[Federal Register Volume 90, Number 130 (Thursday, July 10, 2025)]
[Notices]
[Pages 30763-30769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12871]
=======================================================================
-----------------------------------------------------------------------
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36836]
Norfolk Southern Corporation and Norfolk Southern Railway
Company--Acquisition of Control--Norfolk & Portsmouth Belt Line
Railroad Company
AGENCY: Surface Transportation Board.
ACTION: Decision No. 7 in Docket No. FD 36836; Notice of Acceptance of
Application; Issuance of Procedural Schedule.
-----------------------------------------------------------------------
SUMMARY: The Surface Transportation Board (Board) is accepting for
consideration the application filed on June 13, 2025, by Norfolk
Southern Corporation (NSC) and Norfolk Southern Railway Company (NSR)
(collectively, NS or Applicants). Applicants seek the Board's
authorization of their acquisition of control of Norfolk & Portsmouth
Belt Line Railroad Company (NPBL), a Class III rail carrier operating
in Norfolk, Portsmouth, and Chesapeake, Va. This proposal is referred
to as the Transaction. The Board finds that the application is
complete. The Board, therefore, accepts the application and adopts a
procedural schedule for its consideration.
DATES: Any person who wishes to participate in this proceeding as a
Party of Record must file, by July 23, 2025, a notice of intent to
participate if they have not already done so. Descriptions of
anticipated responsive applications, including inconsistent
applications, are due by August 12, 2025. Petitions for waiver or
clarification with respect to such applications are also due by August
12, 2025. Comments, protests, requests for conditions, and any other
evidence and argument in opposition to the application are due by
August 27, 2025. This includes any comments from the U.S. Department of
Justice (DOJ) and U.S. Department of Transportation (USDOT). All
responsive applications, including inconsistent applications, are due
by September 8, 2025. Responses to comments, protests, requests for
conditions, and other opposition--including responses to DOJ and USDOT
filings--are due by October 27, 2025. Responses to responsive
applications, including inconsistent applications, are also due by
October 27, 2025. Rebuttal in support of the application is also due by
October 27, 2025. Rebuttals in support of responsive applications,
requests for conditions, and other opposition must be filed by November
26, 2025. Final briefs are due by January 6, 2026. If a public hearing
or oral argument is held, it will be held between the filing of
rebuttals and final briefs, on a date to be determined by the Board.
The Board will issue its final decision by April 6, 2026, and the
decision will become effective by May 6, 2026. For further information
regarding deadlines, see the Appendix to this decision.
ADDRESSES: Any filing submitted in this proceeding must be filed with
the Board either via e-filing on the Board's website
[[Page 30764]]
or in writing addressed to 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'
representative, William Mullins, Mullins Law Group, PLLC, 2001 L Street
NW, Suite 720, Washington, DC 20036; and (4) any other person
designated as a Party of Record on the service list.
FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 918-5462. If you
require an accommodation under the Americans with Disabilities Act,
please call (202) 245-0245.
SUPPLEMENTARY INFORMATION: On February 14, 2025, Applicants filed a
submission, styled as an application for a ``minor'' transaction,
seeking the Board's authorization under 49 U.S.C. 11323-25 and 49 CFR
part 1180 of their acquisition of control of NPBL. By decision served
March 14, 2025, and published in the Federal Register on March 17, 2025
(90 FR 12440), the Board found that the Transaction should be
classified as a ``significant'' transaction. See Norfolk S. Corp.--
Acquis. of Control--Norfolk & Portsmouth Belt Line R.R. (Decision No.
2), FD 36836, slip op. at 7-8 (STB served Mar. 14, 2025). Accordingly,
the Board determined that it could not accept Applicants' February 14,
2025 submission as an application at that time and treated the
submission as a prefiling notification for a significant
transaction.\1\ Id. at 7; see also 49 CFR 1180.4(b)(1). The Board
stated that Applicants could perfect their application by supplementing
their February 14, 2025 submission. The Board waived certain filing
requirements that pertain to significant transactions and directed
Applicants to provide certain information in addition to the impact
analysis and supporting documents that are required under 49 CFR
1180.7(a) and (c). Decision No. 2, FD 36836, slip op. at 7-8. The Board
also directed Applicants to file with the Board, by March 21, 2025, a
revised proposed procedural schedule reflecting the Board's
determination that the Transaction is a significant transaction. Id. at
8-9.
---------------------------------------------------------------------------
\1\ Applicants' February 14, 2025 submission will be referred to
as the Prefiling Notification.
---------------------------------------------------------------------------
On March 21, 2025, Applicants filed a ``revised motion for proposed
procedural schedule.'' CSX Transportation, Inc. (CSXT), filed a
response to Applicants' motion on March 28, 2025.\2\ The Board
published notice of, and invited comment on, Applicants' revised
proposed procedural schedule by decision served April 11, 2025, and
published April 16, 2025. See Norfolk S. Corp.--Acquis. of Control--
Norfolk & Portsmouth Belt Line R.R. (Decision No. 3), FD 36836 (STB
served Apr. 11, 2025) (90 FR 16056). Applicants filed comments on the
proposed procedural schedule on April 28, 2025. On June 13, 2025,
Applicants supplemented their February 14, 2025 submission.\3\
---------------------------------------------------------------------------
\2\ On April 1, 2025, Applicants filed a letter in response to
CSXT's March 28, 2025 filing, stating that they intended to file
comments after the Board publishes notice of the proposed schedule
in the Federal Register. (NS Letter 1-2, Apr. 1, 2025.)
\3\ CSXT filed motions to compel production of certain documents
and information on April 9 and April 18, 2025. On June 20, 2025,
CSXT filed a restated and amended motion to compel, to which
Applicants replied on June 25, 2025. The motions to compel will be
addressed in a subsequent decision.
---------------------------------------------------------------------------
According to Applicants, NS is a Class I rail carrier that operates
approximately 19,300 route miles of track. (Prefiling Notification 40.)
\4\ NPBL is a terminal switching company, currently owned by NS
(57.14%) and CSXT (42.86%). (Id. at 12.) NPBL operates approximately 36
miles of rail line from Portsmouth, Va., to Norfolk, Va. (the NPBL
Line), and approximately 27 miles of trackage rights over NS track from
Norfolk to Chesapeake, Va. (the NPBL Trackage Rights). (Id. at 12-13,
42.) The NPBL Line connects with CSXT at Portsmouth, with NSR and the
Chesapeake and Albemarle Railroad at Chesapeake, and the Buckingham
Branch Railroad at Norfolk. (Id. at 58.) According to Applicants, NPBL
serves 24 industries on its system, in addition to serving NS and CSXT.
(Appl. 70.)
---------------------------------------------------------------------------
\4\ Citations to pleadings on the record will cite to the
cumulative page numbers to the extent they are available.
---------------------------------------------------------------------------
The NPBL Trackage Rights facilitate NPBL's access to the Norfolk
International Terminal (NIT). (Prefiling Notification 58.) NIT is the
larger of the two primary container terminals at the Port of Virginia
(POV) in or about the Hampton Roads area. (Id. at 51-52, 60; Appl. 61.)
The NSR track over which the NPBL Trackage Rights run connects directly
to NIT.\5\ (Prefiling Notification 58.) According to Applicants, other
rail carriers can access NIT by interchanging with NSR or arranging for
a switch move involving NPBL. (Id.) CSXT also conducts drayage
operations to NIT from a nearby yard. (Id. at 32, 66.) The other,
smaller container terminal at POV in or about the Hampton Roads area is
the Virginia International Gateway (VIG). (Id. at 60.) NSR and CSXT
both access VIG through the Commonwealth Railway (CWRY), a subsidiary
of Genesee & Wyoming Inc. (Id.) Via NPBL, NSR and CSXT also have rail
access to the Portsmouth Marine Terminal, a former container, break-
bulk, and roll-on/roll-off cargo terminal that is currently being
repurposed to handle heavy and oversized cargo. (Id.) Additionally,
CSXT has direct, on-dock access to the Newport News Marine Terminal, a
break-bulk and roll-on/roll-off facility. (Id. at 60-61.)
---------------------------------------------------------------------------
\5\ The NPBL Trackage Rights connect the main body of NPBL's
system to its line extending from West Junction to NIT. (See Appl.
101); see also NPBL Reply 1-2, June 24, 2025, Norfolk S. Ry.--Pet.
to Set Trackage Rts. Comp.--Norfolk & Portsmouth Belt Line R.R., FD
36223.
---------------------------------------------------------------------------
NPBL's current switch rate to NIT is $210 per loaded car well. (Id.
at 11.) Applicants state that NPBL's switch rate is based on a
``uniform, cost-based structure'' (instead of a profit/market-driven
fee basis), in accordance with an agreement entered into when NPBL was
created in 1897. (Id. at 8 & n.3, 12, 24.)
Until 2016, NPBL operated the NPBL Trackage Rights pursuant to the
terms of a trackage rights agreement entered into in 1917. (Id. at 13.)
NS terminated that agreement in 2016, and the parties have extended the
terms of the terminated agreement on a month-to-month basis since that
time. (Id.) In 2018, in Docket No. FD 36223, NSR filed a petition
asking the Board to set trackage rights compensation for the NPBL
Trackage Rights. That proceeding was held in abeyance pending the
resolution of related federal court litigation.\6\ Norfolk S. Ry.--Pet.
to Set Trackage Rts. Comp.--Norfolk & Portsmouth Belt Line R.R., FD
36223 (STB served July 25, 2019).
---------------------------------------------------------------------------
\6\ On April 30, 2025, NSR filed a motion to end the abeyance
period. On May 20, 2025, CSXT filed a motion to dismiss or to
continue to hold the proceeding in abeyance, to which NSR replied on
June 9, 2025. NPBL replied on June 24, 2025. These motions are
currently pending before the Board.
---------------------------------------------------------------------------
Applicants state that they have effectively controlled NPBL for 42
years. (See, e.g., Prefiling Notification 7-8, 17, 24.) In 1980, NSC
(then known as NWS Enterprises, Inc.) sought authority from the Board's
predecessor agency, the Interstate Commerce Commission (ICC), to
acquire control of Norfolk & Western Railway Company (N&W) and Southern
Railway Company (SRC). (Id. at 59 & n.5.) At that time, NPBL had four
shareholders--SRC, N&W, Norfolk Southern Railway Company (Norfolk
Southern),\7\ and CSXT. (Id. at 59.) The
[[Page 30765]]
ICC approved NSC's application in 1982 (the 1982 Transaction),
resulting in NSC indirectly owning 57.14% of the shares of NPBL. (Id.
at 9, 60; Appl. 13.)
---------------------------------------------------------------------------
\7\ In 1980, Norfolk Southern was a Class II subsidiary of SRC.
(Appl. 13.) It changed its name to Carolina and Northwestern Railway
Company following the 1980 transaction. (Id.)
---------------------------------------------------------------------------
In 1991, the ICC, pursuant to an exemption under 49 CFR
1180.2(d)(3) for transactions within a corporate family, granted SRC
authority to directly control N&W. (Prefiling Notification 9); S. Ry.--
Control Exemption--Norfolk & W. Ry., FD 31791 (ICC served Jan. 14,
1991). At the same time, SRC changed its name to Norfolk Southern
Railway Company. (Prefiling Notification 9); S. Ry.--Control Exemption,
FD 31791, slip op. at 1. Then, in 1998, pursuant to another corporate
family transaction exemption, the Board authorized the merger of N&W
into its parent, NSR (formerly SRC). (Prefiling Notification 9);
Norfolk S. Ry.--Exemption--Norfolk & W. Ry., FD 33648 (STB served Aug.
31, 1998).
In 2018, CSXT filed an antitrust complaint in federal district
court against NS and NPBL, alleging that NS had prevented CSXT from
serving NIT since 2009, when NPBL increased its switch rate to the
current rate of $210 per loaded car well. (Prefiling Notification 11.)
In 2021, NSR filed with the Board a petition for declaratory order
requesting that the Board institute a proceeding to address certain
issues referred to the Board by the district court, including whether
the ICC granted NSC approval to control NPBL when it approved the 1982
Transaction. See Norfolk S.--Pet. for Declaratory Ord. (Declaratory
Ord. Proceeding), FD 36522, slip op. at 1 (STB served June 17, 2022),
aff'd sub nom. Norfolk S. Ry. v. STB, 72 F.4th 297 (D.C. Cir. 2023),
cert. denied, 144 S. Ct. 1343 (2024). In 2022, the Board held that the
agency did not authorize NSC's control of NPBL in the 1982 Transaction
or the notices of exemption in 1991 and 1998, and stated that it
``expect[ed] the parties to take appropriate steps to address the
unauthorized control issue immediately following resolution of the
district court proceeding, including any appeals.'' Declaratory Ord.
Proceeding, FD 36522, slip op. at 1, 9-17 & n.25. In 2023, the district
court granted summary judgment in NS's favor on CSXT's federal
antitrust claims for damages, finding that those claims were untimely.
See CSX Transp., Inc. v. Norfolk S. Ry., 648 F. Supp. 3d 679 (E.D. Va.
2023). The U.S. Court of Appeals for the Fourth Circuit affirmed the
district court's decision. CSX Transp., Inc. v. Norfolk S. Ry., 114
F.4th 280 (4th Cir. 2024). On November 26, 2024, CSXT filed a petition
for certiorari with the U.S. Supreme Court seeking review of the Fourth
Circuit's opinion, (Prefiling Notification 11), which the Supreme Court
denied, CSX Transp., Inc. v. Norfolk S. Ry., 2025 U.S. Lexis 1619 (S.
Ct. 2025).
Applicants state that they are now seeking to obtain control
authority as directed by the Board in the Declaratory Order
Proceeding.\8\ (Prefiling Notification 7-8.) As discussed in more
detail below, on June 20, 2025, CSXT filed a petition to reject
Applicants' application as incomplete, and Applicants responded on June
25, 2025.
---------------------------------------------------------------------------
\8\ Applicants state that they are ``not seeking any form of
retroactive approval.'' (Appl. 9.)
---------------------------------------------------------------------------
Financial Arrangements. According to Applicants, there would be no
new securities or other financial arrangements in connection with the
Transaction. (Id. at 22.)
Passenger Service Impacts. Applicants state that there are
currently no passenger or commuter rail operations on NPBL's rail
system, and there is no plan to introduce any such operations as a
result of the Transaction. (Id. at 45.)
Discontinuances/Abandonments. Applicants assert that no rail
service would be discontinued or abandoned on any portion of NPBL's
system as a result of the Transaction. (Id.)
Public Interest Considerations.\9\ According to Applicants, in the
42 years that they have owned a majority interest in NPBL, they have
not used their effective control to decrease the transportation options
available to shippers, and they have no plans to change that policy
moving forward. (Prefiling Notification 24.) Applicants state that
intermodal shippers have and will continue to have numerous
transportation options for moving their traffic, including (1) through
NIT, served directly by NS; (2) through NIT, served directly by NPBL
and indirectly by CSXT, (3) through NIT, served by CSXT via drayage to
CSXT's nearby dock yard at Pinner's Point, (4) through VIG, served
directly by CWRY and indirectly by CSXT and NSR, and (5) through VIG,
served by CSXT and NSR via drayage.\10\ (Appl. 34.) Applicants further
state that shippers can move traffic directly by trucks and note that
trucking holds the largest market share. (Id. at 34 & n.58, 47.)
Applicants commit to ``(1) ensuring that [their] control of NPBL will
not be used in a manner to artificially inflate NPBL's costs through
the imposition of an unreasonable trackage rights fee, (2) establishing
a trackage rights fee that is fully consistent with the [Board's]
trackage rights rate methodology imposed by the Board to preserve
competition; and (3) establishing and maintaining a uniform cost-based
switching rate.'' (Prefiling Notification 27.)
---------------------------------------------------------------------------
\9\ Under the regulations, the detailed discussion of public
interest justifications is to give ``particular regard to the
relevant statutory criteria.'' 49 CFR 1180.6(a)(2). In a significant
transaction, the Board makes a determination as to whether, as a
result of a transaction, there would likely be a substantial
lessening of competition, creation of a monopoly, or a restraint of
trade in freight surface transportation in any region of the United
States, and whether any anticompetitive effects would be outweighed
by the public interest in meeting significant transportation needs.
See 49 U.S.C. 11324(d)(1)-(2).
\10\ Applicants state that neither NSR nor CSXT currently use
drayage for VIG container traffic. (Appl. 40-41.)
---------------------------------------------------------------------------
Applicants assert that the Transaction would generate public
benefits moving forward. (Appl. 30.) According to Applicants, by
continuing to impose a uniform switch rate, they would ensure that all
NPBL customers contribute to NPBL's operating costs and that no
customers are subsidizing other customers' portions of those costs.\11\
(Id.) Applicants further assert that continuing to impose a cost-based
rate, based on NPBL's variable and fixed costs, along with a modest
return on its investment, would ensure the long-term viability of its
operations and enable NPBL to continue to provide safe and reliable
rail service to all its customers. (Id. at 30-31.)
---------------------------------------------------------------------------
\11\ According to Applicants, if NPBL lowered CSXT's switch
rate, as CSXT has requested, the rate would be less than NPBL's
variable costs, and other NPBL shippers would need to pay more to
cover the difference. (Appl. 92-93.)
---------------------------------------------------------------------------
Additionally, Applicants argue that there are public benefits to
NPBL being part of the NS corporate family, including lower operating
costs, better access to capital for infrastructure investments, cost
savings from purchasing and from lower insurance premiums, and better
liability protections. (Id. at 31.) Applicants also note the
significant investments made in the international intermodal container
market during the time that NS has owned the majority interest in NPBL
and state that these investments ``reflect the intense competitive
marketplace that currently exists for international intermodal
containers that has been sustained throughout NS's effective control of
NPBL, and that will continue to flourish.'' (Prefiling Notification 30-
31, 65.)
Schedule for Consummation. Applicants assert that there is no new
transaction to be consummated as NSC has had effective control of NPBL
since the 1982 Transaction. (Id. at 22.)
[[Page 30766]]
Environmental Impacts. Applicants contend that the Transaction
would not result in any operational changes (such as increases in rail
traffic, train operations, or yard activity) that would exceed the
Board's thresholds for environmental review in 49 CFR 1105.7(e)(4) and
(5). (Prefiling Notification 43.) Applicants therefore assert that the
Transaction does not require the preparation of environmental
documentation under 49 CFR 1105.6(c)(1). (Id.)
Historic Impacts. Applicants assert that, under 49 CFR
1105.8(b)(3), the Transaction does not require a historic report
because there would not be a substantial change to the level of
maintenance of the railroad property. (Id. at 44.)
Labor Impacts. Applicants state that they do not plan to make any
changes to the number of employees working on NPBL as a result of the
Board approving the application. (Id. at 40.) According to Applicants,
no employees of NS or NPBL will be dismissed or displaced as a result
of Board approval. (Id.) Applicants state that, because no adverse
impact on employees is expected, no employee protection agreements have
been negotiated. (Id.)
Primary Application Accepted. Under 49 U.S.C. 11325(a) and 49 CFR
1180.4(c)(7)(i), the Board must accept a complete merger or control
application, no later than 30 days after the application is filed, by
publishing notice of the application in the Federal Register. An
application is complete when it ``contains all information for all
applicant carriers required by these procedures, except as modified by
advance waiver.'' 49 CFR 1180.4(c)(7); see also 49 CFR 1180.6-.8. If
the Board determines that an application is incomplete, the Board must
reject it by the end of the 30-day period. 49 U.S.C. 11325(a); 49 CFR
1180.4(c)(7)(ii). Here, the Board finds that Applicants have provided
information sufficient to satisfy the filing requirements for a
significant transaction application. Accordingly, the Board accepts the
application for consideration. See 49 U.S.C. 11321-11326; 49 CFR 1180.
On June 20, 2025, CSXT filed a petition to reject the application,
asserting that it is incomplete. (CSXT Pet. to Reject CSXT-10-3, June
20, 2025.) According to CSXT, Applicants' market analysis under 49 CFR
1180.7 is inadequate. (Id. at CSXT-10-5 to -7, -13 to -15.) CSXT argues
that Applicants failed to provide an ``analysis, supported by data,
showing how an independent and neutral NPBL would act'' and ``how
markets and competition would differ'' without Applicants' control of
NPBL. (Id. at CSXT-10-6, -13.) Additionally, according to CSXT,
Applicants failed to (1) address the effect of inclusion (or lack of
inclusion), (id. at CSXT-10-7 to -9); (2) submit a marketing plan, (id.
at CSXT-10-9 to -10); (3) describe the relevant markets, (id. at CSXT-
10-10 to -11); (4) demonstrate that Applicants' control would not
result in a two-to-one reduction in competition, (id. at CSXT-10-12 to
-13); and (5) support their claims regarding market comparables, (id.
at CSXT-10-15 to -16).
Applicants replied to CSXT's petition to reject on June 25, 2025.
Applicants assert that they have filed the information required for a
significant transaction under the Board's regulations, as modified by
the Board in Decision No. 2. (NS Reply to Pet. to Reject 6, 7-9, June
25, 2025.) With respect to their market analysis, Applicants argue that
CSXT's petition challenges ``how'' Applicants addressed the
requirements of 49 CFR 1180.7(a) but not ``whether'' they were
addressed. (Id. at 12.) Applicants further argue that the Board's
regulations provide applicants with significant leeway to develop the
best evidence and choose the type and format of that evidence. (Id. at
12-13.) Applicants assert that they have addressed inclusion (to the
extent it was even required),\12\ (id. at 10-12); that their
application reflects that there will be no consolidated marketing plan
as NS is not seeking ``authority to merge or otherwise consolidate with
NPBL in a manner that would do away with the non-discriminatory,
independent nature of NPBL's Board of Directors, its operating
personnel, or its marketing personnel,'' (id. at 17); that they address
the relevant markets by listing the different competitive options,
including their characteristics and costs, (id. at 19); and that they
provide sufficient competitive analysis to establish that there would
be no two-to-one points as a result of the Transaction, (id. at 20).
---------------------------------------------------------------------------
\12\ Because Applicants addressed this criterion, the Board need
not address Applicants' suggestion that such information may not
have been required with this type of transaction.
---------------------------------------------------------------------------
The Board finds that the application, together with the Prefiling
Notification, contains the information required for a significant
transaction under the Board's regulations, as modified by the Board in
Decision No. 2. CSXT's arguments largely challenge the merits of
Applicants' positions--e.g., the way Applicants frame their market
analysis, Applicants' position on whether inclusion would be
appropriate in this case, and the reliability of Applicants' proposed
market comparables. But the issue before the Board at this stage is
whether the application ``contains all information for all applicant
carriers required by these procedures, except as modified by advance
waiver,'' see 49 CFR 1180.4(c)(7), which the Board finds it does. The
issues raised by CSXT's motion to reject are more appropriately
addressed at the merits stage of the proceeding after the record has
been developed.
In support of its position that the application is incomplete, CSXT
points to CSX Corp.--Control & Merger--Pan Am Systems, Inc. (CSXT/Pan
Am), Docket No. FD 36472. (See, e.g., CSXT Pet. to Reject CSXT-10-8 to
-10, June 20, 2025.) However, given the particular history of this
Transaction, with the unauthorized acquisition having occurred over 40
years ago, the type and format of evidence presented may differ from
that which the Board would expect in a more routine proposed
transaction proceeding. See 49 CFR 1180.7(c) (``For significant
transactions, specific regulations on impact analyses are not provided
so that the parties will have the greatest leeway to develop the best
evidence on the impacts of each individual transaction.'')
The Board has reviewed the application and determined that it
contains sufficient information to be considered complete. Accordingly,
CSXT's petition to reject the application is denied. As indicated by
the procedural schedule discussed below, CSXT and other parties will
have the opportunity to comment on the merits of the application at a
later stage. The Board will conduct a careful review after the record
is fully developed before making a determination as to whether the
Transaction would likely substantially lessen competition, create a
monopoly, or restrain trade, and whether any anticompetitive effects
would be outweighed by the public interest in meeting significant
transportation needs. See 49 U.S.C. 11324(d)(1)-(2). The Board reserves
the right to require the filing of additional information, if necessary
for a full record.
Procedural Schedule. As noted above, on March 21, 2025, Applicants
filed a revised proposed procedural schedule reflecting the Board's
determination that the Transaction is a significant transaction. CSXT
filed a response to Applicants' motion on March 28, 2025, proposing a
number of changes to Applicants' revised proposed procedural schedule.
Applicants filed comments, including responses to many of CSXT's
proposed changes, on April
[[Page 30767]]
28, 2025. The Board will address each proposed modification in turn.
First, in their revised procedural schedule, Applicants propose
that comments, protests, requests for conditions, and any other
evidence and argument in opposition to the application be due 60 days
after their application is filed. (NS Revised Mot. 3, Mar. 21, 2025.)
CSXT proposes that this deadline should be 90 days after the
application is filed. (CSXT Response 2-4, Mar. 28, 2025.) CSXT argues
that 90 days is more appropriate here because of the ``serious,
extensive, and longstanding competitive issues that will need to be
addressed in this proceeding, and the existence of a substantial record
that will need to be reviewed.'' (Id. at 4.) CSXT further argues that
syncing the deadline for written comments with the deadline for
responsive applications would create efficiencies for the parties and
is consistent with the Board's practice in past cases, such as Canadian
Pacific Railway--Control--Dakota, Minnesota & Eastern Railroad (DM&E),
FD 35081, slip op. at 18 (STB served Dec. 27, 2007). (Id. at 5.) In
response, NS argues that the applicants in DM&E proposed setting the
deadline at 90 days, thereby waiving their right to a 60-day comment
period. (NS Comments 9, Apr. 28, 2025.) The Board will set the deadline
for comments, protests, requests for conditions, and any other evidence
and argument in opposition to the application at 75 days following the
submission of the application. This deadline provides some additional
time for parties to review the record without unduly shortening the
time for Applicants to prepare their rebuttal filing.\13\
---------------------------------------------------------------------------
\13\ Applicants suggest that 49 U.S.C. 11325(c)(1) prohibits the
filing of comments any later than 60 days from the filing of a
significant application, unless consented to by the applicant. (NS
Comments 11, Apr. 28, 2025.) That section, however, creates a
statutory right for the commenting party to file comments within 60
days, without any restriction on the Board's discretion to provide
additional time within the statutory deadline for concluding
evidentiary proceedings. Compare 49 U.S.C. 11325(c)(1) (``[w]ritten
comments . . . may be filed with the Board within 30 days'') with 49
U.S.C. 11325(a) (``[t]he Board shall publish notice . . . by the end
of the 30th day after the application is filed'').
---------------------------------------------------------------------------
Second, Applicants propose that discovery should close 135 days
after the application is filed. (NS Revised Mot. 3, Mar. 21, 2025.)
\14\ CSXT opposes this proposal, arguing that closing discovery before
rebuttals on responsive applications are filed is an ``attempt to avoid
any discovery on assertions made by NS in response to responsive,
including inconsistent, applications.'' (CSXT Response 7, 9, Mar. 28,
2025.) According to CSXT, a party is entitled to discovery as long as
the record is open. (Id. at 9.) Applicants argue that CSXT's proposal
is an attempt to delay the proceeding and that, in control proceedings,
the timing of discovery is dictated by the controlling statutes and
regulations, such as those which set a deadline for the close of the
evidentiary proceeding. (NS Comments 5-7, Apr. 28, 2025.)
---------------------------------------------------------------------------
\14\ Applicants also proposed that discovery begin on the date
the Board publishes notice of its acceptance of the application in
the Federal Register, (NS Revised Mot. 3, Mar. 21, 2025), and CSXT
objected to this proposal. By order dated April 11, 2025, the Board
determined that it would be appropriate for discovery to begin
immediately. See Decision No. 3, FD 36836, slip op. at 2 n.2,
recons. denied, Norfolk S. Corp.--Acquis. of Control--Norfolk &
Portsmouth Belt Line R.R., FD 36836, slip op. at 5-7 (STB served
June 13, 2025).
---------------------------------------------------------------------------
Agency precedent is clear that ``[p]arties have the right to submit
the final evidence and close the record on the merits of their
application.'' Union Pac.--Control--Chi. & N. W. Transp., FD 32133 et
al., slip op. at 8 (ICC served July 11, 1994). This includes both
primary applicants and responsive applicants. See id. at 8. The Board
therefore finds that all discovery in this proceeding should be
complete by the deadline for the submission of rebuttals in support of
responsive applications. There are, however, ``limits on the type of
evidence which is appropriate for rebuttal and thus there are also
limits on the latitude for discovery.'' See id. Accordingly, any late-
stage discovery, e.g., in preparation for rebuttal filings, should be
limited to those issues that are appropriate for rebuttal. See 49 CFR
1112.6 (``Rebuttal statements shall be confined to issues raised in
reply statements to which they are directed.'').
Third, under Applicants' proposed schedule, rebuttals in support of
responsive applications would be due 30 days after comments on those
applications are due. (NS Revised Mot. 3, Mar. 21, 2025.) CSXT proposes
that this deadline be 45 days after comments to responsive applications
are filed. (CSXT Response 6, Mar. 28, 2025.) CSXT argues that, under
its proposal, both Applicants and responsive applicants would have 45
days to prepare rebuttals regarding their respective applications.
(Id.) The Board will set the deadline for rebuttals in support of
responsive applications at 30 days after comments to responsive
applications are filed. This is consistent with the procedural
schedules adopted in both DM&E and CSXT/Pan Am. See DM&E, FD 35081,
slip op. at 18; CSXT/Pan Am, FD 36472 et al., slip op. at 30 (STB
served July 30, 2021).
Fourth, Applicants include a placeholder in their proposed
procedural schedule for a public hearing, to be held, if deemed
necessary, at a date to be determined. (NS Revised Mot. 3, Mar. 21,
2025.) Applicants state, however, that they do not believe a public
hearing will be required. (Id. at 3 n.8.) CSXT argues that a hearing
will be necessary and proposes striking ``(if necessary)'' from the
schedule. (CSXT Response 3, 7, Mar. 28, 2025.) The Board will decide
whether to conduct a public hearing after the record has been more
fully developed. See 49 U.S.C. 11324(a) (``The Board shall hold a
public hearing unless the Board determines that a public hearing is not
necessary in the public interest.'').
Lastly, Applicants propose that final briefs be due 15 days after
the submission of rebuttals in support of responsive applications. (NS
Revised Mot. 3, Mar. 21, 2025.) CSXT proposes a 30-day period, arguing
that 30 days would ``assist the Board by giving the parties a better
opportunity to summarize what will likely be a complex record'' and is
consistent with the statutory deadline for control proceedings. (CSXT
Response 6, Mar. 28, 2025.) In both DM&E and CSXT/Pan Am, the deadline
for final briefs was approximately 45 days following the submission of
rebuttals in support of responsive applications. See DM&E, FD 35081,
slip op. at 18; CSXT/Pan Am, FD 36472 et al., slip op. at 29-30. Given
that the public hearing, should the Board decide to conduct one, would
be held between the filing of rebuttals and final briefs, the Board
finds that it is appropriate to follow the precedent set in DM&E and
CSXT/Pan Am.
The adopted procedural schedule is in the Appendix to this
decision.\15\
---------------------------------------------------------------------------
\15\ The dates shown in the ``DATES'' section above and the
Appendix to this decision have been calculated based on a Federal
Register publication date of July 10, 2025. Should publication of
this decision occur on a different day, the Board will issue a
revised procedural schedule.
---------------------------------------------------------------------------
Notices of Intent to Participate. Any person who wishes to
participate in this proceeding as a Party of Record must file with the
Board, by July 23, 2025, 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. Parties
who have already submitted a notice of intent to participate are not
required to resubmit an additional notice.
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
[[Page 30768]]
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 he or she has complied with the service
requirements set forth at 49 CFR 1180.4 and any other requirements set
forth in this decision.
Service of 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.
Environmental Matters. The National Environmental Policy Act of
1969 (NEPA), 42 U.S.C. 4321-4370m-11, requires that the Board take
environmental considerations into account in its decision-making. Under
the Board's environmental rules, actions with environmental effects
that are ordinarily insignificant may be excluded from NEPA review
without a case-by-case environmental review. Such activities are
covered as a ``categorical exclusion,'' which is a category of actions
that ``a Federal agency has determined normally does not significantly
affect the quality of the human environment within the meaning of [42
U.S.C.] 4332(2)(C).'' \16\ 42 U.S.C. 4336e(1). In its environmental
rules, the Board has promulgated several categorical exclusions. As
pertinent here, acquisition of control is a category of action that
normally requires no environmental review if certain thresholds would
not be exceeded.\17\ See 49 CFR 1105.6(b)(4), (c)(1)(i).
---------------------------------------------------------------------------
\16\ 42 U.S.C. 4332(2)(C) refers to the section of NEPA that
mandates federal agencies prepare a detailed environmental statement
for major federal actions significantly affecting the quality of the
human environment.
\17\ The thresholds that are typically applicable to a
transaction such as this are the air quality thresholds at 49 CFR
1105.7(e)(5). These thresholds differ depending on whether a rail
line segment is in an area designated as in ``attainment'' or
``nonattainment'' with the National Ambient Air Quality Standards
established under the Clean Air Act (42 U.S.C. 7401-7671q). For rail
lines located in attainment areas, environmental documentation
normally will be prepared if the proposed action would result in (1)
an increase of at least eight trains per day on any segment of rail
line affected by the proposal, (2) an increase in rail traffic of at
least 100% (measured in annual gross ton miles), (3) an increase in
carload activity at rail yards of at least 100%, or (4) an average
increase in truck traffic of more than 10% of the average daily
traffic or 50 vehicles a day on any affected road segment. See 49
CFR 1105.7(e)(5)(i). For rail lines in nonattainment areas,
environmental documentation typically is required when the proposed
action would result in (1) an increase of at least three trains per
day on any segment of rail line, (2) an increase in rail traffic of
at least 50% (measured in annual gross ton miles), (3) an increase
in carload activity at rail yards of at least 20%, or (4) an average
increase in truck traffic of more than 10% of the average daily
traffic or 50 vehicles a day on any given road segment. See 49 CFR
1105.7(e)(5)(ii). The Board's Office of Environmental Analysis (OEA)
has confirmed that NPBL does not pass through any nonattainment
areas. Moreover, should the Board approve the Transaction,
Applicants do not anticipate any diversion of rail carloads to motor
carriage that would implicate the energy thresholds at 49 CFR
1105.7(e)(4) and the truck traffic thresholds at 49 CFR
1105.7(e)(5).
---------------------------------------------------------------------------
The Transaction. OEA has reviewed Applicants' application and based
on the current record has determined that none of the Board's
thresholds would be exceeded as a result of the Transaction because
there would be no increase of eight trains per day or 100% increase in
rail traffic or gross-ton miles. 49 CFR 1105.7(e)(5)(i). NS currently
has three scheduled train arrivals and three scheduled train departures
at NIT per day. (Appl. 68.) NS's Sewells Point Line, which serves NIT,
supports an average of 10 to 15 trains per day. (Id.) As noted above,
NPBL operates as a switching and terminal carrier and serves 24
industries on its system, in addition to serving NS and CSXT. (Id. at
70.) According to Applicants, they have effectively controlled NPBL for
42 years and have no plan to change the operating plan with respect to
patterns or types of service as a result of the Board's approval of
their acquisition of control. (Prefiling Notification 44, 77.)
Applicants further explain that the requested Board approval would not
result in an increase or decrease of rail traffic on either NS or NPBL
lines, or material changes in rail yard activity. (Id. at 43-44, 109-
10.) Therefore, Applicants state that no environmental review is
necessary because Board approval would not result in an increase in
train or truck activity sufficient to trip the thresholds at 49 CFR
1105.7(e)(4) and (5). (Id. at 43.)
Historic Review. The Board's regulations also provide that historic
review normally is not required for acquisitions where there would be
no significant change in operations and properties 50 years old and
older would not be affected. See 49 CFR 1105.8. Applicants contend that
no historic review is required because the Transaction ``will not
substantially change the level of maintenance of the railroad
property,'' under 49 CFR 1105.8(b)(3). (Prefiling Notification 44.)
Conclusions. Based on the information provided to date, and after
consultation with OEA, the Board determines that an environmental and
historic review for the Transaction is not warranted because it does
not appear that the thresholds triggering an environmental review would
be met and there is nothing in the available environmental information
to indicate the potential for significant environmental or historic
impacts should the Board approve the Transaction. CSXT asserts that it
is too early for the Board to make any decisions related to
environmental matters because it is ``unclear how NS's unlawful control
over NPBL affects the [Board's] environmental review.'' (CSXT Response
11, Mar. 28, 2025.) However, given the need for the Board to draw a
``manageable line'' when conducting its environmental reviews, it would
not be practical, or even possible, for it to attempt to investigate
the potential environmental and historic impacts that may have resulted
over the years from NS effectively taking control of NPBL in 1982. See
Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colo., 605 U.S. ---,
145 Sup. Ct. 1497, 1513 (2025) (confirming agencies' ``broad latitude''
about ``where to draw the line--including . . . how far to go in
considering indirect environmental effects from the project at hand'').
It is highly questionable whether such a review, with its obvious
difficulties and limitations, would yield information useful to the
decision-making process. In this case, the ``manageable line'' for
environmental and historic review purposes is best drawn by considering
any potential impacts that may be caused by Board approval. As noted,
there is no indication that Board approval of NS's acquisition of
control of NPBL would result in significant environmental or historic
impacts.
For these reasons, the Board concludes, based on the current
record, that the Transaction qualifies for a categorical exclusion from
environmental review under 49 CFR
[[Page 30769]]
1105.6(c)(1)(i) and that no historic reporting under 49 CFR 1105.8 is
required.
Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices on those persons
designated on the official 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.\18\ In addition, the application may be obtained from
Applicants' representatives at the addresses indicated above.
---------------------------------------------------------------------------
\18\ Applicants submitted a public version and highly
confidential version of their application. The public version is
available on the Board's website. The highly confidential version
may be obtained subject to the provisions of the protective order
issued by the Board on February 19, 2025.
---------------------------------------------------------------------------
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 in Docket No. FD 36836 is 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. CSXT's petition to reject the application is denied.
4. This decision is effective on the date of service.
Decided: July 7, 2025.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Kenyatta Clay,
Clearance Clerk.
Appendix
Procedural Schedule
June 13, 2025 Application filed.
July 10, 2025 Board notice of acceptance of application published in
the Federal Register.
July 23, 2025 Notices of intent to participate in this proceeding
due.
August 12, 2025 Descriptions of anticipated responsive, including
inconsistent, applications due. Petitions for waiver or
clarification with respect to such applications due.
August 27, 2025 Comments, protests, requests for conditions, and any
other evidence and argument in opposition to the application due.
This includes any comments from DOJ and USDOT.
September 8, 2025 Responsive, including inconsistent, applications
due.
October 27, 2025 Responses to comments, protests, requests for
conditions, and other opposition due, including to DOJ and USDOT
filings.
Responses to responsive, including inconsistent, applications due.
Rebuttal in support of the application due.
November 26, 2025 Rebuttal in support of responsive, including
inconsistent, applications due.
TBD \19\ Public hearing (if necessary).
January 6, 2026 Final briefs due. (Close of the record.)
April 6, 2026 Date by which a final decision will be served.
May 6, 2026 \20\ Effective date of final decision.
---------------------------------------------------------------------------
\19\ As noted above, the Board will decide whether to conduct a
public hearing, which would be held between the filing of rebuttals
and final briefs, in a later decision after the record has been more
fully developed. See 49 U.S.C. 11324(a).
\20\ The final decision will become effective 30 days after it
is served.
[FR Doc. 2025-12871 Filed 7-9-25; 8:45 am]
BILLING CODE 4915-01-P