[Federal Register Volume 89, Number 167 (Wednesday, August 28, 2024)]
[Notices]
[Pages 68977-68978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19341]


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SURFACE TRANSPORTATION BOARD

[Docket Nos. FD 36798; and AB 284 (Sub-No. 5X)]


Waterloo Railroad, LLC--Change of Operator Exemption With 
Interchange Commitment--Union Pacific Railroad Company; and Iowa 
Northern Railway Company--Discontinuance of Service Exemption--in Black 
Hawk County, Iowa

    On July 25, 2024, in Docket No. FD 36798, Waterloo Railroad, LLC 
(WTRL), filed a verified notice for a change in operator exemption. 
Under this exemption, WTRL would lease and operate approximately 6.9 
miles of rail line owned by Union Pacific Railroad Company (UP), 
between milepost 325.1 and milepost 332.0, along with connecting 
ancillary trackage (yard and side tracks), in Black Hawk County, Iowa 
(the Line). In doing so, WTRL would replace the Line's current lessee 
and operator, Iowa Northern Railway Company (IANR). On August 7, 2024, 
in Docket No. AB 284 (Sub-No. 5X), IANR filed a petition for exemption 
to discontinue its operations on the Line.\1\
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    \1\ These proceedings are not consolidated but are being 
addressed in the same decision for administrative convenience.
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    As discussed below, WTRL's notice of exemption will be issued, and 
IANR's petition for exemption will be denied as moot.

WTRL's Notice of Exemption, Docket No. FD 36798

    Under 49 CFR 1011.7(a)(2)(x)(A), the Director of the Office of 
Proceedings (Director) is delegated the authority to determine whether 
to issue notices of exemption under 49 U.S.C. 10502 for lease and 
operation transactions under 49 U.S.C. 10901. However, the Board 
reserves to itself the consideration and disposition of all matters 
involving issues of general transportation importance. 49 CFR 
1011.2(a)(6). Accordingly, the Board will revoke the delegation to the 
Director with respect to issuance of the pending notice of exemption 
for a change in operator on the Line. The Board determines that this 
notice of exemption should be issued and does so here.

Notice

    WTRL, a noncarrier, has filed a verified notice of exemption 
pursuant to 49 CFR 1150.31 to lease and operate approximately 6.9 miles 
of rail line owned by UP, between milepost 325.1 and milepost 332.0, 
along with connecting ancillary trackage (yard and side tracks), in 
Black Hawk County, Iowa. The Line, known as the Waterloo Industrial 
Line, is currently operated by IANR, pursuant to a lease with UP. See 
Iowa N. Ry.--Lease Exemption with Interchange Commitment--Rail Line of 
Union Pac. R.R., FD 36277 (STB served March 20, 2019).
    According to the verified notice, WTRL will replace IANR as the 
operator of the Line. Upon WTRL's assumption of operations, IANR will 
have no common carrier obligation on the Line.
    Although IANR stated in its July 26 Reply that it ``could not 
consent to the change in operator filing,'' (IANR Reply 1, July 26, 
2024, FD 36798; see also IANR Pet. 6, Aug. 7, 2024, AB 284 (Sub-No. 
5X); IANR Reply 2, Aug. 14, 2024, FD 36798), IANR subsequently filed a 
petition in Docket No. AB 284 (Sub-No. 5X), itself seeking Board 
authorization to discontinue its operations on the Line. Prior to that 
submission, IANR acknowledged termination of its lease with UP and 
stated it is working ``cooperatively and expeditiously'' with WTRL and 
UP to coordinate the transfer of operations to WTRL. (See IANR Reply 1, 
July 26, 2024, FD 36798; IANR Reply 2, July 31, 2024, FD 36798.) While 
IANR states that the ``steps necessary for a smooth transition of 
operations have not been completed,'' (IANR Pet. 6, Aug. 7, 2024, AB 
284 (Sub-No. 5X)), it offers no support for this assertion nor any 
indication as to what such steps entail. Nor does IANR, in requesting 
expedited consideration of its petition, indicate that the standard 14-
day period between publication of a change in operator notice and its 
effectiveness,\2\ which the Board will apply here, would be 
insufficient.
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    \2\ See 49 CFR 1150.32(b).
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    This transaction is related to a concurrently filed verified notice 
of exemption in OPSEU Pension Plan Trust Fund, Jaguar Transport 
Holdings, LLC, and Jaguar Rail Holdings, LLC--Continuance in Control 
Exemption--Waterloo Railroad, LLC, Docket No. FD 36797, in which OPSEU 
Pension Plan Trust Fund, Jaguar Transport Holdings, LLC, and Jaguar 
Rail Holdings, LLC, seek to continue in control of WTRL upon WTRL's 
becoming a Class III rail carrier.
    WTRL certifies that the draft lease agreement between WTRL and UP 
contains an interchange commitment that affects interchange with third-
party connecting carriers.\3\ WTRL has provided additional information 
regarding the interchange commitment as required by 49 CFR 1150.33(h).
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    \3\ A copy of the draft lease agreement was submitted under seal 
with the verified notice. See 49 CFR 1150.33(h)(1). WTRL states that 
it will submit a copy of the executed agreement when it is fully 
executed.
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    WTRL certifies that its projected annual revenues as a result of 
this transaction will not result in it becoming a Class II or Class I 
rail carrier and that its projected annual revenues will not exceed $5 
million.
    Under 49 CFR 1150.32(b), a change of operator requires that notice 
be given to shippers. The verified notice indicates

[[Page 68978]]

that WTRL provided notice of the transaction and interchange commitment 
to shippers on the Line.
    The earliest this transaction may be consummated is September 6, 
2024, the effective date of the exemption.
    If the verified notice contains false or misleading information, 
the exemption is void ab initio. Petitions to revoke the exemption 
under 49 U.S.C. 10502(d) may be filed at any time. The filing of a 
petition to revoke will not automatically stay the effectiveness of the 
exemption. Petitions for stay must be filed no later than August 30, 
2024 (at least seven days before the exemption becomes effective).
    All pleadings, referring to Docket No. FD 36798, must be filed with 
the Surface Transportation Board either via e-filing on the Board's 
website or in writing addressed to 395 E Street SW, Washington, DC 
20423-0001. In addition, a copy of each pleading must be served on 
WTRL's representative, William A. Mullins, Mullins Law Group PLLC, 2001 
L Street NW, Suite 720, Washington, DC 20036.
    According to WTRL, this action is categorically excluded from 
environmental review under 49 CFR 1105.6(c) and from historic 
preservation reporting requirement under 49 CFR 1105.8(b).
    Decisions of the Board are available at www.stb.gov.

IANR's Petition for Exemption, Docket No. AB 284 (Sub-No. 5X)

    IANR filed its petition under 49 U.S.C. 10502 for exemption from 
the prior approval requirements of 49 U.S.C. 10903 to discontinue its 
lease operations over the Line. IANR states that the proposed 
discontinuance of service would allow IANR ``to effectuate an orderly 
transfer of rail operations from IANR to WTRL.'' (IANR Pet. 2, Aug. 7, 
2024, AB 284 (Sub-No. 5X).) IANR requests expedited consideration of 
its petition. (Id. at 6.)
    Because the change of operator exemption issued here in Docket No. 
FD 36798 effectively discontinues IANR's common carrier obligation on 
the Line, IANR's petition to discontinue its operations on the Line 
will be denied as moot, effective concurrently with effectiveness of 
the change in operator exemption.
    It is ordered:
    1. The delegation of authority to the Director under 49 CFR 
1011.7(a)(2)(x)(A) to determine whether to issue a notice of exemption 
in this proceeding is revoked.
    2. WTRL's notice of exemption is issued and is effective September 
6, 2024.
    3. IANR's petition for exemption is denied as moot, effective on 
September 6, 2024.
    4. This decision will be published in the Federal Register.
    5. This decision is effective on its service date.
    Decided: August 22, 2024.
    By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz. 
Board Member Fuchs concurred with a separate expression.

BOARD MEMBER FUCHS, concurring:
    While I agree with the today's decision and find sufficient 
indication that IANR consents to exiting the Line,\1\ I write 
separately to suggest that the Board consider revising its change-in-
operator exemption regulations to explicitly require a verified notice 
to indicate that the exiting carrier consents to the transaction. The 
notice of exemption process is built for speed and typically involves 
little to no opposition or controversy,\2\ and the process allows 
simultaneous entry and exit licensing to facilitate efficient changes 
in operators. Consistent with this purpose, the Board--in case law--has 
rightly required an indication that the exiting carrier consents to the 
change-in-operator notice. See SMS Rail Serv., Inc.--Change in Operator 
Exemption Including Acquisition by Lease--Salem Branch Line in Salem 
and Gloucester Counties, N.J., FD 36529, slip op. at 2, 2 n.4 (STB 
served July 15, 2022) (notice of change-in-operator exemption under 49 
CFR 1150.41 discontinuing operating authority for a carrier that 
consented, but not for a second carrier that was unreachable and thus 
had not consented). However, the Board's regulations contain no 
explicit requirement. Here, when IANR contested the transaction, the 
case soon generated an atypical amount of litigation for a notice of 
exemption proceeding, and the controversy showed the potential for 
further complications if a carrier were to never consent to exiting. 
Forcing a carrier off a line is no simple, permissive matter, and--in 
stand-alone exit licensing proceedings brought by a third party where 
the subject carrier does not consent (i.e., a typical ``adverse'' 
discontinuance or abandonment case)--the Board has rightly rejected the 
use of exemptions. Wisconsin Dept. of Transp.--Aban. Exemption, FD 
31303, slip op. at 4 (ICC served Dec. 5, 1988) (holding that the 
exemption authority could not be used to force abandonment or 
discontinuance where the carrier opposes this action).\3\ Revising the 
change-in-operator regulations \4\ to explicitly include a consent 
requirement would promote the purpose of the regulations, provide 
needed clarity for parties, and mitigate potential inconsistencies 
across exit licensing proceedings.
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    \1\ I also agree that IANR has not demonstrated that the 
standard 14-day period before the change-in-operator exemption 
becomes effective is insufficient to permit the ``orderly transfer 
of operations from IANR to WTRL.'' (IANR Pet. 2, Aug. 7, 2024, AB 
284 (Sub-No. 5X).)
    \2\ Class Exemption for the Acquisition and Operation of Rail 
Lines under 49 U.S.C. 10901, EP 392 (Sub-No. 1), slip op. at 3 (STB 
served Jan. 15, 1986) (stating that the exemption process ``is 
designed to meet the need for expeditious handling of a large number 
of requests that are rarely opposed,'' and ``to reduce regulatory 
delay and costs'').
    \3\ If, in a future proceeding, the Board were to conclude that 
it does not have adverse discontinuance or abandonment authority, 
the agency would have an independent reason to require consent in 
this type of proceeding.
    \4\ I note that the agency's decision promulgating the 
applicable regulations appears to focus on the agency's entry 
licensing statute, and not the exit licensing statute for 
discontinuances and abandonments, even though a change in operator 
involves an exit. See Class Exemption, EP 392 (Sub-No. 1), slip op. 
at 10 (adopting final rule by citing to 49 U.S.C. 10901 [acquisition 
and operation] but not Sec.  10903 [abandonments]). The Board should 
address this apparent omission in any future rulemaking.

Eden Besera,
Clearance Clerk.
[FR Doc. 2024-19341 Filed 8-27-24; 8:45 am]
BILLING CODE 4915-01-P