[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