[Federal Register Volume 89, Number 150 (Monday, August 5, 2024)]
[Notices]
[Pages 63458-63459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17187]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36764 (Sub-No. 1)]


Great Lakes Terminal Railroad, LLC--Acquisition and Operation 
Exemption--Great Lakes Terminal, LLC, CRRC Sifang America Incorporated, 
and Chicago Enterprise Owners' Association

    On May 2, 2024, Great Lakes Terminal Railroad, LLC (GLTRR), a Class 
III carrier, filed for an exemption under 49 U.S.C. 10502 from the 
provisions of 49 U.S.C. 10902 for after-the-fact authorization to 
acquire and operate approximately 22,568 feet of track in Chicago, 
Ill., owned by Great Lakes Terminal, LLC (GLT), CRRC Sifang America 
Incorporated (CRRC), and Chicago Enterprise Center Owners' Association 
(Owners' Association). For the reasons explained below, the Board will 
grant GLTRR's petition.

Background

    GLTRR's petition seeks after-the-fact authority for the acquisition 
and operation of 22,568 feet of track (the Line) located in and 
adjacent to a transloading facility at 13535 South Torrence Avenue in 
Chicago (the Facility). GLTRR states that ownership of the Line is 
divided between GLT \1\ (owning 14,215 feet of track inside the 
Facility), CRRC (owning 850 feet of track outside the Facility), and 
the Owners' Association (owning 7,503 feet of track outside the 
Facility). (GLTRR Petition 3, 6 & n.11.) According to GLTRR, it 
previously operated over 12,500 feet of track that is now part of the 
Line that was owned by CenterPoint Chicago Enterprise, LLC 
(CenterPoint), leased to Great Lakes Reloading LLC (GLR), an affiliate 
of GLTRR, and operated by GLTRR under a sublease between GLTRR and GLR. 
GLTRR Notice 4 & n.5, Great Lakes Terminal R.R.--Acquis. & Operation 
Exemption--Norfolk S. Ry., FD 36764. GLTRR's authority to operate those 
12,500 feet of track under the sublease with GLR was obtained through a 
notice of exemption. See Great Lakes Terminal R.R.--Lease & Operation 
Exemption--Rail Line of Great Lake Reloading, LLC (January 5, 2018 
Decision), FD 36160 (STB served Jan. 5, 2018). GLTRR asserts that a few 
months after the January 5, 2018 Decision, in April 2018, GLT acquired 
a fee simple interest in the Facility from CenterPoint, including the 
portion of the Line inside the Facility, and that as part of that 
transaction, GLT obtained rights held by CenterPoint allowing it to 
conduct rail operations over the Owners' Association's and CRRC's 
tracks.\2\ (GLTRR Pet. 6.) GLTRR further states that in April 2018, 
soon after GLT's acquisition of these rights and the fee simple 
interest in the Facility, GLT entered into an agreement (2018 
Agreement) with GLTRR to lease GLTRR the track it acquired from 
CenterPoint and to assign to GLTRR the rights to conduct rail 
operations over CRRC's and the Owners' Association's tracks. (Id. at 6, 
10.) As GLTRR explains, it did not seek Board authority to enter into 
the 2018 Agreement. (Id. at 6-7.) GLTRR claims that it did not seek 
authority for the 2018 Agreement at that time based on a mistaken 
belief that no additional authority was needed because it had just 
received Board authority to operate at the Facility under a sublease 
with GLT in Docket No. FD 36160 and would continue to operate at the 
Facility. (See id. at 5.)
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    \1\ GLT is an affiliate of GLTRR, both of which are owned by the 
Transload Group, LLC.
    \2\ GLTRR states that CenterPoint obtained the right to conduct 
rail operations on the Owners' Association's property pursuant to a 
March 23, 2018 declaration and obtained an easement to conduct rail 
operations over CRRC's property pursuant to an August 2017 easement.
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    Prior to GLTRR filing its petition, it filed a notice of exemption 
stating that GLT planned to sell its portion of the Line to Norfolk 
Southern Railway (NSR) and that GLTRR would then lease that portion of 
the Line from NSR and continue to operate as it does today. GLTRR 
Notice 5, Great Lakes Terminal R.R.--Acquis. & Operation Exemption--
Norfolk S. Ry., FD 36764. The verified notice sought Board authority to 
enter into the lease with NSR and to continue to operate over the track 
that would be sold to NSR, as well as the track that would continue to 
be owned by CRRC and the Owners' Association. Id. In that verified 
notice, GLTRR also explained its previous failure to seek authority for 
GLTRR's 2018 acquisition by lease and operation of GLT's tracks and 
requested that the Board grant, ``on its own motion,'' after-the-fact 
authority for that transaction. Id. at 4-5.
    The verified notice was rejected on the grounds that this case was 
not appropriate for the notice of exemption process, which is designed 
for routine cases that do not raise issues requiring significant 
scrutiny. Great Lakes Terminal R.R.--Acquis. & Operation Exemption--
Norfolk S. Ry. (Director Order), FD 36764, slip op. at 2-3 (STB served 
Apr. 26, 2024). The Director Order explained that use of a notice of 
exemption to seek after-the-fact authority for a prior transaction that 
is not the subject of the notice is not routine. Id. at 2. The Director 
Order further stated that the verified notice had raised unanswered 
questions regarding whether GLTRR should have also sought Board 
authority to enter into agreements with CRRC and the Owners' 
Association to operate over their tracks. Id. at 2-3. The Board ordered 
GLTRR to file a petition for exemption for after-the-fact authority for 
the prior acquisition and operation of GLT's tracks and to file a 
petition for exemption for after-the-fact authority for the acquisition 
and operation of CRRC's and the Owners' Association's tracks or to 
explain why such authority is not required. Id. at 3.\3\ As explained 
below, GLTRR's petition adequately addresses the questions raised by 
the Board and otherwise provides information sufficient to grant its 
petition.\4\
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    \3\ The Director Order further stated that once GLTRR obtains 
all necessary after-the-fact authority for prior transactions, it 
can proceed with a notice of exemption for its proposed lease with 
NSR. Id. at 3.
    \4\ GLTRR requested expedited consideration of its petition. 
(GLTRR Pet. 4.) On July 12, 2024, GLTRR filed a letter renewing its 
request for expedited consideration.

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[[Page 63459]]

    GLTRR's verified notice failed to explain why GLTRR had never 
requested authority for agreements pursuant to which it operated over 
the Owners' Association's and CRRC's tracks. Director Order, FD 36764, 
slip op. at 3. Rather, GLTRR only stated that at some point after the 
January 5, 2018 Decision authorized GLTRR to operate 12,500 feet of 
track at the Facility, ``additional trackage was added,'' and that 
GLTRR now operates over 22,568 feet of track, including the track owned 
by the Owners' Association and CRRC. Id. at 2. In its petition, GLTRR 
clarifies that its agreement to lease the track GLT acquired from 
CenterPoint also included an assignment to GLTRR of the rights GLT 
acquired from CenterPoint to operate over track owned by CRRC and the 
Owner's Association.\5\ (GLTRR Pet. 5-6.) For the reasons explained 
below, the Board will grant GLTRR's petition for exemption for after-
the-fact authority for the Line.
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    \5\ The Director Order also noted GLTRR's statement that ``today 
GLTRR is leasing 14,215 linear feet (2.69 miles) of trackage from 
NSR and will continue to operate over [it],'' and explained that 
``[t]his language suggests that GLT has already sold the track to 
NSR and GLTRR has entered into a lease with NSR without the 
necessary Board authority.'' Director Order, FD 36764, slip op. at 
3. GLTRR's petition explains that the language quoted by the Board 
contained a typo and should have referred to GLT rather than NSR as 
the party currently leasing the track to GLTRR, and that NSR has not 
yet purchased GLT's track or consummated a lease with GLTRR. (GLTRR 
Pet. 7.)
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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 shall, to the maximum extent consistent 
with U.S. Code Title 49, subtitle IV, part A, exempt a transaction from 
the detailed application procedures of 49 U.S.C. 10902 when it finds 
that: (1) those procedures are not necessary to carry out the rail 
transportation policy of 49 U.S.C. 10101 (RTP); and (2) either (a) the 
proposal is of limited scope, or (b) the full application procedures 
are not necessary to protect shippers from an abuse of market power.
    The Board finds an after-the-fact exemption should be granted to 
GLTRR for its acquisition and operation of the Line pursuant to the 
2018 Agreement. Prior to the 2018 Agreement, in January 2018, GLTRR 
sought and obtained authority to sublease from GLR and operate track at 
the Facility. See January 5, 2018 Decision, FD 36160. A few months 
later, the Facility was sold to GLT and GLTRR entered into the 2018 
Agreement so that it could continue its operations at that facility 
after the change in ownership.\6\ (See GLTRR Pet. 5.) GLTRR states that 
it failed to seek authority for the 2018 Agreement and subsequent 
operations because it mistakenly believed that the authority it 
obtained in January 2018 to operate pursuant to an agreement with one 
of its affiliates, GLR, was sufficient to allow it to continue to 
operate at the Facility pursuant to an agreement with another of its 
affiliates, GLT. (Id.) Based on the nature of the transaction at issue 
and the inadvertent nature of the failure to seek an exemption prior to 
completing the transaction, an exemption from the prior approval 
requirements of section 10902 is consistent with section 10502(a) and 
detailed scrutiny of the transaction through an application for review 
under 49 U.S.C. 10902 is not necessary here to carry out the RTP.\7\ 
Granting an exemption to correct GLTRR's past error so that it is 
authorized to continue operations at the Facility and can proceed to 
file a notice of exemption for its proposed transaction with NSR 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 (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)), 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.
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    \6\ As noted above, the 2018 Agreement also allowed GLTRR to 
operate over additional trackage immediately outside the Facility 
owned by the Owners' Association and CRRC.
    \7\ The Board has granted after-the-fact authority in similar 
circumstances. See Ark.-Okla. R.R.--Acquis. & Operation Exemption--
Okla., FD 36323 (STB served Sept. 19, 2019) (granting an exemption 
for after-the-fact authority where a carrier was previously 
authorized by the Board to operate a rail line pursuant to a lease 
but mistakenly believed it did not require additional authority to 
exercise a purchase option and continue its operations as owner of 
the line); Elk River R.R.--Merger Exemption--Buffalo Creek R.R., FD 
36434 (STB served Nov. 6, 2020) (granting an exemption for after-
the-fact authority where a rail carrier authorized by the Board to 
operate mistakenly believed it did not need additional authority to 
merge with its affiliate and for the surviving entity to continue 
operations post-merger).
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    Regulation of the transaction is not needed to protect shippers 
from an abuse of market power. GLTRR states that both before and after 
the 2018 Agreement, its operations consisted of providing transloading 
services to shippers seeking to ship steel rebar and steel piping by 
truck after arrival at the Facility by rail, as well as agriculture and 
construction equipment by rail after arrival at the Facility by truck. 
(GLTRR Pet. 10.) Granting the requested exemption for after-the-fact 
authority would give GLTRR authority to provide these same services to 
shippers that it has been providing since 2018.\8\ In addition, and as 
GLTRR contends, there was no apparent loss of rail competition and no 
change in the level of rail service to the shippers as a result of the 
2018 Agreement.
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    \8\ Because regulation of the proposed acquisition and operation 
is not needed to protect shippers from the abuse of market power, 
the Board need not determine whether the transaction is limited in 
scope. 49 U.S.C. 10502(a)(2).
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    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, GLT does not intend to dispose of or alter 
properties subject to the Board's jurisdiction that are 50 years old or 
older, (GLTRR Pet. 14), and discontinuance of service or abandonment by 
GLTRR would be subject to Board jurisdiction.
    It is ordered:
    1. Under 49 U.S.C. 10502, the Board grants GLTRR's petition for 
exemption for after-the-fact authority to acquire and operate the Line.
    2. Notice of this exemption will be published in the Federal 
Register.
    3. This decision will be effective on August 30, 2024. Petitions 
for stay must be filed by August 12, 2024. Petitions to reopen must be 
filed by August 20, 2024.

    Decided: July 30, 2024.

    By the Board, By the Board, Board Members Fuchs, Hedlund, 
Primus, and Schultz.
Eden Besera,
Clearance Clerk.
[FR Doc. 2024-17187 Filed 8-2-24; 8:45 am]
BILLING CODE 4915-01-P