[Federal Register Volume 88, Number 179 (Monday, September 18, 2023)]
[Notices]
[Pages 64020-64021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20072]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36694]
Colorado Pacific Rio Grande Railroad, LLC--Petition for
Exemption--Acquisition and Operation of Line of Railroad in Costilla
County, Colorado
The Colorado Pacific Rio Grande Railroad, LLC (CP Rio Grande), a
Class III carrier, filed a petition for exemption on June 20, 2023,
seeking after-the-fact authority to acquire in bankruptcy and operate
1.53 miles of track extending from milepost 0.0 in Blanca, Colo., to
milepost 1.53 in McClintock, Colo. (the Blanca Spur).\1\ This petition
follows CP Rio Grande's recent acquisition of substantially all assets
of the San Luis & Rio Grande Railroad, Inc. (SLRG), in Colorado Pacific
Rio Grande Railroad--Acquisition & Operation Exemption Containing
Interchange Commitment--San Luis & Rio Grande Railroad, FD 36656 (STB
served Jan. 5, 2023).
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\1\ Despite the name, the Blanca Spur is not excepted spur track
but track over which the Board has licensing authority.
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Background
According to CP Rio Grande, the Blanca Spur was originally part of
a 31-mile line completed in 1910 by the San Luis Valley Southern
Railroad that ran from Blanca, Colo., to Jaroso, Colo., and connected
to the tracks of the Denver & Rio Grande Railroad. (Pet. 3.) This line
was acquired by the Southern San Luis Valley Railroad (the old SSLV) in
1953, at the direction of the Interstate Commerce Commission, the
Board's predecessor agency. (Id.) Over time, the old SSLV abandoned and
sold off sections of the line, leaving only the Blanca Spur remaining,
which the old SSLV ceased operating by the mid-1990s. (Id.) However,
the old SSLV never sought abandonment authority for the Blanca Spur.
(Id.) Instead, it sold the Blanca Spur and the underlying right-of-way
in 2000 to Richard Vondrak of Conejos County, Colo., before dissolving
as an entity shortly thereafter. (Id.)
According to CP Rio Grande, Mr. Vondrak never sought or received
Board approval to acquire or operate the Blanca Spur. (Id.) In 2007, he
sold his interests in the Blanca Spur and the underlying right-of-way
to Iowa Pacific Holdings, LLC (IPH), a railroad holding company and the
parent of Permian Basin Railways (PBR), which in turn owned SLRG. (Id.)
IPH did not seek authority for that transaction. Instead, in 2012, a
newly formed Southern San Luis Valley Railroad, LLC (the new SSLV),
filed a verified notice of exemption to acquire and operate the Blanca
Spur from IPH, asking the Board to exempt IPH's 2007 transaction,
arguing that there was no need for the Board to require IPH to
``unscramble'' it. See S. San Luis Valley R.R.--Acquisition & Operation
Exemption--Iowa Pac. Holdings, LLC, FD 35586, slip op. at 2 (STB served
Feb. 10, 2012). In a related transaction, PBR sought an exemption to
continue in control of the new SSLV upon SSLV's becoming a Class III
carrier. See Iowa Pac. Holdings, LLC--Continuance in Control--S. San
Luis Valley R.R., FD 35585 (STB served Feb. 10, 2012). The Board,
considering the two proceedings together, rejected the new SSLV's
request and denied PBR's request as moot due to the insufficiency of
the record. S. San Luis Valley, slip op. at 3. The Board stated that
should IPH wish to proceed with the contemplated transactions, it
should trace the history of the Blanca Spur as well as it could, with
supporting evidence, and request specific authority from the Board for
this prior transaction, id., but IPH did not do so, (Pet. 4).
CP Rio Grande further states that SLRG was placed into involuntary
Chapter 11 bankruptcy in October 2019, with the order granting relief
for the petition being entered on November 7, 2019. (Pet. 5.) In March
2021, IPH filed for Chapter 7 bankruptcy, but it was dismissed on
January 6, 2022. (Id.) As part of a litigation settlement agreement
entered during those proceedings, the ownership of the Blanca Spur was
transferred from IPH to SLRG's bankruptcy trustee, which the bankruptcy
court approved on July 14, 2022. (Id.) SLRG's bankruptcy trustee
conveyed the Blanca Spur to CP Rio Grande under a purchase and sale
agreement in January 2023. (Id.) CP Rio Grande filed a notice of
exemption in Colorado Pacific Rio Grande Railroad, Docket No. FD 36656,
for the acquisition of most of SLRG's assets on December 20, 2022, and
later filed this petition for exemption on June 20, 2023. (Pet. 5.)
Discussion and Conclusions
The Board finds that CP Rio Grande has supplied information
sufficient to grant this petition.\2\ The petition and supporting
documents trace the ownership history of the Blanca Spur and do not
reveal any extant dispute over CP Rio Grande's ownership of the Blanca
Spur. The documents show that SSLV sold the Blanca Spur to Mr. Vondrak
on July 14, 2000, (id., Ex. B), before he then sold it to IPH on May
24, 2007, (id., Ex. B). During the bankruptcy
[[Page 64021]]
proceedings, the Blanca Spur was transferred from IPH to SLRG without
Board authority, (id., Ex. C), before the bankruptcy trustee for SLRG
sold the Blanca Spur to CP Rio Grande under a purchase and sale
agreement in January 2023, also without prior Board authority as
required by 11 U.S.C. 1172. (Id. at 5.)
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\2\ In situations requiring after-the-fact acquisition
authority, the Board strongly encourages parties to file for such
authority as soon as possible.
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CP Rio Grande indicates Mr. Vondrak cannot be located, and
according to the Illinois Secretary of State's listing of businesses
registered in Illinois, IPH was involuntarily dissolved on June 10,
2022.\3\ There is no indication that any former IPH personnel are
involved with CP Rio Grande. Similarly, PBR is listed as having been
dissolved on October 8, 2021,\4\ and SLRG's bankruptcy was discussed in
greater detail in Colorado Pacific Rio Grande Railroad, FD 36656, slip
op. at 1-2 (STB served Jan. 5, 2023). Under these circumstances, the
Board will not require any further action regarding the earlier
acquisitions and transfers of the Blanca Spur.
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\3\ Business Entity Search, Ill. Sec'y of State, apps.ilsos.gov/businessentitysearch/ (click ``Name'' under ``Choose a Search
Method'' and enter ``Iowa Pacific Holdings'' in the ``Search for''
box, click submit, then click the ``IOWA PACIFIC HOLDINGS, LLC''
entity which has ``INVOLUNTARY DISSOLUTION'' next to it) (last
visited Sept. 5, 2023).
\4\ Id. (click ``Name'' under ``Choose a Search Method'' and
enter ``Permian Basin Railways'' in the ``Search for'' box, click
submit, then click the ``PERMIAN BASIN RAILWAYS, INC.'' entity with
``DISSOLVED'' next to it) (last visited Sept. 5, 2023).
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The acquisition of a rail line by a Class III carrier requires
prior approval from the Board under 49 U.S.C. 10902(a). Under 49 U.S.C.
10502(a), however, the Board must exempt a transaction or service from
regulation upon finding that (1) the regulation is not necessary to
carry out the rail transportation policy (RTP) under 49 U.S.C. 10101
and (2) either the transaction or service is of limited scope or
regulation is not needed to protect shippers from the abuse of market
power.
The Board finds that an after-the-fact exemption should be granted
for CP Rio Grande's acquisition of the Blanca Spur. Detailed scrutiny
of the proposed transaction through an application for review under 49
U.S.C. 10902 is not necessary here to carry out the RTP, and an
exemption would promote the RTP by minimizing the need for regulatory
control over the transaction (49 U.S.C. 10101(2)), ensuring the
development and continuation of a sound rail transportation system able
to compete with other modes of transportation and meet the needs of the
public and national defense (49 U.S.C. 10101(4)), minimizing the need
for regulatory barriers for entry into and exit from the industry (49
U.S.C. 10101(7)), encouraging honest and efficient management of
railroads (49 U.S.C. 10101(9)), and providing for the expeditious
handling and resolution of proceedings required or permitted to be
brought under this part (49 U.S.C. 10101(15)). Other aspects of the RTP
will not be adversely affected.
Regulation of the transaction is not needed to protect shippers
from an abuse of market power. CP Rio Grande purchased the Blanca Spur
out of bankruptcy for the purpose of investing in the track and
developing business for existing and new shippers. Granting the
exemption would ensure that service along the Blanca Spur can continue
because CP Rio Grande will have a common carrier obligation to provide
service upon reasonable request along the track.
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 transaction is for
continued rail service, CP Rio Grande has indicated no plans to alter
railroad properties 50 years old or older, and any future abandonment
of the Blanca Spur would be subject to Board jurisdiction.
It is ordered:
1. Under 49 U.S.C. 10502, the Board exempts CP Rio Grande's
acquisition and operation of the Blanca Spur from the prior approval
requirements of 49 U.S.C. 10902.
2. Notice of this exemption will be published in the Federal
Register.
3. This decision will be effective on October 18, 2023. Petitions
for stay must be filed by September 28, 2023. Petitions to reopen must
be filed by October 9, 2023.
Decided: September 11, 2023.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz.
Regena Smith-Bernard,
Clearance Clerk.
[FR Doc. 2023-20072 Filed 9-15-23; 8:45 am]
BILLING CODE 4915-01-P