[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Notices]
[Pages 71984-71985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25016]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36434]


The Elk River Railroad, Inc.--Merger Exemption--The Buffalo Creek 
Railroad Company

    On August 27, 2020, The Elk River Railroad, Inc. (TERRI), a Class 
III rail carrier, filed a petition under 49 U.S.C. 10502 seeking an 
exemption from the prior approval requirements of 49 U.S.C. 11323-25 to 
authorize the merger of The Buffalo Creek Railroad Company (BCR), a 
Class III rail carrier, with and into TERRI, which is the surviving 
corporation. Because the merger took place in 1995, TERRI is seeking 
after-the-fact authority and asks that the requested exemption be 
granted with retroactive effect. For the reasons discussed below, the 
Board will grant TERRI's petition for an exemption authorizing its 
merger with BCR but will deny the request to make the exemption 
retroactive.

Background

    According to the petition, William T. Bright (Bright) is the sole 
owner of TERRI, a West Virginia corporation that acquired a rail line 
previously owned and operated by CSX Transportation, Inc.\1\ (Pet. 1-
3.) In 1992, BCR, at that time a noncarrier also owned by Bright, 
acquired the rail line of the Buffalo Creek and Gauley Railroad Company 
(BC&G) pursuant to authority granted by the Board's predecessor, the 
Interstate Commerce Commission (ICC),\2\ and

[[Page 71985]]

Bright obtained authority to control BCR as a rail carrier.\3\ (Pet. 3-
4.)
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    \1\ See Elk River R.R.--Lease, Operation & Acquis. Exemption--
Line of CSX Transp., Inc., FD 31497 (ICC served July 26, 1989) 
(authorizing TERRI to acquire a line of railroad between milepost 
6.2, at or near Gilmer, and milepost 67.2, at or near Hartland, in 
Gilmer, Braxton, and Clay Counties, W. Va.).
    \2\ See Buffalo Creek R.R.--Acquis. & Operation Exemption--
Buffalo Creek & Gauley R.R., FD 31968 (ICC served Feb. 11, 1992) 
(authorizing BCR to acquire from BC&G an 18.6-mile rail line 
extending from a junction point at Dundon (milepost 62.2 on the 
TERRI line; milepost 0 on the BC&G line) to Widen (milepost 18.6 on 
the BC&G line) in Clay County, W. Va.).
    \3\ See Bright--Control Exemption--Buffalo Creek R.R., FD 31969, 
slip op. at 3 (ICC served Mar. 9, 1992) (granting an exemption for 
Bright to control BCR). Bright placed the stock of BCR in an 
independent voting trust before BCR acquired the BC&G line in order 
to avoid controlling BCR as a rail carrier before obtaining his ICC 
authority to do so. See id. at 1; (Pet. 3-4).
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    TERRI states that in December 1995, ``[d]ue to an inadvertent 
oversight and lack of knowledge that additional agency approval was 
necessary,'' BCR was merged with and into TERRI, the surviving 
corporation, without prior agency authorization as required under 49 
U.S.C. 11323-25. (Pet. 4-5.) TERRI explains that, had it ``been aware 
of its obligation to obtain additional agency authorization, it would 
have timely filed a verified notice of exemption under 49 CFR 
1180.2(d)(3) prior to consummating the merger.'' (Id. at 5.) In its 
petition, TERRI disclaims any intention ``to flout the law,'' as it 
``only became aware of the need for such authorization as part of 
current Counsel's due diligence relating to the imminent and expected 
sale'' of BC&G to the State of West Virginia. (Id.) To address this 
oversight, TERRI seeks expedited consideration of its petition under 49 
U.S.C. 10502 for an exemption from the prior approval requirements of 
49 U.S.C. 11323-25 to authorize its 1995 merger with BCR and seeks 
retroactive effect.

Discussion and Conclusions

    Under 49 U.S.C. 11323(a)(1), the merger of two rail carriers into 
one corporation for the ownership, management, or operation of the 
previously separately owned properties requires prior approval of the 
Board. When a transaction does not involve the merger or control of at 
least two Class I railroads, it is governed by 49 U.S.C. 11324(d). 
However, under 49 U.S.C. 10502(a), the Board must exempt a transaction 
or service from regulation upon finding that: (1) Regulation is not 
necessary to carry out the rail transportation policy (RTP) of 49 
U.S.C. 10101; and (2) either (a) the transaction or service is of 
limited scope, or (b) regulation is not needed to protect shippers from 
the abuse of market power.
    Here, an exemption from the prior approval requirements of sections 
11323-25 is consistent with section 10502(a). Detailed scrutiny of this 
transaction is not necessary to carry out the RTP here. An exemption 
from the application process would promote a fair and expeditious 
regulatory decision-making process, minimize the need for Federal 
regulatory control, encourage honest and efficient management of 
railroads, and result in the expeditious handling of this proceeding. 
See 49 U.S.C. 10101(2), (9), (15). Other aspects of the RTP would not 
be adversely affected.
    Regulation of this transaction is not needed to protect shippers 
from the abuse of market power.\4\ At the time of the 1995 merger, 
TERRI and BCR already were commonly controlled by Bright, and indeed, 
as TERRI points out, the transaction likely would have qualified for 
the class exemption for transactions within a corporate family under 49 
CFR 1180.2(d)(3) had it been timely sought. Moreover, the record 
indicates there has been no loss of rail competition, no adverse change 
in the competitive balance in the transportation market, and no change 
in the level of service to any shippers because, as TERRI explains in 
its petition, the BC&G rail line does not connect with another rail 
line other than TERRI's at Dundon, W. Va., and has not carried any 
traffic in over twenty years. (Pet. 6.)
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    \4\ Because the Board concludes that regulation is not needed to 
protect shippers from the abuse of market power, it is unnecessary 
to determine whether the proposed transaction is limited in scope. 
See 49 U.S.C. 10502(a).
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    Under 49 U.S.C. 10502(g), the Board may not use its exemption 
authority to relieve a rail carrier of its statutory obligation to 
protect the interests of its employees. Section 11326(c), however, 
precludes the Board from imposing labor protection for Class III rail 
carriers receiving authority under sections 11324-25. Accordingly, the 
Board may not impose labor protective conditions here because TERRI and 
BCR were both Class III carriers at the time of the merger.
    This transaction is categorically excluded from environmental 
review under 49 CFR 1105.6(c)(1) and from the historic reporting 
requirements under 49 CFR 1105.8(b).
    As stated above, TERRI seeks an exemption with retroactive effect, 
arguing that its failure to obtain prior approval or an exemption for 
its merger with BCR was ``an inadvertent oversight'' and ``was in no 
way intended to flout the law[.]'' (Pet. 5.) Although the Board on 
occasion has granted authority retroactively,\5\ it generally disfavors 
retroactive grants of authority.\6\ As TERRI provides no explanation as 
to why retroactive authority is needed, the Board declines to grant 
retroactive authority here.
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    \5\ See, e.g., Grand Elk R.R.--Acquis. of Incidental Trackage 
Rights Exemption--Norfolk S. Ry., FD 35187 (Sub-No. 1) et al., slip 
op. at 4 (STB served Nov. 20, 2017) (after having previously denied 
a request for retroactive authority, reopening the proceeding to 
make exemption retroactive in light of changed circumstances).
    \6\ See, e.g., Ark.-Okla. R.R.--Acquis. & Operation Exemption--
Okla., FD 36323, slip op. at 3 (STB served Sept. 19, 2019) 
(declining a request for retroactive authority and stating that the 
Board ``generally disfavors retroactive grants of authority'').
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    It is ordered:
    1. Under 49 U.S.C. 10502, the Board exempts from the prior approval 
requirements of 49 U.S.C. 11323-25 BCR's merger with and into TERRI.
    2. Notice of the exemption will be published in the Federal 
Register.
    3. The exemption will be effective on the service date of this 
decision.

    Decided: November 5, 2020.

    By the Board, Board Members Begeman, Fuchs, and Oberman.
Tammy Lowery,
Clearance Clerk.
[FR Doc. 2020-25016 Filed 11-10-20; 8:45 am]
BILLING CODE 4915-01-P