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Dakota, Minnesota & Eastern Railroad Corporation and Cedar American Rail Holdings, Inc.--Control--Iowa, Chicago & Eastern Railroad Corporation
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: September 27, 2002 (Volume 67, Number 188)]
[Notices]
[Page 61188-61194]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se02-180]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 34178]
Dakota, Minnesota & Eastern Railroad Corporation and Cedar
American Rail Holdings, Inc.--Control--Iowa, Chicago & Eastern Railroad
Corporation
AGENCY: Surface Transportation Board, DOT.
ACTION: Decision No. 2 in STB Finance Docket No. 34178; Notice of
Acceptance of Primary Application and Related Filings; Issuance of
Procedural Schedule.\1\
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\1\ This decision covers: a railroad control application, which
was filed in STB Finance Docket No. 34178, Dakota, Minnesota &
Eastern Railroad Corporation and Cedar American Rail Holdings,
Inc.--Control--Iowa, Chicago & Eastern Railroad Corporation; a
terminal trackage rights application, which was filed in STB Finance
Docket No. 34178 (Sub-No. 1), Dakota, Minnesota & Eastern Railroad
Corporation--Terminal Trackage Rights--Union Pacific Railroad
Company; and a trackage rights exemption notice, which was filed in
STB Finance Docket No. 34178 (Sub-No. 2), Dakota, Minnesota &
Eastern Railroad Corporation--Trackage Rights Exemption--Iowa,
Chicago & Eastern Railroad Corporation and Iowa Northern Railway
Company. The railroad control application filed in STB Finance
Docket No. 34178 is referred to as the ``primary application.'' The
terminal trackage rights application filed in STB Finance Docket No.
34178 (Sub-No. 1) and the trackage rights exemption notice filed in
STB Finance Docket No. 34178 (Sub-No. 2) are referred to
collectively as the ``related filings.''
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SUMMARY: The Surface Transportation Board (Board) is accepting for
consideration the DME-2 primary application and the undesignated
related filings filed August 29, 2002, by Dakota, Minnesota & Eastern
Railroad Corporation (DM&E), Cedar American Rail Holdings, Inc.
(Holdings), and Iowa, Chicago & Eastern Railroad Corporation (IC&E).\2\
The primary application seeks Board approval and authorization under 49
U.S.C. 11321-26 for DM&E's acquisition of indirect control of IC&E
through ownership of IC&E's stock by Holdings, which is itself a wholly
owned subsidiary of DM&E. The related filings seek related trackage
rights relief contingent upon approval of the primary application. The
Board finds that the transaction proposed in
[[Page 61189]]
the primary application is a ``minor transaction'' under 49 CFR
1180.2(c).
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\2\ DM&E, Holdings, and IC&E are referred to collectively as
applicants.
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The Board has considered applicants'' DME-3 petition for
establishment of a procedural schedule, also filed August 29, 2002.
With a modification to provide additional time for public comments, the
Board is adopting the procedural schedule applicants have proposed
(which, as modified, will allow the Board to issue a decision 29 days
prior to the statutory deadline, assuming that no environmental review
is required and further assuming that no oral argument is held). The
Board's schedule provides for issuance of a decision on the 45th day
after the close of the record.
DATES: The effective date of this decision is September 27, 2002. Any
person who wishes to participate in this proceeding as a party of
record must file, no later than October 15, 2002, a notice of intent to
participate. All comments, protests, requests for conditions, and any
other evidence and argument in opposition to the primary application
and/or either or both of the related filings, including filings by the
U.S. Department of Justice (DOJ) and the U.S. Department of
Transportation (DOT), must be filed by November 14, 2002. Responses to
comments, protests, requests for conditions, and other opposition,
responses to comments of DOJ and DOT, and rebuttal in support of the
primary application and/or either or both of the related filings must
be filed by December 13, 2002. For further information respecting
dates, see Appendix A (Procedural Schedule).
ADDRESSES: Send an original and 25 copies of all pleadings referring to
STB Finance Docket No. 34178 to: Surface Transportation Board, 1925 K
Street, NW., Washington, DC 20423-0001.\3\ In addition, one copy of all
documents in this proceeding must be sent to: (1) Secretary of the
United States Department of Transportation, 400 Seventh Street, SW,
Washington, DC 20590; (2) Attorney General of the United States, c/o
Assistant Attorney General, Antitrust Division, Room 3645, Department
of Justice, Washington, DC 20530; (3) William C. Sippel, Esq., Fletcher
& Sippel LLC, Two Prudential Plaza, Suite 3125, 180 North Stetson
Avenue, Chicago, IL 60601-6721; and (4) David L. Knudson, Esq.,
Davenport, Evans, Hurwitz & Smith, L.L.P., 206 West 14th Street, Sioux
Falls, SD 57104.
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\3\ In order for a document to be considered a formal filing,
the Board must receive an original and 25 copies of the document,
which must show that it has been properly served. Documents
transmitted by facsimile (FAX) will not be considered formal filings
and are not encouraged because they will result in unnecessarily
burdensome, duplicative processing. In addition, each formal filing
must be accompanied by an electronic submission per our requirements
as discussed in detail in this decision.
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In addition to submitting an original and 25 copies of all paper
documents filed with the Board, parties also must submit, on 3.5-inch
IBM-compatible floppy diskettes (disks) or compact discs (CDs), copies
of all textual materials, electronic workpapers, data bases and
spreadsheets used to develop quantitative evidence. Textual materials
must be in, or compatible with, WordPerfect 9.0. Electronic
spreadsheets must be in, or compatible with, Lotus 1-2-3 Release 9 or
Microsoft Excel 2002. A copy of each disk or CD submitted to the Board
should be provided to any other party upon request. Further details are
discussed below.
FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1655.
[Assistance for the hearing impaired is available through the Federal
Information Relay Service (FIRS) at 1-800-877-8339.]
SUPPLEMENTARY INFORMATION: The DM&E/IC&E common control for which
applicants seek approval in the primary application involves the
acquisition by DM&E of indirect control of IC&E through ownership of
IC&E's stock by DM&E's Holdings subsidiary.
Dakota, Minnesota & Eastern Railroad Corporation
DM&E, a Class II railroad, owns or operates approximately 1,103
route miles of rail lines (including approximately 720 route miles of
main lines and approximately 383 route miles of branch lines) in
Wyoming, South Dakota, Nebraska, Minnesota, and Iowa. DM&E's principal
route extends from Colony (Bentonite), WY, through Rapid City, SD, to
Winona, MN. Branch lines extend from Rapid City to Crawford, NE, and
Chadron, NE; from Blunt, SD, to Onida, SD; from Wolsey, SD, to
Aberdeen, SD, via trackage rights on The Burlington Northern and Santa
Fe Railway Company (BNSF); from Redfield, SD, to Mansfield, SD; from
Waseca, MN, to Hartland, MN; and from Hartland, MN, to Mason City, IA,
via trackage rights on Union Pacific Railroad Company (UP).\4\ DM&E
also has a currently inactive branch line extending from Huron, SD, to
Yale, SD, and currently inactive trackage rights on BNSF extending from
Yale, SD, to Watertown, SD. DM&E also operates via trackage rights over
Soo Line Railroad Company, d/b/a Canadian Pacific Railway (CP), between
Minnesota City, MN, and Winona, MN, and via trackage rights over short,
isolated segments of UP-owned trackage in Mankato, Owatonna, and
Winona, MN.
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\4\ DM&E's Hartland-Mason City trackage rights are restricted:
to interchanging traffic with UP at Mason City; and to interchanging
limited categories of traffic with Cedar River Railroad Company
(CEDR) at Glenville, MN, and with Iowa Northern Railway Company
(IANR) at Manly, IA.
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DM&E's principal yard and terminal facilities are located at Waseca
and Tracy, MN, and Huron, Pierre, and Rapid City, SD. DM&E interchanges
traffic with UP at Winona and Mankato, MN, and at Mason City, IA; with
CP at Minnesota City, MN; with BNSF at Wolsey, Aberdeen, and Redfield,
SD, and Crawford, NE; and with Nebkota Railway, Inc., at Chadron, NE.
DM&E can also conduct, via its overhead trackage rights on UP's
Hartland-Mason City line, restricted interchanges with CEDR at
Glenville, MN, and with IANR at Manly, IA. Although the lines of DM&E
and IC&E cross at grade and connect in Owatonna, MN, DM&E and IC&E
cannot (for the most part) interchange at that location due to
restrictions on DM&E's trackage rights on the UP-owned ``island''
trackage through Owatonna.\5\
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\5\ DM&E's overhead trackage rights on UP's Hartland-Mason City
line do not allow DM&E to interchange with IC&E at Albert Lea, MN,
or Mason City, IA, two points at which IC&E lines connect with UP's
Hartland-Mason City Line.
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Iowa, Chicago & Eastern Railroad Corporation
IC&E, a Class II railroad, owns or operates approximately 1,397
route miles of rail lines (including approximately 786 route miles of
main lines and approximately 611 route miles of secondary or branch
lines) in Minnesota, Iowa, Kansas, Missouri, Wisconsin, and Illinois.
All of these lines were recently acquired by IC&E from I&M Rail Link,
LLC (I&M), in an asset acquisition transaction (the IC&E/I&M asset
acquisition transaction).\6\ IC&E began rail operations on July 30,
2002, upon consummation of the IC&E/I&M asset acquisition transaction.
IC&E's principal routes extend from Chicago, IL, to Sabula Junction,
IA, and from there both southwest to Kansas City, MO, and northwest to
Minneapolis/St. Paul, MN. Significant secondary routes--known as the
Corn Lines--extend across Southern Minnesota from Ramsey, MN, to
Jackson, MN, and across Northern Iowa from Marquette, IA, to Sheldon,
IA. Branch lines extend from Davis
[[Page 61190]]
Junction, IL, through Rockford, IL, and Beloit, WI, to Janesville, WI;
from Mason City, IA, to Comus, MN; from Wells, MN, to Minnesota Lake,
MN; from Davenport, IA, to Albany, IL, via trackage rights on BNSF; and
from Davenport, IA, to Eldridge, IA. IC&E has overhead trackage rights
over other railroads at a number of locations, including over CP
between River Junction, MN, and Merriam Park, MN, and between Comus,
MN, and Rosemount, MN; over IANR between Nora Springs, IA, and Plymouth
Junction, IA (connecting two IC&E line segments); and over the Commuter
Rail Division of the Regional Transportation Authority of Northeast
Illinois, d/b/a Metra, between Pingree Grove, IL, and Cragin Junction
in Chicago, IL.\7\
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\6\ See Iowa, Chicago & Eastern Railroad Corporation--
Acquisition and Operation Exemption--Lines of I&M Rail Link, LLC,
STB Finance Docket No. 34177 (STB served June 12, 2002, June 26,
2002, and July 22, 2002) (IC&E Acquisition).
\7\ Applicants indicate that IC&E will shortly commence
operations into Chicago via the Pingree Grove-Cragin Junction line
pursuant to a temporary detour agreement with Metra. Applicants add
that, in the interim, IC&E traffic to/from the Chicago terminal has
been handled via haulage arrangements with other railroads.
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IC&E's principal yard and terminal facilities are located at
Davenport, IA, Ottumwa, IA, Muscatine, IA, Marquette, IA, Mason City,
IA, West Davenport, IA, Savanna, IL, and Davis Junction, IL. IC&E owns
a non-controlling stock interest in the Kansas City Terminal Railway
Company (KCT), a switching and terminal carrier in Kansas City, KS/MO.
IC&E is also a joint owner with The Kansas City Southern Railway
Company (KCS) of the ``Joint Agency'' yard facility in Kansas City, MO.
IC&E interchanges traffic: with The Belt Railway Company of Chicago
(BRC) at Cragin Junction/Clearing, IL; with BNSF at East Moline, IL,
Moline, IL, Bettendorf, IA, Ottumwa, IA, Minneapolis/St. Paul, MN, and
Kansas City, MO; with CEDR at Charles City, IA, and Lyle, MN; with
Chicago, Central & Pacific Railroad Company at Dubuque, IA, and
Rockford, IL; with the Chillicothe-Brunswick Rail Authority at
Chillicothe, MO; with the Elgin, Joliet & Eastern Railway Company at
Spaulding, IL; with Illinois RailNet, Inc., at Davis Junction, IL; with
the Indiana Harbor Belt Railroad Company (IHB) at Franklin Park, IL;
with Iowa Interstate Railroad Ltd. at Rock Island, IL, and Davenport,
IA; with IANR at Nora Springs, IA, and Plymouth Junction, IA; with the
Iowa Traction Railroad Company at Mason City, IA; with KCS at Kansas
City, MO; with the Minnesota Commercial Railway Company at Minneapolis/
St. Paul, MN; with Norfolk Southern Railway Company at Birmingham, MO,
and Kansas City, MO; with CP at Bensenville, IL, Minneapolis/St. Paul,
MN, Northfield, MN, and River Junction, MN; with UP at Clinton, IA,
Emmetsburg, IA, Mason City, IA, Sheldon, IA, Minneapolis/St. Paul, MN,
Kansas City, MO, and Janesville, WI; and with Wisconsin & Southern
Railway Company at Janesville, WI. IC&E also interchanges with all
major line-haul carriers at Chicago, through intermediate switching
services provided by BRC, IHB, and CP.\8\
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\8\ IC&E's overhead traffic rights on CP's River Junction-Twin
Cities line do not allow IC&E to interchange with DM&E at Minnesota
City, MN, or Winona, MN, two points at which DM&E lines connect with
CP's line.
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Cedar American Rail Holdings
Holdings, a wholly owned noncarrier subsidiary of DM&E, is the
beneficial owner of all of the outstanding common stock of IC&E.
Applicants indicate, however, that, immediately prior to the
consummation of the IC&E/I&M asset acquisition transaction, Holdings
placed the stock of IC&E into an independent voting trust, where it
will remain pending action by the Board on the primary application.
Applicants further indicate that, although it is anticipated that, if
the primary application is approved, Holdings would function as if it
were a holding company for DM&E and IC&E (i.e., Holdings would oversee
the management and coordination of operations on the DM&E/IC&E system
and would perform marketing and administrative services for both DM&E
and IC&E, as if each of DM&E and IC&E were a wholly owned subsidiary of
Holdings), DM&E's capital structure did not easily allow for the
creation of a holding company in the normal corporate chain position
above DM&E. Holdings, applicants therefore assert, was created as a
subsidiary of DM&E (i.e., positioned in the corporate chain between
DM&E and IC&E).
The DM&E/IC&E Common Control Transaction: The Mechanics; Timing
The DM&E/IC&E common control transaction proposed in the primary
application contemplates the acquisition, by DM&E, of indirect control
of IC&E through the termination of the voting trust in which the IC&E
stock is currently held and the distribution of that stock to Holdings,
DM&E's wholly owned subsidiary. Applicants indicate that, if and when
control is consummated, Holdings would function as if it were the
holding company for both DM&E and IC&E and would oversee the distinct
but coordinated operations of DM&E and IC&E, which would remain
separate entities and which would conduct their own operations with
their own employees and would be responsible for their own
transportation, mechanical, and engineering functions. Applicants
further indicate that DM&E would consummate control of IC&E (through
termination of the IC&E voting trust, which would allow Holdings to
exercise control over the IC&E stock) as soon as a Board decision
approving the primary application and authorizing the DM&E/IC&E common
control transaction has become effective.
Public Interest Considerations: In General
Applicants contend that the proposed DM&E/IC&E common control would
strengthen the combined DM&E/IC&E system and improve both its operating
and financial performance. Common control, applicants argue, would
allow both railroads to serve their customers more effectively and to
compete more effectively with Class I railroads, motor carriers, and
barge transportation in the mid-American transportation market.
Customers on both carriers, applicants maintain, would benefit from the
better equipment coordination and utilization, improved service
patterns, and other operating efficiencies made possible by common
control. The larger and more diversified traffic base and greater
financial resources of the combined DM&E/IC&E system, applicants argue,
would provide a more stable and reliable environment for shippers on
both railroads. Grain shippers on both DM&E and IC&E, applicants
contend, would benefit from having access to a combined, coordinated
system fleet of over 6,100 covered hopper cars. And, applicants
maintain, common control would provide shippers and receivers on DM&E
and IC&E with new, independent routing and service options and more
efficient and competitive single-system access to significant new
markets and gateways.
Applicants maintain, with respect to DM&E, that common control
would allow DM&E to gain independent access to major markets and
gateways. Shippers on DM&E's lines, applicants claim, would benefit
from new single-system rail access to the longer river shipping season
at Mississippi River ports south of Winona, MN, and grain shippers
would enjoy, for the first time, independent, single-system access to
the major rail gateways of Chicago and Kansas City, new single-system
routes to major grain processing plants on IC&E, new independent joint-
line routes to processors elsewhere in Iowa (such as on IANR in Cedar
Rapids), and neutral interline access to significant long-haul
destination markets in the south-central United States. And common
control, applicants maintain, would guarantee that DM&E would have
neutral eastern
[[Page 61191]]
routings for coal movements from the Powder River Basin (PRB) in
Wyoming, if and when DM&E constructs its recently-approved line into
the PRB.\9\
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\9\ See Dakota, Minnesota & Eastern Railroad Corporation
Construction Into The Powder River Basin, STB Finance Docket No.
33407 (STB served Jan. 30, 2002) (PRB Construction), pet. for
judicial review pending sub nom. Mid States Coalition for Progress
et al. v. Surface Transportation Board et al., No. 02-1359 et al.
(8th Cir. filed Feb. 7, 2002).
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Applicants maintain, with respect to IC&E, that, after many years
of doubt regarding the viability of the rail lines now owned by IC&E,
common control of DM&E and IC&E would solidify the return of those
lines as a stable, reliable, and essential component of the regional
rail network in the north-central United States. Grain shippers on
IC&E's lines, applicants argue, would gain potential new routes to the
Pacific Northwest for export, while grain receivers on IC&E's lines and
elsewhere in Iowa would be assured continued reliable, independent, and
long-term access to grain from origins both on IC&E's Corn Lines and
also on DM&E's lines in southern Minnesota and South Dakota. And,
applicants assert, IC&E's largest customer, a steel manufacturing firm
near Davenport, IA, would have single-system service for inbound scrap
that currently originates on DM&E but must now be interchanged to an
intermediate carrier for interchange to IC&E.
Public Interest Considerations: Competitive Impacts
Applicants contend that the proposed DM&E/IC&E common control
transaction, which they describe as completely ``end-to-end'' in
nature, would have no adverse impact on competition. DM&E and IC&E,
applicants state, serve no common industries today and do not currently
interchange traffic at any location, and, therefore, common control
would not result in any reduction in existing rail-to-rail competition
at any point or in any market. No shipper, applicants maintain, would
lose competitive rail service or access to any existing routing options
as a result of common control. The combined DM&E/IC&E system,
applicants assert, would face intense competition from the large Class
I rail systems that would surround it. And common control, applicants
argue, would have no adverse impact on the continuation of essential
transportation services by DM&E, by IC&E, or by any other railroad, and
diversions of traffic from other railroads, applicants maintain, would
be minimal.\10\
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\10\ Applicants anticipate that, as a result of common control,
approximately 9,850 carloads of traffic would be diverted to the
combined DM&E/IC&E system annually, generating annual revenues of
approximately $8.1 million. Applicants indicate that, for the most
part, these diversions would represent extensions of haul on
existing DM&E traffic resulting from shippers favoring the single-
system service offerings of the combined DM&E/IC&E.
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Environmental Implications
Applicants contend that, under 49 CFR 1105.6(c)(2)(i), the DM&E/
IC&E common control proposal is categorically excluded from
environmental reporting requirements because (applicants maintain)
common control would not result in changes in carrier operations that
would exceed the thresholds established in 49 CFR 1105.7(e)(4) or (5).
Applicants further contend: that common control would result in a minor
increase (no more than several trains per week) in traffic over IC&E's
rail line between Owatonna, MN, and Mason City, IA; that this, however,
would be offset by a roughly corresponding decrease in train operations
over DM&E's Waseca, MN-Hartland, MN, line and UP's Hartland, MN-Mason
City, IA, line (which includes UP's ``Spine Line'' route between Albert
Lea, MN, and Mason City, IA); and that anticipated traffic increases
elsewhere on the combined DM&E/IC&E system would be handled in existing
scheduled train movements.\11\
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\11\ As we announced in our IC&E Acquisition decision served
July 22, 2002 (at 16-17), we do not intend to consider the potential
environmental impacts associated with the prospect of routing over
former I&M lines traffic to or from the new line that we have
approved for construction in PRB Construction unless and until DM&E
is prepared to build that line. As we explained, deferring any such
examination is appropriate given the current uncertainty as to
whether that line will be built and, if built, what portion of the
traffic to and from the new line would move over which I&M lines.
Because the information we would not to assess the potential
environmental impacts is not yet available, it would be premature to
attempt to conduct such an assessment now. In the meantime, we have
barred IC&E from handling over former I&M lines any trains moving to
or from the new line until we conduct an appropriate environmental
review of the cumulative impacts of the approvals that we issued in
those two cases together with the approval that the applicants seek
in this case.
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Historic Preservation Implications
Applicants contend that, under 49 CFR 1105.8(b)(1) and (3), the
DM&E/IC&E common control proposal is exempt from historic preservation
reporting requirements. Applicants reason: that rail operations would
continue after consummation of common control; that there would not be
a substantial change in the level of maintenance of railroad property;
that further Board approval would be required to abandon any service;
and that there are no plans to dispose of or alter properties subject
to Board jurisdiction that are 50 years old or older.
Labor Protection
Applicants acknowledge that the applicable level of labor
protection for the proposed DM&E/IC&E common control transaction would
be that set forth in New York Dock Ry.--Control--Brooklyn Eastern
Dist., 360 I.C.C. 60, 84-90 (1979). Applicants add, however, that they
do not anticipate that any existing DM&E or IC&E employees would be
adversely affected by DM&E/IC&E common control.
Related Filing: Terminal Trackage Rights Application
In STB Finance Docket No. 34178 (Sub-No. 1), DM&E has filed,
contingent upon approval of the DM&E/IC&E common control proposal, a
``terminal trackage rights'' application for an order under 49 U.S.C.
11102 that would permit DM&E to operate, without restriction, over
approximately 3,700 feet of UP track in Owatonna, MN (extending between
approximately MPs 88.6 and 87.9), in order to establish an unrestricted
connection at Owatonna between DM&E and IC&E.
DM&E explains: That, when it was created in 1986 as a spinoff from
the Chicago & North Western Transportation Company (C&NW), it acquired
from C&NW approximately 1,000 miles of rail lines and related trackage
rights in South Dakota, Minnesota, and Iowa, extending in a generally
west-east direction between Rapid City, SD, and Winona, MN; that, for
the most part, DM&E acquired, in 1986, ownership of the Rapid City-
Winona line; that, however, DM&E did not acquire, in 1986, ownership of
the 2.4-mile segment of that line that lies in Owatonna between
approximately MPs 88.6 and 86.2, which included (at approximately MP
87.9) a physical at-grade connection with a north-south CP line; that,
as respects this 2.4-mile segment, DM&E acquired, in 1986, trackage
rights that were both exclusive (C&NW did not retain the right to
operate over the segment) and restricted (DM&E was allowed to use the
trackage rights for overhead traffic, and for any DM&E/CP interchange
traffic that originated or terminated either on the 2.4-mile segment or
at industries in Owatonna served by CP and open to reciprocal
switching); that C&NW retained ownership of the 2.4-mile segment and
all ancillary trackage in Owatonna; and that the 2.4-mile segment was
``carved out'' of the DM&E/C&NW asset acquisition transaction in order
to preclude an unrestricted DM&E/CP interchange at Owatonna.
[[Page 61192]]
DM&E further explains that, although C&NW's ownership interest in
the 2.4-mile segment was acquired several years ago by UP, and although
CP's (later I&M's) north-south line through Owatonna was recently
acquired by IC&E, a restriction created in 1986 that precluded the
movement, under DM&E's trackage rights, of most DM&E/CP interchange
traffic continues to exist, and now bars the creation of a meaningful
DM&E/IC&E interchange at Owatonna. This restriction continues to exist,
DM&E adds, even though the 2.4-mile segment has not been used by C&NW
(or UP) since 1986, and even though the 2.4-mile segment now exists as
an ``island'' that is not connected to the rest of the UP system.\12\
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\12\ The UP (formerly C&NW) north-south ``Spine Line'' between
the Twin Cities and Kansas City passes under the 2.4-mile segment
(at approximately MP 88.5) but does not connect with that segment.
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DM&E contends that terminal trackage rights over an approximately
0.7-mile portion of the 2.4-mile segment (i.e., over the portion of the
2.4-mile segment that lies between approximately MPs 88.6 and 87.9)
would be necessary to establish a direct connection and unrestricted
interchange between DM&E and IC&E, which (DM&E notes) do not presently
connect with each other at any location. DM&E further contends that,
without such relief, DM&E and IC&E would be unable to effectuate the
competitive traffic routings that would otherwise be made possible by
the DM&E/IC&E combination. A DM&E/IC&E interchange at Owatonna, DM&E
argues, would be essential for applicants to achieve many of the
competitive and service benefits of DM&E/IC&E common control.
DM&E asserts that a grant of the sought terminal trackage rights
would also be necessary to allow DM&E to operate via trackage rights
over IC&E's line between Owatonna, MN, and Mason City, IA, as
contemplated by the trackage rights exemption notice filed in STB
Finance Docket No. 34178 (Sub-No. 2). DM&E explains that the ability to
operate over IC&E to Mason City would provide DM&E with efficient and
unrestricted interchanges: with CEDR at Lyle, MN; with IANR at Plymouth
Junction, IA, and Nora Springs, IA; and with IC&E at Mason City, IA.
DM&E acknowledges that, in the recent PRB Construction decision,
the Board granted DM&E authority to construct, just east of Owatonna, a
1.7-mile ``loop'' connection between DM&E's west-east line (beginning
at a point past the end of the 2.4-mile segment) and what was then
I&M's (and is now IC&E's) north-south line. See PRB Construction, slip
op. at 19, 41 (the 1.7-mile loop is ``Alternative O-4,'' which DM&E was
authorized to construct if it could not reach an agreement with UP for
a DM&E/I&M interchange at MP 87.9, referred to as ``Alternative O-5'').
DM&E argues, however, that, as the Board itself has concluded, see PRB
Construction, slip op. at 19, a MP 87.9 interchange would be
``environmentally preferable'' to construction of the 1.7-mile loop.
And, DM&E asserts, given that the only obstacle to a MP 87.9
interchange is a 1986 restriction, construction of the 1.7-mile loop
would be completely unnecessary and wasteful.
DM&E therefore asks that we allow the establishment of an
unrestricted DM&E/IC&E connection at Owatonna by granting its
application for terminal trackage rights between approximately MPs 88.6
and 87.9. DM&E further contends that, although 49 U.S.C. 11102(a)
provides that compensation for use of terminal trackage rights ``shall
be paid or adequately secured'' before a carrier may begin to use such
rights, we should not require that the compensation be established
before DM&E could begin use of the proposed STB Finance Docket No.
34178 (Sub-No. 1) terminal trackage rights. Such a requirement, DM&E
explains, would delay the public benefits of the proposed DM&E/IC&E
common control.
Related Filing: Trackage Rights Exemption Notice
In STB Finance Docket No. 34178 (Sub-No. 2), DM&E has filed,
contingent upon approval of both the DM&E/IC&E common control
transaction and the Sub-No. 1 terminal trackage rights application,\13\
a notice of exemption pursuant to 49 CFR 1180.2(d)(7) to obtain
overhead trackage rights: (1) on the IC&E line between Owatonna, MN (at
approximately MP 101.9), and Mason City, IA (at approximately MP 0.0),
a distance of approximately 72.4 miles;\14\ and (2) on the IANR line
between Plymouth Junction, IA (at approximately MP 219.5), and Nora
Springs, IA (at approximately MP 210.7), a distance of approximately
8.8 miles. The Sub-No. 2 trackage rights, which are being sought with
the approval of IC&E and IANR, would allow DM&E to interchange traffic:
with IC&E at Austin, MN, and Mason City, IA; with UP at Mason City, IA;
with CEDR at Lyle, MN; and with IANR at Plymouth Junction and Nora
Springs, IA. DM&E indicates that the Sub-No. 2 trackage rights would
facilitate the effective movement of trains and interchange of traffic
between DM&E and IC&E, would expand routing and service options with
other rail carriers, and would reduce trackage rights fees paid to UP
in connection with DM&E's existing route to Mason City. DM&E
acknowledges that the applicable level of labor protection for the Sub-
No. 2 trackage rights would be that set forth in Norfolk and Western
Ry. Co.--Trackage Rights--BN, 354 I.C.C. 605, 610-15 (1978), as
modified in Mendocino Coast Ry., Inc.--Lease and Operate, 360 I.C.C.
653, 664 (1980).
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\13\ DM&E indicates that, although the notice of exemption
(filed August 29, 2002) respecting the exempt trackage rights
transactions in STB Finance Docket No. 34178 (Sub-No. 2) would
become effective prior to the effective date of a Board decision on
the primary application and Sub-No. 1 terminal trackage rights
application, consummation of the Sub-No. 2 trackage rights
transactions is contingent on approval of both the primary
application and the Sub-No. 1 terminal trackage rights application.
\14\ At Ramsey, MN (an intermediate point between Owatonna and
Mason City), there is a milepost equation at which MP 72.5=MP 43.0.
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Primary Application and Related Filings Accepted
We agree with applicants that the DM&E/IC&E common control
transaction proposed in the primary application is a ``minor
transaction'' under 49 CFR 1180.2(c), and we are accepting the primary
application for consideration because it is in substantial compliance
with the applicable regulations governing minor transactions. See 49
U.S.C. 11321-26; 49 CFR part 1180. We are also accepting for
consideration the two related filings, which are also in compliance
with the applicable regulations.\15\
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\15\ We reserve the right to require the filing of supplemental
information from applicants or any other party or individual, if
necessary to complete the record in this matter.
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Public Inspection
The application and the related filings are available for
inspection in the Docket File Reading Room (Room 755) at the offices of
the Surface Transportation Board, 1925 K Street, NW., in Washington,
DC. In addition, they may be obtained from applicants' representatives
(Mr. Sippel, for DM&E and Holdings; Mr. Knudson, for IC&E) at the
addresses indicated above.
Procedural Schedule
Applicants have indicated that they desire to consummate the DM&E/
IC&E common control transaction as soon after January 1, 2003, as
possible. They have therefore proposed a procedural schedule that
provides for issuance of a decision by the Board by January 3, 2003,
and if the application is granted,
[[Page 61193]]
with an effective date of January 15, 2003.
We will adopt a 151-day procedural schedule that provides some
additional time to that proposed by applicants for comments by
interested parties, but still provides for less total time than the
180-day procedural schedule (30 days + 105 days + 45 days) provided by
the deadlines set forth at 49 U.S.C. 11325(a), (d)(2). Under the
schedule we are adopting: all comments, protests, requests for
conditions, and any other evidence and argument in opposition to the
primary application and/or either or both of the related filings,
including comments of DOJ and DOT, will be due on November 14, 2002;
\16\ responses to comments, protests, requests for conditions, and
other opposition, responses to comments of DOJ and DOT, and rebuttal in
support of the primary application and/or either or both of the related
filings will be due on December 13, 2002; and our decision will be
issued by January 27, 2003 (the 45th day after the close of the
record). If we determine that an Environmental Assessment or
Environmental Impact Statement is required, we will adjust the
procedural schedule as necessary. Also, if oral argument is held, our
decision will be issued within 45 days after the oral argument.\17\
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\16\ DOT, in its DOT-1 pleading filed September 18, 2002, has
asked that we modify the procedural schedule to accommodate its past
practice of filing comments not only in response to the application
itself but also in response to the comments filed by other parties.
As in past proceedings, we will allow DOT to file its comments in
response to other parties' comments on the reply due date (here,
December 13, 2002) should DOT decide to file such a response, with
the understanding that applicants, if they feel the need, will be
allowed to late-file (as quickly as possible) a reply to DOT's
responsive comments. In this manner, we will not extend the
procedural schedule unnecessarily.
\17\ If we ultimately decide to approve the DM&E/IC&E common
control transaction, we will give consideration at that point to
applicants' request that we shorten the usual 30-day period between
the service date of an approval decision and the effective date of
that decision. See DME-3 at 3 (applicants ask that any such approval
become effective on the 12th day after the service date of our
decision).
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Notice of Intent To Participate
Any person who wishes to participate in this proceeding as a party
of record (POR) must file with the Board, no later than October 15,
2002, an original and 25 copies of a notice of intent to participate,
accompanied by a certificate of service indicating that the notice has
been properly served on the Secretary of the United States Department
of Transportation, the Attorney General of the United States, and
applicants' representatives. In addition, as previously noted, parties
must submit one electronic copy of each document filed with the Board.
Further details respecting such electronic submissions are provided
below.
We will serve, as soon as practicable, a notice containing the
official service list (the service list notice). Each party of record
will be required to serve upon all other parties of record, 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 party of
record also will be required to file with the Board, within 10 days of
the service date of the service list notice, an original plus 10 copies
of a certificate of service, along with an electronic copy, 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 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 (PORs), and therefore,
need not be served with copies of filings, unless any such Member or
Governor has requested to be, and is designated as, a POR.
We will serve copies of our decisions, orders, and notices only on
those persons who are designated on the official service list as either
POR, MOC, or GOV. All other interested persons are encouraged to make
advance arrangements with the Board's copy contractor, Da2 Da Legal
Copy Service, to receive copies of Board decisions, orders, and notices
served in this proceeding. Da 2 Da Legal Copy Service will handle the
collection of charges and the mailing and/or faxing of decisions,
orders, and notices to persons who request this service. The telephone
number for Da 2 Da Legal Copy Service is (202) 293-7776.\18\
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\18\ 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. Our Railroad Consolidation Procedures
provide: "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." See 49 CFR 1180.4(a)(3). The primary application and other
filings in this proceeding will also be available on the Board's
website at "www.sbt.dot.gov" under ``Filings.'' Furthermore, Da 2
Da Legal Copy Service will provide, for a charge, copies of the
primary application or any other filing made in this proceeding,
except to the extent any such filing is subject to the protective
order previously entered in this proceeding.
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Comments, Protests, Requests for Conditions, and Other Opposition
Evidence and Argument, Including Filings by DOJ and DOT
All comments, protests, requests for conditions, and any other
evidence and argument in opposition to the primary application and/or
either or both of the related filings, including filings by DOJ and
DOT, must be filed by November 14, 2002.
Parties (including DOJ and DOT) filing such comments, etc., must
submit an original and 25 copies thereof. Each such submission: must be
filed with the Surface Transportation Board, 1925 K Street, NW.,
Washington, DC 20423-0001; must refer to STB Finance Docket No. 34178;
and must be clearly labeled with an identification acronym for that
party and number for the submission by that party (e.g., the primary
application was labeled ``DME-2''), see 49 CFR 1180.4(a)(2). In
addition, as previously noted, parties must submit one electronic copy
of each document filed with the Board. Further details respecting such
electronic submissions are provided below.
Comments, etc., must be concurrently served by first class mail on
the U.S. Attorney General and the U.S. Secretary of Transportation,
applicants' representatives, and all other parties of record, and
should include: the docket number and title of the proceeding and the
name, address, and telephone number of the commenting party and its
representative upon whom service shall be made.
Because we have determined that the DM&E/IC&E common control
transaction proposed in the primary application is a minor transaction,
no responsive applications will be permitted. See 49 CFR 1180.4(d)(1).
Protesting parties are advised that, if they seek either the denial
of the primary application or the imposition of conditions upon any
approval thereof, on the theory that approval without imposition of
conditions will harm either their ability to provide essential services
and/or competition, 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).
Responses to Comments, Protests, Requests for Conditions, and Other
Opposition, Including DOJ and DOT; Rebuttal in Support of Primary
Application
Responses to comments, protests, requests for conditions, and other
opposition submissions, responses to comments of DOJ and DOT, and
rebuttal
[[Page 61194]]
in support of the primary application and/or either or both of the
related filings must be filed by December 13, 2002.
Discovery
Discovery may begin immediately. We encourage the parties to
resolve all discovery matters expeditiously and amicably.
Electronic Submissions: In General
As already mentioned, in addition to submitting an original and 25
paper copies of each document filed with the Board, parties must
submit, on 3.5-inch IBM-compatible floppy diskettes (disks) or on
compact discs (CDs), copies of all textual materials, electronic
workpapers, data bases, and spreadsheets used to develop quantitative
evidence.\19\ Textual materials must be in, or compatible with,
WordPerfect 9.0. Electronic spreadsheets must be in, or compatible
with, Lotus 1-2-3 Release 9 or Microsoft Excel 2002. Each disk or CD
should be clearly labeled with the identification acronym and number of
the corresponding paper document, see 49 CFR 1180.4(a)(2), and a copy
of such disk or CD should be provided to any other party upon request.
Also, each disk or CD should be clearly labeled as containing
confidential or redacted materials. The data contained on the disks and
CDs submitted to the Board will be subject to the protective order
granted in Decision No. 1, served August 14, 2002, and will be for the
exclusive use of Board employees reviewing substantive and/or
procedural matters in this proceeding. The flexibility provided by such
computer data will facilitate timely review by the Board and its
staff.\20\
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\19\ Parties unable to comply with the electronic submission
requirements can seek a waiver from the Board.
\20\ The electronic submission requirements set forth in this
decision supersede, for the purposes of this proceeding, the
otherwise applicable electronic submission requirements set forth in
our regulations.
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Electronic Submissions: Workpapers, Data Bases, and Spreadsheets
In the past, we have encountered problems with the ``links'' in
spreadsheets functioning properly when the spreadsheets are installed
on desktop computers or network servers. To avoid such problems,
parties submitting electronic workpapers, data bases, and/or
spreadsheets should use naming and linking conventions that will permit
the spreadsheets to operate on the Board's computers.\21\ Electronic
data bases should be compatible with the Microsoft Open Database
Connectivity (ODBC) standard.\22\ The Board currently uses Microsoft
Access 2000, and data bases submitted should be either in this format
or another ODBC-compatible format. Otherwise, submitters should explain
why it is not possible to submit the data base in this format and seek
a determination as to whether it is feasible for us to accept the data
base in another format.
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\21\ We will not specify a particular naming and linking
convention. It is incumbent upon the submitter to use generic naming
and linking conventions that will permit the spreadsheets to operate
on desktop computers or from a network server. Questions concerning
naming and linking matters and/or compatibility with our computers
can be addressed to William H. Washburn, Office of Economics,
Environmental Analysis, and Administration, at (202) 565-1550.
\22\ ODBC is a Windows technology that allows a data base
software package, such as Microsoft Access, to import data from a
data base created using a different software package. All data bases
must be supported with adequate documentation on data attributes,
SQL queries, programmed reports, etc.
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This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.
It is ordered:
1. The primary application in STB Finance Docket No. 34178 and the
related filings in STB Finance Docket No. 34178 (Sub-Nos. 1 and 2) are
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 September 27, 2002.
Decided: September 19, 2002.
By the Board, Chairman Morgan and Vice Chairman Burkes.
Vernon A. Williams,
Secretary.
Appendix A: Procedural Schedule
August 29, 2002: Primary application, related filings, and petition
for establishment of procedural schedule filed.
September 27, 2002: Board notice of acceptance of primary
application and related filings published in the Federal Register.
October 15, 2002: Notices of intent to participate due.
November 14, 2002: All comments, protests, requests for conditions,
and any other evidence and argument in opposition to the primary
application and/or either or both of the related filings, including
filings of the U.S. Department of Justice (DOJ) and the U.S.
Department of Transportation (DOT), due.
December 13, 2002: Responses to comments, protests, requests for
conditions, and other opposition due. Responses to comments of DOJ
and DOT due. Rebuttal in support of primary application and/or
either or both of the related filings due.
January 27, 2003: Date of service of final decision (if no
environmental review is required and no oral argument is held).
[FR Doc. 02-24602 Filed 9-26-02; 8:45 am]
BILLING CODE 4915-00-P