[Federal Register Volume 88, Number 104 (Wednesday, May 31, 2023)]
[Notices]
[Pages 34912-34915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11555]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36699 1]
Norfolk Southern Railway Company and The Cincinnati, New Orleans,
and Texas Pacific Railway Company--Acquisition--Trustees of the
Cincinnati Southern Railway
AGENCY: Surface Transportation Board.
ACTION: Decision No. 1 in Docket No. FD 36699; Notice of Acceptance of
Application and a Related Verified Notice of Exemption; Issuance of
Procedural Schedule.
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SUMMARY: The Surface Transportation Board (STB or Board) is accepting
for consideration an application (Application) and a related verified
notice of exemption, both filed on May 1, 2023, by Norfolk Southern
Railway Company (NSR), on behalf of itself and its wholly owned
subsidiary, The Cincinnati, New Orleans and Texas Pacific Railway
Company (CNOTP) (collectively, Applicants). The Application seeks Board
approval for NSR to acquire from the Trustees of the Cincinnati
Southern Railway (Trustees) and operate approximately 338.2 miles of
rail line between Cincinnati, Ohio, and Chattanooga, Tenn., known as
the Cincinnati Southern Railway (the CSR Line or the Line). This
proposal is referred to as the Transaction. In the verified notice of
exemption, Applicants seek authority for CNOTP to continue to operate
the Line following its acquisition by Applicants. The Board finds that
the Application is complete. The Board also makes the preliminary
determination, based on the evidence presented in the Application, that
the Transaction is a minor transaction. The Board emphasizes that this
is not a final determination and may be rebutted by subsequent filings
and evidence submitted into the record for this proceeding.
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\1\ This decision embraces The Cincinnati, New Orleans & Texas
Pacific Railway--Intra-Corporate Family Operation Exemption--Line of
Norfolk Southern Railway, Docket No. FD 36699 (Sub-No. 1).
DATES: The effective date of this decision is May 31, 2023. Any person
who wishes to participate in this proceeding as a Party of Record must
file, no later than June 15, 2023, a notice of intent to participate.
All comments, protests, requests for conditions, and any other evidence
and argument in opposition to the Application and related filings,
including filings by the U.S. Department of Justice (DOJ) and the U.S.
Department of Transportation (DOT), must be filed by June 30, 2023.
Responses to comments, protests, requests for conditions, other
opposition, and rebuttal in support of the Application or related
filings must be filed by July 28, 2023. See Appendix (Procedural
Schedule). A final decision in this matter will be served no later than
September 11, 2023. Further procedural orders, if any, would be issued
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by the Board, if necessary.
ADDRESSES: Any filing submitted in this proceeding must be filed with
the Board either via e-filing or in writing addressed to: Surface
Transportation Board, 395 E Street SW, Washington, DC 20423-0001. In
addition, one copy of each filing 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) Applicants NSR and
CNOTP's representative, Raymond A. Atkins, Sidley Austin LLP, 1501 K
Street NW,
[[Page 34913]]
Washington, DC 20005; and (4) any other person designated as a Party of
Record on the service list.
FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 740-5567. If
you require an accommodation under the Americans with Disabilities Act,
please call (202) 245-0245.
SUPPLEMENTARY INFORMATION: Applicants seek the Board's prior review and
authorization pursuant to 49 U.S.C. 11323-25 and 49 CFR part 1180 for
NSR to acquire from the Trustees and to operate the CSR Line pursuant
to an asset purchase and sale agreement executed by Applicants and the
Trustees on November 21, 2022 (PSA). (Appl. 1, 10.) NSR is a Class I
rail carrier that operates approximately 19,300 route miles in the
District of Columbia and 21 states, including Tennessee, Kentucky, and
Ohio. (Id. at 18.) CNOTP, a wholly owned subsidiary of NSR and Class
III rail carrier, has leased and operated the CSR Line since 1881. (Id.
at 1-2, 18.) Applicants state that the CSR Line is operated as part of
the NSR system, and that, although the lease between CNOTP and the
Trustees would be terminated as part of this Transaction, Applicants
intend for CNOTP to operate the Line for the foreseeable future. (Id.
at 2.)
According to Applicants, the CSR Line extends from the City of
Cincinnati, Hamilton County, Ohio, at the point of connection to NSR
estimated to be at or near calculated milepost 0.0, and
proceeds south to the point of connection to The Alabama Great Southern
Railroad Company (another subsidiary of NSR) in the City of
Chattanooga, Hamilton County, Tenn., at or near calculated milepost
338.2, together with all branch lines, sidings, and other
appurtenant railroad facilities associated therewith.\2\ (Id. at 3.)
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\2\ Applicants state that, given the long history of the CSR
Line, the identification of specific mileposts at the Line's termini
has varied slightly over time but that the description of the Line
provided in the Application here is correct. (Appl. 3 n.9.)
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Financial Arrangements. According to Applicants, no new securities
would be issued in connection with the Transaction. (Id. at 13.)
Applicants anticipate that the purchase price would be paid from cash
on hand and/or NSR's credit facilities. (Id.)
Passenger Service Impacts. Applicants state that there would be no
impact on commuter or other passenger service because there are no
current passenger or commuter operations on the CSR Line and the
Transaction does not contemplate introducing such operations. (Id. at
23-24.)
Discontinuances/Abandonments. Applicants state that rail service
would not be abandoned or discontinued on any portion of the CSR Line
as a result of the Transaction. (Id. at 24.) However, the Application
does state that, as part of the PSA, Applicants have agreed to engage
in good faith negotiations with the State of Ohio to donate to the
state as interim trail manager under the National Trails System Act, 16
U.S.C. 1241-51, on customary terms and subject to obtaining any
required STB authority, an approximately 21.52-mile NSR line in Ohio
that is not part of, and does not connect with, the CSR Line. (Appl.
24.)
Public Interest Considerations. Applicants state that the
Transaction would not result in a lessening of competition, creation of
a monopoly, or restraint of trade in any region of the United States.
(Id. at 13.) According to Applicants, the Transaction would not reduce
the number of competitive options available to any shipper, as the
number of rail carriers serving each shipper on the Line would remain
the same and Applicants would maintain the same interchanges with the
same connecting rail carriers at the same locations where those rail
carriers currently interchange traffic. (Id. at 14.) Applicants
maintain that they do not plan to make operational changes as a result
of the Transaction. (Id.)
Time Schedule for Consummation. Applicants state that the
Transaction is scheduled to be consummated as soon as practicable after
the Board's decision approving the Application becomes effective and
upon satisfaction of all other conditions precedent to closing set
forth in the PSA, including approval of the proposed sale by the voters
of Cincinnati. (Id. at 11.)
Environmental Impacts. Applicants state that, pursuant to 49 CFR
1105.6(c)(1), no environmental reporting is required because the
Transaction would not lead to operational changes exceeding the
thresholds for environmental review in 49 CFR 1105.7(e)(4) & (5).
(Appl. 21.)
Historic Preservation Impacts. Applicants state that no historic
report is required because the Transaction is ``for the purpose of
continued rail operations where further STB approval is required to
abandon any service and there are no plans to dispose of or alter
properties subject to STB jurisdiction that are 50 years old or
older.'' (Id. at 22-23 (quoting 49 CFR 1105.8(b)(1)).)
Labor Impacts. Applicants state that they do not plan to make any
changes to the number of employees working on the Line in connection
with the Transaction and that no NSR or CNOTP employees would be
dismissed or displaced as a result of the Transaction. (Appl. 16.)
Applicants also assert that, in accordance with 49 U.S.C. 11326 and
Board precedent, the appropriate employee protection conditions to
impose are those set out in New York Dock Railway--Control--Brooklyn
Eastern District Terminal, 360 I.C.C. 60 (1979), aff'd sub nom. New
York Dock Railway v. United States, 609 F.2d 83 (2d Cir. 1979), as
modified by Wilmington Terminal Railroad--Purchase & Lease--CSX
Transportation Inc., 6 I.C.C.2d 799, 814-26 (1990), aff'd sub nom.
Railway Labor Executives' Association v. Interstate Commerce
Commission, 930 F.2d 511 (6th Cir. 1991). (Appl. 16.)
Related Filing. In Docket No. FD 36699 (Sub-No. 1), Applicants have
filed a verified notice of exemption pursuant to 49 CFR 1180.2(d)(3)
for an intra-corporate family transaction that would permit CNOTP to
continue to operate the CSR Line following consummation of the
Transaction in Docket No. FD 36699, which would terminate CNOTP's
existing lease with the Trustees. Applicants state that they intend to
consummate the intra-corporate family transaction contemporaneously
with the Transaction in Docket No. FD 36699. As a condition to use of
this exemption, Applicants state that they do not object to imposition
of the employee protective conditions set out in Mendocino Coast
Railway, Inc.--Lease & Operate, 354 I.C.C. 732 (1978), as modified in
Mendocino Coast Railway, Inc.--Lease & Operate--California Western
Railroad, 360 I.C.C. 653 (1980).
Primary Application and Related Filing Accepted. The Board finds
that the proposed Transaction would be a ``minor transaction'' under 49
CFR 1180.2(c), and the Board accepts the Application for consideration
because it is in substantial compliance with the applicable regulations
governing minor transactions. See 49 U.S.C. 11321-26; 49 CFR part 1180.
The Board is also accepting for consideration the related verified
notice of exemption filed in Docket No. FD 36699 (Sub-No. 1), which is
also in compliance with the applicable regulations. The Board reserves
the right to require the filing of supplemental information as
necessary to complete the record.
When a transaction does not involve the merger or control of two or
more Class I railroads, the Board's treatment differs depending upon
whether the transaction would have ``regional or national
transportation significance.'' 49 U.S.C 11325. Under 49 CFR 1180.2, a
transaction that does not involve two or
[[Page 34914]]
more Class I railroads is to be classified as ``minor''--and thus not
having regional or national transportation significance--if a
determination can be made that either: (1) the transaction clearly will
not have any anticompetitive effects; or (2) any anticompetitive
effects of the transaction will clearly be outweighed by the
transaction's anticipated contribution to the public interest in
meeting significant transportation needs. A transaction not involving
the control or merger of two or more Class I railroads is to be
classified as ``significant'' if neither of these determinations can be
made.
Nothing in the record thus far suggests that the Transaction would
have anticompetitive effects. According to Applicants, the purpose of
the Transaction is to convert Applicants' interest in the CSR Line from
a leasehold to fee simple ownership, eliminating the need for
increasingly complicated and time-consuming negotiations to
periodically extend and modify the lease. (Appl. 3.) As such,
Applicants state that they will continue to operate the CSR Line in the
same manner that they have operated it for more than a century, with no
change in service patterns or train operations anticipated as a result
of the Transaction. (Id. at 7.) Specifically, they claim that there
will be no reduction in the competitive options available to shippers
and that no connecting railroad will be foreclosed from interchange.
(Id.) Applicants state that where, as here, no shipper would have fewer
competitive rail options and longstanding operations would continue
unchanged as a result of a transaction, the Board has found it is
unlikely such a transaction would have anticompetitive effects. (Id. at
6.)
Therefore, based on the information provided in the Application,
the Board finds the proposed Transaction to be a minor transaction
under 49 CFR 1180.2(c). Such a categorization does not mean that the
proposed Transaction is insignificant or not of importance. Indeed,
after the record in the proceeding is fully developed, the Board will
carefully review the proposed Transaction to make certain that it does
not substantially lessen competition, create a monopoly, or restrain
trade, and that any anticompetitive effects are outweighed by the
public interest. See 49 U.S.C 11324(d)(1)-(2). Pursuant to the
applicable standard, the Board may also impose conditions on the
Transaction.
Procedural Schedule. Any person who wishes to participate in this
proceeding as a Party of Record must file a notice of intent to
participate no later than June 15, 2023; 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 June 30, 2023; and responses to comments, protests,
requests for conditions, and other opposition on the transportation
merits of the Transaction must be filed by July 28, 2023. The Board is
required to issue ``a final decision by the 45th day after the date on
which it concludes the evidentiary proceedings,'' 49 U.S.C.
11325(d)(2), and will do so here.\3\ The Board reserves the right to
adjust the schedule as circumstances may warrant.
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\3\ This notice will be published in the Federal Register on May
31, 2023; all subsequent deadlines will be calculated from this
date. Deadlines for filings are calculated in accordance with 49 CFR
1104.7(a).
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For further information regarding dates, see the Appendix to this
decision.
Notice of Intent To Participate. Any person who wishes to
participate in this proceeding as a Party of Record must file with the
Board, no later than June 15, 2023, 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, and Applicants' representative.
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 Party of Record
representing a particular entity, the extra name(s) will be added to
the service list as a ``Non-Party.'' 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 they have
complied with the service requirements set forth at 49 CFR 1180.4 and
any other requirements set forth in this decision.
Service on Parties of Record. Each Party of Record will be required
to serve upon all other Parties of Record, within 10 days of the
service date of this decision, copies of all filings previously
submitted by that party (to the extent such filings have not previously
been served upon such other parties). Each Party of Record will also be
required to file with the Board, within 10 days of the service date of
this decision, a certificate of service indicating that the service
required by the preceding sentence has been accomplished. Every filing
made by a Party of Record after the service date of this decision must
have its own certificate of service indicating that all Parties of
Record on the service list have been served with a copy of the filing.
Members of the United States Congress and Governors are not Parties of
Record and need not be served with copies of filings, unless any Member
or Governor has requested to be, and is designated as, a Party of
Record.
Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices on those persons who are
designated on the service list as a Party of Record or Non-Party. All
other interested persons are encouraged to obtain copies of decisions,
orders, and notices via the Board's website at www.stb.gov.
Access to Filings. Under the Board's rules, any document filed with
the Board (including applications, pleadings, etc.) shall be promptly
furnished to interested persons on request, unless subject to a
protective order. 49 CFR 1180.4(a)(3). The Application and other
filings in this proceeding will be furnished to interested persons upon
request and will also be available on the Board's website at
www.stb.gov. In addition, the Application may be obtained from
Applicants' representative at the address 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 filed in Docket No. FD 36699 and the related
verified notice of exemption filed in Docket No. FD 36699 (Sub-No. 1)
are accepted for consideration.
2. The parties to this proceeding must comply with the procedural
schedule shown in the Appendix to this decision and the procedural
requirements described in this decision.
3. This decision is effective on May 31, 2023.
Decided: May 24, 2023.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz.
Kenyatta Clay,
Clearance Clerk.
Appendix
Procedural Schedule
May 1, 2023--Application filed.
May 31, 2023--Board notice of acceptance of application served and
published in the Federal Register.
June 15, 2023--Notices of intent to participate in this proceeding
due.
June 30, 2023--All comments, protests, requests for conditions, and
any other evidence and argument in
[[Page 34915]]
opposition to the application, including filings of DOJ and DOT, due.
July 28, 2023--Responses to comments, protests, requests for
conditions, and other opposition due. Rebuttal in support of the
application due.
September 11, 2023--Date by which a final decision will be served.
October 11, 2023 \4\--Date by which a final decision will become
effective.
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\4\ The final decision will become effective 30 days after it is
served.
[FR Doc. 2023-11555 Filed 5-30-23; 8:45 am]
BILLING CODE 4915-01-P