[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Notices]
[Pages 40475-40476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19615]


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DEPARTMENT OF TRANSPORTATION
    \1\ The ICC Termination Act of 1995, Pub. L. 104-88, 109 Stat. 
803 (ICCTA), which was enacted on December 29, 1995, and took effect 
on January 1, 1996, abolished the Interstate Commerce Commission 
(ICC) and transferred certain functions to the Surface 
Transportation Board (Board). This notice relates to an acquisition 
of control of a rail carrier that is subject to Board jurisdiction 
pursuant to 49 U.S.C. 11323-25.
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[STB Finance Docket No. 32892]


CSX Corporation and CSX Transportation, Inc.--Control--The 
Indiana Rail Road Company

AGENCY: Surface Transportation Board.

ACTION: Notice of acceptance of application.

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SUMMARY: The Board accepts for consideration the application filed July 
3, 1996, by CSX Corporation (CSX), CSX Transportation, Inc. (CSXT), and 
The Indiana Rail Road Company (INRD) (collectively, applicants), for 
CSX and CSXT to acquire control of INRD. In accordance with 49 CFR 
1180.4(b)(2)(iv), the Board finds that this is a minor transaction as 
described in 49 CFR 1180.2(c).

DATES: This decision is effective on August 2, 1996. Written comments, 
including comments from the Secretary of Transportation and the 
Attorney General of the United States, must be filed with the Board no 
later than September 3, 1996. The Board will issue a service list 
shortly thereafter. Copies of the comments must be served on all 
parties of record within 10 days after the Board issues the service 
list and must be confirmed by certificate of service filed with the 
Board indicating that all designated individuals and organizations on 
the service list have been properly served. Applicants' reply is due 
September 23, 1996.

ADDRESSES: Send an original and 10 copies of pleadings referring to STB 
Finance Docket No. 32892 to: Surface Transportation Board, Office of 
the Secretary, Case Control Branch, 1201 Constitution Avenue, N.W., 
Washington, DC 20423. In addition, send one copy of all pleadings to 
applicants' representatives: (1) G. Paul Moates, Sidley & Austin, 1722 
Eye Street, N.W., Washington, DC 20006; and (2) John H. Broadley, 
Jenner & Block, 601 Thirteenth Street, N.W., Twelfth Floor, Washington, 
DC 20005.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-5660. [TDD for 
the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: Applicants seek approval under 49 U.S.C. 
11323-25 for CSX and CSXT to acquire control of INRD by acquiring a 
controlling interest in Midland United Corporation (Midland), the 
noncarrier holding company that owns INRD.
    Applicants state that this is a minor transaction as defined in 49 
CFR part 1180, the regulations that implemented former 49 U.S.C. 11343-
45. The ICCTA revised those statutory provisions and reenacted them as 
49 U.S.C. 11323-25. Because the proposed transaction does not involve 
the merger or control of two Class I railroads, it is subject to the 
standards of 49 U.S.C. 11324(d). Also, as discussed below, because we 
have determined that the transaction is not of regional or national 
significance, the procedures set out at 49 U.S.C. 11325(d) apply. Under 
section 204(a) of the ICCTA, all ICC rules in effect on the date of 
enactment of the ICCTA ``shall continue in effect according to their 
terms until modified, terminated, superseded, set aside, or revoked in 
accordance with law by the Board * * * or operation of law.'' While the 
standards and procedures of former sections 11343-45 and current 
sections 11323-25 are substantially similar, insofar as minor 
transactions are concerned, the procedures of current section 11325(d) 
differ slightly from those at 49 CFR 1180.4 and shall govern. 
Otherwise, the use of the regulations at 49 CFR part 1180 for this 
proceeding appears proper.
    CSXT is a Class I rail carrier wholly owned by CSX, a noncarrier, 
and operates approximately 19,000 miles of track in 20 states, the 
District of Columbia, and the province of Ontario, Canada. INRD is a 
Class III rail carrier that operates approximately 155 miles of track 
between Newton, IL, and Indianapolis, IN. CSXT's lines, relevant to 
this transaction, run essentially north and south, while INRD's line 
runs essentially east and west. INRD and CSXT have direct connections 
at Sullivan and Bloomington, IN, and an indirect connection at 
Indianapolis, IN, through which they interchange freight traffic.
    The principal commodity handled by INRD is Indiana coal. In 1995, 
INRD transported approximately 34,000 carloads of Indiana coal, which 
is more than 60% of its total annual carloads of approximately 56,000. 
According to applicants, Indiana coal is currently available from a 
number of mine sources served by Soo Line Railroad Company (Soo), INRD, 
and Indiana Southern Railroad Company (ISRR). Applicants argue that the 
availability of coal from mine sources located in neighboring states as 
well as from western coal mines creates competition in coal 
transportation services for shippers and receivers served by INRD. 
Applicants submit that the wide variety of coal source and 
transportation options precludes any significant competitive harm as a 
result of the proposed transaction.
    In support of its contention that the proposed transaction is 
unlikely to affect, much less diminish, competition for INRD's shippers 
and receivers, applicants provide the following traffic data. 
Approximately two-thirds of INRD's coal traffic consists of movements 
to electric power generating utility plants served directly by INRD. 
Nearly one-half of that traffic moved in all-local service from two 
active INRD-served mines at Switz City, IN. The remainder of INRD's 
terminating coal traffic consisted of interline movements originating 
at mines served by Soo and/or ISRR. With only one exception, generating 
fewer than 1,000 carloads of INRD traffic in 1995, those mines are not 
served by CSXT. All of INRD's interline-received coal traffic served 
utility plants that currently are served either exclusively by INRD or 
by two rail carriers other than CSXT. Only one

[[Page 40476]]

coal receiver located on INRD's line currently can be served directly 
by CSXT. The remainder of INRD's 1995 coal traffic (approximately 
12,000 carloads) moved in joint-line service with Soo, ISRR, and/or 
Conrail to utilities and industrial users in Indiana, Wisconsin, and 
Iowa, and none of those receivers is served by CSXT. Therefore, 
applicants conclude that the common control of INRD and CSXT will not 
diminish competition for INRD-originating coal traffic. INRD also 
provides overhead haulage services for CSXT between Bloomington and 
Sullivan, which accounted for approximately 10% of INRD's traffic in 
1995.
    The largest share of INRD's non-coal traffic, approximately 8,200 
carloads in 1995, originated or terminated at local industries on 
INRD's main line at Robinson, IL. INRD is the only rail carrier serving 
Robinson. Less than 10% of INRD's 1995 traffic consisted of farm 
products (primarily grain) that originated at one of three country 
elevators located on INRD's main line between Newton and Sullivan. 
Applicants submit that the proposed transaction will strengthen grain 
competition by enhancing rail service between INRD origins and CSXT 
long-haul destinations, thereby improving access to potential markets 
for Indiana and Illinois grain producers.
    CSXT owns 40% of Midland's issued and outstanding voting common 
stock, as well as options to acquire the remaining 60% of Midland's 
stock and certain nonvoting covertible preferred stock. CSXT proposes 
to acquire control of INRD through control of Midland, either by 
converting its preferred stock or by exercising its options to purchase 
the remainder of the outstanding common stock.2
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    \2\ By decision served May 3, 1996, in this proceeding, the 
Board granted a waiver to permit applicants to file this application 
without disclosing the consideration to be paid in connection with 
the transaction.
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    Applicants maintain that the proposed transaction will preserve the 
quality of INRD's transportation services, improve those services 
through better coordination of operations and marketing with CSXT, and 
allow the pursuit of opportunities for operating efficiencies and 
expanded marketing through common ownership and operation. They state 
that the acquisition of control provides a financially attractive 
investment opportunity for CSXT, and that INRD's rail operations are a 
natural complement to those of CSXT, strengthening their existing 
operating relationship and facilitating joint marketing of their rail 
services and tighter coordination of their operations. It will also 
allow INRD to enhance its services to its customers and provide greater 
access to CSXT's supply of freight cars.
    Applicants propose to maintain INRD as a separate subsidiary for 
the foreseeable future, operating essentially in the same manner as it 
does today, with no significant changes in operations or service. Under 
CSXT's current operating plan, only modest operating efficiencies, 
marketing considerations, and service improvements are contemplated, 
while preserving INRD's existing schedules and services. If, however, 
CSXT later acquires the balance of Midland's common stock under the 
terms of its Option Agreement, applicants indicate that it is possible 
that CSXT will seek to coordinate more closely the carriers' 
operations. Applicants state that there are no present plans to close 
any existing interline route or to alter or cancel any existing 
divisions with connecting carriers.
    Applicants submit that the proposed transaction will have no 
adverse impact on employees, and that all CSXT and INRD employees will 
retain their existing positions and responsibilities. Applicants 
acknowledge that approval of the transaction will be subject to the 
conditions set forth in New York Dock Ry.--Control--Brooklyn Eastern 
Dist., 360 I.C.C. 60 (1979).
    Under 49 CFR part 1180, we must determine whether a proposed 
transaction is major, significant, or minor. The proposed transaction, 
which involves the control by a Class I rail carrier of a Class III 
rail carrier, has no regional or national significance and will clearly 
not have any anticompetitive effects. We conclude that the competitive 
and operational effects of CSXT's control of INRD would be minimal and 
that none is adverse. Moreover, it appears that there is considerable 
potential for improved coordination of operations and marketing between 
CSXT and INRD that will positively affect the services provided by both 
carriers, especially INRD. Accordingly, we find the proposal to be a 
minor transaction under 49 CFR 1180.2(c), consistent with the 
categories of transactions now defined at 49 U.S.C. 11325(a). Because 
the application complies with the applicable regulations governing 
minor transactions, we are accepting it for consideration.
    The application and exhibits are available for inspection in the 
Public Docket Room at the Offices of the Board in Washington, DC. In 
addition, they may be obtained upon request from applicants' above 
named representatives.
    Interested persons, including government entities, may participate 
in this proceeding by submitting written comments. Any person who files 
timely comments will be considered a party of record if the person so 
requests. No petition for leave to intervene need be filed.
    Consistent with 49 CFR 1180.4(c)(1)(iii), written comments must 
contain:
    (a) The docket number and title of the proceeding;
    (b) The name, address, and telephone number of the commenting party 
and its representative upon whom service shall be made;
    (c) The commenting party's position (i.e., whether it supports or 
opposes the proposed transaction);
    (d) A statement whether the commenting party intends to participate 
formally in the proceeding or merely comment on the proposal;
    (e) If desired, a request for an oral hearing with reasons 
supporting this request; the request must indicate the disputed 
material facts that can be resolved only at a hearing; and
    (f) A list of all information sought to be discovered from the 
applicant carriers.
    Because we have determined that this proposal is a minor 
transaction, no responsive applications will be permitted. The time 
limits for processing this transaction are set forth at 49 U.S.C. 
11325(d).
    Discovery may begin immediately. We encourage parties to resolve 
all discovery matters expeditiously and amicably.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. This application is accepted for consideration under 49 U.S.C. 
11323-25 as a minor transaction under 49 CFR 1180.2(c).
    2. The parties shall comply with all provisions stated above.
    3. This decision is effective on August 2, 1996.

    Decided: July 25, 1996.

    By the Board, Chairman Morgan, Vice Chairman Simmons, and 
Commissioner Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 96-19615 Filed 8-1-96; 8:45 am]
BILLING CODE 4915-00-P