[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