Soo Line Corporation-Control-Central Maine & Quebec Railway, Inc.

 
CONTENT
Federal Register, Volume 85 Issue 11 (Thursday, January 16, 2020)
[Federal Register Volume 85, Number 11 (Thursday, January 16, 2020)]
[Notices]
[Pages 2803-2806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00625]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36368]
Soo Line Corporation--Control--Central Maine & Quebec Railway,
Inc.
AGENCY: Surface Transportation Board.
ACTION: Decision No. 1 in Docket No. FD 36368; 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 17, 2019, by Soo Line
Corporation (Soo Line Corp.) and Central Maine & Quebec Railway US Inc.
(CMQR US) (collectively, Applicants). The application seeks Board
approval for Soo Line Corp., an indirect wholly owned holding company
subsidiary of Canadian Pacific Railway Company (CP), to acquire
[[Page 2804]]
control of CMQR US. This proposal is referred to as the Transaction.
    The Board finds that the application is complete. The Board also
makes the preliminary determination, based on the evidence presented in
the application, that the Transaction is a minor transaction because it
``clearly will not have any anticompetitive effects'' and that, if any
such anticompetitive effects were found to exist, they would ``clearly
be outweighed by the [T]ransaction's anticipated contribution to the
public interest in meeting significant transportation needs.'' 49 CFR
1180.2. The Board emphasizes that this is not a final determination and
may be rebutted by subsequent filings and evidence submitted into the
record for this proceeding. The Board will carefully consider any
claims that the Transaction would have anticompetitive effects.
DATES: The effective date of this decision is January 16, 2020. Any
person who wishes to participate in this proceeding as a Party of
Record must file, no later than February 4, 2020, 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 related filings, including filings by the U.S. Department of
Justice (DOJ) and the U.S. Department of Transportation (DOT), must be
filed by February 18, 2020. Responses to comments, protests, requests
for conditions, other opposition, and rebuttal in support of the
primary application or related filings must be filed by March 20, 2020.
See Appendix (Procedural Schedule). A final decision in this matter
will be served no later than May 4, 2020. Further procedural orders, if
any, would be issued by the Board, if necessary.
ADDRESSES: Any filing submitted in this proceeding must be filed with
the Board either via e-filing or in writing addressed to: Surface
Transportation Board, 395 E Street SW, Washington, DC 20423-0001. In
addition, one copy of each filing must be sent (and may be sent by
email only if service by email is acceptable to the recipient) to each
of the following: (1) Secretary of Transportation, 1200 New Jersey
Avenue SE, Washington, DC 20590; (2) Attorney General of the United
States, c/o Assistant Attorney General, Antitrust Division, Room 3109,
Department of Justice, Washington, DC 20530; (3) applicant Soo Line
Corp.'s representative, David F. Rifkind, Stinson LLP, 1775
Pennsylvania Ave. NW, Suite 800, Washington, DC 20006; (4) applicant
CMQR US's representative, Terence M. Hynes, Sidley Austin LLP, 1501 K
Street NW #600, Washington, DC 20005; and (5) any other person
designated as a Party of Record on the service list notice. As
explained below, the service list notice will be issued as soon after
February 4, 2020, as practicable.
FOR FURTHER INFORMATION CONTACT: Nathaniel Bawcombe at (202) 245-0376.
Assistance for the hearing impaired is available through the Federal
Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: Applicants seek the Board's prior review and
authorization pursuant to 49 U.S.C. 11323-25 and 49 CFR part 1180 for
Soo Line Corp. to acquire control of CMQR US. (Appl. 1.) Applicant Soo
Line Corp. is an indirect, wholly owned subsidiary of CP. (Id. at 1
n.1.) Applicant CMQR US is a wholly owned subsidiary of Railroad
Acquisition Holdings LLC (RAH). (Id. at 1, 6.) RAH is a wholly owned
subsidiary of Fortress Transportation and Infrastructure Investors LLC.
(Id. at 1 n.2.) Soo Line Corp. plans to acquire all of the outstanding
membership interests of RAH, including all of the outstanding common
stock of CMQR US, through a merger of Black Bear Acquisition LLC, a
wholly owned subsidiary of Soo Line Corp., and RAH, pursuant to an
Agreement and Plan of Merger (Merger Agreement). (Id. at 6.) RAH would
be the surviving limited liability company and a wholly owned
subsidiary of Soo Line Corp. (Id.)
    CMQR US owns and operates approximately 244.2 miles of rail lines
in Vermont and Maine and also has the right to operate on approximately
57.25 miles of rail line leased from the Maine Department of
Transportation, for a total of approximately 301.45 route miles in the
United States.\1\ (Id. at 1, 18.) More specifically, these lines
consist of the rail line beginning at a point in the vicinity of
Searsport, Me., designated on CMQR US's system map as milepost
0.0 of CMQR US's Bangor Subdivision and continuing north
through Maine through Brownville Junction, Me. to a point in the
vicinity of Millinocket, Me., designated as milepost 109.00
of CMQR US's Millinocket Subdivision, a distance of approximately 109
miles; the rail line beginning at a point in the vicinity of
Millinocket, designated on CMQR US's system map as milepost 0.0 of the East Millinocket Subdivision and continuing southeast to
East Millinocket, Me., to a point designated as milepost 6.19 of CMQR US's East Millinocket Subdivision, a distance of
approximately 6.19 miles; the rail line beginning at a point in the
vicinity of Brownville Junction, designated on CMQR US's system map as
milepost 0.0 on CMQR US's K.I. Subdivision and continuing
to a point in the vicinity of Brownville Junction, designated as
milepost 4.0 of the K.I. Subdivision, a distance of
approximately 3.74 miles; the rail line beginning in the vicinity of
Brownville Junction, from a point of connection with Eastern Maine
Railway Company designated on CMQR US's system map as milepost
0.0 of CMQR US's Moosehead Subdivision and continuing west
to the United States/Canada border near Skinner, Me., designated as
milepost 101.80 of the Moosehead Subdivision, a distance of
approximately 101.8 miles; the rail line beginning at the United
States/Canada border crossing in the vicinity of Richford, Vt.,
designated on CMQR US's system map as milepost 26.25 of
CMQR US's Newport Subdivision, continuing north into Canada, re-
entering the United States near North Troy, Vt., and then continuing
south to a point in the vicinity of Newport, Vt., designated as
milepost 60.4 at the end of the Newport Subdivision, a
distance of approximately 23.47 miles in the United States; \2\ and the
rail line leased from the Maine Department of Transportation beginning
in the vicinity of Brunswick, Me., designated on CMQR US's system map
as milepost 29.40 of CMQR US's Rockland Subdivision and
continuing to a point in the vicinity of Rockland, Me., designated as
milepost 86.65 of the Rockland Subdivision, a distance of
approximately 57.25 miles. (Id. at 18-20.)
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    \1\ Soo Line Corp. will also acquire 236.81 route miles of rail
line from CMQR Canada and will seek authorization from the
appropriate Canadian authority for that acquisition. (Appl. 2 n.3.)
    \2\ The Newport Subdivision crosses into Canada at milepost
32.63 and enters the United States again at milepost
43.32 near North Troy, Vt. (Appl. 19.)
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    Financial Arrangements. According to Applicants, no new securities
would be issued in connection with the Transaction. Applicants state
that the only relevant financial arrangement is the payment of the
purchase price by Soo Line Corp., as provided in the Merger Agreement.
(Id. at 12.)
    Passenger Service Impacts. Applicants state that the only passenger
service operating on lines owned or operated by CMQR US is the National
Railroad Passenger Corporation (Amtrak) service on the Rockland
subdivision. (Id., Ex. 15 at 13.) According to Applicants, there are no
plans to make any changes to the operations or management of the
Rockland operation that would alter Amtrak's future ability to operate.
(Id.)
[[Page 2805]]
    Discontinuances/Abandonments. Applicants state that Soo Line Corp.
does not plan to abandon or discontinue service on rail lines in the
United States as a result of the Transaction. (Id. at 22, Ex. 15 at
13.)
    Public Interest Considerations. Applicants assert that the
Transaction would not result in the lessening of rail competition,
creation of a monopoly, or restraint of trade in freight surface
transportation in any region of the United States. (Id. at 2, 12.)
Applicants state that the Transaction is an end-to-end line acquisition
and note that neither applicant has lines that are parallel or
duplicative of the other's system. (Id. at 12-13.) Applicants assert
that there will be no negative competitive impacts and that no shipper
would see a reduction in the number of competitive rail options as a
result of the Transaction. (Id.)
    According to Applicants, CMQR US will continue to maintain
interline service agreements with Class II and Class III carriers with
which it currently interchanges traffic, and none of the interline
traffic originates or terminates at facilities on those carriers that
are directly served by CP. (Id.)
    Applicants claim that intermodal competition in Maine and Vermont
is strong and that the Transaction will preserve and enhance
competition by allowing Applicants to compete more vigorously against
other rail carriers and transportation modes in the region. (Id. at 13-
14.) The Transaction will, according to Applicants, allow them to
provider faster, seamless, and more economical and efficient service.
(Id.) In addition, Applications state that improved service will extend
market reach for CP and CMQR customers, providing them direct access to
markets on each other's systems, including certain import and export
markets. (Id.)
    Time Schedule for Consummation. Applicants state that the
Transaction is scheduled to be consummated on December 30, 2019. (Id.
at 7.) \3\
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    \3\ On December 30, 2019, Applicants filed a letter confirming
the consummation of the Transaction. The letter also stated that all
of the outstanding common stock of CMQR US was deposited in an
independent voting trust pending the Board's decision on the
application. (Soo Line Corp. Ltr. 1, Dec. 30, 2019 (citing 49 CFR
1013.3).)
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    Environmental Impacts. Applicants state that, pursuant to 49 CFR
1105.6(c)(1), no environmental reporting is required because the
environmental impacts of the Transaction fall below the thresholds
established in 49 CFR 1105.7(e)(4) and (5). (Appl. 20-22.)
    Historic Preservation Impacts. Applicants state that no historic
report is required under 49 CFR 1105.8, as rail operations would
continue after Soo Line Corp.'s purchase of CMQR US, and Soo Line Corp.
has no plans to dispose of or alter properties subject to the Board's
jurisdiction that are 50 years old or older. (Appl. 2, 22.)
    Labor Impacts. Applicants state that CMQR US currently employs 94
people in Maine, Vermont, and Ohio. (Id. at 15.) Applicants state that
no current CP employees in the United States would be adversely
affected by the Transaction. (Id.)
    Applicants state that any employees adversely impacted by the
Transaction would be entitled to labor protective conditions in
accordance with New York Dock Railway--Control--Brooklyn Eastern
District Terminal, 360 I.C.C. 60, aff'd New York Dock Railway v. United
States, 609 F.2d 83 (2d Cir. 1979), as modified by Wilmington Terminal
Railroad--Purchase & Lease--CSX Transportation Inc., 6 I.C.C. 2d 799,
814-26 (1990), aff'd sub nom. Railway Labor Executives' Ass'n v. ICC,
930 F.2d 511 (6th Cir. 1991). (Appl. 15.)
    Primary Application and Related Filings Accepted. The Board finds
that the proposed Transaction would be a ``minor transaction'' under 49
CFR 1180.2(c), and the Board accepts the 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 pt. 1180.
The Board reserves the right to require the filing of supplemental
information as necessary to complete the record.
    When a transaction does not involve the merger or control of two or
more Class I railroads, the Board's treatment differs depending upon
whether the transaction would have ``regional or national
transportation significance.'' 49 U.S.C. 11325. Under 49 CFR 1180.2, a
transaction that does not involve two or more Class I railroads is to
be classified as ``minor''--and thus not having regional or national
transportation significance--if a determination can be made that
either: (1) The transaction clearly will not have any anticompetitive
effects; or (2) any anticompetitive effects of the transaction will
clearly be outweighed by the transaction's anticipated contribution to
the public interest in meeting significant transportation needs. A
transaction not involving the control or merger of two or more Class I
railroads is to be classified as ``significant'' if neither of these
determinations can be made.
    Nothing in the record thus far suggests that the Transaction would
have anticompetitive effects. The Transaction is an end-to-end
acquisition involving approximately 301.45 miles of rail line in
Vermont and Maine. As Applicants note, the Board has held that end-to-
end transactions are unlikely to raise competitive concerns. (Appl. 5);
see Norfolk S. Ry.--Joint Control & Operating/Pooling Agreements--Pan
Am S. LLC, FD 35147 et al., slip op. at 5 (STB served Mar. 10, 2009).
The application indicates that the Transaction would not result in any
two-to-one shippers. (Appl. 13.)
    Moreover, if anticompetitive effects resulting from the Transaction
should later be shown to be likely, they would appear, from the face of
the application, to be clearly outweighed by the Transaction's
contribution to the public interest in meeting significant
transportation needs. As noted in the application, the Transaction
would result in more efficient movement of existing and future
interline traffic between CMQR and CP, thus reducing costs. (Id. at 4,
9-10.) Moreover, according to Applicants, the Transaction would benefit
shippers by opening new markets, including import and export markets
served by the Atlantic deep-water ports of Searsport, Me., and Saint
John, N.B. (Id. at 9.) Applicants' intention to ensure that CMQR US
will have access to capital and other resources needed to grow and
operate safely and efficiently would also be beneficial. (Id. at 11.)
    Therefore, based on the information provided in the application,
the Board finds the proposed Transaction to be a minor transaction
under 49 CFR 1180.2(c). Such a categorization does not mean that the
proposed Transaction is insignificant or not of importance. Indeed,
after the record in the proceeding is fully developed, the Board will
carefully review the proposed Transaction to make certain that it does
not substantially lessen competition, create a monopoly, or restrain
trade, and that any anticompetitive effects are outweighed by the
public interest. See 49 U.S.C. 11324(d)(1)-(2). The Board may also
impose conditions to mitigate or eliminate any anticompetitive impacts
of the transaction.
    Procedural Schedule. The Board has considered Applicants' motion
for a procedural schedule, filed December 17, 2019.\4\ Applicants'
proposed procedural schedule provides 33 days for comments from all
parties on the application and 30 days for the concurrent filing of
replies to comments and rebuttal in support of the
[[Page 2806]]
application. Applicants' proposed procedural schedule then provides 54
days after the close of the evidentiary period for the Board to issue
its final decision. The Board will adopt a procedural schedule that
will allow 33 days for comments on the application and 31 days for
replies to comments and rebuttal in support of the application. The
Board is required to issue ``a final decision by the 45th day after the
date on which it concludes the evidentiary proceedings,'' 49 U.S.C.
11325(d)(2), and will do so here.\5\
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    \4\ Applicants provide for 31 days from the filing of the
application to the publication of this notice. The Board, however,
is required to publish this notice within 30 days of the filing of
the application. 49 U.S.C. 11325(a).
    \5\ This notice will be published in the Federal Register on
January 16, 2020; all subsequent deadlines will be calculated from
this date. Deadlines for filings are calculated in accordance with
49 CFR 1104.7(a).
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    For further information regarding procedural dates, see the
Appendix (Procedural Schedule) to this decision.
    Notice of Intent to Participate. Any person who wishes to
participate in this proceeding as a Party of Record must file with the
Board, no later than February 4, 2020, a notice of intent to
participate, accompanied by a certificate of service indicating that
the notice has been properly served on the Secretary of Transportation,
the Attorney General of the United States, and Applicants'
representatives.
    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 Party of Record
representing a particular entity, the extra name(s) will be added to
the service list as a ``Non-Party.'' Any person designated as a Non-
Party will receive copies of Board decisions, orders, and notices but
not copies of official filings. Persons seeking to change their status
must accompany that request with a written certification that he or she
has complied with the service requirements set forth at 49 CFR 1180.4
and any other requirements set forth in this decision.
    Service List Notice. The Board will serve, as soon after February
4, 2020, 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 will also 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 Party of Record after the service date of the service
list notice must have its own certificate of service indicating that
all Parties of Record on the service list have been served with a copy
of the filing. Members of the United States Congress and Governors are
not Parties of Record and need not be served with copies of filings,
unless any Member or Governor has requested to be, and is designated
as, a Party of Record.
    Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices on those persons who are
designated on the official service list as a Party of Record or Non-
Party. All other interested persons are encouraged to obtain copies of
decisions, orders, and notices via the Board's website at www.stb.gov.
    Access to Filings. Under the Board's rules, any document filed with
the Board (including applications, pleadings, etc.) shall be promptly
furnished to interested persons on request, unless subject to a
protective order. 49 CFR 1180.4(a)(3). The application and other
filings in this proceeding will be furnished to interested persons upon
request and will also be available on the Board's website at
www.stb.gov.\6\ In addition, the application may be obtained from
Applicants' representatives at the addresses indicated above.
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    \6\ Applicants have submitted a public version and highly
confidential version of their application. The public version is
available on the Board's website. The highly confidential version
may be obtained subject to the provisions of the protective order
issued by the Board on December 3, 2019.
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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 application is accepted for consideration.
    2. The parties to this proceeding must comply with the procedural
schedule shown in the Appendix to this decision and the procedural
requirements described in this decision.
    3. This decision is effective on January 16, 2020.
    By the Board, Board Members Begeman, Fuchs, and Oberman.
    Decided: January 10, 2020.
Brendetta Jones,
Clearance Clerk.
Procedural Schedule
November 26, 2019 Motion for Protective Order filed.
December 17, 2019 Application and Motion for Establishment of
Procedural Schedule filed.
January 16, 2020 Board notice of acceptance of application served and
published in the Federal Register.
February 4, 2020 Notices of intent to participate in this proceeding
due.
February 18, 2020 All comments, protests, requests for conditions, and
any other evidence and argument in opposition to the application,
including filings of DOJ and DOT, due.
March 20, 2020 Responses to comments, protests, requests for
conditions, and other opposition due. Rebuttal in support of the
application due.
May 4, 2020 Date by which a final decision will be served.
June 3, 2020 \7\ Date by which a final decision will become effective.
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    \7\ The final decision will become effective 30 days after it is
served.
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[FR Doc. 2020-00625 Filed 1-15-20; 8:45 am]
 BILLING CODE 4915-01-P