[Federal Register Volume 86, Number 72 (Friday, April 16, 2021)]
[Notices]
[Pages 20229-20231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07792]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36432]


Independence Rail Works Ltd.--Acquisition and Operation 
Exemption--Byesville Scenic Trails, LLC

    On August 26, 2020, Independence Rail Works Ltd. (IRW) filed a 
petition for exemption under 49 U.S.C. 10502 from the prior approval 
requirements of 49 U.S.C. 10901 to authorize, after the fact, its 
acquisition and operation of 3.6 miles of track in Guernsey County, 
Ohio, extending from milepost 4.9 to milepost 8.5 (the Line). IRW asks 
that the requested exemption be granted with retroactive effect. On 
November 19, 2020, the Board initiated a proceeding and requested 
additional information from various parties. Indep. Rail Works Ltd.--
Acquis. & Operation Exemption--Byesville Scenic Trails, LLC (November 
2020 Decision), FD 36432 (STB served Nov. 19, 2020). The parties have 
now provided sufficient information, and the Board will grant IRW an 
exemption to acquire and operate the Line. However, the exemption will 
not be granted retroactively.

Background

    According to IRW, the Line is a portion of a longer segment of 
track that IRW purchased from Byesville Scenic Trails, LLC (BST), in 
2013.\1\ IRW claims that it has maintained the Line but that the only 
rail operations on the Line are shipments by CUOH of approximately 30 
cars of aggregate and sand per week to Mar-Zane, Inc. (Mar-Zane), the 
only shipper on the Line, at milepost 8.0. (Pet. 4, 8.) IRW claims 
that, when CUOH began providing service over the Line, IRW believed 
that the Line was private track and that CUOH's service to Mar-Zane was 
outside the Board's jurisdiction. (Id. at 6.)
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    \1\ That longer track segment, approximately 13.3 miles in 
length, extended from milepost 4.9 to milepost 18.23 in Guernsey and 
Noble Counties, Ohio, connecting with the Columbus and Ohio River 
Railroad (CUOH) in Byesville, Ohio, at milepost 4.9. (Pet. 1-2.)
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    IRW asserts that recently, when it was evaluating the potential 
expanded use of the Line, it discovered that the Line is not private 
track and is in fact a rail line within the Board's jurisdiction. (Id. 
at 4-5.) IRW explains that all 13.3 miles of track it purchased were 
originally owned by CSX Transportation, Inc. (CSXT), and that the Board 
authorized CSXT to abandon those 13.3 miles in June 1999. (Id. at 3); 
see CSX Transp., Inc.--Aban. Exemption--in Guernsey & Noble Cntys., 
Ohio, AB 55 (Sub-No. 569X) (STB served June 4, 1999). Thereafter, CSXT 
consummated abandonment of the segment between milepost 8.5 and 
milepost 18.23, (see CSXT filing, Sept. 1, 2000, AB 55 (Sub-No. 569X)), 
but the remaining portion--the Line--was sold to the Cambridge-Guernsey 
County Community Improvement Corporation (CIC) under the Board's offer 
of financial assistance (OFA) process, see 49 U.S.C. 10904; 49 CFR 
1152.27, thus remaining a rail line under the Board's jurisdiction. See 
CSX Transp., Inc.--Aban. Exemption--in Guernsey & Noble Cntys., Ohio, 
AB 55 (Sub-No. 569X) (STB served Nov. 7, 2000).
    As noted above, IRW states in its petition that it acquired the 
Line from BST in 2013. IRW now seeks after-the-fact authority for its 
unauthorized 2013 acquisition and for its right to operate the Line. 
(Pet. 3-4.) IRW asks for the exemption to be made retroactive to the 
date of its acquisition. (Id. at 13.) In its petition, IRW provided no 
information concerning how and when BST acquired the Line.
    Because IRW's petition raised issues that required clarification, 
the Board in the November 2020 Decision requested that IRW and other 
relevant parties provide additional information with respect to BST's 
previous acquisition of the Line, the ownership of the track segment 
extending from milepost 4.9 to milepost 5.14, and the statement in 
IRW's petition indicating that it planned to seek discontinuance 
authority. In response, IRW filed a supplement to its petition on 
December 18, 2020; CSXT filed a reply on December 18, 2020; and CUOH 
filed a letter in response on December 17, 2020.
    First, having noted that the Board approved CIC's purchase of the 
Line from CSXT under the OFA process in 1999 and that IRW purchased the 
Line (without authorization) from BST in 2013, the November 2020 
Decision sought clarification regarding the circumstances surrounding 
BST's previous acquisition of the Line. In response, IRW's supplement 
states that, after reviewing property records and consulting with 
responsible representatives of CIC,\2\ IRW determined that Mr. Jerry J. 
Jacobson, or an entity under his control, purchased the Line from CIC 
on March 6, 2008, and that the Line was transferred to BST, which was 
owned by Mr. Jacobson, on August 12, 2008.\3\ (IRW Supplement 3-4.) IRW 
states that Mr. Jacobson died in 2017. (Id. at 3.)
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    \2\ IRW's supplement included a verification from the Economic 
Development Director of CIC for the section of IRW's supplement 
regarding BST's acquisition of the Line.
    \3\ According to IRW, the Line was held by Sugarcreek Real 
Estate Investments, LLC for five months before being transferred to 
BST. (IRW Suppl. 4.) IRW states that the Articles of Organization 
for Sugarcreek Real Estate Investments, LLC, were signed by Ms. 
Laura Jacobson, the wife of Mr. Jacobson. (Id. at 4 n.4.)
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    Next, the November 2020 Decision pointed out that, in 2004, CUOH 
obtained Board authorization to lease track from CSXT extending from 
milepost 0.0 to milepost 5.14, and that thus there appeared to be a 
segment of that leased track between milepost 4.9 and milepost 5.14 
that overlapped with the Line. See also Columbus & Ohio River R.R.--
Acquis. & Operation Exemption--Rail Lines of CSX Transp., Inc., FD 
34540 (STB served Dec. 20, 2004). Given the apparent conflicting 
information with respect to the segment of track between milepost 4.9 
and milepost 5.14, the Board requested all relevant information 
relating to the ownership of this segment of track. November 2020 
Decision, FD 36432, slip op. at 3.
    In their filings, both IRW and CSXT confirm there is no overlap 
between the 2004 transaction and the transaction at issue in this 
proceeding. IRW states that the confusion over the ownership of this 
segment of track was due to a relabeling

[[Page 20230]]

of mileposts. (IRW Suppl. 2.) IRW states that the quitclaim deed 
evidencing the sale from BST to IRW, which IRW provided with its 
supplement, indicates that the Line starts at CSXT Val Station 
2647+60,\4\ which IRW's records list as corresponding to milepost 
4.9.\5\ (Id.) CSXT states that the quitclaim deed for the sale from 
CSXT to CIC and the lease between CSXT and CUOH \6\ both indicate that 
the dividing line between the track owned by CSXT and the track owned 
by IRW is located at Val Station 2647+60. (CSXT Reply 3.)
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    \4\ IRW states that the quitclaim deed shows that Val Station 
2647+60 is located just north of Main Street in Byesville, Ohio. 
(IRW Suppl. 2-3.) According to IRW, Guernsey County property records 
also indicate that IRW's ownership of the Line begins just north of 
Main Street. (Id. at 3.)
    \5\ IRW states that going forward neither CSXT nor IRW will 
assign mileposts at the location of Val Station 2647+60 to avoid any 
discrepancies in future filings and records. (IRW Suppl. 3.)
    \6\ CSXT's reply includes a copy of the quitclaim deed for the 
sale from CSXT to CIC in September 2000 and a copy of an exhibit 
from the lease between CSXT and CUOH containing a map showing the 
point where the leased track ends and the track previously sold to 
CIC begins. (CSXT Reply, V.S. Elizabeth Walsh 3-6.)
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    Finally, in response to certain statements in IRW's petition 
regarding IRW's plan to seek discontinuance authority and the Line's 
potential subsequent status as private track, the November 2020 
Decision noted that a common carrier line subject to the Board's 
jurisdiction cannot become private track unless and until the Board 
authorizes its abandonment and the abandonment is consummated. November 
2020 Decision, FD 36432, slip op. at 3-4. In response, IRW's supplement 
acknowledges that the Line will remain subject to the Board's 
jurisdiction unless it is abandoned pursuant to abandonment authority 
granted by the Board. (IRW Suppl. 4.) IRW states that following the 
Board's decision on the petition, IRW either will contract with a 
carrier to provide service on the Line, subject to any requisite Board 
approval or exemption, recognizing that IRW will have a residual common 
carrier obligation, or it will seek discontinuance authority. (Id. at 
4-5.)

Discussion and Conclusions

    Preliminary Issues. The Board finds that the parties have provided 
sufficient information regarding the issues raised in the November 2020 
Decision to enable the Board to rule on the merits of the petition. The 
additional information provided by CSXT and IRW establishes that there 
is no dispute regarding the ownership of the track segment extending 
from IRW's milepost 4.9 to IRW's milepost 5.14. Both IRW and CSXT have 
provided documentation establishing that the Line extends from Val 
Station 2647+60, which IRW's records list as corresponding to milepost 
4.9, to Val Station 2834+40, which IRW's records list as corresponding 
to milepost 8.5.\7\ Accordingly, the Board finds that CSXT does not own 
any part of the track for which IRW seeks an acquisition and operation 
exemption.
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    \7\ In light of the information provided by IRW and CSXT in this 
proceeding, the Board will issue a corrected notice of exemption in 
Docket No. FD 34540 stating that the southern terminus of the leased 
segment of track is located at CSXT Val Station 2647+60.
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    With respect to the prior unauthorized acquisition of the Line by 
BST, the additional information provided indicates that Mr. Jacobson, 
or an entity under his control, purchased the Line from CIC on March 6, 
2008, over five years after the transfer of the Line pursuant to the 
OFA process, and that the Line was transferred to BST, which was owned 
by Mr. Jacobson, on August 12, 2008. The Ohio Secretary of State's 
listing of businesses registered in Ohio lists BST's status as ``dead'' 
and indicates that the company was dissolved in June 2018.\8\ In these 
circumstances, the Board will not require any further action with 
respect to BST's prior acquisition of the Line.\9\
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    \8\ Business Search, Ohio Sec'y of State, https://businesssearch.ohiosos.gov/ (enter ``Byesville Scenic Trails, LLC'' 
in the ``Business Name'' search box, click ``Search'', and then 
click ``Show Details'' in the search results) (last visited Apr. 6, 
2021).
    \9\ Cf. ABE Fairmont, LLC--Aban. Exemption--in Fillmore Cnty., 
Neb., AB 1106X et al., slip op. at 5 (STB served Jan. 29, 2018).
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    Finally, IRW's supplement clarifies that it understands that the 
Line may not be treated as private track unless it obtains abandonment 
authority from the Board and consummates the abandonment.\10\
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    \10\ As noted above, IRW indicates that it might seek authority 
to discontinue service on the Line. Acquisitions of active rail 
lines are generally supposed to be for continued rail use, though 
the Board has, in certain limited situations, granted acquisition 
authority when discontinuance/abandonment was subsequently planned, 
where the circumstances warrant it. See, e.g., Wis. Rapids R.R.--
Lease & Operation Exemption--Line of Wis. Cent. Ltd., FD 36339, slip 
op. at 1-2 n.1 (STB served Aug. 16, 2019); Ga. Dep't of Transp.--
Aban. Exemption--in Fulton Cnty., Ga., AB 1096X, slip op. at 1 n.2 
(STB served May 30, 2012). The Board will address any request for 
discontinuance authority that IRW might file at the appropriate 
time.
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    Exemption from 49 U.S.C. 10901. The acquisition of a line of 
railroad by a noncarrier requires prior approval by the Board under 49 
U.S.C. 10901(a)(4). Under 49 U.S.C. 10502(a), however, 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, the Board finds that an exemption after-the-fact with respect 
to IRW's 2013 acquisition of the Line from BST should be granted. 
Detailed scrutiny of the proposed transaction through an application 
for review and approval under 49 U.S.C. 10901 is not necessary here to 
carry out the RTP. An exemption would promote the RTP by: minimizing 
the need for federal regulatory control over the transaction, (49 
U.S.C. 10101(2)); reducing regulatory barriers to entry into the rail 
industry, (49 U.S.C. 10101(7)); encouraging efficient management of 
railroads, (49 U.S.C. 10101(9)); and providing for the expeditious 
handling and resolution of proceedings, (49 U.S.C. 10101(15)). Other 
aspects of the RTP will not be adversely affected.
    Regulation of this transaction is not needed to protect shippers 
from the abuse of market power.\11\ Mar-Zane, the only shipper on the 
Line, supports IRW's petition. In addition, there would be no loss of 
rail competition and no adverse change in the competitive balance in 
the transportation market as a result of the acquisition exemption. Nor 
would there be a change in the level of service. Rather, providing the 
exemption sought here will ensure that service on the Line continues 
because IRW will have a common carrier obligation to provide service on 
the Line upon reasonable request unless and until it receives 
abandonment or discontinuance authority.
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    \11\ Given this finding, the Board need not determine whether 
the transaction is limited in scope. See 49 U.S.C. 10502(a).
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    Employee Protection. 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. However, 49 
U.S.C. 10901(c) states that when authorizing a transaction governed by 
49 U.S.C. 10901 the Board may require compliance with conditions 
``other than labor protective conditions'' that are necessary in the 
public interest. Accordingly, the Board may not impose labor protective 
conditions here.
    Environmental and Historic Review. Under 49 CFR 1105.6(c)(1), this 
action, which will not result in significant changes in carrier 
operations, is categorically excluded from environmental review. 
Similarly, under 49 CFR 1105.8(b)(1), no historic report is required 
because the subject

[[Page 20231]]

transaction is for continued rail service, IRW has indicated no plans 
to alter railroad properties 50 years old or older, and any abandonment 
would be subject to Board jurisdiction.
    Effective Date. As stated above, IRW seeks an exemption with 
retroactive effect. Although the Board on occasion has granted 
authority retroactively,\12\ it generally disfavors such grants.\13\ 
Given that IRW has failed to explain why retroactive authority is 
needed in this case, the Board is unable to assess the need and 
declines to make its authority retroactive here. The exemption will be 
effective on May 13, 2021, unless it is stayed.
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    \12\ 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, 
including a state court decision that declined to rule on a 
contractual issue because Board previously only granted prospective 
authority).
    \13\ See, e.g., Elk River R.R.--Merger Exemption--Buffalo Creek 
R.R., FD 36434, slip op. at 3 (STB served Nov. 6, 2020); Ark.--Okla. 
R.R.--Acquis. & Operation Exemption--State of Okla., FD 36323, slip 
op. at 3 (STB served Sept. 19, 2019).
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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. 10901 IRW's acquisition and operation of the 
Line.
    2. Notice of this exemption will be published in the Federal 
Register.
    3. This exemption will be effective on May 13, 2021. Petitions for 
stay must be filed by April 23, 2021. Petitions to reopen must be filed 
by May 3, 2021.

    Decided: April 9, 2021.

    By the Board, Board Members Begeman, Fuchs, Oberman, Primus, and 
Schultz.
Tammy Lowery,
Clearance Clerk.
[FR Doc. 2021-07792 Filed 4-15-21; 8:45 am]
BILLING CODE 4915-01-P