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Canadian Pacific Railway Company, et al.--Control--Dakota, Minnesota & Eastern Railroad Corp., et al.
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: January 4, 2008 (Volume 73, Number 3)]
[Notices]
[Page 923-930]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ja08-63]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 35081]
Canadian Pacific Railway Company, et al.--Control--Dakota,
Minnesota & Eastern Railroad Corp., et al.
AGENCY: Surface Transportation Board, DOT.
ACTION: Decision No. 4 in STB Finance Docket No. 35081; Notice of
Acceptance of Application; Issuance of Procedural Schedule.
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SUMMARY: The Surface Transportation Board (Board) is accepting for
consideration the application filed on December 5, 2007, by Canadian
Pacific Railway Corporation (CPRC), Soo Line Holding Company, a
Delaware Corporation and indirect subsidiary of CPRC (Soo Holding),
Dakota, Minnesota & Eastern Railroad Corporation (DM&E), and Iowa,
Chicago & Eastern Railroad Corporation, a wholly owned rail subsidiary
of DM&E (IC&E). The application filed on December 5 seeks Board
approval under 49 U.S.C. 11321-26 of the acquisition of control of DM&E
and IC&E by Soo Holding (and, indirectly, by CPRC). This proposal is
referred to as the ``transaction,'' and CPRC, Soo Holding, DM&E, and
IC&E are referred to collectively as ``Applicants.'' \1\
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\1\ In Decision No. 1 in this proceeding, served September 21,
2007, the Board issued a Protective Order to facilitate the
discovery process and establish appropriate procedures for the
submission of evidence containing confidential or proprietary
information. On October 5, 2007, Applicants submitted an application
for the proposed transaction and requested that the Board treat the
transaction as a ``minor transaction.'' In Decision No. 2, served
November 2, 2007, and published in the Federal Register on November
8, 2007, at 72 FR 63232-63236, the Board found the proposed
transaction to be ``significant'' and considered the October 5
submission as a prefiling notification, thus allowing Applicants to
perfect their application by submitting the difference between the
filing fee for a ``minor'' transaction and ``significant''
transaction, as well as any supplemental materials or information.
On December 5, 2007, applicants submitted the difference in filing
fees and other supplemental material. We will refer to the October 5
prefiling notification, as supplemented on December 5, as ``the
December 5 application.''
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The Board finds that the transaction is a ``significant
transaction'' under 49 CFR 1180.2(b), and adopts a procedural schedule
for consideration of the application, under which the Board's final
decision would be issued by September 30, 2008.
DATES: The effective date of this decision is January 4, 2008. Any
person who wishes to participate in this proceeding as a party of
record (POR) must file, no later than January 25, 2008, a notice of
intent to participate if they have not already done so. Descriptions of
anticipated responsive applications (including inconsistent
applications) and any petitions for waiver or clarification with
respect to such applications are also due by January 25, 2008.
Applicants shall file a proposed Safety Integration Plan (SIP) with the
Board's Section of Environmental Analysis (SEA) and the Federal
Railroad Administration (FRA) by February 4, 2008. All environmental
comments must also be filed by February 4, 2008, addressed to the
attention of SEA. All responsive applications, requests for conditions,
and any other evidence and argument in opposition to the application,
including filings by DOJ and DOT, must be filed by March 4, 2008.
Replies to responsive applications, requests for conditions, and other
opposition, and rebuttal in support of the application must be filed by
April 18, 2008. DOJ and DOT will be allowed to file, on the response
due date (here, April 18), their comments in response to the comments
of other parties, and Applicants will be allowed to file a response to
any such comments filed by DOJ and/or DOT by April 25, 2008. Rebuttals
in support of responsive applications, requests for conditions, and
other opposition must be filed by May 19, 2008. Final briefs, if any,
will be due by July 2, 2008. If a public hearing or oral argument is
held, it will be held on a date to be determined by the Board. The
Board will issue its final decision by September 30, 2008. For further
information respecting dates, see Appendix A (Procedural Schedule).
ADDRESSES: Any filing submitted in this proceeding must be submitted
either via the Board's e-filing format or in the traditional paper
format as provided for in the Board's rules. Any person using e-filing
should attach a document and otherwise comply with the instructions
found on the Board's Web site at http://www.stb.dot.gov at the ``E-
FILING'' link. Any person submitting a filing in the traditional paper
format should send an original and 10 paper copies of the filing (and
also an electronic version) to: Surface Transportation Board, 395 E
Street, SW., Washington, DC 20423-0001. In addition, one copy of each
filing in this proceeding must be sent (and may be sent by e-mail only
if service by e-mail 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) Terence M. Hynes
(representing CPRC), Sidley Austin LLP, 1501 K Street, NW., Washington,
DC 20005; (4) William C. Sippel (representing DM&E), Fletcher & Sippel,
29 North Wacker Drive, Suite 920, Chicago, IL 60606; and (5) any other
person designated as a POR on the service list notice (as explained
below, the service list notice will be issued as soon as practicable).
FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 245-0359.
[Assistance for the hearing impaired is available through the Federal
Information Relay Service (FIRS) at 1-800-877-8339.]
SUPPLEMENTARY INFORMATION: CPRC is a Canadian corporation whose stock
is publicly held and traded on the New York and Toronto stock
exchanges. CPRC and its U.S. rail carrier subsidiaries, Soo Line
Railroad Company (Soo) and Delaware and
[[Page 924]]
Hudson Railway Company, Inc. (D&H), operate a transcontinental rail
network over 13,000 miles in Canada and the United States. (CPRC, Soo,
and D&H are referred to collectively as CPR.) CPR serves the principal
business centers of Canada and 14 U.S. states in the Northeast and
Midwest. The major commodities transported by CPR include bulk
commodities such as grain, coal, sulfur, and fertilizers; merchandise
freight including finished vehicles and automotive parts, forest
products, industrial products, and consumer products; and intermodal
traffic. In fiscal year 2006, the freight revenues of CPR were
approximately $4.4 billion.
DM&E is a privately held Class II rail carrier headquartered in
Sioux Falls, SD. DM&E and its subsidiary, IC&E, operate over 2,500
miles of rail lines serving eight U.S. states, including the major
Midwestern gateways of Chicago, IL, Minneapolis/St. Paul, MN, and
Kansas City, MO. Together, DM&E and IC&E interchange rail traffic with
all seven U.S. Class I railroads.
DM&E was created in 1986 from lines formerly owned by Chicago and
North Western Transportation Company (CNW) in South Dakota, Minnesota,
and Iowa. In 1996 DM&E acquired CNW's Colony Line, running from Eastern
Wyoming through Western South Dakota and into Northwestern Nebraska.
DM&E subsequently acquired the lines now operated by IC&E from the
former Iowa and Minnesota Rail Link in 2002. IC&E owns or operates
approximately 1,322 route miles of rail lines that were once part of
the CPR system, in Illinois, Minnesota, Missouri, and Wisconsin.
In 2006, the Board granted DM&E authority to construct and operate
282 miles of new railroad lines to serve coal origins in Wyoming's
Powder River Basin (PRB). DM&E states that it is currently pursuing the
process of acquiring the right-of-way needed to build the PRB line. It
must execute agreements with PRB mines on terms for operations by DM&E
over their loading track and facilities. DM&E must also secure
sufficient contractual commitments from prospective coal shippers to
route their traffic over the PRB line to justify the large investment
to build it. Finally, DM&E must arrange financing for the project and
comply with the environmental conditions imposed by the Board. If the
proposed transaction is approved, CPR states that it plans to work
diligently with DM&E to accomplish these necessary prerequisites to
construction of the proposed PRB line but has not committed to
constructing the line.
The proposed transaction for which Applicants seek approval
involves the acquisition of control of DM&E and IC&E by Soo Holding
(and, indirectly, by CPRC). On October 4, 2007, Soo Line Properties
Company, a Delaware corporation and wholly owned subsidiary of Soo
Holding (Soo Properties), merged with and into DM&E, subject to the
voting trust described below. At the time of closing, DM&E shareholders
received cash consideration of approximately $1.48 billion, subject to
certain working capital adjustments in accordance with the Agreement
and Plan of Merger (Merger Agreement). As part of the $1.48 billion
paid at closing, DM&E and IC&E repaid certain obligations to third
party creditors, including $250 million to the FRA. The Merger
Agreement provides for future contingent payments by CPR to DM&E's
shareholders of up to approximately $1 billion. Specifically, an
additional payment of $350 million will become due if construction
starts on the PRB line prior to December 31, 2025. Further contingent
payments of up to approximately $707 million will become due upon the
movement of specified volumes of PRB coal over the PRB line prior to
December 31, 2025.
Financial Arrangements. No new equity securities will be issued in
connection with the transaction. The purchase price was funded by CPRC
from available cash and credit facilities. In connection with the
closing, Soo Holdings advanced $250 million to DM&E to enable it to
repay outstanding indebtedness to FRA. DM&E's obligation to FRA was
replaced by an intercompany private loan from Soo Holdings to DM&E in
the amount of $250 million.
Passenger Service Impacts. Applicants state that no commuter or
passenger service is provided over the lines currently operated by
DM&E. Applicants do not anticipate that any CPR line over which
passenger operations are presently conducted would be materially
affected by the proposed transaction. Applicants state that CPR's
freight train schedules are built around passenger and commuter
operations, in order to avoid freight train interference with passenger
train service. Applicants further assert that no such line will be
downgraded, eliminated, or operated on a consolidated basis as a result
of the transaction. The Board notes that both IC&E and CPR share tracks
with the Commuter Rail Division of the Regional Transportation
Authority (Metra), a commuter rail authority serving the Chicago
metropolitan area. The Board also notes that the National Railroad
Passenger Corporation (Amtrak) operates over CPR between Minneapolis/
St. Paul and Chicago, with heavier traffic between Milwaukee and Chicago.
Discontinuances/Abandonments. Applicants state that they do not
presently plan any line abandonments or the elimination of any
duplicative facilities in connection with the transaction.
Public Interest Considerations. Applicants contend that the
transaction would not result in any lessening of competition, creation
of a monopoly, or restraint of trade in freight surface transportation
in any region of the United States. Rather, Applicants state that CPR's
acquisition of DM&E and IC&E (collectively referred to as DME) would be
strongly pro-competitive. Most significantly, Applicants note that the
transaction would create new single-system rail options where none
currently exist. Applicants contend that CPR's plan to invest $300
million in capital improvements on DME's existing lines would enhance
safety and the efficiency of its operations, thereby strengthening the
competitive ability of DME. Applicants state that this investment would
allow DME to upgrade track, bridges, and other rail facilities and to
bring its safety performance closer to CPR standards, thus improving
the fluidity of their train operations. The transaction would restore
CPR's direct access to the Kansas City gateway, enhancing its ability
to compete effectively for rail traffic moving between CPR's current
network and points in the U.S. Southwest and Mexico. Applicants assert
that the transaction would enable CPR to assist DM&E in possibly
bringing to fruition its proposal to introduce a third rail competitor
to the PRB, which is currently served by UP and BNSF.
According to the application, the geographic limitations of DME's
existing rail network restrict the ability of its shippers to compete
in distant end markets for their products. Currently, DME must
interchange traffic moving beyond its service territory with other
railroads at busy rail gateways, including Chicago, Kansas City, and
Minneapolis/St. Paul, thus requiring longer transit times. As a result
of the transaction, Applicants state that DME would become part of a
transcontinental Class I rail system with direct access to major
metropolitan centers of the U.S. Midwest (including Chicago, Detroit,
MI, Milwaukee, WI, and Minneapolis/St. Paul), U.S. Northeast (including
Buffalo, NY, and Philadelphia, PA), and Canada (including Calgary,
Montreal, Toronto, and Vancouver), positioning DME shippers to take
advantage of future opportunities for growth.
[[Page 925]]
Applicants state that the new single system routings created by the
proposed transaction will give DME shippers--for the first time--direct
rail access to all of these potential destinations, enhancing their
ability to compete in distant end markets for their products.
Applicants state that CPR shippers would likewise gain the ability
to ship products to/from points served by DME on a single-system basis.
Specifically, Applicants assert that CPR's acquisition of IC&E's lines
would give CPR the ability to participate in the growing transportation
of ethanol. Applicants also state that the transaction would give CPR
the opportunity to increase its participation in the substantial volume
of bentonite clay traffic that originates at the western end of DM&E's
system. Applicants state that CPR would also gain greater
diversification in the U.S. grain network with IC&E's coverage of Iowa
and Southern Minnesota corn origins.
Applicants state that DME and its customers would also benefit from
access to CPR's large, modern car and locomotive fleet. The ability to
draw upon CPR's fleet of almost 70,000 cars, and improved equipment
utilization made possible by coordinating CPR and DME operations, would
produce cost savings for DME and help it to meet the needs of its
customers. The transaction would also generate substantial benefits for
shippers of a variety of commodities, including grain, ethanol,
bentonite clay, silica sand, steel, and plastics. In support of this,
Applicants submit numerous statements of shippers who testify as to the
opportunities for growth, increased access to markets, and improved
ability to compete in distant markets, as potential benefits of the
proposed transaction.
Applicants assert that the transaction would not result in any
lessening of effective rail competition because the transaction is
almost entirely ``end-to-end,'' in that there is minimal overlap in
Applicants' current rail systems. Applicants note that both CPR and DME
operate between Minneapolis/St. Paul and Chicago, but several other
rail carriers also operate between those points now, and they will
continue to do so if the proposed transaction is approved and
consummated. CPR and DME intersect at only four locations: Chicago, St.
Paul, Minnesota City, MN, and La Crescent, MN. Thus, Applicants state
that the rail networks of CPR and DME are complementary, not
competitive. While intermodal shipments and motor vehicles are major
commodities of CPR, Applicants argue that DME does not participate in
significant volumes of such traffic. Conversely, steel shipments
account for a far greater portion of traffic for DME than for CPR.
There are five U.S. states in which both CPR and DME offer rail
service (either directly or through a haulage agreement or other
commercial arrangement): Illinois, Minnesota, Missouri, South Dakota,
and Wisconsin. In Wisconsin, CPR and DME do not serve any common
stations. Within Illinois, Minnesota, Missouri, and South Dakota,
Applicants believe that 30 stations are commonly served by CPR and DME.
Of those 30 stations, ten stations are served by CPR, DME, and one
other railroad. Fifteen stations are served by the Applicants and two
additional carriers. Five stations, according to the Official Railway
Station List (ORSL), are served exclusively by CPR and DME.
Based on the Board's Carload Waybill Sample for the year 2005,
Applicants state that none of the five stations exclusively served by
CPR and DME would lose competitive rail service as a result of the
proposed transaction due to the fact that at least one of the carriers
was not active at each station.
Applicants also assert that none of the ten stations served by CPR,
DME, and one additional rail carrier (which are located in Illinois,
Minnesota, Missouri, and South Dakota) would experience a loss of
competitive rail service as a result of the transaction, due to a
variety of reasons, including the fact that several stations served
solely as a point of interchange for CPR and/or DME. Additionally,
according to the Carload Waybill Sample, rail traffic that originated
or terminated at several of the stations was not handled by both CPR
and DME.
Regarding the 14 short line carriers in DME's service territory,
Applicants state that none will be left without competitive routing
options involving non-Applicant carriers following the proposed
transaction. Thirteen of these short line carriers have the ability to
interchange with at least one railroad other than Applicants. One short
line carrier, the Iowa Traction Railroad Company, can connect only with
IC&E today, so its options would not be affected by the transaction.
In response to comments filed by Iowa Northern Railway Company
(IANR) on October 26, 2007, challenging the rigor and completeness of
their station-specific analysis, Applicants also submitted an analysis
of the impact on geographic (i.e., source or destination) competition,
as well as further analysis of possible horizontal competitive issues,
by examining Applicants' participation in rail traffic at the Bureau of
Economic Analysis Economic Area (BEA) level. Applicants assert that the
transaction would not reduce or eliminate source or destination
competition for the traffic in which Applicants participate today.
Independent Voting Trust. On October 4, 2007, Soo Properties was
merged with and into DM&E. At that time, all the common shares of DM&E
were deposited into an independent voting trust, pending Board approval
of the proposed transaction, in order to avoid unlawful control of DM&E
and IC&E in violation of 49 U.S.C. 11323. On or after the effective
date of a Board final order authorizing the transaction, the voting
trust would be terminated; DM&E's shares would be transferred to Soo
Holding; and DM&E would become a wholly owned subsidiary of Soo Holding
(and an indirect subsidiary of CPRC). In the event that the Board does
not approve the transaction, Soo Holding would use its reasonable best
efforts to sell or direct the trustee to sell the trust interests to
one or more eligible purchasers or otherwise dispose of the trust
interests during a period of 2 years after such a decision becomes final.
With the exception of the Board's final approval of the
transaction, all conditions precedent to closing of the merger have
been satisfied.
Environmental Impacts. Applicants contend that the transaction
would not result in any 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)(5). Applicants therefore
assert that the transaction does not require the preparation of
environmental documentation under 49 CFR 1105.6(b)(4). However,
Applicants plan to prepare a Safety Integration Plan (SIP) under the
Board's rules at 49 CFR 1106 and 49 CFR 1180.1(f)(3) setting out how
they would ensure that safe operations are maintained throughout the
acquisition-implementation process, if the proposed transaction is approved.
Applicants propose that the Board defer any required analysis of
the environmental impacts of the movement of DM&E PRB coal trains over
the lines of IC&E and/or CPR because definitive information regarding
the likely volume, destination, and routing of DM&E PRB coal trains
beyond DM&E's existing line remains speculative.
The City of Winona, Mayo Clinic, and BNSF Railway Company (BNSF)
have filed comments on Applicants' proposed environmental approach.
Applicants replied to BNSF's comments. The Board will consider these
comments in its review of the
[[Page 926]]
transaction; there is no need for the commenters to refile those
submissions.
Historic Preservation Impacts. Applicants contend that a historic
review is not required for this transaction.
Labor Impacts. Applicants do not anticipate that the transaction
would result in any operational changes that would adversely affect any
Soo employees. The operational change involving the handling by Soo of
traffic between Minnesota City and Chicago would likely have no
significant effect on Soo employees because cars moving from or to
Minnesota City would simply be added to trains currently operated by
Soo over its own lines.
The transaction involves an operational change that would affect
the handling of certain DME traffic to and from Chicago, which would
affect DME employees in two ways. First, there would be a reduction of
two crew starts per day on trains operating on the lines from Waseca,
MN, to Nora Springs, IA. This would affect employees who report for
work at Waseca and draw their assignments from a crew board maintained
there. However, there would be an offsetting addition of two crew
starts per day on trains operating from Waseca to Minnesota City, which
would be available to employees who report to Waseca. Second, there
would be a reduction of four crew starts per day on IC&E because two
daily IC&E trains, each requiring two crews, would no longer operate
between Nora Springs and Chicago. That reduction would affect IC&E
train and engine service employees who currently report for work at
Mason City, IA, and Dubuque, IA, and draw their assignments from crew
boards maintained at those locations.
Applicants further state that it is possible that, as a result of
this operational change, there would be a need for fewer active IC&E
train and engine service employees at Mason City and Dubuque, for at
least a short time. Because affected IC&E train and engine service
employees have seniority covering all of IC&E's territory, they would
be entitled, and expected, to take work assignments elsewhere on IC&E.
Applicants expect sufficient work to be available on IC&E for all of
the carrier's active train and engine service employees.
Applicants state that any carrier employees who are adversely
affected by the proposed transaction would be entitled to the benefits
of a fair arrangement in accordance with the requirements of 49 U.S.C.
11326. New York Dock Ry.--Control--Brooklyn Eastern District Terminal,
360 I.C.C. 60, aff'd sub nom. New York Dock Ry. v. United States, 609
F.2d 83 (2d Cir. 1979). Applicants note that neither CPR nor DME has
negotiated a protective agreement with any labor organization in
connection with the proposed transaction.
Application Accepted. For the reasons outlined in Decision No. 2,
the Board finds that the transaction would be a ``significant
transaction,'' under 49 CFR 1180.2(b), and accepts the December 5
application for consideration because it is in substantial compliance
with the applicable regulations governing a significant transaction.
See 49 U.S.C. 11321-26; 49 CFR 1180. The Board reserves the right to
require the filing of additional supplemental information, if necessary
for a full record.
Public Inspection. The application is available for inspection in
the library (Room 131) at the offices of the Surface Transportation
Board, 395 E Street, SW., in Washington, DC. In addition, the
application may be obtained from Mr. Hynes (representing CPRC) and Mr.
Sippel (representing DM&E) at the addresses indicated above.
Procedural Schedule. On November 13, 2007, Applicants filed a
petition to establish a revised procedural schedule as directed by the
Board in Decision No. 2. On November 26, 2007, the Board issued a
notice of the proposed procedural schedule and requested public
comments (Decision No. 3). The Board's proposed procedural schedule was
the same as the Applicants' proposed procedural schedule, except that
the record would close with the filing of briefs on July 2, 2008, and
would provide for a possible oral argument or public hearing to be held
on a date to be determined by the Board. No comments were received in
opposition to the Board's proposed procedural schedule.
Accordingly, the Board adopts the procedural schedule as previously
proposed in Decision No. 3. Under the procedural schedule adopted by
the Board: Any person who wishes to participate in this proceeding as a
POR must file, no later than January 25, 2008, a notice of intent to
participate; descriptions of anticipated responsive applications
(including inconsistent applications) and any petitions for waiver or
clarification with respect to such applications are also due by January
25, 2008; applicants shall file a proposed SIP with SEA and FRA by
February 4, 2008; all environmental comments must also be filed by
February 4, 2008, addressed to the attention of SEA; responsive
applications, requests for conditions, and any other evidence and
argument in opposition to the application, including filings by DOJ and
DOT, must be filed by March 4, 2008; replies to responsive
applications, requests for conditions, and other opposition, and
rebuttal in support of the application must be filed by April 18, 2008;
DOJ and DOT will be allowed to file, on the response due date (here,
April 18), their comments in response to the comments of other parties,
and Applicants will be allowed to file a response to any such comments
filed by DOJ and/or DOT by April 25, 2008; rebuttals in support of
responsive applications, requests for conditions, and other opposition
must be filed by May 19, 2008; final briefs, if any, will be due by
July 2, 2008. Under this schedule, a public hearing or oral argument
may be held on a date to be determined by the Board. The Board will
issue its final decision by September 30, 2008, and that decision will
be effective October 30, 2008. For further information respecting
dates, see Appendix A (Procedural Schedule).
Notice of Intent to Participate. Any person who wishes to
participate in this proceeding as a POR must file with the Board, no
later than January 25, 2008, 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, Mr. Hynes (representing CPRC), and Mr.
Sippel (representing DM&E). Notices of intent to participate received
to date have been compiled in a preliminary service list. 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 POR representing a
particular entity, the extra name will be added to the service list as
a ``Non-Party.'' The final list will reflect the Board's policy of
allowing only one official representative per party to be placed as a
POR on the service list, as specified in Press Release No. 97-68 dated
August 18, 1997, announcing the implementation of the Board's ``One
Party-One Representative'' policy for service lists. 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 List Notice. The Board will serve, as soon after January
25, 2008, as
[[Page 927]]
practicable, a notice containing the official service list (the
service-list notice). Parties should review the preliminary service
list, in Decision No. 4, served on December 27, 2007, and notify the
Board of any corrections.
Each POR will be required to serve upon all other PORs, within 10
days of the service date of the service-list notice, copies of all
filings previously submitted by that party (to the extent such filings
have not previously been served upon such other parties). Each POR also
will be required to file with the Board, within 10 days of the service
date of the service-list notice, a certificate of service indicating
that the service required by the preceding sentence has been
accomplished. Every filing made by a POR after the service date of the
service-list notice must have its own certificate of service indicating
that all PORs on the service list have been served with a copy of the
filing. Members of the United States Congress (MOCs) and Governors
(GOVs) 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 POR.
Environmental Comments. All environmental comments must be filed by
February 4, 2008, and addressed to the attention of SEA.
Descriptions of Anticipated Responsive Applications and Petitions
for Waiver or Clarification. Descriptions of anticipated responsive,
including inconsistent, applications and petitions for waiver or
clarification with respect to such applications must be filed by
January 25, 2008.
Responsive Applications, Requests for Conditions, and Other
Opposition Evidence and Argument, Including Filings by DOJ and DOT. All
responsive applications, requests for conditions, and any other
evidence and argument in opposition to the application, including
filings by DOJ and DOT, must be filed by March 4, 2008.
Protesting parties are advised that, if they seek either the denial
of the application or the imposition of conditions upon any approval
thereof, on the theory that approval (or approval without conditions)
would harm competition and/or their ability to provide essential
services, they must present substantial evidence in support of their
positions. See Lamoille Valley R.R. Co. v. ICC, 711 F.2d 295 (D.C. Cir.
1983).
Replies to Responsive Applications, Requests for Conditions, and
Other Opposition, and Rebuttal in Support of the Application. Replies
to responsive applications, requests for conditions, and other
opposition, and rebuttal in support of the application must be filed by
April 18, 2008.
Rebuttals in Support of Responsive Applications, Requests for
Conditions, and Other Opposition. Rebuttals in support of responsive
applications, requests for conditions, and other opposition must be
filed by May 19, 2008.
Final Briefs and Public Hearing/Oral Argument. Final briefs, if
any, will be due by July 2, 2008. The Board may hold a public hearing
or an oral argument in this proceeding on a date to be determined by
the Board.
Discovery. Discovery may begin immediately. The parties are
encouraged to resolve all discovery matters expeditiously and amicably.
Environmental Matters. Under both the regulations of the Council on
Environmental Quality (CEQ) implementing the National Environmental
Policy Act of 1969, 42 U.S.C. 4321 et seq. (NEPA), and the Board's own
environmental rules, actions whose environmental effects are ordinarily
insignificant may be excluded from NEPA review across the board,
without a case-by-case review. Such activities are said to be covered
by a ``categorical exclusion,'' which CEQ defines at 40 CFR 1508.4 as:
[A] category of actions which do not individually or
cumulatively have a significant effect on the human environment and
which have been found to have no effect in procedures adopted by a
federal agency in implementation of these regulations * * * and for
which, therefore, neither an environmental assessment nor an
environmental impact statement is required.
An agency's procedures for categorical exclusions ``shall provide
for extraordinary circumstances in which a normally excluded action may
have a significant environmental effect,'' thus requiring preparation
of either an Environmental Assessment (EA) or an Environmental Impact
Statement (EIS). Id. See also 49 CFR 1105.6(d). But absent
extraordinary circumstances, once a project is found to fit within a
categorical exclusion, no further NEPA procedures are warranted.
In its environmental rules, the Board has promulgated various
categorical exclusions. As pertinent here, a rail line acquisition is a
classification of action that normally requires no environmental review
if certain thresholds would not be exceeded.\2\ See 49 CFR
1105.6(c)(2)(i). The Board's regulations also provide that historic
review normally is not required for acquisitions where there will be no
significant change in operations and properties 50 years old and older
will not be affected. See 49 CFR 1105.8.
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\2\ The 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. 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 8 trains per day, (2) an increase in rail traffic of at
least 100 percent (measured in annual gross ton miles), or (3) an
increase in carload activity at rail yards of at least 100 percent.
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 3 trains per day,
(2) an increase in rail traffic of at least 50 percent (measured in
annual gross ton miles), or (3) an increase in carload activity at
rail yards of at least 20 percent. See 49 CFR 1105.7(e)(5)(ii).
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The Proposed Acquisition. Applicants assert in their application
that most of the rail lines of DME and CPR are located in attainment
areas.\3\ They project that the proposed transaction would not increase
the level of train operations by more than 1 additional train per day
along any segment of the combined CPR-DME system over the next 5 years
(by 2012),\4\ and therefore maintain that the 3 or 8-train-per-day
threshold in the Board's environmental rules would not be met in this
case.\5\ Applicants assert that their traffic projections account for
both (1) traffic that would move beyond DME's service territory on
CPR's lines, and (2) projected growth in rail traffic on certain
segments of DME lines that would likely occur in any case (e.g.,
anticipated growth of ethanol production).
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\3\ According to Applicants, the only nonattainment areas where
traffic might change as a result of the proposed transaction are in
the following counties: Cook and Lake Counties, IL; Lake and Porter
Counties, IN; Kenosha, Milwaukee, Racine, and Waukesha Counties, WI;
and Lenawee, Monroe, Washtenaw, and Wayne Counties, MI.
\4\ Applicants project an increase of 1.5 trains per day with an
empty back haul.
\5\ Indeed, Applicants state that there could be a reduction in
train activity along certain segments as traffic moving in shorter
trains run by DME today between Huron, SD, and Chicago (via
Owatonna, MN, Nora Springs, IA, and Dubuque) could be consolidated
with CPR traffic at Minnesota City and moved to/from Chicago in
existing Soo trains that operate between Minneapolis/St. Paul and Chicago.
---------------------------------------------------------------------------
Applicants also project only small increases in annual gross ton
miles as a result of the proposed transaction, which would be well
below the thresholds for preparation of environmental documentation.
For example, Applicants maintain that the proposed acquisition would
result in an increase of 5,800 carloads of ``extended haul'' traffic by
the year 2010. All of this increase, Applicants state, would occur on
the lines of CPR (either on Soo's lines east of Chicago, or its lines
north of Minneapolis/St. Paul). According to
[[Page 928]]
Applicants, this modest traffic increase would translate into an
increase of about 0.5 million gross ton miles, less than a 50 or 100
percent increase in gross ton miles over any portion of Applicants'
rail lines. In addition, Applicants project only a modest increase by
2010 in gross ton miles over CPR's line between Milwaukee and Chicago
as a result of the consolidation of DM&E carloads at Minnesota City
onto existing CPR trains that operate between Minneapolis/St. Paul and
Chicago. Further, Applicants contend that, even if the projected
traffic growth that likely would occur regardless of this proposal were
considered, the CPR line would only see an increase of about 17 percent
(about 503 million gross ton miles), and the increase on the DME lines
would be about 8.4 percent in gross ton miles between Davis Junction,
IL, and Chicago (approximately 153 million gross ton miles).
Finally, Applicants anticipate only minor increases in rail yard
activity.
Historic Review. According to Applicants, the proposed transaction
would not involve any line abandonments or elimination of duplicative
rail facilities. Any future line abandonment by Applicants would
require Board authorization or exemption. Furthermore, Applicants state
that they have no new plans to alter or dispose of properties 50 or
more years old.\6\
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\6\ Applicants note that CPR would make available to DM&E $300
million to upgrade and rehabilitate its tracks, structures (bridges)
and rail facilities. Applicants maintain, however, that the work
funded by this investment relates to rail facility improvements that
already have been the subject of extensive environmental and
historic review by the Board in connection with the DM&E Powder
River Basin construction project, authorizing DM&E to build a new
280-mile rail line extension of its current system to reach the PRB
area of Wyoming.
Applicants note that the work to be funded by CPR would involve
substantially the same type of work, on the same properties, that
was reviewed and is being addressed pursuant to the Programmatic
Agreement for the DM&E PRB construction case, which sets forth the
historic review process for both DM&E's new line and the
rehabilitation of DM&E's existing line in South Dakota and
Minnesota. Thus, Applicants argue, there is no need for a separate,
duplicative historical review for the planned rail line upgrades
related to this case.
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Other Actions
1. The DM&E PRB Rail Line. In 2006, DM&E obtained authority to
build and operate its new rail line into the PRB.\7\ Applicants argue
that because the Board has already fully considered the environmental
impacts of the construction and operation of that line in DM&E PRB
Construction--in an environmental review process that encompassed the
rehabilitation of DM&E's existing lines in South Dakota and Minnesota--
there is no need for a further environmental review of the same lines
considered in DM&E PRB Construction here.
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\7\ See Dakota, MN & Eastern RR--Construction--Powder River
Basin, 3 S.T.B. 847 (1998) (preliminary consideration); Dakota, MN &
Eastern RR--Construction--Powder River Basin, 6 S.T.B. 8 (2002)
(first approval), remanded sub nom. Mid States Coalition for
Progress v. STB, 345 F.3d 520 (8th Cir. 2003) (requiring further
consideration of four environmental issues), reauthorized Dakota,
Minnesota & Eastern Railroad Corporation Construction into the
Powder River Basin, STB Finance Docket No. 33407 (STB served Feb.
15, 2006), aff'd, Mayo Foundation v. STB, 472 F.3d 545 (8th Cir.
2006) (referred to as DM&E PRB Construction).
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2. The Movement of DM&E Coal Trains Over the Lines of IC&E and CPR.
Applicants note that in a separate proceeding the Board previously
imposed a condition prohibiting the movement of DM&E's PRB coal trains
over IC&E's rail lines until an environmental review of the potential
impacts of such operations was conducted.\8\ Subsequently, the Board
determined that an EIS would be needed to comply with this condition.\9\
At the request of DM&E, preparation of that EIS was put on hold.
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\8\ Iowa, Chicago & Eastern Railroad Corporation--Acquisition
and Operation Exemption--Lines of I&M Rail Link, LLC, STB Finance
Docket No. 34177 (STB served July 22, 2002), modified (STB served
Oct. 18, 2006) (IC&E).
\9\ See IC&E; STB Press Release No. 07-07, available on the
Board's Web site.
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Applicants assert that it would be appropriate to continue to defer
preparation of that EIS because it is not possible at this time to
evaluate any potential environmental issues that might be associated
with the transportation of DM&E PRB coal traffic over the lines of IC&E
and/or CPR. Applicants explain that DM&E has not yet secured contracts
with shippers for the movement of PRB coal over the newly authorized
DM&E PRB line, and that Applicants have not yet made a decision to
build it. According to Applicants, in the absence of definitive
transportation commitments, the identity of the CPR-DME system's future
coal customers, the volume of coal that would be transported to
particular locations, the destinations to which such shipments would
move, and the routing of such shipments beyond DM&E's lines remain
speculative. Without such information, Applicants state, it would not
be possible for the Board to evaluate in a meaningful fashion the
potential environmental impacts of such future coal transportation
operations.
At the same time, Applicants recognize the Board's obligation under
NEPA to examine the environmental impacts of the transportation of DM&E
PRB coal trains over the lines of IC&E and/or CPR. Accordingly,
Applicants propose that the Board impose a condition on any decision
authorizing this transaction that would defer any required analysis of
the environmental impacts of the movement of DM&E PRB coal trains over
the lines of IC&E and/or CPR until such time as more definitive
information regarding the likely volume and routing of those trains
becomes available.
On October 19, 2007, Winona requested that the Board impose
environmental mitigation for Winona as part of this acquisition
proceeding, or alternatively, that it impose mitigation for Winona in
connection with the currently deferred analysis of the movement of DM&E
PRB coal trains over the lines of IC&E and/or CPR.
On October 24, 2007, BNSF submitted comments asserting that the
application is incomplete because it fails to address the environmental
effects of CPR's acquisition of DM&E's authority to construct a new
rail line into the PRB. Further, according to BNSF, the Board would not
meet its NEPA obligations by deferring its environmental review of the
effects of DM&E PRB coal traffic operating over the IC&E and/or CPR
lines. BNSF asserts that the entire acquisition--both rail traffic
moving now and DM&E PRB coal traffic that might eventually move over
IC&E and/or CPR lines--should be examined now and together.
On October 24, 2007, as noted previously, Mayo Clinic filed a reply
alleging that the Board should compel the Applicants to provide
``meaningful information'' that addresses the future movement of DM&E
PRB coal trains through Rochester, MN, where the Mayo Clinic is
located; that now is the time to address the potential increase in DM&E
PRB coal traffic (and ethanol traffic) moving through Rochester; and
that the Board should require the Applicants to prepare a SIP pursuant
to the Board's regulations at 49 CFR 1106.
On October 29, 2007, Applicants filed a reply to BNSF's
environmental comments.
Preliminary Conclusions. Based on the information provided to date
and after consultations with SEA, the Board preliminarily concludes
that, for the reasons discussed below, the environmental review process
proposed by Applicants would allow the Board to meet its NEPA
obligations. Specifically, the Board preliminarily determines that an
environmental and historic review for the proposed acquisition is not
warranted because it does not appear that the thresholds triggering an
[[Page 929]]
environmental review would be met, and there is nothing in the
available environmental information to indicate the potential for
significant environmental impacts resulting from the proposed acquisition.
With respect to the handling of DM&E PRB coal trains over the lines
of IC&E and/or CPR, the Board preliminarily concludes, based on the
available information, that there is no need to conduct any further
environmental review here of the rail lines considered in DM&E PRB
Construction,\10\ and that the Board should defer the preparation of
environmental documentation on routing DM&E PRB coal traffic over the
rail lines of IC&E and/or CPR (including the consideration of
mitigation for Winona) until more information is available.
---------------------------------------------------------------------------
\10\ Mayo Clinic's suggestion that the Board should look again
at DM&E's movement of PRB coal traffic through Rochester ignores the
extensive environmental review of those movements (at traffic levels
of up to 100 million tons of PRB coal per year) that has already
taken place. See DM&E PRB Construction (imposing extensive
mitigation for Rochester and the Mayo Clinic to minimize the
potential impacts of that traffic). Moreover, even if there is a
potential for more than the 100 million tons of coal per year
analyzed in DM&E PRB Construction, there is no basis for Mayo
Clinic's assumption that all of this traffic would move through
Rochester, given the numerous interchange points on DM&E's existing system.
DM&E's movement of ethanol would likely take place regardless of
the proposed acquisition and, therefore, does not require NEPA
review in this case or the DM&E PRB Construction case.
---------------------------------------------------------------------------
BNSF's assertion that the application is incomplete because it does
not adequately describe the potential environmental effects of running
DM&E PRB coal trains over the IC&E and/or CPR rail lines ignores the
fact that sufficient information does not appear to be currently
available to conduct a meaningful environmental review now. Applicants
state that they have not yet made a decision to build the new PRB line
approved in DM&E PRB Construction. They note that numerous steps
(including acquisition of the right-of-way and agreements with PRB
mines) would have to be completed before the project would be
justified. Moreover, it does not appear that there would be any harm to
interested persons, potentially affected communities, or to the
environment by deferring the environmental review because the Board
would preclude Applicants from operating any DM&E PRB coal trains over
lines of IC&E and/or CPR until the Board conducts an appropriate
environmental review and issues a final decision addressing the impacts
of such coal train operations and allowing such operations to begin.\11\
---------------------------------------------------------------------------
\11\ The Board's environmental review process will provide ample
opportunity for all to participate.
---------------------------------------------------------------------------
Specifically, Applicants proposed two environmental conditions to
address the potential movement of DM&E PRB coal trains operating over
the lines of IC&E and/or CPR. After reviewing the application, the
Board preliminarily intends to impose the following modified conditions
on any decision authorizing the proposed transaction:
Applicants may not transport coal unit trains originating on the
new rail line approved for construction in DM&E PRB Construction
over lines currently operated by IC&E and/or CPR until the Board has
prepared an Environmental Impact Statement, and has issued a final
decision addressing the environmental impacts of such coal
operations and allowed such operations to begin.
Prior to commencing any construction of the new rail line
approved in DM&E PRB Construction, Applicants shall notify the Board
of Applicants' intent to begin construction, and shall submit to the
Board reasonably foreseeable projections regarding the movement of
DM&E PRB coal traffic on the rail lines of IC&E and/or CPR, so that
the environmental review can begin.
Finally, regarding Mayo Clinic's argument that preparation of a SIP
is warranted here, Applicants expressly state in their application that
they intend to prepare a SIP and submit it to the Board. Under the
Board's SIP rules, Applicants are to file a proposed SIP with SEA and
FRA within 60 days of the filing date of the application, setting out
how they intend to ensure that safe operations are maintained
throughout the acquisition implementation process. 49 CFR 1106.4(a).
Accordingly, the procedural schedule requires the proposed SIP to be
filed no later than February 4, 2008.
The proposed SIP is normally part of the environmental record, is
reviewed by SEA, and is put out for public review and comment during
the environmental review process. 49 CFR 1106.4(b). If the Board
authorizes the proposed transaction and adopts the SIP, the Board
requires compliance with the SIP as a condition to its authorization.
49 CFR 1106.4(b)(4). The Board's rules also specifically provide that,
in cases where no formal environmental review is required under NEPA,
the Board will develop appropriate case-specific SIP procedures based
on the facts and circumstances presented. 49 CFR 1106.4(c). Thus, the
SIP process will take place here whether or not preparation of an EA or
EIS is found to be warranted for the proposed transaction.
The Board is requesting comments from all interested parties on
these preliminary determinations regarding how to handle the
environmental review here. Environmental comments must be submitted to
the Board by February 4, 2008, addressed to the attention of SEA. SEA
will make a final recommendation to the Board regarding the level of
environmental review that is needed to meet the Board's NEPA
responsibilities, and how to conduct the SIP process, after considering
any public comments received during the environmental comment period.
Filing/Service Requirements. Persons wishing to participate in this
proceeding must file with the Board and serve on other parties: a
notice of intent to participate (due by January 25, 2008) and a
certificate of service indicating service of prior pleadings on persons
designated as PORs on the service-list notice (due by the 10th day
after the service date of the service-list notice). Such persons may
file responsive applications, requests for conditions, and any other
evidence and argument in opposition to the application (due by March
4); and any replies to responsive applications, etc. (due by April 18),
any rebuttal in support of responsive applications, etc. (due by May
19), and any final briefs (due by July 2).
Filing Requirements. Any document filed in this proceeding must be
filed either via the Board's e-filing format or in the traditional
paper format. Any person using e-filing should attach a document and
otherwise comply with the instructions found on the Board's Web site at
http://www.stb.dot.gov at the ``E-FILING'' link. Any person filing a
document in the traditional paper format should send an original and 10
paper copies of the document (and also an electronic version) to:
Surface Transportation Board, 395 E Street, SW., Washington, DC 20423-0001.
Service Requirements. One copy of each document filed in this
proceeding must be sent to each of the following (any copy may be sent
by e-mail only if service by e-mail is acceptable to the recipient):
(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) Terence M. Hynes (representing
CPRC), Sidley Austin LLP, 1501 K Street, NW., Washington, DC 20005; (4)
William C. Sippel (representing DM&E), Fletcher & Sippel, 29 North
Wacker Drive, Suite 920, Chicago, IL 60606; and (5) any other person
designated as a POR on the service-list notice.
Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices only on those persons who
are designated on
[[Page 930]]
the official service list as either POR, MOC, GOV, or Non-Party. All
other interested persons are encouraged either to secure copies of
decisions, orders, and notices via the Board's Web site at
http://www.stb.dot.gov under ``E-LIBRARY/Decisions & Notices'' or to
make advance arrangements with the Board's copy contractor, ASAP Document
Solutions (mailing address: Suite 103, 9332 Annapolis Rd., Lanham, MD
20706; e-mail address: asapdc@verizon.net; telephone number: 202-306-
4004), to receive copies of decisions, orders, and notices served in
this proceeding. ASAP Document Solutions will handle the collection of
charges and the mailing and/or faxing of decisions, orders, and notices
to persons who request this service.
Access to Filings. An interested person does not need to be on the
service list to obtain a copy of the primary application or any other
filing made in this proceeding. Under the Board's rules, any document
filed with the Board (including applications, pleadings, etc.) shall be
promptly furnished by the filing party to interested persons on
request, unless subject to a protective order. 49 CFR 1180.4(a)(3). The
primary application and other filings in this proceeding will also be
available on the Board's Web site at http://www.stb.dot.gov under ``E-
LIBRARY/Filings.''
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 STB Finance Docket No. 35081 is accepted for
consideration.
2. The parties to this proceeding must comply with the procedural
schedule adopted by the Board in this proceeding as shown in Appendix A.
3. The parties to this proceeding must comply with the procedural
requirements described in this decision.
4. This decision is effective on January 4, 2008.
Decided: December 21, 2007.
By the Board, Chairman Nottingham, Vice Chairman Buttrey, and
Commissioner Mulvey.
Vernon A. Williams,
Secretary.
Appendix A: Procedural Schedule
------------------------------------------------------------------------
------------------------------------------------------------------------
September 10, 2007..................... Motion for Protective Order
filed.
September 21, 2007..................... Protective Order issued.
October 5, 2007........................ Prefiling notification and
Motion to Establish Procedural
Schedule filed.
November 8, 2007....................... Notice of receipt of prefiling
notification published in the
Federal Register.
November 29, 2007...................... Proposed procedural schedule
published in the Federal
Register.
December 5, 2007....................... Application filed.
January 4, 2008........................ Board notice of acceptance of
application to be published in
the Federal Register.
January 25, 2008....................... Notices of intent to
participate in this proceeding
due. Descriptions of
anticipated responsive
applications (including
inconsistent applications)
due. Petitions for waiver or
clarification with respect to
such applications due.
February 4, 2008....................... Proposed SIP to be filed with
SEA and FRA. Environmental
comments due, addressed to the
attention of SEA.
March 4, 2008.......................... All responsive applications,
requests for conditions, and
any other evidence and
argument in opposition to the
application, including filings
of DOJ and DOT, due.
April 18, 2008......................... Replies to responsive
applications, requests for
conditions, and other
opposition due. Rebuttal in
support of the application
due. Response of DOJ and DOT
to other parties' comments
due.
April 25, 2008......................... Applicants' response to
responsive comments of DOJ and
DOT due.
May 19, 2008........................... Rebuttals to responsive
applications, requests for
conditions, and other
opposition due.
TBD.................................... A public hearing or oral
argument may be held.
July 2, 2008........................... Final briefs, if any, due.
September 30, 2008..................... Date of service of final
decision.
October 30, 2008....................... Effective date of final
decision.
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[FR Doc. E7-25480 Filed 1-3-08; 8:45 am]
BILLING CODE 4915-01-P