Soo Line Corporation-Control-Central Maine & Quebec Railway, Inc., 2803-2806 [2020-00625]

Agencies

• Surface Transportation Board

[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