[Federal Register Volume 68, Number 234 (Friday, December 5, 2003)]
[Notices]
[Pages 68130-68137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30090]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 34424]


Canadian National Railway Company and Grand Trunk Corporation--
Control--Duluth, Missabe and Iron Range Railway Company, Bessemer and 
Lake Erie Railroad Company, and The Pittsburgh & Conneaut Dock Company

AGENCY: Surface Transportation Board, DOT.

ACTION: Decision No. 2 in STB Finance Docket No. 34424; Notice of 
Acceptance of Primary Application and Related Filings; Issuance of 
Procedural Schedule.\1\

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    \1\ This decision covers: the railroad control application filed 
in STB Finance Docket No. 34424, Canadian National Railway Company 
and Grand Trunk Corporation--Control--Duluth, Missabe and Iron Range 
Railway Company, Bessemer and Lake Erie Railroad Company, and The 
Pittsburgh & Conneaut Dock Company; the trackage rights exemption 
notice filed in STB Finance Docket No. 34424 (Sub-No. 1), Duluth, 
Winnipeg and Pacific Railway Company--Trackage Rights--Duluth, 
Missabe and Iron Range Railway Company; and the trackage rights 
exemption notice filed in STB Finance Docket No. 34424 (Sub-No. 2), 
Duluth, Missabe and Iron Range Railway Company--Trackage Rights--
Duluth, Winnipeg and Pacific Railway Company. The railroad control 
application filed in STB Finance Docket No. 34424 is referred to as 
the ``primary application.'' The trackage rights exemption notices 
filed in STB Finance Docket No. 34424 (Sub-Nos. 1 and 2) are 
referred to collectively as the ``related filings.''
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SUMMARY: The Surface Transportation Board (Board) is accepting for 
consideration the primary application and related filings filed 
November 5, 2003, by Canadian National Railway Company (CNR, a rail 
carrier that controls several rail carrier subsidiaries) and Grand 
Trunk Corporation (GTC, a noncarrier holding company through which CNR 
controls its U.S. rail carrier subsidiaries). CNR and GTC are referred 
to collectively as CN or as applicants. The primary application seeks 
Board approval and authorization under 49

[[Page 68131]]

U.S.C. 11321-26 for the acquisition by CN of control of three U.S. 
railroads: Duluth, Missabe and Iron Range Railway Company (DMIR), 
Bessemer and Lake Erie Railroad Company (B&LE), and the Pittsburgh & 
Conneaut Dock Company (P&C Dock). Because DMIR, B&LE, and P&C Dock are 
now controlled by Great Lakes Transportation LLC (GLT), the primary 
application is referred to as the ``CN/GLT Application,'' the 
transaction proposed in the primary application is referred to as the 
``CN/GLT Transaction'' or the Transaction, and DMIR, B&LE, and P&C Dock 
are referred to collectively as the ``GLT Railroads.'' The related 
filings seek related trackage rights contingent upon approval of the 
primary application. The Board finds that the transaction proposed in 
the primary application is a ``minor transaction'' under 49 CFR 
1180.2(c).
    The Board has considered CN's petition suggesting a 146-day 
procedural schedule, also filed November 5, 2003. The Board is adopting 
a 156-day procedural schedule patterned upon the 156-day procedural 
schedule that was adopted earlier this year in the ``KCS/Tex Mex'' 
proceeding.\2\ The 156-day procedural schedule adopted by the Board is 
essentially the same as the 146-day procedural schedule suggested by 
CN, except that the Board's schedule adds five days to the 
``evidentiary proceeding'' stage and another five days to the ``final 
decision'' stage. The 156-day procedural schedule will allow the Board 
to issue a decision 45 days after the close of the record and 24 days 
prior to the statutory deadline, assuming that no unanticipated 
environmental review is required.
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    \2\ See Kansas City Southern--Control--The Kansas City Southern 
Railway Company, Gateway Eastern Railway Company, and The Texas 
Mexican Railway Company, STB Finance Docket No. 34342, Decision No. 
2 (STB served June 9, 2003, and published at 68 FR 35474 on June 13, 
2003).

DATES: The effective date of this decision is December 5, 2003. 
Comments on CN's Environmental Appendix (submitted November 5, 2003, 
and supplemented November 10, 2003) are due by December 10, 2003. CN 
must submit its Safety Integration Plan (SIP) by December 15, 2003. Any 
person who wishes to participate in this proceeding as a party of 
record (POR) must file, no later than December 19, 2003, a notice of 
intent to participate. Comments on CN's SIP must be filed by January 
22, 2004. All comments, protests, requests for conditions, and any 
other evidence and argument in opposition to the primary application 
and/or either or both of the related filings, including filings by the 
U.S. Department of Justice (DOJ) and the U.S. Department of 
Transportation (DOT), must be filed by January 26, 2004. Responses to 
comments, protests, requests for conditions, and other opposition, 
responses to comments of DOJ and DOT, and rebuttal in support of the 
primary application and/or either or both of the related filings must 
be filed by February 24, 2004. A public hearing/oral argument will be 
held the week of March 1, 2004 (the precise date and the location will 
be announced later). For further information respecting dates, see 
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Appendix A (Procedural Schedule).

ADDRESSES: Send an original and 20 copies of all pleadings (except for 
environmental submissions, as discussed below) referring to STB Finance 
Docket No. 34424 to: Surface Transportation Board, 1925 K Street, NW., 
Washington, DC 20423-0001.\3\ In addition, one copy of all documents in 
this proceeding must be sent to each of the following: (1) Secretary of 
the United States Department of Transportation, 400 Seventh Street, 
SW., Washington, DC 20590; (2) Attorney General of the United States, 
c/o Assistant Attorney General, Antitrust Division, Room 3645, 
Department of Justice, Washington, DC 20530; and (3) Paul A. 
Cunningham, Esq., Harkins Cunningham LLP, 801 Pennsylvania Avenue, NW., 
Suite 600, Washington, DC 20004-2664.
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    \3\ For a document to be considered a formal filing, the Board 
must receive an original and 20 copies of the document, which must 
show that it has been properly served upon all Parties of Record. 
Documents transmitted by facsimile (Fax) will not be considered 
formal filings and are not encouraged because they would result in 
unnecessarily burdensome, duplicative processing. In addition, each 
formal filing must be accompanied by an electronic submission per 
the Board's requirements as discussed in detail in this decision.
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    In addition to submitting an original and 20 copies of all paper 
documents filed with the Board, parties must also submit, on 3.5-inch 
IBM-compatible floppy diskettes (disks) or compact discs (CDs), copies 
of all textual materials, electronic workpapers, data bases, and 
spreadsheets used to develop quantitative evidence. Textual materials 
must be in, or compatible with, WordPerfect 10.0. Electronic 
spreadsheets must be in, or compatible with, Lotus 1-2-3 Release 9 or 
Microsoft Excel 2002. A copy of each disk or CD submitted to the Board 
should be provided to any other party upon request. Further details are 
discussed below.
    Comments (an original and 10 copies) on the Environmental Appendix 
and SIP should be submitted in writing to: Attn: Phillis Johnson-Ball, 
STB Finance Docket No. 34424, Surface Transportation Board, 1925 K 
Street, NW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1655. 
(Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.)

SUPPLEMENTARY INFORMATION: The CN/GLT Transaction proposed in the 
primary application contemplates the acquisition, by CN, of control of 
four carriers--the three GLT Railroads (DMIR, B&LE, and P&C Dock) and 
an affiliated water carrier (Great Lakes Fleet, Inc., referred to as 
GLF)--which now operate an integrated iron ore delivery chain that 
extends from ore mines in Minnesota to steel plants in Pennsylvania. 
The three GLT Railroads (DMIR, B&LE, and P&C Dock) and the affiliated 
GLT water carrier (GLF) are referred to collectively as the ``GLT 
Carriers.'' The proposed acquisition, by CN, of control of DMIR, B&LE, 
and P&C Dock is subject to the jurisdiction of the Board; the related 
acquisition, by CN, of control of GLF is not subject to the 
jurisdiction of the Board. See 49 U.S.C. 11323 (the Board's ``control 
jurisdiction'' extends only to transactions involving rail carriers). 
The related acquisition, by CN, of control of GLF is, however, subject 
to review by the U.S. Maritime Administration and the Coast Guard, and 
is also subject to review under the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976.
    Canadian National. As of September 30, 2003, CN's rail network, 
which crosses North America from east to west and from north to south, 
serving major ports on three coasts, consisting of 17,539 route miles 
in 15 American states and eight Canadian provinces. CN's principal 
routes run: (1) Between Vancouver and Prince Rupert, BC, in the west, 
and Halifax, NS, in the east, serving every major metropolitan area in 
Canada; (2) between Chicago, IL, and Buffalo, NY, serving three major 
metropolitan areas (Chicago, IL, Detroit, MI, and Buffalo, NY) in the 
U.S.; (3) between Winnipeg, MB, and Chicago, IL; (4) between Chicago 
and the Gulf of Mexico, reaching every major metropolitan area on the 
Mississippi River (including St. Louis, MO, Memphis, TN, and New 
Orleans, LA); and (5) between Nebraska/Iowa and Chicago, extending from 
Sioux City and Council Bluffs, IA, in the west, to Chicago in the east. 
CN's U.S. operations are conducted by CNR and, through CNR's GTC 
subsidiary, by 10 U.S. railroads that are part of the CN system: 
Duluth, Winnipeg and Pacific

[[Page 68132]]

Railway Company (DWP), Grand Trunk Western Railroad Incorporated (GTW), 
St. Clair Tunnel Company (SCTC), Illinois Central Railroad Company 
(IC), Chicago, Central & Pacific Railroad Company (CCP), Cedar River 
Railroad Company (CRRC), Waterloo Railway Company (WRC), Wisconsin 
Central Ltd. (WCL), Sault Ste. Marie Bridge Company (SSMB), and 
Wisconsin Chicago Link Ltd. (WCLL).
    In 1999, CN acquired IC to position itself to better serve north-
south ``NAFTA'' traffic by extending its system from Chicago to the 
Gulf Coast. As a result of the 1999 CN/IC transaction and CN's 1998 
marketing alliance with The Kansas City Southern Railway Company (KCS), 
CN is today part of a NAFTA rail network offering shippers access to 
TFM, S.A. de C.V. (TFM), Mexico's largest rail system. In 2001, CN 
acquired WCL and its affiliates, thus providing CN with a connection 
between Chicago and the CN lines west of the Great Lakes. This 
connection is completely under CN ownership, with the exception of the 
17-mile segment between Nopeming Junction, MN, and South Itasca, WI, 
over which CN's DWP subsidiary operates by means of trackage rights 
granted by DMIR.
    The GLT Carriers. DMIR, a Class II railroad that owns 212 miles of 
rail line in Minnesota and Wisconsin, carries primarily: (1) Taconite 
pellets (a form of processed iron ore) from taconite plants in the 
Mesabi Range (a) to DMIR-owned docks on Lake Superior at Duluth, MN, 
and Two Harbors, MN (for loading onto vessels for movement to steel 
plants), and (b) to interchange points with other railroads; and (2) 
limestone from the dock at Duluth to Mesabi Range taconite plants. 
DMIR's Missabe Main Line runs 74 miles in a generally north-south 
direction between Mountain Iron, MN, and Duluth, MN. Its Iron Range 
Main Line runs 74 miles in a generally east-west direction between Iron 
Junction, MN (where the Missabe Main Line and the Iron Range Main Line 
intersect) and Two Harbors, MN. DMIR also operates 64 miles of branch 
lines. Among these branch lines are the Shaw Cut Off/Superior Branch, 
which runs 16 miles eastward from Emmert, MN, to Keenan, MN, where it 
meets the Missabe Main Line; the Taconite District, which runs 4.5 
miles to the west of Calumet, MN (the Taconite District is not 
contiguous with any other DMIR line); and the Interstate Branch/Spirit 
Lake Branch, which runs from Adolph, MN (on the Missabe Main Line), 23 
miles in a generally southward and eastward direction through Nopeming 
Junction, MN, to South Itasca, WI (near Superior, WI), where DMIR's 
property ends. DMIR's lines between Virginia, MN (in the north), and 
Duluth, MN, and South Itasca, WI (in the south), are generally parallel 
to CN's lines between Virginia and South Itasca, and, for the 
southernmost 17 miles of that corridor (i.e., the 17-mile segment from 
Nopeming Junction, MN, to South Itasca, WI), CN and DMIR operate over 
the same track, pursuant to trackage rights granted by DMIR to CN's DWP 
subsidiary. DMIR itself operates via trackage rights over 10 miles of 
CN track between Shelton, MN, and Minorca Junction, MN, and over 19 
miles of track of the Burlington Northern and Santa Fe Railway Company 
(BNSF) between Calumet, MN, and Emmert, MN (the Calumet-Emmert trackage 
rights enable DMIR to access its Taconite District).
    B&LE, a Class II railroad operating between North Bessemer, PA 
(near Pittsburgh, PA), and the port at Conneaut, OH (on Lake Erie), 
carries principally coal, iron ore, and limestone. B&LE's main line 
runs between North Bessemer and Albion, PA, and its two northernmost 
branch lines run between Albion, PA, on the one hand, and, on the other 
hand, Conneaut, OH, and Wallace Junction, PA.
    P&C Dock, a Class III railroad, does not own or operate any rail 
routes, but performs switching operations and ship-to-rail and rail-to-
ship bulk transfer operations for B&LE at three docks at Conneaut, OH.
    GLF is a water carrier (not a rail carrier) that owns a fleet of 
vessels that carry ore and other bulk commodities on the Great Lakes.
    DMIR, B&LE, P&C Dock, and GLF are wholly owned subsidiaries of DMIR 
Holdings Corp. (DMIR Holdings), B&LE Holdings Corp. (B&LE Holdings), 
P&CD Holdings Corp. (P&CD Holdings), and GLF Holdings Corp. (GLF 
Holdings), respectively. DMIR Holdings, B&LE Holdings, P&CD Holdings, 
and GLF Holdings are noncarriers, and each is a wholly owned subsidiary 
of Great Lakes Transportation LLC (GLT). GLT is owned by Great Lakes 
Transportation Holdings, L.P., which is an affiliate of The Blackstone 
Group.
    The CN/GLT Transaction. GTC and GLT have entered into a Stock 
Purchase Agreement (the CN/GLT Agreement), dated October 19, 2003, that 
provides that, subject to a number of conditions, GTC will purchase 
from GLT all of the issued and outstanding shares of DMIR Holdings, 
B&LE Holdings, P&CD Holdings, and GLF Holdings for an overall purchase 
price of $380 million, subject to certain adjustments provided for in 
the CN/GLT Agreement. CN advises that, if the CN/GLT Transaction is 
approved, it intends to pay the purchase price in cash on the closing 
date under the CN/GLT Agreement (CN expects to meet the cash 
requirements for consummation of the Transaction by borrowing under its 
existing revolving credit facility, combined with long-term debt), and 
it intends to consummate control of the GLT Railroads as soon as 
possible after a final order of the Board approving the primary 
application and authorizing the Transaction has become effective. CN 
further advises that, because it plans few operational changes in 
connection with the CN/GLT Transaction, it expects to fully implement 
that Transaction shortly after consummation of CN control of the GLT 
Railroads. CN adds that, although it does not anticipate any increases 
in total traffic and revenue handled by CN and the GLT Railroads as a 
result of the CN/GLT Transaction, it does anticipate that the 
Transaction would lead to more efficient operations and permit 
efficiency-related cost reductions. CN advises that it has no present 
plans to merge DMIR Holdings, B&LE Holdings, or P&CD Holdings into any 
other entity in the CN system, or to merge any of the GLT Railroads 
with any of CN's other subsidiaries.
    Related Filings. DWP and DMIR operate two separate rail lines that 
run between Shelton Junction, MN (near Virginia, MN), and Nopeming 
Junction, MN (near Superior, WI). The related filings, which were made 
pursuant to 49 CFR 1180.2(d)(7), involve reciprocal grants of trackage 
rights that would allow each of DWP and DMIR to operate its trains, 
locomotives, cars, and equipment, with its own crews, over the other's 
essentially parallel line between Shelton Junction and Nopeming 
Junction. In STB Finance Docket No. 34424 (Sub-No. 1), DWP has filed a 
notice of exemption relating to trackage rights to be granted to DWP 
over DMIR's lines between Shelton Junction (Mileage B 2.71 on DMIR's 
Virginia Branch) and Nopeming Junction (Mileage R 5.77 on DMIR's Spirit 
Lake Branch), a distance of approximately 64 miles. In STB Finance 
Docket No. 34424 (Sub-No. 2), DMIR has filed a notice of exemption 
relating to trackage rights to be granted to DMIR over DWP's lines 
between Shelton Junction (MP 70.7 on DWP's Rainy Subdivision) and 
Nopeming Junction (MP 10.7 on DWP's Rainy Subdivision), a distance of 
approximately 60 miles. The reciprocal trackage rights provided for in 
the notices of exemption filed in STB Finance Docket No. 34424 (Sub-
Nos. 1 and 2) are intended to be effective upon

[[Page 68133]]

acquisition by CN of control of DMIR, and, therefore, are contingent 
upon approval of the primary application.
    CN/GLT Common Control: Purposes Served. CN contends that its 
acquisition of control of the GLT Railroads would serve three primary 
purposes.
    First, acquisition of control of DMIR would give CN full ownership 
of the route over which all CN traffic between Winnipeg and Chicago now 
moves. CN notes that, at present, it must operate by means of trackage 
rights granted by DMIR over the 17-mile segment between Nopeming 
Junction and South Itasca.
    Second, CN contends that acquisition of control of DMIR would 
increase CN's operational flexibility by allowing CN to institute 
``directional running'' on the two parallel Shelton Junction-Nopeming 
Junction lines, which would reduce transit time and increase service 
reliability over CN's entire Winnipeg-Chicago corridor. CN adds that, 
because DMIR's Shelton Junction-Nopeming Junction line has newer ties 
and newer and heavier rail than DWP's Shelton Junction-Nopeming 
Junction line, the transfer to the DMIR line of some traffic that now 
uses the DWP line would allow CN to avoid the capital expenditures that 
would otherwise be required for centralized traffic control (CTC) and 
extensions of sidings on the DWP line.
    Third, CN contends that acquisition of control of the four GLT 
Carriers (DMIR, B&LE, P&C Dock, and GLF), which provide an important 
supply line for the North American steel industry, would enable CN to 
develop closer and more extensive relationships with companies in and 
serving that industry.
    CN/GLT Common Control: Public Interest Considerations. CN contends 
that the CN/GLT Transaction would benefit the public interest by 
connecting two transportation systems that do not compete with each 
other but, rather, complement each other. The CN/GLT Transaction, CN 
argues, would strengthen the GLT Railroads by making them part of the 
rail system operated by CN, a successful rail carrier that would have 
the commitment and ability to make long-term investments in plant, 
equipment, and systems as they become needed. CN contends that the CN/
GLT Transaction would enable CN to lower its maintenance costs and to 
improve transit times and reliability for shippers by using the 
parallel DWP and DMIR lines between Shelton Junction and Nopeming 
Junction for freight moving between western Canada and Chicago. And, CN 
adds, the CN/GLT Transaction would eliminate the need for interchange 
between CN and DMIR, thus permitting some single-line rail operations 
to and from shippers on CN and on DMIR, which should result in reduced 
handling and shortened car transit times.
    CN contends that, in view of the limited scope of the CN/GLT 
Transaction, the record of CN and its constituent railroads over the 
past decade in successfully implementing rail consolidations, the good 
operating condition of both systems, and the absence of any need for a 
sweeping ``Day One'' change in systems, the CN/GLT Transaction would 
present a low risk of implementation-related service difficulties.
    CN contends that the CN/GLT Transaction would have no 
anticompetitive effects.
    (1) Horizontal Effects. CN contends that the CN/GLT Transaction 
would not have adverse ``horizontal'' effects on competition. CN 
explains that, except for Virginia, MN, and Duluth, MN/Superior, WI, 
which each receive rail service from three or more rail carriers, the 
CN and GLT lines serve no common metropolitan areas or cities. CN 
further explains that there would be no 2-to-1 shippers (i.e., there is 
no shipper now capable of receiving rail service from more than one 
independent railroad who would be reduced to having only one 
independent railroad available to it), and that, although there would 
arguably be one 3-to-2 shipper (i.e., a shipper now capable of 
receiving rail service from three independent railroads that, as a 
result of the Transaction, would only have two independent railroads 
available), that shipper (Koppers, Inc., at Ambridge, MN) would not be 
adversely affected by the nominal reduction in horizontal 
competition.\4\
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    \4\ See CN-2 at 53. See also CN-2 at 68 & n.3.
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    (2) Vertical Effects. CN contends that the CN/GLT Transaction would 
not have adverse ``vertical'' effects on competition. CN explains that 
there would be no harm to shippers from a reduction in source or 
geographic competition, because CN and the GLT Railroads do not serve 
competing origins or destinations. CN further explains that, although 
vertical effects might conceivably arise when a railroad with market 
power in one geographic market merges with a connecting railroad and, 
as a result of the merger, extends its market power to the connecting 
railroad's territory, closing gateways and thus foreclosing other 
connecting railroads from participating in movements to or from the 
first railroad's service area, vertical effects of this nature are 
unlikely as a matter of economic theory. CN adds that, in any event, 
applicants would not engage in such foreclosure by closing efficient 
gateways; rather, applicants would keep all existing active gateways 
affected by the CN/GLT Transaction open on commercially reasonable 
terms, and applicants would waive any defenses they might otherwise 
have as a result of the CN/GLT Transaction, under the Board's general 
policy that it does not separately regulate bottleneck rates, in 
circumstances where a shipper prior to the CN/GLT Transaction would 
have been entitled to regulation of a bottleneck rate under the Board's 
``contract exception'' to the general rule.
    Special Case: Eveleth Mines, LLC, d/b/a EVTAC Mining. CN advises: 
that, until May 2003, Eveleth Mines, LLC, d/b/a EVTAC Mining (EVTAC), 
operated a facility at Fairlane, MN (11 miles south of Virginia, MN), 
that processed raw iron ore into taconite pellets; that, although only 
DMIR was physically capable of carrying iron ore to, or processed 
taconite pellets from, the loading and unloading tracks at EVTAC's 
Fairlane facility, both CN and DMIR were capable of carrying general 
freight (i.e., commodities other than iron ore and taconite) to and 
from other tracks at that facility; and that, therefore, if EVTAC had 
not closed the Fairlane facility in May 2003, that facility would have 
been regarded, as respects the CN/GLT Transaction, as a ``1-to-1'' 
facility for iron ore and taconite and a ``2-to-1'' facility for 
general freight. CN also advises, however, that it might be argued that 
CN could have built in to the Fairlane facility to handle its iron ore 
and taconite freight, or that EVTAC could have built out to CN to 
obtain competitive service from CN as respects EVTAC's iron ore and 
taconite movements. CN further advises: That, if the EVTAC facility 
should reopen and require rail service, CN would be prepared to offer 
competitive access to another railroad for general freight, so as to 
restore two-railroad competition for that traffic; that, to this end, 
CN intends, should EVTAC reopen, to grant trackage rights access to 
EVTAC to another railroad, or, if traffic volumes are too low to 
justify trackage rights operations, to provide haulage service or 
switching at a rate that would not disadvantage the other railroad; and 
that, to replicate any build-in or build-out opportunity that now 
exists as respects iron ore and taconite traffic, CN would also be 
prepared to provide another railroad access to the build-in or build-
out point via trackage rights over the DWP line. CN adds that, although 
it would expect to negotiate the terms of such access (either as 
respects general freight or as

[[Page 68134]]

respects access to the build-in/build-out point) through voluntary 
agreement with a competing railroad, it is, of course, possible that 
the parties might be unable to agree on such terms. CN therefore 
contends that, if the Board approves the primary application, the Board 
should retain jurisdiction over the CN/GLT Transaction for a reasonable 
period for the purpose of reopening this proceeding if the EVTAC 
facility should resume operations and require rail service, if 
necessary to prescribe terms of access for a second rail carrier to 
handle general freight (i.e., commodities other than iron ore and 
taconite) to and/or from the EVTAC facility, or to prescribe terms of 
access to a build-in or build-out point on the existing DWP line that 
would permit a second rail carrier to handle iron ore and taconite to/
from that facility. CN adds that, because its trackage rights agreement 
with DMIR prohibits CN from transporting iron ore (including taconite 
pellets) over the DMIR line between Nopeming Junction and South Itasca, 
CN should not be required to permit use of that DMIR line for 
transportation of iron ore, except on commercial terms. CN also adds 
that, because CN does not have access to an ore dock of its own in the 
Duluth/Superior area, the railroad receiving trackage rights to a 
build-in/build-out point should not be one that presently owns such a 
dock.
    Labor Protection. CN projects that the CN/GLT Transaction would 
result in the elimination of 122 positions and the transfer of 18 
positions. CN also projects that the reciprocal grants of Shelton 
Junction-Nopeming Junction trackage rights provided for in the related 
filings would have no adverse effect on train and engine service 
employees. CN notes, however, that, whereas these projections represent 
CN's best estimate, based on information presently available, of the 
changes necessary to effect the public transportation benefits and the 
efficiencies of the CN/GLT Transaction, additional changes might be 
required as circumstances change, opportunities open elsewhere on the 
CN system, traffic and shipping patterns evolve, and CN acquires 
experience in operating the combined system. CN acknowledges that the 
applicable level of labor protection for the CN/GLT Transaction would 
be that set forth in New York Dock Ry.--Control--Brooklyn Eastern 
Dist., 360 I.C.C. 60, 84-90 (1979), aff'd sub nom. New York Dock Ry. v. 
United States, 609 F.2d 83 (2d Cir. 1979), and that the applicable 
level of labor protection for the Shelton Junction-Nopeming Junction 
trackage rights would be that set forth in Norfolk and Western Ry. 
Co.--Trackage Rights--BN, 354 I.C.C. 605, 610-15 (1978), as modified in 
Mendocino Coast Ry., Inc.--Lease and Operate, 360 I.C.C. 653, 664 
(1980), aff'd sub nom. Railway Labor Exec. Ass'n v. United States, 675 
F.2d 1248 (D.C. Cir. 1982). CN adds that management employees whose 
positions would be eliminated as a result of the Transaction, and who 
would not be offered a job opportunity elsewhere in the CN system, 
would be offered severance packages, and that, if relocation to another 
job is offered, CN would also offer to relocate the management employee 
in accordance with the then-current CN management relocation plan.

Primary Application and Related Filings Accepted

    The Board agrees with CN that the CN/GLT Transaction proposed in 
the primary application would be a ``minor transaction'' under 49 CFR 
1180.2(c), and the Board is accepting the primary application for 
consideration because it is in substantial compliance with the 
applicable regulations governing minor transactions. See 49 U.S.C. 
11321-26; 49 CFR part 1180. The Board is also accepting for 
consideration the two related filings, which are also in compliance 
with the applicable regulations. The Board reserves the right to 
require the filing of supplemental information from CN or any other 
party or individual, if necessary to complete the record in this 
matter.

Public Inspection

    The primary application and the related filings are available for 
inspection in the Docket File Reading Room (Room 755) at the offices of 
the Surface Transportation Board, 1925 K Street, NW., in Washington, 
DC. In addition, they may be obtained from CN's representative (Mr. 
Cunningham) at the address indicated above.

Procedural Schedule

    CN contends that, in view of the asserted public benefits of the 
CN/GLT Transaction, the asserted lack of competitive harm, and the 
asserted absence of complicating environmental factors or related 
applications, a shorter procedural schedule than the 180-day maximum 
procedural schedule allowed by statute would be appropriate. CN has 
therefore proposed a 146-day procedural schedule that provides for 
issuance of a decision by the Board on March 30, 2004.
    The Board is adopting a 156-day procedural schedule patterned upon 
the 156-day procedural schedule that was adopted earlier this year in 
the ``KCS/Tex Mex'' proceeding. The Board's 156-day procedural 
schedule, although 10 days longer than the schedule suggested by CN, 
still provides for less total time than the 180-day procedural schedule 
(30 days + 105 days + 45 days) established by the deadlines set forth 
at 49 U.S.C. 11325(a), (d)(2). Comments on CN's Environmental Appendix 
(submitted November 5, 2003, and supplemented November 10, 2003) are 
due by December 10, 2003. CN must submit its Safety Integration Plan 
(SIP) by December 15, 2003. Any person who wishes to participate in 
this proceeding as a party of record (POR) must file, no later than 
December 19, 2003, a notice of intent to participate. Comments on CN's 
SIP must be filed by January 22, 2004. All comments, protests, requests 
for conditions, and any other evidence and argument in opposition to 
the primary application and/or either or both of the related filings, 
including filings by the U.S. Department of Justice (DOJ) and the U.S. 
Department of Transportation (DOT), must be filed by January 26, 2004. 
As in past proceedings, DOT will be allowed to file, on the reply due 
date (here, February 24, 2004), its comments in response to the 
comments of other parties, and CN will be allowed to late-file (as 
quickly as possible) a reply to DOT's responsive comments. Responses to 
comments, protests, requests for conditions, and other opposition, 
responses to comments of DOJ and DOT, and rebuttal in support of the 
primary application and/or either or both of the related filings must 
be filed by February 24, 2004. A public hearing/oral argument will be 
held the week of March 1, 2004 (the precise date and the location will 
be announced later). The Board's decision will be issued on April 9, 
2004 (the 156th day after the date on which the primary application and 
the related filings were filed, and the 45th day after the close of the 
record). If, however, it is determined that an Environmental Impact 
Statement or Environmental Assessment is required, the procedural 
schedule will be adjusted as necessary.

Notice of Intent To Participate

    Any person who wishes to participate in this proceeding as a POR 
must file with the Board, no later than December 19, 2003, an original 
and 20 copies of a notice of intent to participate, accompanied by a 
certificate of service indicating that the notice has been properly 
served on the Secretary of the United States Department of 
Transportation, the Attorney General of the United States, and CN's 
representative (Mr. Cunningham). In

[[Page 68135]]

addition, as previously noted, parties must submit one electronic copy 
of each document filed with the Board. Further details respecting such 
electronic submissions are provided below.
    The Board will serve, as soon as practicable, a notice containing 
the official service list (the service list notice). Each POR will be 
required to serve upon all other PORs, within 10 days of the service 
date of the service list notice, copies of all filings previously 
submitted by that party (to the extent such filings have not previously 
been served upon such other parties). Each POR also will be required to 
file with the Board, within 10 days of the service date of the service 
list notice, an original plus 10 copies of a certificate of service, 
along with an electronic copy, indicating that the service required by 
the preceding sentence has been accomplished. Every filing made by a 
POR after the service date of the service list notice must have its own 
certificate of service indicating that all PORs on the service list 
have been served with a copy of the filing. Members of the United 
States Congress (MOCs) and Governors (GOVs) are not parties of record, 
and therefore, need not be served with copies of filings, unless any 
such Member or Governor has requested to be, and is designated as, a 
POR.
    The Board will serve copies of its decisions, orders, and notices 
only on those persons who are designated on the official service list 
as either POR, MOC, or GOV. All other interested persons are encouraged 
to make advance arrangements with the Board's copy contractor, ASAP 
Document Solutions,\5\ to receive copies of Board decisions, orders, 
and notices served in this proceeding. ASAP Document Solutions will 
handle the collection of charges and the mailing and/or faxing of 
decisions, orders, and notices to persons who request this service.
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    \5\ The mailing address is: ASAP Document Solutions, Suite 405, 
1925 K Street, NW., Washington, DC 20006. The telephone number is: 
(202) 293-7878. The e-mail address is: [email protected].
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    An interested person does not need to be on the service list to 
obtain a copy of the primary application or any other filing made in 
this proceeding. The Board's Railroad Consolidation Procedures provide: 
``Any document filed with the Board (including applications, pleadings, 
etc.) shall be promptly furnished to interested persons on request, 
unless subject to a protective order.'' 49 CFR 1180.4(a)(3). The 
primary application and other filings in this proceeding will also be 
available on the Board's Web site at www.stb.dot.gov under ``Filings.'' 
Furthermore, ASAP Document Solutions will provide, for a charge, copies 
of the primary application or any other filing made in this proceeding, 
except to the extent any such filing is subject to the protective order 
previously entered in this proceeding.

Comments, Protests, Requests for Conditions, and Other Opposition 
Evidence and Argument, Including Filings by DOJ and DOT

    All comments, protests, requests for conditions, and any other 
evidence and argument in opposition to the primary application and/or 
either or both of the related filings, including filings by DOJ and 
DOT, must be filed by January 26, 2004.
    Parties (including DOJ and DOT) filing such comments, etc., must 
submit an original and 20 copies thereof. Each such submission: must be 
filed with the Surface Transportation Board, 1925 K Street, NW., 
Washington, DC 20423-0001; must refer to STB Finance Docket No. 34424; 
and must be clearly labeled with an identification acronym and number 
(e.g., the primary application was labeled ``CN-2''), see 49 CFR 
1180.4(a)(2). In addition, as previously noted, parties must submit one 
electronic copy of each document filed with the Board. Further details 
respecting such electronic submissions are provided below.
    Comments, etc., must be concurrently served by first class mail on 
the U.S. Attorney General and the Secretary of the United States 
Department of Transportation, CN's representative, and all other PORs, 
and should include the docket number and title of the proceeding, and 
the name, address, and telephone number of the commenting party and its 
representative upon whom service shall be made.
    Because the CN/GLT Transaction proposed in the primary application 
has been determined to be a minor transaction, no responsive 
applications will be permitted. See 49 CFR 1180.4(d)(1).
    Protesting parties are advised that, if they seek either the denial 
of the primary application or the imposition of conditions upon any 
approval thereof, on the theory that approval (or approval without 
imposition of conditions) would harm competition and/or their ability 
to provide essential services, they must present substantial evidence 
in support of their positions. See Lamoille Valley R.R. Co. v. ICC, 711 
F.2d 295 (D.C. Cir. 1983).

Responses to Comments, Protests, Requests for Conditions, and Other 
Opposition, Including DOJ and DOT; Rebuttal in Support of Primary 
Application

    Responses to comments, protests, requests for conditions, and other 
opposition submissions, responses to comments of DOJ and DOT, and 
rebuttal in support of the primary application and/or either or both of 
the related filings must be filed by February 24, 2004.

Environmental Matters

    Under the regulations of the President's Council on Environmental 
Quality implementing the National Environmental Policy Act of 1969 
(NEPA) and under the Board's environmental regulations as well, actions 
are separated into three classes that prescribe the level of 
documentation required in the NEPA process. Actions that may 
significantly affect the environment generally require the Board to 
prepare an Environmental Impact Statement (EIS). 40 CFR 1501.4(a)(1); 
49 CFR 1105.4(f), 1105.6(a). Actions that may or may not have a 
significant environmental impact ordinarily require the Board to 
prepare a more limited Environmental Assessment (EA) (an EA is a 
document containing environmental analysis sufficient for the Board to 
determine whether it should prepare an EIS or may make a finding that 
the transaction will have no significant environmental impact). 40 CFR 
1501.4(c); 49 CFR 1105.4(d), 1105.6(b). Actions that ordinarily have 
insignificant environmental effects may normally be categorically 
excluded from NEPA review, without a case-by-case review. 40 CFR 
1500.4(p), 1501.4(a)(2), 1508.4; 49 CFR 1105.6(c). And, even when the 
Board's presumptive tonnage thresholds for environmental analysis are 
met, the Board may reclassify a particular transaction or modify the 
requirement that an EIS or EA be prepared, if the railroad applicant 
demonstrates that the proposed transaction has no potential for 
significant environmental effects. 49 CFR 1105.6(d).
    Prior to filing the CN/GLT Application with the Board on November 
5, 2003, CN discussed the CN/GLT Transaction with the Board's Section 
of Environmental Analysis (SEA) and explained that, in its view, the 
CN/GLT Transaction would have no significant environmental impacts, and 
that, therefore, preparation by the Board of an EIS or EA is not 
required to discharge the Board's obligations under NEPA. Pursuant to 
CN's discussions

[[Page 68136]]

with SEA, CN prepared an Environmental Appendix that describes what CN 
regards as the reasonably foreseeable impacts of the CN/GLT 
Transaction, and that explains why CN believes that there is no need to 
prepare either an EIS or an EA. CN argues, in essence: that the only 
reasonably foreseeable Transaction-related operational change involves 
coordinated use of the DWP/DMIR lines in the 64-mile Shelton Junction-
Nopeming Junction corridor (which, CN advises, lies in a relatively 
sparsely populated area of northeastern Minnesota); that, if 
foreseeable increases in tonnage on the DMIR line are compared to 
traffic volumes now moving on the DMIR line, the Board's presumptive 
tonnage thresholds for environmental analysis would be exceeded on a 
total of 61.5 miles of the DMIR line; but that, if foreseeable 
increases in tonnage on the DMIR line are compared to the traffic 
volumes generated before the recent closing of EVTAC's Fairlane 
facility, the Board's presumptive tonnage thresholds would not be 
exceeded at all, except on the 6.0-mile segment running through the 
rural territory between Adolph and Nopeming Junction. CN contends, in 
essence, that whether potential traffic shifts are measured against a 
base that includes or excludes EVTAC traffic, the reality of the 
situation is that the environmental consequences of the CN/GLT 
Transaction would be insignificant and thus do not warrant 
environmental review beyond that entailed in the preparation and review 
of CN's Environmental Appendix.
    CN offers the following points in support of this contention: (1) 
The Transaction should have no impact on land use, biological 
resources, or natural resources because there would be no construction 
or abandonment of rail lines, and no construction or operational 
changes in connection with rail yards or intermodal facilities; (2) 
there are no plans to dispose of or alter any properties that are 50 
years old or older; (3) the only operational change contemplated by CN 
is the coordination of operations on the parallel DWP and DMIR lines 
between Shelton Junction and Nopeming Junction; (4) any traffic 
increases resulting from such coordination would reflect shifts of 
existing traffic, not new traffic or diversions from trucks or other 
railroads; (5) the DMIR line between Shelton Junction and Nopeming 
Junction runs through a lightly populated area; (6) the estimated 
increase in rail traffic on that line would be below the applicable 
tonnage threshold on nearly the entire length of that line, if the 
increase were measured against pre-May 2003 traffic volumes; (7) the 
potential environmental impacts from increased traffic on DMIR's 
Shelton Junction-Nopeming Junction line would be minimal (because there 
would be no increase in energy consumption, air quality would be 
unchanged or better, noise impacts would be insignificant, roadway at-
grade crossings would remain safe, there would be little impact on rail 
safety, the quantities of hazardous materials shifted to the DMIR line 
would be modest, directional running should allow rail traffic to move 
more smoothly, and there would be no high and adverse impacts on any 
``environmental justice'' populations); and (8) even the potential 
environmental impacts from increased traffic on the Adolph-Nopeming 
Junction segment of DMIR's Shelton Junction-Nopeming Junction line 
should be insignificant (CN claims that only 66 structures of any kind 
lie within 1,000 feet of the Adolph-Nopeming Junction right-of-way).
    To facilitate public review of all aspects of the Environmental 
Appendix, and to provide an opportunity for comments to SEA on the CN/
GLT Transaction, and, in particular, on CN's conclusion that the 
Transaction would have no significant environmental impacts, CN mailed 
copies of the Environmental Appendix to appropriate local, state, and 
federal environmental agencies and other interested parties, and placed 
notices in major newspapers delivered to potentially affected 
communities. December 10, 2003, is the date by which interested parties 
may submit comments on the Environmental Appendix directly to SEA.
    CN has advised that, pursuant to the joint regulations adopted by 
the Board and the Federal Railroad Administration (FRA) to ensure 
adequate and coordinated consideration of safety integration issues by 
both the Board and FRA, see 49 CFR Parts 244 and 1106, CN will submit a 
Safety Integration Plan (SIP) to the Board and FRA by December 15, 
2003. CN has further advised that it will distribute the SIP to 
appropriate government agencies and other interested parties, and will 
place notices in major newspapers delivered to potentially affected 
communities, to announce the availability of the SIP. Interested 
parties will have until January 22, 2004, to submit comments on the SIP 
to SEA. In accordance with past practice, the Board will include in any 
decision approving the CN/GLT Transaction a condition requiring CN to 
comply with the SIP. See 49 CFR 1106.4(b)(4).
    Based on its consideration of all timely comments on the 
Environmental Appendix and the SIP and its own independent review of 
all available environmental information, SEA will recommend to the 
Board whether there is a need for formal environmental review of the 
CN/GLT Transaction, and the Board will then determine whether formal 
environmental review is required and, if so, whether an EIS or an EA 
should be prepared. If an EIS or an EA is required to meet the Board's 
obligations under NEPA, the procedural schedule set forth in this 
decision will be adjusted accordingly.

Public Hearing/Oral Argument

    To afford interested parties an opportunity to address the Board 
respecting any issues arising out of the CN/GLT Transaction, a public 
hearing/oral argument will be held the week of March 1, 2004. The 
precise date and the location will be announced later.

Discovery

    Discovery may begin immediately. The parties are encouraged to 
resolve all discovery matters expeditiously and amicably.

Electronic Submissions: In General

    As already mentioned, in addition to submitting an original and 20 
paper copies of each document filed with the Board, parties must 
submit, on 3.5-inch IBM-compatible floppy diskettes (disks) or on 
compact discs (CDs), copies of all textual materials, electronic 
workpapers, data bases, and spreadsheets used to develop quantitative 
evidence. Parties unable to comply with the electronic submission 
requirement can seek a waiver from the Board. Textual materials must be 
in, or compatible with, WordPerfect 10.0. Electronic spreadsheets must 
be in, or compatible with, Lotus 1-2-3 Release 9 or Microsoft Excel 
2002. Each disk or CD should be clearly labeled with the identification 
acronym and number of the corresponding paper document, see 49 CFR 
1180.4(a)(2), and a copy of such disk or CD should be provided to any 
other party upon request. Also, each disk or CD should be clearly 
labeled as containing confidential or redacted materials. The data 
contained on the disks and CDs submitted to the Board will be subject 
to the protective order granted in Decision No. 1 (served October 29, 
2003), and will be for the exclusive use of Board employees reviewing 
substantive and/or procedural matters in this proceeding. The 
flexibility provided by computer data will facilitate timely review by 
the Board and its staff. The electronic

[[Page 68137]]

submission requirements set forth in this decision supersede, for the 
purposes of this proceeding, the otherwise applicable electronic 
submission requirements set forth in the Board's regulations. See 49 
CFR 1104.3(b).

Electronic Submissions: Workpapers, Data Bases, and Spreadsheets

    In the past, the Board has encountered problems with the ``links'' 
in spreadsheets functioning properly when the spreadsheets are 
installed on desktop computers or network servers. To avoid such 
problems, parties submitting electronic workpapers, data bases, and/or 
spreadsheets should use naming and linking conventions that will permit 
the spreadsheets to operate on the Board's computers.\6\ Electronic 
data bases should be compatible with the Microsoft Open Database 
Connectivity (ODBC) standard.\7\ The Board currently uses Microsoft 
Access 2000, and data bases submitted should be either in this format 
or another ODBC-compatible format. Otherwise, submitters should explain 
why it is not possible to submit the data base in this format and seek 
a determination as to whether it is feasible for the Board to accept 
the data base in another format.
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    \6\ The Board will not specify a particular naming and linking 
convention. It is incumbent upon the submitter to use generic naming 
and linking conventions that will permit the spreadsheets to operate 
on desktop computers or from a network server. Questions concerning 
naming and linking matters and/or compatibility with the Board's 
computers can be addressed to William H. Washburn, Office of 
Economics, Environmental Analysis, and Administration, at (202) 565-
1550.
    \7\ ODBC is a Windows technology that allows a database software 
package, such as Microsoft Access, to import data from a database 
created using a different software package. All databases must be 
supported with adequate documentation on data attributes, SQL 
queries, programmed reports, etc.
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    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. The primary application in STB Finance Docket No. 34424 and the 
related filings in STB Finance Docket No. 34424 (Sub-Nos. 1 and 2) are 
accepted for consideration.
    2. The parties to this proceeding must comply with the Procedural 
Schedule adopted by the Board in this proceeding as shown in Appendix 
A.
    3. The parties to this proceeding must comply with the procedural 
requirements described in this decision.
    4. This decision is effective on December 5, 2003.

    Decided: November 25, 2003.

    By the Board, Chairman Nober.
Vernon A. Williams,
Secretary.

Appendix A: Procedural Schedule

November 5, 2003--Primary application, related filings, 
Environmental Appendix, and petition for establishment of procedural 
schedule filed.
November 10, 2003--Supplemented Environmental Appendix submitted.
December 5, 2003--Board notice of acceptance of primary application 
and related filings published in the Federal Register.
December 10, 2003--Comments on the Environmental Appendix due.
December 15, 2003--Safety Integration Plan (SIP) due.
December 19, 2003--Notices of intent to participate due.
January 22, 2004--Comments on the SIP due.
January 26, 2004--All comments, protests, requests for conditions, 
and any other evidence and argument in opposition to the primary 
application and/or either or both of the related filings, including 
filings of the U.S. Department of Justice (DOJ) and the U.S. 
Department of Transportation (DOT), due.
February 24, 2004--Responses to comments, protests, requests for 
conditions, and other opposition due. Responses to comments of DOJ 
and DOT due. Rebuttal in support of the primary application and/or 
either or both of the related filings due.
Week of March 1, 2004--A public hearing/oral argument will be held 
the week of March 1, 2004 (the precise date and the location will be 
announced later).
April 9, 2004--Date of service of final decision (if no 
unanticipated environmental review is required).

[FR Doc. 03-30090 Filed 12-4-03; 8:45 am]
BILLING CODE 4915-00-P