[Federal Register Volume 80, Number 77 (Wednesday, April 22, 2015)]
[Notices]
[Pages 22613-22615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-09360]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. MCF 21062]


Ace Express Coaches, LLC, et al.; Acquisition and Control; 
Certain Properties of Evergreen Trails, Inc. d/b/a Horizon Coach Lines

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice tentatively approving and authorizing finance 
transaction.

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SUMMARY: Ace Express Coaches, LLC (Buyer), and its affiliated parties 
(All Aboard America! Holdings, Inc. (AHI), Celerity AHI Holdings SPV, 
LLC (Celerity Holdings), Celerity Partners IV, LLC (Celerity Partners), 
and Industrial Bus Lines, Inc. (IBL)) (collectively, Applicants) have 
filed an application under 49 U.S.C. 14303 for the Buyer to acquire 
certain assets of Evergreen Trails, Inc. d/b/a Horizon Coach Lines 
(Seller), and for the continuance in control of the Buyer by AHI, 
Celerity Holdings, and Celerity Partners once the Buyer becomes a 
federally regulated motor carrier of passengers. The Board is 
tentatively approving and authorizing the transaction, and, if no 
opposing comments are timely filed, this notice will be the final Board 
action. Persons wishing to oppose the application must follow the rules 
at 49 CFR 1182.5 and 1182.8.

DATES: Comments must be filed by June 8, 2015. Applicants may file a 
reply by June 22, 2015. If no comments are filed by June 8, 2015, this 
notice shall be effective on June 9, 2015.

ADDRESSES: Send an original and 10 copies of any comments referring to 
Docket No. MCF 21062 to: Surface Transportation Board, 395 E Street 
SW., Washington, DC 20423-0001. In addition, send one copy of comments 
to Applicants' representative: Mark J. Andrews, Strasburger & Price, 
LLP, Suite 717, 1025 Connecticut Avenue NW., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: Matthew Bornstein: (202) 245-0385. 
Federal Information Relay Service (FIRS) for the hearing impaired: 1-
800-877-8339.

SUPPLEMENTARY INFORMATION: The Buyer is a newly established limited 
liability company under the laws of Delaware.\1\

[[Page 22614]]

Applicants state that the Buyer applied to the Federal Motor Carrier 
Safety Administration (FMCSA) for nationwide charter and special 
operations authority, as a motor passenger carrier operating over 
irregular routes, in Docket No. MC-908184. IBL, a motor carrier of 
passengers (MC-133171), is a corporation established under the laws of 
New Mexico. IBL provides charter and contract services in Arizona, New 
Mexico, and Texas utilizing 101 motor coaches and minibuses. The Buyer 
and IBL are under the control of AHI, Celerity Holdings, and Celerity 
Partners, each a noncarrier organized under the laws of Delaware. AHI 
also owns 100 percent of the stock of two other federally regulated 
motor carriers of passengers: Hotard Coaches, Inc. (Hotard) (MC-148331) 
and Sureride Charter Inc. d/b/a Sundiego Charter Co. (Sundiego) (MC-
324772).\2\ Hotard operates local and regional charter and contract 
services within Louisiana and southern Mississippi. Sundiego conducts 
charter, sightseeing, and various shuttle operations to, from, and 
within California and adjoining states.
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    \1\ Concurrently with their application, the parties also filed 
a request for interim approval under 49 U.S.C. 14303(i). In a 
decision served on April 8, 2015, in related Docket No. MCF 21062 
TA, interim approval was granted, effective on the service date of 
that decision.
    \2\ The Board authorized control of Hotard and IBL by AHI and 
the Celerity entities in Celerity Partners IV--Control--Calco 
Travel, MCF 21044 (STB served May 11, 2012). The Board also 
authorized control of Sundiego by AHI and the Celerity entities in 
Celerity Partners IV--Control-- Sureride Charter, MCF 21055 (STB 
served Oct. 29, 2013).
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    The Seller, a motor carrier of passengers (MC-107638), is a 
corporation established under the laws of the State of Washington. The 
Seller is under the control of Francis W. Sherman, a noncarrier 
individual. Mr. Sherman exercises control of the Seller through 
intermediate holding companies FSCS Corporation and TMS West Coast, 
Inc. Applicants state that the Seller currently provides both 
government and corporate shuttle services, scheduled shuttle services 
between Denver and two mountain resort towns in Colorado (carrying both 
patrons and employees of the casinos located there), and leisure travel 
services to, from, and within Colorado. The government shuttle services 
include services provided under a contract between the Seller and the 
U.S. Department of Defense (DOD). Applicants state that the Seller 
utilized approximately eight vans and minibuses for the corporate 
shuttles, 11 motor coaches for the casino operations, and 33 coaches 
plus two minibuses for all other work. Applicants indicate that the 
revenue mix generated by these assets in 2014 for the government/
corporate shuttles, casino operations, and charters was approximately 
9, 48, and 43 percent, respectively. In addition, the Applicants state 
that the Seller has been awarded an intercity passenger service 
contract with the Colorado Department of Transportation (CDOT) under 
which 13 additional CDOT-owned coaches will commence operations within 
the next few months.
    Applicants explain that the proposed transaction would close in 
three phases. The first phase, as discussed in MCF 21062 TA, 
contemplates that the Buyer and IBL would acquire control of the assets 
currently operated by the Seller in Colorado.\3\ All of the non-DOD 
assets, including vehicles, would be operated by IBL (under its 
existing FMCSA authority) pursuant to an interim management agreement 
between IBL and the Buyer. Vehicles owned by the Seller would be leased 
to the Buyer, and vehicle leases to the Seller by third parties would 
be assigned to the Buyer. The DOD contract would be assigned to and 
performed by IBL under a management agreement with the Buyer, as 
required by DOD regulations, which preclude contracts with passenger 
carriers in existence less than a year.
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    \3\ These assets include: (i) The Seller's operations center in 
Golden, Colorado, plus six other leased terminals and parking 
facilities; (ii) approximately 44 motor coaches and 23 other 
vehicles; (iii) all maintenance facilities and supplies for these 
vehicles; (iv) certain licenses and permits necessary to operate the 
assets; (v) furniture, fixtures, office equipment, software, and 
intellectual property in use for such operations; and (vi) existing 
and prospective charter and shuttle contracts based in Colorado.
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    The second phase of the proposed transaction would entail the Buyer 
becoming permanent owner and operator of all the non-DOD assets, 
including vehicles, upon the effective date of the Board's approval of 
the transaction and once the Buyer has obtained FMCSA operating 
authority. Any interim role of IBL managing such assets would therefore 
end. Lastly, the third phase of the proposed transaction would occur as 
soon as practicable after the first anniversary of the phase two 
closing. The Buyer would replace IBL as the direct operator of the DOD 
contract and the proposed acquisition would then be complete.
    Under 49 U.S.C. 14303(b), the Board must approve and authorize a 
transaction that it finds consistent with the public interest, taking 
into consideration at least: (1) The effect of the proposed transaction 
on the adequacy of transportation to the public; (2) the total fixed 
charges that result; and (3) the interest of affected carrier 
employees. Applicants have submitted information, as required by 49 CFR 
1182.2, including the information to demonstrate that the proposed 
transaction is consistent with the public interest under 49 U.S.C. 
14303(b), and a statement that Applicants' aggregate gross operating 
revenues of the Buyer, IBL, Hotard, Sundiego, and the Colorado assets 
of the Seller exceeded $2 million for the preceding 12-month period, 
see 49 U.S.C. 14303(g).
    Applicants submit that the proposed transaction would have a 
positive net impact on the adequacy of transportation to the public 
because Applicants do not intend to change the operations of Seller's 
assets, but intend to modernize the bus fleet used in those operations. 
They anticipate that the proposed transaction would enhance services to 
the public by implementing vehicle sharing arrangements, coordinated 
driver training and safety management services, and by centralizing 
certain management support functions. With respect to fixed charges, 
Applicants state that the combined scale of operations of the Buyer, 
IBL, Hotard, and Sundiego would allow the Buyer to enhance its volume 
purchasing power, thereby reducing insurance premiums and achieving 
deeper volume discounts for tires, equipment, and fuel. Applicants 
claim that the proposed transaction also would have a positive impact 
on employees. The Buyer intends to retain Seller's existing management 
and hourly employees who are involved in the operation of the assets 
being acquired. Applicants assert that this would result in continued 
job security and opportunities for growth in the combined business of 
the Buyer and its affiliated carriers.
    Applicants further claim that the acquisition would not likely 
affect competition because the markets in which the Seller's Colorado 
assets and the previously approved combination of Sundiego, IBL, and 
Hotard operate are adjacent, but do not significantly overlap. 
Applicants note that numerous carriers compete with the Seller's 
operations in Colorado and that the Seller operates fewer than 50 
percent of all coaches in the Denver and Colorado Springs markets. 
These local and regional carriers include Seller's largest competitor, 
Busco, Inc. d/b/a Arrow Stage Lines (Busco), which operates 33 motor 
coaches from its Denver facility and has 216 coaches in its total 
fleet. Ramblin Express, Inc. (Ramblin) also operates 45 units and has 
facilities in Denver and Colorado Springs, and Colorado Tour Line LLC, 
which operates under the GrayLine brand, operates motor coaches in both 
markets. In addition, Applicants state that Colorado Charter Line, Inc. 
(CCL) and Premier Charter (Premier) are two

[[Page 22615]]

smaller charter companies that operate in the Denver area.
    According to Applicants, in the casino shuttle market, the Seller 
and Ramblin are the current operators (regulated by the Colorado Public 
Utility Commission), and the Buyer merely would replace the Seller in 
this market. Applicants argue that services provided under contract 
involve a competitive bidding process where the competing local and 
regional carriers mentioned above could bid for shuttle services, along 
with any interested nationwide operators and that thus, the market 
would remain competitive if the proposed transaction were approved. 
Applicants state that services provided on a ``spot basis'' are the 
norm for much of Seller's charter business involving leisure travel and 
that these charter operations face competition from nationwide 
operators in addition to the local and regional carriers mentioned 
above (Busco, Ramblin, CCL, and Premier). They also note that motor 
passenger carriers face intense market competition from other 
transportation modes, such as private automobiles, airlines, and 
trains.
    On the basis of the application, the Board finds that the proposed 
acquisition is consistent with the public interest and should be 
tentatively approved and authorized. If any opposing comments are 
timely filed, these findings will be deemed vacated, and, unless a 
final decision can be made on the record as developed, a procedural 
schedule will be adopted to reconsider the application. See 49 CFR 
1182.6(c). If no opposing comments are filed by the expiration of the 
comment period, this notice will take effect automatically and will be 
the final Board action.
    Board decisions and notices are available on our Web site at 
``WWW.STB.DOT.GOV''.
    This decision will not significantly affect either the quality of 
the human environment or the conservation of energy resources.
    It is ordered:
    1. The proposed transaction is approved and authorized, subject to 
the filing of opposing comments.
    2. If opposing comments are timely filed, the findings made in this 
notice will be deemed vacated.
    3. This notice will be effective June 9, 2015, unless opposing 
comments are filed by June 8, 2015.
    4. A copy of this decision will be served on: (1) U.S. Department 
of Transportation, Federal Motor Carrier Safety Administration, 1200 
New Jersey Avenue SE., Washington, DC 20590; (2) the U.S. Department of 
Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW., 
Washington, DC 20530; and (3) the U.S. Department of Transportation, 
Office of the General Counsel, 1200 New Jersey Avenue SE., Washington, 
DC 20590.

    Decided: April 16, 2015.

    By the Board, Acting Chairman Miller and Vice Chairman Begeman.
Brendetta S. Jones,
Clearance Clerk.
[FR Doc. 2015-09360 Filed 4-21-15; 8:45 am]
 BILLING CODE 4915-01-P