[Federal Register Volume 82, Number 44 (Wednesday, March 8, 2017)]
[Notices]
[Pages 13040-13041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04472]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36071]


Delmarva Central Railroad Company--Lease and Operation Exemption 
With Interchange Commitment--Norfolk Southern Railway Company

    On November 17, 2016, Delmarva Central Railroad Company (DCR), at 
that time a noncarrier, filed a verified notice of exemption under 49 
CFR 1150.31 to lease and operate approximately 161.59 miles of rail 
line (the Line) owned by Norfolk Southern Railway Company (NSR). Notice 
of the exemption was served and published in the Federal Register on 
December 2, 2016 (81 FR 87,122).\1\
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    \1\ DCR's parent, Carload Express, Inc. (Carload), filed a 
verified notice of exemption to continue in control of DCR upon 
DCR's becoming a Class III carrier. See Carload Express, Inc.--
Continuance in Control Exemption--Delmarva Cent. R.R., Docket No. FD 
36072. Notice of that exemption was also served and published in the 
Federal Register on December 2, 2016. (81 FR 87,123).
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    On December 14, 2016, SMART/TD Delaware State Legislative Board 
(SMART/TD) petitioned the Board to revoke the lease and operation 
exemption.\2\ SMART/TD asserts that the DCR's lease and operation has 
economic and safety considerations that should be investigated by the 
Board. In particular, SMART/TD claims that DCR, a company with fewer 
resources than NSR, cannot adequately maintain the Line's rails and 
bridges as they have been maintained by NSR. SMART/TD notes that the 
Line crosses three bridges, two of those bridges are 100 years old and 
the remaining bridge is 60 years old. It notes that one of the bridges 
was recently out of service for 30 days and questions whether DCR could 
have restored the bridge in the same expeditious manner as NSR, given 
DCR's ``limited finances.'' It further asserts that the Line is 
deteriorating and maintenance will become increasingly expensive. 
SMART/TD also claims that there are no insurance minimums in place for 
smaller carriers and that it fears that local taxpayers might be forced 
to carry the burden in case of a disaster.
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    \2\ No stay was sought or imposed. Because the effective date 
was not stayed, the exemption became effective on December 17, 2016. 
DCR later notified the Board that it has since consummated the 
transaction.
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    SMART/TD also asserts that the lease will result in replacing a 
``qualified, experienced, and knowledgeable'' labor force with 
``untrained and unfamiliar'' employees, which, according to SMART/TD, 
raises safety concerns. According to SMART/TD, these concerns implicate 
the national rail transportation policy (RTP) goal of ``operat[ing] 
transportation facilities and equipment without detriment to the public 
health and safety.'' 49 U.S.C. 10101(8). Moreover, citing the RTP 
policy goal of ``encourag[ing] fair wages and safe and suitable working 
conditions in the railroad industry,'' 49 U.S.C. 10101(11), SMART/TD 
asserts that DCR will employ ``an inferior, unqualified labor force 
that is willing to accept less money because they are less qualified,'' 
and that DCR's employees' wages and benefits will be inferior to those 
of Class I railroad employees.
    DCR filed a reply on December 27, 2016. In response to SMART/TD's 
suggestion that DCR cannot safely operate the Line, DCR notes that it 
is under the control of Carload, a noncarrier holding company that owns 
and operates other Class III carriers. See, e.g., Carload Express, 
Inc.--Continuance in Control Exemption--Ohio Terminal Ry., FD 35704 
(STB served Jan. 11, 2013). As such, DCR states that its owners, 
managers, and personnel are already familiar with the safety 
regulations administered by the Federal Railroad Administration (FRA). 
DCR states that it will operate the Line in accordance with FRA 
regulations.
    DCR further explains that the concerns about bridge maintenance are 
unwarranted. DCR states that NSR has maintained the bridges in full 
compliance with FRA standards and safe operating practices. DCR notes 
that,

[[Page 13041]]

although one of the bridges was closed for 30 days, this was for 
routine maintenance and resulted from construction delays caused by 
weather conditions. DCR adds that it has inspected the bridges and has 
the knowledge and resources to maintain them.
    As to concerns about wages and benefits, DCR asserts that it offers 
some of the best wages and benefits of any employer on the Delmarva 
Peninsula. DCR notes that it received more applications for employment 
than there are available positions. It adds that it requires all its 
employees to abide by all applicable safety rules and offers suitable 
working conditions.

Discussion and Conclusions

    Because DCR's lease and operation exemption has gone into effect, 
SMART/TD's request will be treated as a petition to reopen and revoke 
the exemption under 49 U.S.C. 10502(d).\3\ Under 49 U.S.C. 10502(d), an 
exemption may be revoked, in whole or in part, if the Board finds that 
regulation of the transaction is necessary to carry out the RTP of 49 
U.S.C. 10101. Under 49 CFR 1115.3(b), the petition must state in detail 
whether revocation is supported by material error, new evidence, or 
substantially changed circumstances. See N.Y. Cent. Lines--Aban. 
Exemption--in Montgomery & Schenectady Ctys., N.Y., AB 565 (Sub-No. 
14X) (STB served Jan. 22, 2004). The party seeking revocation has the 
burden of showing that regulation is necessary to carry out the RTP, 49 
CFR 1121.4(f), and petitions to revoke must be based on reasonable, 
specific concerns demonstrating that revocation of the exemption is 
warranted and more detailed scrutiny of the transaction is necessary. 
See Consol. Rail Corp.--Trackage Rights Exemption--Mo. Pac. R.R., FD 
32662 (STB served June 18, 1998).
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    \3\ See e.g., BNSF Ry.--Trackage Rights Exemption--Union Pac. 
R.R., FD 35601, slip op. at 3-4 (STB served Sept. 11, 2013); Watco 
Holdings, Inc.--Acquis. of Control Exemption--Wis. & S. R.R., FD 
35573, slip op. at 1-2 (STB served Mar. 22, 2012); Elk River R.R.--
Constr. & Operation Exemption--Clay & Kanawha Ctys., W.Va., FD 
31989, slip op. at 1 n.3 (STB served Apr. 11, 1997).
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    Here, SMART/TD fails to establish that revocation of the exemption 
is necessary to carry out the RTP. Although SMART/TD has cited the RTP 
goals of operating without detriment to the public health and safety 
(49 U.S.C. 10101(8)) and encouraging fair wages and suitable working 
conditions (49 U.S.C. 10101(11)), it has not shown that regulation is 
necessary to carry out these goals.
    The Board takes safety concerns seriously; however, SMART/TD's 
concerns here are vague and speculative and do not arise from any 
demonstrated shortcomings specific to DCR. DCR has expressed a 
commitment to abide by FRA regulations, and its parent, Carload, is 
familiar with FRA's requirements. As to maintenance, DCR states that it 
has already inspected the bridges and has explained the one extended 
bridge closure cited by SMART/TD. Furthermore, NSR's contract with DCR 
obligates DCR to comply with FRA standards of operation, to maintain 
the tracks at standards specified by NSR, and to carry certain 
insurance policies covering incidents that might occur while operating 
the Line.
    SMART/TD's concern about DCR's having fewer resources than NSR, the 
Line's Class I owner, also does not warrant revocation. Class I 
carriers routinely spin-off lines to newly formed Class III carriers, 
and SMART/TD has not demonstrated that DCR will be any less prepared to 
assume the responsibility to maintain and operate the Line that any 
other new Class III carrier would be. Moreover, as DCR notes, its 
parent company, Carload, is an experienced shortline operator. DCR 
explains that Carload's railroads ``have strong safety records and 
there have been no FRA or STB reported allegations that its shortline 
employees have been treated unfairly or required to operate in unsafe 
conditions;'' SMART/TD has offered no evidence to the contrary. SMART/
TD has also failed to show that the labor impact here is different 
from, or greater than, the impacts typically associated with the 
acquisition of a rail line by any new carrier.
    For the foregoing reasons, SMART/TD has not shown that reopening 
and revocation are supported by material error, new evidence, or 
substantially changed circumstances, or that applying the Board's 
regulation to the transaction is necessary to carry out the RTP. 
Accordingly, the Board finds no basis to revoke DCR's exemption or 
begin a revocation proceeding.
    It is ordered:
    1. SMART/TD's petition to revoke DCR's exemption is denied.
    2. This decision is effective on its date of service.

    Decided: March 1, 2017.

    By the Board, Board Members Begeman, Elliott, and Miller.
Raina S. Contee,
Clearance Clerk.
[FR Doc. 2017-04472 Filed 3-7-17; 8:45 am]
BILLING CODE 4915-01-P