[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Notices]
[Pages 46682-46686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18527]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. FD 35523]


CSX Transportation, Inc.--Joint Use--Louisville & Indiana 
Railroad Company, Inc.

AGENCY: Surface Transportation Board, DOT.

ACTION: Decision No. 3 in FD 35523; Notice of Acceptance of Application 
and Related Filings; Issuance of Procedural Schedule.

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SUMMARY: The Surface Transportation Board (Board) is accepting for 
consideration the application submitted on June 14, 2013, and 
supplemented on July 2, 2013, by CSX Transportation, Inc. (CSXT), and 
Louisville & Indiana Railroad Company, Inc. (L&I). The application 
seeks Board approval under 49 U.S.C. 11323 et seq., for joint use by 
CSXT and L&I of L&I's 106.5-mile railroad line between its connection 
with CSXT in Indianapolis, Ind., milepost 4.0, and its 
connection with CSXT in Louisville, Ky., milepost 110.5 
(the Line). In order to jointly use the Line with L&I, CSXT seeks to 
acquire and use a perpetual, non-exclusive freight railroad operating 
easement over the Line. This proposal is referred to as the 
Transaction, and CSXT and L&I are referred to collectively as 
Applicants.
    The Board finds that the Transaction is a ``minor transaction'' 
under 49 CFR 1180.2(c), and that the application, as supplemented on 
July 2, 2013, is complete.\1\ The Board adopts a procedural schedule 
for consideration of the application, under which the Board's final 
decision would be issued by December 6, 2013 (assuming the 
environmental review process has been completed), and would become 
effective by December 26, 2013.
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    \1\ On July 2, 2013, Applicants filed public and confidential 
versions of Section 4 of Attachment C to the Joint Use Operating 
Agreement. For more information, see Decision No. 2 in this docket.

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[[Page 46683]]


DATES: The effective date of this decision is August 1, 2013. Any 
person who wishes to participate in this proceeding as a party of 
record (POR) must file, no later than August 15, 2013, a notice of 
intent to participate. All comments, protests, requests for conditions, 
and any other evidence and argument in opposition to the application, 
including filings by the U.S. Department of Justice (DOJ) and the U.S. 
Department of Transportation (DOT), must be filed by September 30, 
2013. Responses to comments, protests, requests for conditions, and 
other opposition on the transportation merits of the Transaction, and 
rebuttal in support of the application must be filed by October 21, 
2013.
    The Board's Office of Environmental Analysis (OEA) will issue a 
Draft Environmental Assessment (EA) on August 30, 2013, for public 
review and comment. Comments on the Draft EA will be due by September 
30, 2013. OEA expects to issue a Final EA completing the environmental 
review process on or before November 6, 2013.
    If a public hearing or oral argument is held, it will be held on a 
date to be determined by the Board. The Board expects to issue its 
final decision by December 6, 2013, unless more time is needed to 
permit the completion of the environmental review process, and to make 
the decision effective by December 26, 2013. For further information 
respecting dates, see the Appendix (Procedural Schedule).

ADDRESSES: Any filing submitted on the transportation merits in this 
proceeding must be submitted either via the Board's e-filing format or 
in the traditional paper format. Any person using e-filing should 
attach a document and otherwise comply with the instructions found on 
the Board's Web site at www.stb.dot.gov at the ``E-FILING'' link. Any 
person submitting a filing in the traditional paper format should send 
an original and 10 paper copies of the filing (and also an electronic 
version) to: Surface Transportation Board, 395 E Street SW., 
Washington, DC 20423-0001. In addition, one copy of each filing in this 
proceeding must be sent (and may be sent by email only if service by 
email is acceptable to the recipient) to each of the following: (1) 
Secretary of Transportation, 1200 New Jersey Avenue SE., Washington, DC 
20590; (2) Attorney General of the United States, c/o Assistant 
Attorney General, Antitrust Division, Room 3109, Department of Justice, 
Washington, DC 20530; (3) Louis E. Gitomer (representing CSXT), Law 
Offices of Louis E. Gitomer, LLC, 600 Baltimore Avenue, Suite 301, 
Towson, MD 21204; (4) Mark H. Sidman (representing L&I), Anacostia Rail 
Holdings Company, 1701 Pennsylvania Avenue NW., Suite 300, Washington, 
DC 20006; and (5) any other person designated as a POR on the service 
list notice (as explained below, the service list notice will be issued 
as soon after August 15, 2013, as practicable).

FOR FURTHER INFORMATION CONTACT: Jonathon Binet, (202) 245-0368. 
[Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: CSXT is a wholly owned subsidiary of CSX 
Corporation and is a Class I railroad that owns and operates 
approximately 21,000 miles of railroad lines in the United States and 
Canada. As relevant here, CSXT currently operates over the Line 
pursuant to trackage rights.\2\
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    \2\ See CSX Transp.--Trackage Rights Exemption--Louisville & 
Ind. R.R., FD 33744 (STB served June 21, 2001). Under the terms of 
the Joint Use Operating Agreement, these trackage rights would 
become dormant but would automatically reactivate should the 
Easement Agreement terminate.
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    L&I, a Class III railroad, is a wholly owned subsidiary of 
Anacostia Rail Holdings. L&I owns and operates 106 miles of rail lines 
in Kentucky and Indiana. Prior to L&I's acquisition of the Line, it was 
owned by Consolidated Rail Corporation. Currently, the Line handles two 
trains per day between Indianapolis and Seymour, Ind. (L&I); four 
trains per day between Seymour and Jeffersonville Yard, Ind. (2 L&I and 
2 CSXT); and seven trains per day between Jeffersonville Yard and 
Louisville, Ky. (5 L&I and 2 CSXT).
    Joint use of the Line would be made possible through CSXT's 
acquisition and use of a perpetual, non-exclusive freight railroad 
operating easement over the Line. In order to accomplish this, CSXT and 
L&I have entered into a Transaction Agreement, Easement Agreement, and 
Joint Use Operating Agreement, as well as other agreements. L&I has 
agreed to sell the easement to CSXT for $10 million. As a result of the 
Transaction, CSXT would fund an upgrade of the Line, which would result 
in the following improvements: upgrade of the track from FRA Class 2 
(up to 25 mph) to FRA Class 4 track (up to 60 mph), replacement of a 
bridge, modernization of the current dispatching system, and completion 
of upgrades necessary to permit the handling of 286,000 pound gross 
weight on rail cars (GWOR). These upgrades are estimated to cost 
between $70 million and $90 million, and would be completed within 
seven years. L&I would continue to provide overhead service and 
exclusive local service, while CSXT would continue to provide overhead 
service on the Line.
    Applicants claim that the upgrades to the Line will increase the 
efficiency and performance of both CSXT's and L&I's operations. Once 
the upgrades are completed, Applicants state that there will be 17 
trains (2 L&I and 15 CSXT) per day operating between Indianapolis and 
Jeffersonville Yard, Ind.; and 20 trains (5 L&I and 15 CSXT) per day 
operating between Jeffersonville Yard, Ind. and Louisville, Ky.\3\ 
Applicants state that the Transaction would create routing flexibility 
and performance improvements for CSXT in the Midwestern and South 
regions (areas encompassing Ohio, Indiana, Illinois, and Kentucky). 
Applicants state that CSXT expects to save about 130.5 hours of transit 
time per day, resulting in savings of about $11.8 million per year. 
Applicants state that L&I would benefit from the upgraded Line without 
incurring the capital cost and would share the cost of maintaining the 
Line with CSXT based on usage.
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    \3\ These projections reflect increases in CSXT's number of 
trains. L&I present number of trains is not projected to change as a 
result of the transaction.
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    Under the Joint Use Operating Agreement, the existing track would 
be improved to allow the Line to handle cars weighing 286,000 pounds 
GWOR, rather than the current weight of 263,000 pounds GWOR. L&I would 
be able to use the Line as it does today, however, L&I would be 
required to pay CSXT for use of the upgraded line for cars weighing 
more than 263,000 pounds GWOR or taller than 18'6'' above the top rail 
when CSXT is not involved in the movement of the car (referred to as 
``subject cars'').\4\ Under Section 4 of Attachment C to the Joint Use 
Operating Agreement, L&I's subject cars would be charged a per unit-
mile fee for overhead movement between milepost 4.0 and milepost 98.3. 
According to Applicants, this compensation arrangement is perpetual and 
is based on the Transaction Agreement. L&I would also be charged for 
originating or terminating a certain number of subject cars at 
customers served by CSXT or accessible to CSXT by reciprocal switch 
within a calendar year, subject to some exclusions. Another provision 
of the Joint Use Operating Agreement precludes L&I's ability to grant 
operating rights to third party Class I railroads and specifies that 
L&I shall not

[[Page 46684]]

grant operating rights to a Class I carrier without prior written 
consent of CSXT.
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    \4\ Under the Joint Use Operating Agreement, L&I could opt out 
of the payments for cars taller than 18'6'', with a one-time payment 
to CSXT.
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    Financial Arrangements. Under the Transaction, L&I would sell the 
easement to CSXT for $10 million. No new securities would be issued by 
CSXT or L&I. The upgrades would be funded as part of CSXT's annual 
capital budget.
    Passenger Service Impacts. Applicants state that the Transaction 
would not adversely impact commuter or other passenger service. 
Pursuant to terms of Applicants' Joint Use Operating Agreement, L&I 
would retain all rights with respect to the conduct of passenger 
operations on the Line.
    Discontinuances/Abandonments. The Transaction does not involve the 
abandonment of, or discontinuance of service over, any rail lines. Nor 
do Applicants have any plans at this time to discontinue service over 
or abandon any lines as a result of the Transaction.
    Public Interest Considerations. Applicants assert that the 
Transaction would not reduce the number of railroads serving any 
shipper on the Line. Rather, all shippers along the Line would receive 
faster service and be able to use taller and heavier cars. L&I would 
continue to serve the same shippers it serves today. Applicants state 
that the competitive balance between CSXT and L&I would not be altered 
because L&I and CSXT would remain unaffiliated. Applicants claim that 
L&I would benefit by receiving an upgraded track, a new bridge, and 
upgraded dispatching and signaling systems without incurring the 
capital cost.
    Applicants state that CSXT currently uses trackage rights over the 
Line to relieve some of the congestion on its Louisville Cincinnati 
Subdivision (LCL Subdivision).\5\ After the upgrades are complete, CSXT 
expects to reduce inefficiencies caused by running shorter and slower 
trains on the LCL Subdivision. According to Applicants, CSXT's use of 
the Line would reduce freight transit time in the Midwestern and South 
regions, reduce fuel consumption, upgrade car utilization, and allow it 
to compete more effectively with nearby railroads and short and long-
haul trucking companies.
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    \5\ Expansion of the LCL Subdivision is not feasible due to 
curvature and weight restrictions and short sidings. Application, 
11.
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    Time Schedule for Consummation. Applicants expect to consummate the 
Transaction before the end of 2013.
    Environmental Matters. The National Environmental Policy Act of 
1969, 42 U.S.C. 4321-4347 (NEPA), requires that the Board take 
environmental considerations into account in its decisionmaking. 
Environmental review under NEPA will be required here because the 
projected increases in train traffic on the Line (between 13 and 15 
trains per day) exceed the thresholds in the Board's environmental 
rules (generally an increase in 3 or 8 trains per day). Consistent with 
those rules, OEA currently is preparing a Draft EA. OEA anticipates 
issuing its Draft EA for public comment on August 30, 2013. Parties 
interested in commenting on the Draft EA must submit comments by 
September 30, 2013. The Draft EA will provide instructions on how to 
submit comments on the document. OEA anticipates issuing a Final EA on 
or before November 6, 2013.
    Labor Impacts. Applicants state that no employees of CSXT and L&I 
would be adversely affected. According to Applicants, CSXT trains that 
are operated over the Line would continue to be crewed by CSXT 
employees. L&I trains would continue to be operated by L&I employees. 
L&I would continue to maintain and dispatch the Line.
    Applicants request that the Board impose the employee protective 
conditions set forth in Norfolk and Western Railway Co.--Trackage 
Rights--Burlington Northern, Inc., 354 I.C.C. 605 (1978), as modified 
in Mendocino Coast Railway, Inc.--Lease and Operate--California Western 
Railroad, 360 I.C.C. 653 (1980).
    Application accepted. Under 49 CFR 1180.4(b)(2)(iv), the Board must 
determine whether a proposed transaction is ``major,'' ``significant,'' 
or ``minor.'' Here, we must determine whether the Transaction is 
``significant'' under Sec.  1180.2(b) or ``minor'' under Sec.  
1180.2(c).\6\ A transaction that does not involve the control or merger 
of two or more Class I railroads is not of regional or national 
transportation significance, and therefore is classified as ``minor'' 
if: (1) The transaction would clearly not have anticompetitive effects, 
or (2) any anticompetitive effects would clearly be outweighed by the 
transaction's contribution to the public interest in meeting 
significant transportation needs. See 49 CFR 1180.2(b), (c).
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    \6\ See 49 CFR 1180.4(b)(2)(iv). This transaction is not 
``major'' because it does not involve the control or merger of two 
or more Class I carriers. See 49 CFR 1180.2(a). It also is not 
``exempt'' because it is not within one of the eight class 
exemptions listed in Sec.  1180.2(d).
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    Based on a review of the application and supplement, the Board 
finds that the Transaction does not appear to be of regional or 
national transportation significance and therefore qualifies as a 
``minor transaction'' under the Board's regulatory scheme. The Board 
has identified some provisions in the parties' agreements that may have 
anticompetitive effects. Under Section 4 of Attachment C to the Joint 
Use Operating Agreement, the fee L&I must pay CSXT for overhead 
movement of certain cars on the upgraded track between milepost 4.0 and 
milepost 98.3 could be an anticompetitive effect because it may create 
a disincentive for L&I to interchange with carriers other than CSXT. 
Furthermore, this provision would continue in perpetuity. In addition, 
the Transaction explicitly precludes L&I from granting operating rights 
to other Class I railroads without the permission of CSXT. Because the 
compensation arrangement only applies to 286,000 pounds GWOR and cars 
above a certain height--both of which are car types that L&I does not 
presently handle--the provisions do not appear to affect L&I's ability 
to continue its current operations and serve the shippers it serves 
today. In other transactions involving a significant capital investment 
by a railroad to improve lines that it does not own or fully control, 
the Board has permitted certain restrictions similarly aimed at 
protecting that investment. See Kansas City S. Ry. and Meridian 
Speedway LLC--Exemption for Transactions Within a Corporate Family, FD 
34822 (STB served Feb. 16, 2006) (authorizing a transaction that 
involved a significant investment by Norfolk Southern Railway Company 
(NSR) in capital improvements to a line of the Kansas City Southern 
Railroad, but imposed certain restrictions on other railroads from 
operating over it); see also Norfolk S. Ry., Pan Am Rys., et al.--Joint 
Control and Operating/Pooling Agreements--Pan Am S. LLC, FD 35147 (STB 
served Mar. 10, 2009) (authorizing the control and ownership of Pan Am 
Southern and substantial investment by NSR in improvements to Pan Am 
Southern's lines and facilities).
    Here, the Board finds the Transaction to be a ``minor transaction'' 
because it appears on the face of the application, as supplemented, 
that any anticompetitive effects of the Transaction would clearly be 
outweighed by the contribution to the public interest. The proposed 
upgrades to the Line would allow more efficient operations by both L&I 
and CSXT. L&I would receive an upgraded track, from FRA Class 2 (up to 
25 mph) to FRA Class 4 track (up to 60 mph), a new bridge, and upgraded 
dispatching and signaling systems. Customers along the Line would 
receive faster service and be able to use heavier and taller cars.
    The Board's findings regarding competitive impact and contributions 
to the public interest are preliminary. The

[[Page 46685]]

Board will give careful consideration to any claims that the potential 
anticompetitive effects of the Transaction would not be outweighed by 
its potential benefits. We also note that the Board can condition the 
Transaction to mitigate or eliminate adverse effects.
    The Board accepts the application for consideration because it is 
in substantial compliance with the applicable regulations governing 
``minor transactions.'' See 49 CFR pt. 1180; 49 U.S.C. 11321-26. The 
Board reserves the right to require the filing of supplemental 
information as necessary to complete the record.
    Procedural schedule. The Board has considered Applicants' request 
for an expedited procedural schedule, under which the Board would issue 
its final decision on November 25, 2013, 146 days after the application 
has been filed (rather than 180 days), and have that decision become 
effective 20 days after it is issued (rather than 30 days). The Board 
will adopt a procedural schedule, based on the filing of the 
supplemental information on July 2, 2013, that attempts to accommodate 
the parties' desire to close the Transaction by the end of 2013. Under 
the procedural schedule we are adopting in this case: Any person who 
wishes to participate in this proceeding as a party of record (POR) 
must file a notice of intent to participate no later than August 15, 
2013; all comments, protests, requests for conditions, and any other 
evidence and argument in opposition to the application, including 
filings by DOJ and DOT, must be filed by September 30, 2013; comments 
on the Draft EA must be submitted by September 30, 2013; and responses 
to comments, protests, requests for conditions, and other opposition on 
the transportation merits of the Transaction, as well as Applicants' 
rebuttal in support of the application, must be filed by October 21, 
2013. The Board plans to issue its Final EA on or before November 6, 
2013, and its final decision by December 6, 2013, and to make any such 
approval effective by December 26, 2013. The Board reserves the right 
to adjust the schedule as circumstances may warrant. For further 
information regarding dates, see the Appendix (Procedural Schedule).
    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 August 15, 2013, a notice of intent to participate, 
accompanied by a certificate of service indicating that the notice has 
been properly served on the Secretary of Transportation, the Attorney 
General of the United States, Mr. Sidman (representing L&I), and Mr. 
Gitomer (representing CSXT).
    If a request is made in the notice of intent to participate to have 
more than one name added to the service list as a POR representing a 
particular entity, the extra name will be added to the service list as 
a ``Non-Party.'' The list will reflect the Board's policy of allowing 
only one official representative per party to be placed on the service 
list, as specified in Press Release No. 97-68 dated August 18, 1997, 
announcing the implementation of the Board's ``One Party-One 
Representative'' policy for service lists. Any person designated as a 
Non-Party will receive copies of Board decisions, orders, and notices 
but not copies of official filings. Persons seeking to change their 
status must accompany that request with a written certification that he 
or she has complied with the service requirements set forth at 49 CFR 
1180.4, and any other requirements set forth in this decision.
    Service list notice. The Board will serve, as soon after August 15, 
2013, 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 will also be required to file with the Board, within 
10 days of the service date of the service list notice, a certificate 
of service indicating that the service required by the preceding 
sentence has been accomplished. Every filing made by a POR 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 need not be served with copies of filings, unless any MOC or GOV 
has requested to be, and is designated as, a POR.
    Service of decisions, orders, and notices. 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, GOV, or 
Non-Party. All other interested persons are encouraged to secure copies 
of decisions, orders, and notices via the Board's Web site at 
``www.stb.dot.gov'' under ``E-LIBRARY/Decisions & Notices.'' It is not 
necessary to become a POR in order to participate in the environmental 
review process. Nor must environmental comments be served on other 
parties. The Draft EA will be posted on the Board's Web site. In 
addition, OEA will distribute the document to appropriate federal, 
state, and local agencies and other interested parties in the project 
area. OEA will also provide copies of the Draft EA to public libraries 
in the project area. Any person or interested party may submit comments 
on the Draft EA by following the instructions in the document for 
submitting comments.
    Access to filings. Under the Board's rules, any document filed with 
the Board (including applications, pleadings, etc.) shall be promptly 
furnished by the filer to interested persons on request, unless subject 
to a protective order. 49 CFR 1180.4(a)(3). Such documents are 
available for inspection in the Docket File Reading Room (Room 131) at 
the offices of the Surface Transportation Board, 395 E Street SW., in 
Washington, DC. The application and other filings in this proceeding 
will also be available on the Board's Web site at ``www.stb.dot.gov'' 
under ``E-LIBRARY/Filings.'' In addition, the application may be 
obtained from Messrs. Sidman and Gitomer at the addresses indicated 
above.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. The application in FD 35523, as supplemented, is 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 the 
Appendix.
    3. The parties to this proceeding must comply with the procedural 
requirements described in this decision.
    4. This decision is effective on August 1, 2013.

    Decided: July 29, 2013.

    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey.
Derrick A. Gardner,
Clearance Clerk.

Appendix: Procedural Schedule

June 14, 2013 Motion for Protective Order filed.
July 2, 2013 Application, as supplemented, filed.
August 15, 2013 Notices of intent to participate in this proceeding 
due. Discovery requests due to Applicants.
September 3, 2013 Applicants' responses to discovery requests due.
August 30, 2013 OEA issues Draft EA.
September 30, 2013 Comments due from all parties, including the

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Attorney General and the Secretary of Transportation, on the 
transportation merits of the Transaction.
September 30, 2013 Comments on Draft EA due to OEA.
October 21, 2013 Responses to comments on the transportation merits of 
the Transaction due. Applicants' rebuttal in support of the application 
due.
October 30, 2013 Close of record on the transportation merits.
On or before November 6, 2013 OEA issues Final EA.
December 6, 2013 Board serves final decision.*
December 26, 2013 Effective date of final decision.
* The Board reserves the right to modify this schedule as circumstances 
may warrant.

[FR Doc. 2013-18527 Filed 7-31-13; 8:45 am]
BILLING CODE 4915-01-P