoke exemption
pursuant to 49 U.S.C. 10502(d) or declare exemption void ab initio
pursuant to 49 CFR 1150.42(c),'' (id. at 2).
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Background
The Line consists of two tracks that begin at a point of connection
with a rail line owned by Union Pacific Railroad Company (UP) at the
northern boundary of the Facility, immediately south of Channel Drive,
and extends southward to ending points immediately north of the
Sacramento River Deep Water Ship Channel.\2\ (Verified Notice 3; see
id., Ex. A (map).) The Line has no mileposts and is owned by CHPR's
noncarrier corporate affiliate, Greencycle Properties, LLC
(Greencycle).\3\ (Verified Notice 1.)
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\2\ CHPR states that a third track, which is excluded from the
linear footage of the Line, will be spur track pursuant to 49 U.S.C.
10906. (Verified Notice 3; see id., Ex. A (map).)
\3\ According to CHPR, it and Greencycle are both controlled by
Teichert Inc. (Teichert), a noncarrier that does not own any other
rail carriers. (Verified Notice 1.)
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According to the verified notice, CHPR and Greencycle have agreed
that CHPR would ``acquire the right to conduct railroad common carrier
service over'' the Line and that CHPR would ``assume responsibility for
the provision of associated commodity-handling and transloading
services within'' the Facility. (Id. at 2.) CHPR asserts that it is
leasing the Line and Facility from Greencycle under a lease effective
July 1, 2026. (Reply 26-27.) CHPR states that it will deliver
``comprehensive, railroad-oriented transportation services within'' the
Facility, ``including, among other things, the inbound and outbound
transportation of railroad-borne shipments.'' (Verified Notice 2-3; see
Reply 11-12 (describing its intended services package to involve
``comprehensive transload and logistics services,'' including ``[t]he
offloading, temporary storage, and reloading of bulk commodities into
motor carriers for local distribution'').) CHPR further asserts that it
has ``communicated its short line operations plans with UP'' and that
UP has indicated willingness ``to coordinate with CHPR on its common
carrier implementation and subsequent operating plans.'' (Verified
Notice 4; see Reply 13 (noting that CHPR and UP executed a formal
interchange agreement, effective July 14, 2026).)
The May 28 Notice provided that petitions for stay were due by June
4, 2026; no stay requests were filed. By decision served June 10, 2026
(June 10 Decision), the Board waived the 60-day advance notice
requirement under 49 CFR 1150.32(e) and established that CHPR's
exemption would become effective on June 11, 2026.
On July 31, 2026, the SGEs filed the Petition, arguing that the
Board should reject the verified notice, revoke the exemption, or
declare the exemption void ab initio. On August 20, 2026, CHPR replied
to the petition.
Preliminary Matter
On September 8, 2026, the SGEs filed a request for leave to file a
rebuttal to CHPR's reply. In the filing, the SGEs assert, among other
things, that the reply contains factual inaccuracies and is misleading.
On September 23, 2026, CHPR filed an opposition to the SGEs' request
for leave. The Board's rules do not permit a reply to a reply, see 49
CFR 1104.13(c),\4\ and the SGEs' filing, which they characterize as a
``limited rebuttal,'' largely repeats or expands on arguments and
information presented in the Petition. Accordingly, the SGEs' request
for leave to file a rebuttal will be denied.
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\4\ As a general matter, to promote the orderly and efficient
administration of cases, the Board is more strictly enforcing 49 CFR
1104.13(c). Kan. & Okla. R.R.--Lease & Operation Exemption with
Interchange Commitment--Union Pac. R.R., FD 36849, slip op. at 7
(STB served Mar. 20, 2026) (citing Sunflower State Indus. Ry.--Pet.
for Declaratory Ord., FD 36714 (Sub-No. 1), slip op. at 2 n.3 (STB
served Mar. 28, 2025)).
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Discussion and Conclusions
As noted above, CHPR's notice of exemption has already become
effective, with no party having sought a stay of the effective date.
Because the exemption is already in effect, the Petition--which seeks
rejection and revocation--will be treated as a petition to revoke. See
Middletown & N.J. R.R.--Lease & Operation Exemption--Norfolk S. Ry., FD
35412, slip op. at 2 n.1 (STB served Dec. 23, 2010). Pursuant to 49
U.S.C. 10502(d), ``an already-effective exemption may be revoked, in
whole or in part, if regulation is necessary to carry out the [Rail
Transportation Policy (RTP)] of 49 U.S.C. 10101.'' Mid-Atl. Gateway
LLC--Lease & Operation Exemption--Certain Rail Line Assets of J.P.
Rail, Inc., FD 36644, slip op. at 2 (STB served Feb. 15, 2023).
[[Page 68222]]
Furthermore, ``[t]he Board shall, within 90 days after receipt of a
request for revocation . . . determine whether to begin an appropriate
proceeding.'' 49 U.S.C. 10502(d). If it ``decides not to begin a
proceeding,'' the Board must publish ``the reasons for the decision''
in the Federal Register. Id.
``A party seeking revocation or rejection of a notice of exemption
has the burden of demonstrating that the notice contains false or
misleading information, or that regulation is necessary to carry out
the'' RTP. TGS Cedar Port R.R.--Operation Exemption--in Chambers Cnty.,
Tex., FD 36627, slip op. at 3 (STB served Apr. 1, 2024) (quoting Gen.
Ry.--Exemption for Acquis. of R.R. Line--in Osceola & Dickinson Cntys.,
Iowa, FD 34867, slip op. at 4 (STB served June 15, 2007)) (denying
petition to revoke); see 49 U.S.C. 10502(d). An exemption under 49 CFR
part 1150 subpart D is void ab initio if the verified notice of
exemption contains false or misleading information that is material to
the authorization process. TGS Cedar Port R.R., FD 36627, slip op. at 3
(citing 49 CFR 1150.32(c); Berkshire Scenic Ry. Museum, Inc. v. ICC, 52
F.3d 378, 381 (1st Cir. 1995)). The ``[f]ailure to disclose material
information can render a notice misleading by omission.'' Ohio River
Partners LLC--Acquis. & Operation Exemption--Hannibal Dev., LLC, FD
35984, slip op. at 3 (STB served Apr. 1, 2016) (citing U S Rail Corp.--
Lease & Operation Exemption--Shannon G., a N.J. LLC, FD 35042 (STB
served Oct. 8, 2008)). Information is material if the transaction would
not otherwise have qualified for an exemption. TGS Cedar Port R.R., FD
36627, slip op. at 3 (citing Berkshire, 52 F.3d at 381). Additionally,
in considering whether a statement is misleading, ``the relevant
question is whether the Board itself has been materially misled.'' Id.
(citing Snohomish Cnty., Wash. v. STB, 954 F.3d 290, 303 (D.C. Cir.
2020)).
As discussed below, the SGEs argue that the exemption should be
declared void ab initio or revoked because the verified notice is
misleading, CHPR is not prepared to operate as a common carrier, and
the circumstances are too complicated for the class exemption process.
The Board addresses these arguments in turn below.
Request To Declare Exemption Void Ab Initio
Alleged omissions and misstatements. According to the SGEs, CHPR
omits material information from the verified notice and presents other
material information in a misleading manner, ``which appear to have
been intended to mask the full scope of the owners' activities,''
rendering the verified notice void ab initio. (Pet. 3.) The SGEs assert
that the verified notice refers to the Facility as a railroad-served
``terminal complex'' but fails to discuss how ``one of the primary
activities at the site would be transfer of petroleum product from
ships to storage tanks'' and then from storage tanks to trucks. (Id. at
5; see also id. at 9-10 (arguing that the verified notice omitted
details about plans for receiving asphaltic oil via maritime shipments,
making related infrastructure developments, and negotiating a dock
lease).) The SGEs further criticize CHPR's filing for not discussing
plans to repurpose the Facility's existing chemical storage tanks to
accommodate asphaltic oil storage (see, e.g., id. at 3), and claim that
CHPR's intended operations are not ``a typical rail to truck transload
operation'' because the ``loading of trucks activity will physically
occur over 300 feet from the rail spur,'' (id. at 12). The Petition
also describes interactions between the SGEs and Teichert personnel
since August 2025 concerning anticipated operations at the Facility
(including rail) and attaches correspondence related to such plans and
related permitting issues. (See, e.g., id. at 2-4, 6-8, 10-11; id.,
Exs. B, E.)
The SGEs further assert that the verified notice should have
explained that Greencycle is the only entity with ``physical access to
the rail lines,'' which, according to the SGEs, makes Greencycle the
only possible shipper (id. at 5 \5\), but that CHPR instead uses
terminology that ``might invoke images of a multi-tenant rail park or a
logistics park,'' (id. at 11). According to the SGEs, Greencycle ``is
merely a rail served customer of'' UP (id. at 6), and CHPR's activities
will occur ``behind the gate'' (or fence) at the Facility (id. at 4;
see id. at 6, 12, 13, 14).\6\ The SGEs also take issue with the
verified notice's description of the track as ``2,132 linear feet''
without clarifying, in text, that the total embraces three segments of
track (one 985-foot track, one 897-foot track, and a 250-foot connector
track). (Id. at 5.) Additionally, the SGEs suggest that CHPR's
projection of $5 million in annual operating revenues ``refers to
revenues from sales of asphalt,'' not rail transportation. (Id. at 14.)
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\5\ The SGEs claim that ``there are no other rail customers
involved, nor can there be unless Greencycle sells parcels of its
property to other entities who might be served by'' CHPR. (Pet. 12.)
\6\ According to the SGEs, a closed gate and/or fence runs
across the tracks at the Facility. (See Pet. 12 (citing Pet., Ex. F
(photos dated July 17, 2026)).) The SGEs similarly describe the
Facility's prior owner as ``a behind the fence shipper facility that
was rail served by'' UP. (Id. at 13.)
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In response, CHPR argues that its verified notice provides what is
required under the regulations: an accurate description of ``the lines
of railroad that would become the subject to the proceeding.'' (Reply 9
(emphasis omitted) (citing 49 CFR 1150.33(e)(3)-(4)).) CHPR asserts
that ``an exhaustive, granular inventory of . . . ancillary
transportation infrastructure'' is not required by the regulations.
(Id. at 9.) CHPR also argues that its negotiations for a river dock
lease and the repurposing of storage tanks have ``no bearing on'' the
exemption criteria here, which focus on ``the relevant transaction
elements--specifically, the acquisition of operating rights over the
track and the commitment to provide common carrier service over them.''
(Id. at 10.) CHPR further argues that the Board should reject the SGEs'
suggestion that the filing falsely ``implied direct, side-by-side rail-
to-truck transloading'' despite the 300-foot distance between the truck
bay and the rail spur. (Id. at 14 (citing Pet. 12).) According to CHPR,
the verified notice made no such representations, such details would
not have affected the validity of the exemption, and CHPR's plans
regarding transfer of commodities are standard for multimodal logistics
providers. (Id.)
CHPR further states that its description of the site as a
``terminal complex'' was accurate because the Facility will function as
``a multimodal transload terminal,'' with CHPR ``receiving asphaltic
oil via multiple modes (rail and ship), storing it in tanks, and
transferring it to tanker trucks for distribution to off-site asphalt
plants.'' (Id. at 9-10; see Verified Notice 2, 3.) CHPR avows that the
Facility ``can and will be made available to other customers'' beyond
Greencycle and that CHPR is fully aware of--and ``steadfast[ly]
commit[ted]'' to fulfilling--its common carrier obligation. (Reply 12;
see id. at 23-24.) CHPR further asserts that it is standard practice
for rail customers to use terminal facilities for transloading ``using
available ground space'' without any need for an on-site real estate
footprint or intermediate storage. (Id. at 27, 28.\7\) Additionally,
CHPR states that
[[Page 68223]]
the verified notice accurately describes the length of the Line (id. at
14-15), and that its projection of annual operating revenues exceeding
$5 million is ``a good-faith estimate of the revenues to be generated
from the comprehensive railroad services package CHPR will provide,''
(id. at 11; see id. at 12 (stating that the estimate reflects the
``comprehensive scope of projected common carrier logistics
services'')). CHPR represents that the figure did not account for the
sale of the commodity as ``CHPR will merely transport and handle
asphaltic oil for a charge; it will not be the beneficial owner of
it.'' (Id.)
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\7\ CHPR asserts that if any customers require intermediate
storage, it is possible to provide that ``without triggering
California subdivision laws,'' as the SGEs appear to suggest. (Reply
28; see Pet. 12.) According to CHPR, ``customers can contract for
the throughput of asphaltic oil via'' the existing storage tanks, or
they could ``execute simple facility lease agreements for the large
on-site warehouse or individual storage tanks to accommodate
completely different rail-borne products.'' (Reply 28.) CHPR states
that it is ``in preliminary discussions with third-party
construction companies to provide exactly these services.'' (Id.)
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The information that the SGEs claim is either misleading or omitted
from the verified notice is not material because it does not bear on
the exemption criteria. (See, e.g., Reply 9-10.) The Board's
regulations require a notice of exemption to include ``[a] brief
summary of the proposed transaction.'' 49 CFR 1150.33. CHPR's verified
notice met this requirement. The information about CHPR's operations
that the SGEs argue was omitted or misleading--such as CHPR's plans to
facilitate maritime shipments (in addition to rail) or repurpose
storage tanks and the distance between the rail spur and truck
loading--are not required by the regulation. Additionally, the verified
notice's description of the Facility as a ``terminal complex'' (or
``railroad-served terminal facility'') was not misleading, as it
appears to reflect CHPR's plans for rail service. (Verified Notice 2,
3.) Furthermore, as discussed below, CHPR has verified that it has
prospective third-party customers. (See Reply 28-29.) The Board also
does not take issue with CHPR's description of the track as 2,132
linear feet, particularly in light of the verified notice's map
depicting the segments of track (see Verified Notice 3; id., Ex. A (map
depicting a ``track 1'' and a ``track 2'' as 897 and 985 feet,
respectively, with a 250-foot ``connector track,'' and a ``track 3 spur
track'' as 709 feet)), and the SGEs have provided no basis for the
Board to find that CHPR's ``good-faith estimate'' of anticipated
revenues was false or misleading.
Alleged lack of readiness or intention to commence common carrier
operations. The SGEs contend that CHPR is not a legitimate rail carrier
and that it is seeking operating authority ``to take advantage of the
preemptive authority of the Board's jurisdiction . . . and avoid
certain state and local land use regulations.'' (Pet. 4; see id. at 3,
4-5.) The SGEs also claim that a lack of preparation for common carrier
operations by CHPR indicates that it does not intend to provide common
carrier service. The SGEs assert that ``[i]nstead of . . . an
interchange agreement with Union Pacific, as one would expect from a
short line railroad, [CHPR] apparently has only an industry track
agreement with Union Pacific, which is what one would expect of a
typical rail served customer.'' (Id. at 6 (citing id., Ex. B at 5
(August 2025 letter from Teichert's attorney to City of West Sacramento
noting that Teichert had ``entered into a track licensing agreement
with [UP] for ongoing rail service'' at the Facility)).) The SGEs also
question CHPR's intentions by asserting that there are no discernable
locomotives or rail equipment in place yet at the Facility (id. at 12-
13), CHPR is not listed on UP's website as a short line that it
connects with (id. at 8, 13), and CHPR does not yet have an official
Standard Carrier Alpha Code (SCAC) identifier (id. at 8, 13).
In its reply, CHPR acknowledges that it sought common carrier
authority in part to address ``the community's attempts to `regulate'
away the Terminal's historic access to the interstate network.'' (Reply
23.) CHPR argues, however, that it is not problematic for it to
consider preemption in invoking the Board's common carrier
authorization processes (id. at 23), and that it is ``a lawful
prerogative, provided the entity assumes the actual, objective
obligations of a common carr[ier], as CHPR pledges to do,'' (id. at
24). CHPR also responds with a detailed description of its preparations
to provide common carrier service. (Id. at 12-14, 25, 26, 28-29.)
The Board's regulations and precedent do not require CHPR to have
all operating assets and administrative arrangements in place prior to
seeking common carrier operating authority. See Townline Rail Terminal,
LLC--Constr. & Operation Exemption--in Suffolk Cnty., N.Y., FD 36575
(STB served Nov. 15, 2023) (denying motion to dismiss petition for
exemption and rejecting argument that the exemption filer's ``failure
to provide evidence that it ha[d] entered into an interchange agreement
with [railroad] indicates [filer] would not be a rail carrier''); Mid-
Atl. Gateway LLC, FD 36644, slip op. at 2 (``The grant of the exemption
here does not require the parties to complete the transaction, and
revoking the exemption is not necessary simply because the parties have
not reached a final agreement to go forward.''). The verified notice
states that CHPR was in communication with UP about its intended short
line operations (see Verified Notice 4), and CHPR explains that it and
UP now have executed a formal interchange agreement and have continued
discussions regarding interline service (Reply 13 (stating that the
parties ``are forging ahead with other interline service arrangements
consistent with UP's acceptance of CHPR's intended common carrier
status''); id. at 26 (referring to ``active, ongoing commercial
discussions regarding the handling of traffic in interline service''
and asserting that ``UP has been highly receptive here'')).
Further, CHPR has pledged that it ``will acquire the administrative
identifiers and operational assets in the ordinary course of business
as it acts upon its permissive authority,'' (Reply 13-14), and
indicates that it has been making progress on those efforts since the
exemption took effect (id. at 25 (asserting that it is in the process
of obtaining SCAC registration, developing common carrier tariffs, and
coordinating with the Railroad Retirement Board)); see Riverview
Trenton R.R.--Pet. for Exemption from 49 U.S.C. 10901 to Acquire &
Operate a Rail Line in Wayne Cnty., Mich., FD 34040, slip op. at 3-4
(STB served Nov. 30, 2007) (carrier's delay in beginning operations was
not a basis to revoke the exemption where it was taking ``steps . . .
to restore rail service'' and appeared to ``remain[ ] committed to
instituting the proposed rail service''). Moreover, CHPR has repeatedly
affirmed that it ``fully understands its statutory obligations to hold
itself out to the public as a common carrier'' and that it ``stands
ready'' to provide its services and Facility access to third parties
upon reasonable demand. (Reply 12; see id. at 3, 23-24, 26); Townline
Rail Terminal, LLC, FD 36575, slip op. at 4-5 (STB served Nov. 15,
2023) (referring to exemption filer's repeated statements ``that it
would offer common carrier rail service to the public for
compensation''). CHPR has also represented that after it announced its
plans to commence common carrier service, prospective third-party
customers ``promptly came forward seeking opportunities to transload
additional, non-asphalt commodities,'' which it states demonstrates ``a
plausible local need'' for its intended services. (Reply 28-29.) The
SGEs have not provided the Board with any basis to discredit these
sworn statements.\8\
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\8\ CHPR's reply includes a sworn verification from its Vice
President (Reply 61.)
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Finally, to support their argument that CHPR is not a rail carrier,
the SGEs primarily rely on the Board's decision in
[[Page 68224]]
Hi Tech Trans, LLC--Petition for Declaratory Order--Newark, N.J., FD
34192 (Sub-No. 1), slip op. at 5 (STB served Aug. 14, 2003)
(transloading activities not within the Board's jurisdiction where,
among other things, activities were ``not performed by a rail carrier
or under the auspices of a rail carrier holding itself out as providing
those services''). However, Hi Tech is not applicable. Unlike the
third-party transloader there, which operated a transloading facility
located on a rail carrier's property and was not itself a rail carrier,
CHPR has stated that it will hold itself out to the public as a rail
carrier and has sought operating authority to do so.\9\
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\9\ The Board has revoked exemptions where there was specific
evidence indicating that a transaction was merely a sham to preempt
state or local condemnation actions and the record raised
significant doubt as to whether the exemption-holder ever intended
to initiate rail service. See, e.g., Milwaukee Ind. Trade Ctr.,
LLC--Acquis. & Operation Exemption--Line Owned by Milwaukee Ind.
Trade Ctr., LLC, FD 35133, slip op. at 7-8 (STB served June 16,
2010); Jefferson Terminal R.R.--Acquis. & Operation Exemption--Crown
Enters., Inc., 5 ST.B. 461, 465 (2001). Here, that is not the case.
Even though CHPR may have ``sought common carrier status in part''
to obtain preemption, there is no specific evidence on the record
that its efforts to serve as a common carrier are not legitimate and
thus there is no basis here for the Board to find that the verified
notice was void ab initio or to revoke the exemption. Accordingly,
while CHPR's failure to disclose the existence of its dispute with
the SGEs was not materially misleading, earlier disclosure could
have allowed the Board to address this concern more expeditiously.
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Therefore, the Board finds that CHPR did not materially mislead the
Board or omit material information and will deny the SGEs' request to
declare the exemption void ab initio.
Request To Revoke Exemption
The SGEs claim that even if the Board does not conclude that the
verified notice was deliberately false or misleading, the Petition
shows that ``the Board did not fully understand the situation on the
ground when it issued its decision'' and that this is ``not a simple or
straightforward transaction.'' (Pet. 15; see id. at 19 (stating that
the ``circumstances concerning these so-called new railroad operations
are too complicated to be handled in a notice of exemption'').)
Accordingly, they claim that ``it would be proper for the Board to . .
. revoke the exemption.'' (Id. at 15.) CHPR responds that the SGEs have
failed to demonstrate that regulating CHPR would advance or support the
RTP objectives. (Reply 15.)
However, the SGEs have not demonstrated that regulation is
necessary to carry out the RTP. See 49 U.S.C. 10502(d); 49 CFR
1121.4(f) (``[t]he person seeking revocation has the burden of showing
that the revocation criteria of 49 U.S.C. 10502(d) have been met''). As
CHPR points out, the SGEs have not asserted that regulation is
necessary to carry out the RTP or otherwise tried to show that CHPR's
operations will harm the national rail network, threaten competitive
service, or harm shippers. (Reply 15.) Accordingly, the Board will
decline to revoke the exemption on the basis that regulation is
necessary to carry out the RTP.
For the reasons set forth above, the Petition will be denied, and
accordingly, the Board will not institute a proceeding under 49 U.S.C.
10502(d).
It is ordered:
1. The Board declines to institute a proceeding under 49 U.S.C.
10502(d).
2. The Petition is denied.
3. The SGEs' request for leave to file a rebuttal is denied.
4. This decision will be published in the Federal Register.
5. This decision is effective on its date of service.
Decided: October 27, 2026.
By the Board, Board Members Fuchs, Hedlund, Kloster, and
Schultz.
Zantori Dickerson,
Clearance Clerk.
[FR Doc. 2026-22090 Filed 10-28-26; 8:45 am]
BILLING CODE 4915-01-P
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