CSX Transportation, Inc.-Acquisition and Operation-Rail Line of Meridian & Bigbee Railroad, L.L.C., 77403-77409 [2023-24854]

Agencies

• Surface Transportation Board

[Federal Register Volume 88, Number 216 (Thursday, November 9, 2023)]
[Notices]
[Pages 77403-77409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24854]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36727]


CSX Transportation, Inc.--Acquisition and Operation--Rail Line of 
Meridian & Bigbee Railroad, L.L.C.

AGENCY: Surface Transportation Board.

ACTION: Decision No. 1; Notice of acceptance of primary application; 
Notice of acceptance of related filings for consideration; Issuance of 
procedural schedule.

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SUMMARY: The Surface Transportation Board (Board) is accepting the 
primary application (Application) filed October 6, 2023, by CSX 
Transportation Inc. (CSXT), and accepting for consideration two related 
filings. The Application seeks Board approval for CSXT to acquire and 
operate the assets comprising the rail line of Meridian & Bigbee 
Railroad, L.L.C. (MNBR) that runs approximately 93.68 miles between the 
cities of Burkville, Ala., and Myrtlewood, Ala., in Lowndes, Dallas, 
Wilcox and Marengo Counties (the Eastern Line). This proposal is 
referred to as the ``Proposed Transaction.'' The related filings are 
notices of exemption seeking Board approval of transactions involving 
trackage rights of other carriers (Related Transactions).

DATES: The effective date of this decision is November 3, 2023. CSXT is 
directed to supplement its Application as discussed in this decision by 
November 21, 2023. Any person who wishes to participate in this 
proceeding as a Party of Record must file, no later than November 27, 
2023, a notice of intent to participate. All comments, protests, 
requests for conditions, and any other evidence and argument in 
opposition to the 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 December 11, 2023. Responses to 
comments, protests, requests for conditions, other opposition, and 
rebuttal in support of the Application or related filings must be filed 
by January 8, 2023. See Appendix (Procedural Schedule). A final 
decision in this matter will be served no later than 45 days after the 
date on which the evidentiary proceedings conclude, subject to the 
completion of environmental review. Further procedural orders, if any, 
would be issued by the Board.

ADDRESSES: Any filing submitted in this proceeding should be filed with 
the Board via e-filing on the Board's website. 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) CSXT's representative, Peter W. Denton, 
Steptoe & Johnson LLP, 1330 Connecticut Ave. NW, Washington, DC 20036; 
(4) AGR's and MNBR's representative, Justin J. Marks, Clark Hill PLC, 
1001 Pennsylvania Ave. NW, Suite 1300 South, Washington, DC 20004; and 
(5) any other person designated as a Party of Record on the service 
list.

FOR FURTHER INFORMATION CONTACT: Jonathon Binet at (202) 245-0368. If 
you require an accommodation under the Americans with Disabilities Act, 
please call (202) 245-0245.

SUPPLEMENTARY INFORMATION: CSXT seeks the Board's prior review and 
authorization pursuant to 49 U.S.C. 11323-25 and 49 CFR part 1180 to 
acquire from MNBR and operate the Eastern Line. (Appl. 1.) The Eastern 
Line consists of two segments totaling approximately 93.68 miles: (1) 
extending from milepost XXB 189.00 near Burkville to milepost XXB 
222.00 at Western Junction, a distance of about 30.22 miles; \1\ and 
(2) extending from a connection with the first segment at Western 
Junction, milepost OOR 716.25 to milepost ORS 779.71 near Myrtlewood, a 
distance of about 63.46 miles. (Id.) The Eastern Line includes Selma 
Yard, at Selma, Ala., and the following stations: Myrtlewood, Linden, 
Thomaston, Safford, Orville, Beloit, Selma, Industrial Lead, Tyler, 
Benton, Whitehall, and Burkville. (Id.) Two other carriers, Alabama 
Gulf Coast Railway LLC (AGR) and Norfolk Southern Railway (NSR) connect 
with the Eastern Line. AGR's line connects to the Eastern Line at 
Linden, Ala. (Id. at 5.) AGR operates over an approximately 10-mile 
portion of the Eastern Line between Linden and Myrtlewood to 
interchange traffic with MNBR.\2\ (Id.) NSR connects to the Eastern 
Line at Selma, where it interchanges traffic with MNBR. (Id. at 12.)
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    \1\ The Board notes that, for the Burkville-Western Junction 
segment, the difference between the milepost numbers is 33 but the 
claimed distance of the segment is 30.22 miles. CSXT is directed to 
confirm that 30.22 miles is the correct distance of this segment or 
to provide a correction. CSXT shall submit this information by 
November 21, 2023 when it submits the supplemental information 
discussed below.
    \2\ AGR and MNBR are both controlled by Genesee & Wyoming Inc. 
(GWI). See Genesee & Wyo. Inc.--Control--RailAmerica, Inc., FD 
35654, slip op. at 3 n.7 (STB served Dec. 20, 2012).
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    Prior to 2003, CSXT and its predecessors owned and operated the 
Eastern Line. (Id. at 2.) In 2003, CSXT entered into a Land Lease 
Agreement (2003 Agreement) with M&B Railroad, L.L.C. (M&B), which was 
later renamed MNBR,\3\ whereby CSXT: (1) sold to M&B the tracks, rails, 
ties, ballast, other track materials, switches, crossings, bridges, 
culverts, crossing warning devices and any and all improvements or 
fixtures affixed to the Eastern Line (Assets); (2) leased to M&B for a 
20-year term the real property underlying the Eastern Line; and (3) 
granted M&B incidental overhead trackage rights over approximately 14 
miles of CSXT trackage between the eastern end of the Eastern Line at 
Burkville and Montgomery, Ala., to effectuate interchange between M&B 
and CSXT at CSXT's S and N Yard and Chester Yard at Montgomery. (Id.) 
The 2003 Agreement will expire at the end of its 20-year term, on 
November 14, 2023, thereby ending MNBR's leasehold interest. (Id.) The 
2003 Agreement provides that CSXT may reacquire the Assets from MNBR 
upon expiration of MNBR's leasehold interest. (Id.) The parties have 
entered an agreement for CSXT to reacquire the Assets from MNBR 
(Transaction Agreement).\4\ (Id. at 2-3.) Because MNBR's lease is set 
to expire during this proceeding, CSXT and MNBR have agreed to extend 
the 2003 Agreement until the first to occur of: (1) the closing date of 
the transactions contemplated under the Transaction Agreement; or (2) 
the ``Drop Dead Date,'' as defined in the Transaction Agreement. (Id.)
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    \3\ GWI acquired control of M&B in 2005 and later changed its 
name to MNBR. See Genesee & Wyo. Inc.--Control Exemption--Rail 
Partners, L.P., FD 34708 (STB served June 24, 2005).
    \4\ The Transaction Agreement is attached to the Application as 
Exhibit 2.
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    In Docket No. AB 1335X, MNBR filed a verified notice of exemption 
under the

[[Page 77404]]

class exemption at 49 CFR part 1152, subpart F, to discontinue overhead 
trackage rights along an approximately 14-mile rail line extending 
between milepost XXB189 near Burkville, Ala., and Montgomery Yard in 
Montgomery, Ala. In Docket No. FD 36724, Alabama Gulf Coast Railway LLC 
(AGR) filed a verified notice of exemption to acquire overhead trackage 
rights from CSXT over approximately 9.5 miles of the Eastern Line 
running between milepost 59.9 at Linden, Ala., and milepost 50.4 near 
Myrtlewood.\5\
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    \5\ This decision embraces the following dockets: Alabama & Gulf 
Coast Railway--Trackage Rights Exemption--CSX Transportation, Inc., 
Docket No. FD 36724; Meridian & Bigbee Railroad--Discontinuance of 
Incidental Overhead Trackage Rights--in Lowndes & Montgomery 
Counties, Ala., Docket No. AB 1335X.
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    The Board finds that the Application is complete and that the 
Transaction is a minor transaction based upon the preliminary 
determination that the Proposed Transaction's anticipated contribution 
to the public interest in meeting significant transportation needs 
clearly outweighs any potential anticompetitive effects. 49 CFR 
1180.2(b), (c). The Board makes this preliminary determination based 
solely on the evidence presented in the Application. The Board 
emphasizes that this is not a final determination and may be revisited 
or rebutted by subsequent filings and evidence submitted into the 
record for this proceeding. The Board also adopts a procedural schedule 
for consideration of the Application and directs CSXT to file certain 
supplemental information.
    Finally, an Environmental Assessment (EA) will be prepared to 
comply with the Board's obligations under the National Environmental 
Policy Act, 42 U.S.C. 4321-4370m-11 (NEPA), and related environmental 
laws.\6\
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    \6\ The Board is required to accommodate the requirements of 
NEPA in its decision-making. Therefore, the Board will not issue a 
final decision on the merits of the Application until the 
environmental review is complete, including preparation of an EA and 
opportunity for public comment and participation during the EA 
process. See Environmental Matters section below.
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    CPKC Transaction. In addition to the Eastern Line, MNBR owns and 
operates a rail line that connects to the Eastern Line at Myrtlewood 
and extends west to Meridian, Miss. (Western Line), where it connects 
with Canadian Pacific Railway Company (CPKC). (Id. at 3.) CPKC has 
filed an application seeking Board authority to acquire and operate 
over the Western Line (CPKC Transaction). CPKC Appl. 2, Oct. 6, 2023, 
Canadian Pac. Kan. City Ltd.--Acquis. & Operation--Certain Rail Line of 
Meridian & Bigbee R.R. in Lauderdale Cnty., Miss., & Choctaw & Marengo 
Cntys., Ala., FD 36732 et al. MNBR serves local traffic on the Eastern 
Line and the Western Line and operates over the two rail lines to move 
overhead traffic between CSXT at Montgomery \7\ and CPKC at Meridian. 
(Appl. at 3.) The Proposed Transaction contemplates CSXT taking over 
MNBR's operations on the Eastern Line and MNBR ceasing all operations 
on the Eastern Line. (Id.) The CPKC Transaction contemplates CPKC 
acquiring and operating over the Western Line but MNBR continuing to 
provide local service on the Western Line. CPKC Appl., Ex. 2, Retained 
Trackage Rights Agreement, art. 2.1, Oct. 6, 2023, Canadian Pac. Kan. 
City Ltd., FD 36732 et al. If both the Proposed Transaction and the 
CPKC Transaction are consummated, overhead traffic between Meridian and 
Montgomery will be directly interchanged between CSXT and CPKC at 
Myrtlewood, eliminating MNBR as an intermediate carrier for this 
overhead traffic. (Appl. at 13.)
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    \7\ As noted above, MNBR operates between Burkville (the eastern 
end of the Eastern Line) and Montgomery pursuant to overhead 
trackage rights.
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    CSXT states that the Proposed Transaction and the CPKC Transaction 
are not contingent on each other ``in that the [Proposed] Transaction 
could proceed regardless of whether the CPKC Transaction is 
consummated.'' (Id. at 6.) According to CPKC, the CPKC Transaction is 
contingent on CSXT acquiring and resuming operations on the Eastern 
Line. CPKC Appl. 2, Oct. 6, 2023, Canadian Pac. Kan. City Ltd., FD 
36732 et al. CSXT asks that the Board examine the Proposed Transaction 
independently of the CPKC Transaction. (Id. at 8.) The Board declines 
to do so for purposes of this decision. CSXT states only that the 
Proposed Transaction ``could proceed'' if the CPKC Transaction is not 
consummated, not that it necessarily will do so. Thus, it is not clear 
that the Proposed Transaction is in fact independent of the CPKC 
Transaction. Moreover, because the CPKC Transaction is specifically 
dependent upon consummation of the Proposed Transaction, the CPKC 
Transaction, and the effects that flow from it, would themselves be 
effects of the Proposed Transaction and must therefore be considered in 
determining whether the Proposed Transaction is minor or significant 
under 49 CFR 1180.2.
    Financial Arrangements. According to CSXT, no new securities would 
be issued in connection with the Proposed Transaction. (Id. at 22.) 
CSXT states that the purchase price would be paid from cash on hand. 
(Id.)
    Passenger Service Impacts. CSXT states that there are no current 
passenger or commuter operations on the Eastern Line and there would be 
no impact on commuter or other passenger service. (Id., 22-A, V.S. 
Adams 15.)
    Discontinuances/Abandonments. CSXT states that it does not 
anticipate abandoning any rail lines as a result of the Proposed 
Transaction. (Id., Ex. 15, Operating Plan 17.) As noted above, MNBR 
seeks Board authority to discontinue trackage rights over CSXT's line 
between Burkville and Montgomery if the Proposed Transaction is 
approved.
    Public Interest Considerations. CSXT asserts that if the Board 
approves the Proposed Transaction and the CPKC Transaction, it will 
create a direct CSXT-CPKC interchange at Myrtlewood, which will result 
in more efficient movement of existing CSXT-CPKC interchange traffic 
between the Eastern United States (CSXT) and the Western U.S. and 
Mexico (CPKC) without any reduction in competition. (Appl. 13.) CSXT 
claims the Proposed Transaction is an end-to-end transaction that will 
not result in any loss of competitive options available to MNBR-served 
shippers. (Id. at 11-12.) According to CSXT, the largest traffic group 
on the Eastern Line is overhead traffic to or from CSXT on which MNBR 
functions as a bridge carrier and that the Proposed Transaction will 
simply shift the interchange point for this traffic from Montgomery to 
Myrtlewood. (Id. at 13, Ex. 22-B, Reishus V.S. 11.) CSXT further states 
that most local traffic on MNBR today moves to CSXT and such movements 
will be unaffected by the CSXT Transaction. (Id., Ex. 22-A, V.S. Adams 
13.) In addition, CSXT states that the short line carriers that connect 
to the Eastern Line (MNBR and AGR) will not lose a connecting 
alternative. (Id. at 11.) It contends that the CSXT network fails to 
reach locations or regions served by AGR or reached through CPKC at 
Meridian (or involving Western Line shippers) and cannot plausibly 
provide competing single-line service for existing interline traffic 
with these carriers; hence, it has no incentive to foreclose those 
shippers' use of AGR and CPKC for interchange service. (Id., Ex. 22-B, 
V.S. Reishus 13.) CSXT notes that local shippers today have the ability 
to move on MNBR to interchange with NSR at Selma and that NSR and CSXT 
compete at a variety of locations across the eastern United States. 
(Id., Ex. 22-A, V.S. Adams 11, Ex. 22-B, V.S. Reishus 13.) However, 
CSXT states that MNBR's shippers use this option only for a small 
volume of traffic and CSXT

[[Page 77405]]

is committing to keeping the gateway with NSR at Selma open on 
commercially reasonable terms and asking the Board to impose this 
commitment as a condition to approval of Proposed Transaction. (Id., 
Ex. 22-A, V.S. Adams 13.) CSXT further states that one MNBR shipper 
currently moves traffic both to NSR at Selma and to CSXT at Montgomery. 
(Id.) According to CSXT, it will commit to that customer to continue to 
provide service to NSR at Selma at current rates, subject to reasonable 
cost escalation, for five years and on commercially reasonable terms 
thereafter. (Id., Ex. 22-A, V.S. Adams 13-14.)
    CSXT claims that the Proposed Transaction will have public benefits 
that are ``large, important, and obvious.'' (Appl. 14-15.) CSXT states 
that for the traffic that currently moves to or from CSXT, eliminating 
MNBR as an intermediate carrier will reduce costs and streamline the 
movement of traffic. (Id., Ex. 22-A, V.S. Adams 4.) In addition, CSXT 
states that certain CSXT-CPKC traffic is interchanged at less efficient 
gateways--such as New Orleans, La., Brookwood, Ala., and East St. 
Louis, Mo.--and that it projects that a portion of this traffic will be 
diverted to the new CSXT-CPKC Myrtlewood gateway if both the Proposed 
Transaction and the CPKC Transaction are approved. (Id. at 13.) CSXT 
further claims that establishing a new, more efficient gateway between 
CSXT and CPKC at Myrtlewood will allow each carrier to compete more 
effectively with other carriers and modes in the region and create 
redundancy in the southern portion of CSXT's network that will give 
CSXT a greater ability to respond to unexpected network problems. (Id. 
at 13, 16.)
    Additionally, CSXT states that once the transaction is consummated, 
it will make significant investments in the track, roadbed, bridges, 
warning devices, and wayside detectors on the Eastern Line, which will 
increase safety, reliability, and train speeds. (Id. at 15.) In 
addition, CSXT claims that acquisition of the Eastern Line will support 
CSXT's ongoing efforts to attract new industrial development to its 
rail network and will give CSXT's shippers expanded transportation 
options, which CSXT hopes will lead to further rail traffic growth. 
(Id.)
    Time Schedule for Consummation. CSXT seeks to consummate the 
Proposed Transaction on or soon after the effective date of a Board 
decision authorizing the Proposed Transaction, subject to the 
completion of any required labor implementing agreements. (Id. at 20.) 
CSXT anticipates that the Related Transactions will be consummated 
concurrently with the Proposed Transaction. (Id.)
    Environmental Impacts. According to CSXT, the Proposed Transaction 
will have no adverse impacts on the environment. (Id., Ex. 4, Env't 
Info. 8.) CSXT projects that if the Proposed Transaction and the CPKC 
Transaction are both consummated, there will be increases in gross ton 
miles and yard activity that exceed the Board's thresholds for 
environmental review on the Eastern Line and on the Burkville-
Montgomery segment, but that there will be no additional trains as a 
result of the transactions in the next five years. (Id., Ex. 4, Env't 
Info. 6-7, Ex. 22-A, V.S. Adams 14.) CSXT asserts that improvements in 
train speeds will counteract any effect of increases in train length. 
(Id. at Ex. 22-A, V.S. Adams 14.) CSXT also claims that the Proposed 
Transaction will have environmental benefits because the planned 
infrastructure improvements will result in increasing safety, 
reliability, and train speeds and will remove truck traffic from 
congested highways. (Id., Ex. 4, Env't Info. 9.) For the reasons 
discussed below, an EA will be prepared because the Board's thresholds 
for environmental review will be exceeded if the Proposed Transaction 
and the CPKC Transaction are both consummated. See Environmental 
Matters section.
    Historic Preservation Impacts. According to CSXT, under 49 CFR 
1105.8(b)(1), the Proposed Transaction and the Related Transactions are 
exempt from historic preservation reporting requirements. CSXT states 
that rail operations will continue on the Eastern Line and the 
Burkville-Montgomery segment, and that further approval will be 
required to abandon any service. CSXT further states that there are no 
plans to dispose of or alter properties subject to Board jurisdiction 
that are fifty years old or older. Therefore, based on the current 
record, no historic review is required.
    Labor Impacts. CSXT asserts that the Proposed Transaction will not 
have any adverse impact on labor. (Id., Ex. 22-A, V.S. Adams 15.) CSXT 
states that it will be employing more people on the Eastern Line as a 
result of the Proposed Transaction. (Id., Ex. 22-A, V.S. Adams 16.) 
According to CSXT, CSXT, and MNBR will not integrate any of their 
forces and CSXT employees will assume the responsibility for 
maintaining, dispatching, and operating CSXT trains over the Eastern 
Line. (Id. at 25.) CSXT further states that it understands that MNBR 
intends to abolish seven transportation positions, four engineering 
positions, and one mechanical position as a result of the Proposed 
Transaction. (Id. at 26.) According to CSXT, in addition to possible 
employment with CSXT, MNBR, or other GWI-controlled carriers may have 
other positions for employees who currently occupy these positions. 
(Id.) In addition, CSXT states that AGR employees will continue to 
operate AGR trains over the Eastern Line between Linden and Myrtlewood 
as they do today pursuant to a new trackage rights agreement with CSXT. 
(Id.)
    CSXT is requesting that the employee protective conditions 
established in 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' Association v. 
Interstate Commerce Commission, 930 F.2d 511 (6th Cir. 1991), be 
imposed on the Proposed Transaction to address any adverse impact to 
current employees. (Appl. at 26.)
    Related Filings. In connection with the Related Transactions, MNBR, 
and AGR each filed a notice of exemption.\8\
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    \8\ Also, on October 6, 2023, CSXT filed a motion for protective 
order in Docket No. FD 36727, which was granted by decision served 
on October 11, 2023.
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    MNBR Discontinuance: In Docket No. AB 1335X, MNBR filed a verified 
notice of exemption under the class exemption at 49 CFR part 1152, 
subpart F, to discontinue overhead trackage rights along an 
approximately 14-mile rail line extending between milepost XXB189 near 
Burkville and Montgomery Yard in Montgomery. MNBR states that it does 
not intend to consummate its discontinuance authority unless and until 
CSXT consummates the Proposed Transaction. If consummated, MNBR and 
CSXT will interchange traffic at Myrtlewood, rather than at Montgomery. 
According to MNBR, its proposed discontinuance qualifies for the 
Board's two-year out-of-service class exemption procedures because it 
seeks to discontinue overhead trackage rights and has not provided any 
local service within the past two years. However, another carrier, 
CSXT, has been providing local service over the same line during that 
two-year period. In Austin Area Terminal Railroad--Discontinuance of 
Service Exemption--in Bastrop, Burnet, Lee, Llano, Travis, and 
Williamson Counties, Tex., AB 578X (STB served Nov. 3, 2023), the Board 
recently reaffirmed that to qualify

[[Page 77406]]

for the two-year-out-of-service class exemption a carrier must certify 
that no local traffic has moved over the line for two years, not just 
its own traffic. Accordingly, the Board upheld a prior decision that 
rejected a verified notice because the required certification 
concerning the absence of local traffic on the line was deficient. Id. 
at 1. The Board noted, however, that carriers may petition the Board 
for individual exemptions under 49 U.S.C. 10502(a) and granted on its 
own motion an individual exemption authorizing the discontinuance. Id. 
at 4-5.
    Although, per Austin Area Terminal Railroad, MNBR may not proceed 
under the Board's two-year out-of-service class exemption procedures, 
during consideration of the broader Proposed Transaction, the Board 
will nonetheless consider whether to grant an individual exemption for 
this discontinuance authority on its own motion. To that end, MNBR may 
supplement the record in Docket No. AB 1335X with any additional 
information and argument it would like the Board to consider in 
determining whether the proposed discontinuance meets the exemption 
standard of 49 U.S.C. 10502(a). Any supplement filed by MNBR in Docket 
No. AB 1335X will be due by November 21, 2023.
    AGR Trackage Rights. In Docket No. FD 36724, AGR filed a verified 
notice of exemption under 49 CFR 1180.2(d)(7) to acquire overhead 
trackage rights from CSXT over approximately 9.5 miles of rail line 
running between milepost 59.9 at Linden, and milepost 50.4 near 
Myrtlewood. AGR states that it intends to consummate the transaction 
either on the effective date of its notice or upon the consummation of 
the Proposed Transaction, whichever occurs later. AGR intends to use 
its overhead trackage rights for the interchange of traffic with MNBR, 
CSXT, and other carriers at Myrtlewood.
    Primary Application and Related Filings. The Board finds that the 
Proposed Transaction would be a ``minor transaction'' under 49 CFR 
1180.2(c), and the Board accepts the Application because it is in 
substantial compliance with the applicable regulations governing minor 
transactions. See 49 U.S.C. 11321-26; 49 CFR part 1180. Additionally, 
the Board is also accepting for consideration the related verified 
notice of exemption filed in Docket No. FD 36724,\9\ which is also in 
compliance with the applicable regulations. As discussed below, the 
Board will require CSXT to supplement the record and reserves the right 
to require further supplemental information as necessary to complete 
the record.
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    \9\ Additionally, as discussed above, MNBR's verified notice of 
exemption in Docket No. AB 1335X does not qualify for the class 
exemption procedures under which it was filed; however, the verified 
notice will be accepted as evidence bearing on consideration of 
whether to grant MNBR an individual exemption on the Board's own 
motion.
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    When a transaction does not involve the merger or control of two or 
more Class I railroads, its classification will differ 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 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.
    The Board finds the Proposed Transaction to be a ``minor 
transaction'' because it appears from the face of the Application that 
the efficiency and other public interest benefits would clearly 
outweigh the potential anticompetitive effects of the transaction. 
Shippers that are currently served by MNBR would be served by CSXT 
post-transaction and this service could become more efficient due to 
the elimination of MNBR as an intermediate carrier and the upgrades to 
the line planned by CSXT. These upgrades could also improve the safety 
of operations over the Eastern Line. In addition, CSXT has committed to 
keeping the Selma gateway open for interchange with NSR on commercially 
reasonable terms and, for the one shipper on the Eastern Line that 
currently connects to both CSXT and NSR, CSXT has committed to keep 
current rates in place for five years. The Proposed Transaction, in 
combination with the CPKC Transaction, would create a direct connection 
between CSXT and CPKC at Myrtlewood. This new East-West Class I 
connection, along with the infrastructure upgrades planned by CSXT and 
CPKC, could provide a more efficient route for existing and future 
traffic moving between the eastern and southeastern United States and 
the southwestern United States and Mexico, potentially providing both 
economic and environmental benefits. Diverting existing traffic to the 
new Myrtlewood gateway from congested gateways such as New Orleans 
could also improve the efficiency of operations at those existing 
gateways.\10\ Moreover, adding a new East-West Class I gateway will 
provide redundancy in the national network and could reduce the 
economic impact of future outages in other areas (e.g., if rail 
infrastructure in the New Orleans area becomes unusable for a prolonged 
period due to flooding). There is a potential that traffic currently 
interchanged with other carriers may be diverted to the Myrtlewood 
interchange post-transaction (as discussed in the section below), and 
this has implications for competition, including a potential increase 
in competition to the benefit of shippers. The Board finds, at least 
preliminarily, that the potential risks of anticompetitive effects are 
clearly outweighed by the Proposed Transaction's anticipated benefits.
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    \10\ CSXT has broadly represented that ``no gateways would be 
closed'' to shippers as a result of the transactions. (CSXT Reply 7, 
Oct. 27, 2023 (replying to a request filed by NSR, discussed 
below).) CSXT states that there are no commercial agreements between 
CSXT and CPKC that would force a rerouting of traffic and that the 
creation of the new Myrtlewood gateway would simply give shippers a 
new competitive option to route traffic through Myrtlewood instead 
of moving through other congested locations. (Id.) It also states 
that ``[t]hose gateways would remain fully open, but shippers would 
now have an efficient alternative to them.'' (Id.)
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    For these reasons, 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). This determination should not be 
read to mean that the proposed Transaction is insignificant or of 
little importance. Indeed, after the record is fully developed, the 
Board will conduct a careful review before making a final determination 
as to whether the Proposed Transaction would substantially lessen 
competition, create a monopoly, or restrain trade, and whether any 
anticompetitive effects would be outweighed by the public interest. See 
49 U.S.C. 11324(d)(1)(2). The Board may also consider imposing 
conditions on the Proposed Transaction.
    Supplemental Information. The Board notes that the Proposed 
Transaction, in conjunction with the CPKC's Transaction, may result in 
shifts to traffic flows, including traffic currently interchanged with 
a third-party carrier. (See e.g., Appl., Ex. 22-A, V.S. Adams 6 (``[I]f 
CPKC also acquires the Western Line and upgrades it, the substantially

[[Page 77407]]

improved efficiency of the line between Meridian and Montgomery . . . 
is expected to significantly increase the amount of traffic that can be 
diverted to the Eastern Line in overhead traffic.''); CPKC Appl., App. 
3, Wahba V.S. 5-7, Oct. 6, 2023, Canadian Pac. Kan. City Ltd., FD 36732 
et al. (describing potential diversion of premium automotive traffic 
moving between KCSM-served locations in Mexico and CSXT-served 
locations on the East Coast, but interchanged with a bridge carrier at 
Laredo and at East St. Louis, Memphis, and New Orleans, to direct CPKC-
CSXT interchange at Myrtlewood).) To assist the Board in its 
consideration of the Proposed Transaction and in making the 
determination of what--if any--conditions might be warranted, CSXT will 
be directed to supplement its Application with certain additional 
information by November 21, 2023. See 49 CFR 1180.4(c)(2)(v) (``The 
applicant shall submit such additional information to support its 
application as the Board may require.'').\11\
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    \11\ On October 25, 2023, NSR filed a request (NSR's Request) 
for the Board to consolidate this proceeding with the proceeding 
regarding the CPKC Transaction and hold the consolidated proceeding 
in abeyance, including the Board's determination of whether to 
designate the transactions as minor or significant, until such time 
that CSXT and CPKC provide certain additional information, primarily 
regarding the potential effects of changes in CPKC-CSXT traffic 
flows on other traffic. On October 27, 2023, CSXT filed a reply. 
CSXT does not oppose embracing the two cases in one proceeding but 
argues the Board should not require the parties to file a 
consolidated application. (CSXT Reply 6 n.3, Oct. 27, 2023.) CSXT 
further argues that its application is complete and that the issues 
raised by NSR can be addressed through the comment process required 
by the procedural schedule. (Id. at 7.) On October 31, 2023, 
Illinois Central Railroad Company filed in support of NSR's request 
for consolidation. For the reasons given above, the current record 
supports a minor designation. The Board will not order the parties 
to submit a consolidated application at this time, though as 
discussed below, the Board's Office of Environmental Analysis (OEA) 
has determined that it is appropriate to prepare one EA to encompass 
both the Western Line and the Eastern Line. The Board may further 
address the consolidation issue in a subsequent decision. 
Additionally, the Board will not hold the proceedings in abeyance, 
as the Board is requiring CSXT to supplement the record as discussed 
further in this decision.
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    Specifically, in its reply to NSR's Request, CSXT broadly claims 
that ``[n]o gateways would be closed as a result of either 
transaction'' and that previously-used gateways ``would remain fully 
open.'' (CSXT Reply, 7, Oct. 27, 2023; see also supra note 9.) 
Moreover, CPKC specifically argues that ``[f]or traffic from CSXT 
origins that might use the new Myrtlewood routing, CSXT would not be 
obtaining a longer haul than it could realize via other gateways like 
New Orleans, Memphis, or East St. Louis, and thus there is no 
conceivably applicable theory of foreclosure.'' (CPKC Reply 5 n.3, FD 
36732, Oct. 27, 2023.) The Board appreciates these statements. 
Nevertheless, CSXT will be directed to more fully explain its position 
that no gateway ``would be closed,'' and describe in detail what it 
means when it says that all previously-used gateways will ``remain 
fully open.'' \12\ In addition, to help the Board evaluate the argument 
made by CPKC regarding certain CSXT gateways, CSXT should also address 
whether, and to what extent, the Proposed Transaction will give it the 
ability and incentive to avoid existing interline routing arrangements 
with carriers other than CPKC, and which may require interchange at New 
Orleans, Memphis, or East St. Louis (as well as Chicago or any other 
interchange location) for traffic from certain CSXT origin areas, so 
that it may move that traffic via a longer haul through the CPKC-CSXT 
interchange at Myrtlewood. See, e.g., https://www.up.com/customers/shortline/interline_agree/index.htm.
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    \12\ The Board notes that CPKC states that there is not ``some 
secret overarching agreement between CPKC and CSXT that has not been 
put before the Board and that somehow implicates the competitive 
landscape.'' (CPKC Reply 5-6, FD 36732, Oct. 27, 2023.)
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    Additionally, in its supplement, to further inform the Board's 
analysis, CSXT shall provide a list of all origination/destination 
areas,\13\ including gateways, for the projected diverted and new 
traffic; identify any interchange partners participating in current 
movements of this traffic as well as projected diverted and new 
movements (if applicable); \14\ and provide the associated volumes by 
origination/destination areas for projected diverted and new traffic. 
The Board recognizes that CSXT was recently involved in a transaction 
that required the production of substantial information about its 
network and the markets it serves. Some of the work involved with that 
production may be relevant to the Proposed Transaction, potentially 
lowering the burden on CSXT of producing the information requested 
here, which the Board recognizes goes beyond what is generally required 
for a minor transaction under 49 CFR 1180.4 (and therefore, not 
necessarily applicable to future minor transactions).
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    \13\ Origination/destination areas may be as broad as a state or 
group of states. CSXT shall provide a justification for its 
definition of the state or region whatever grouping metric it uses 
for its analysis, and it shall specify the gateway(s) used by 
traffic for the origination or destination areas.
    \14\ Information should include the total count of cars 
interchanged categorized by two-digit Standard Transportation 
Commodity Code and broken out by interchange partner.
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    To assist the Board in evaluating the Proposed Transaction, in 
conjunction with CPKC's proposed acquisition of the Western Line, CSXT 
will be directed to provide additional operational information. As NSR 
notes, the Application does not include an analysis of the potential 
operational impacts to shippers or Amtrak passengers on rail segments 
outside the Eastern Line and Western Line. (NSR Reply 12-13.) 
Accordingly, the Board directs CSXT to detail any impacts anticipated 
on other rail operations, including (1) potential impacts on any 
passenger rail operations that involve crossing the Eastern Line, and 
(2) delays that may be occasioned because a line is scheduled to handle 
increased traffic due to route consolidations or traffic diversions. 
Additionally, CSXT shall provide a description of the effect of any 
deferred maintenance or delayed capital improvements on the subject 
lines and associated equipment. This should include the schedule for 
eliminating such deferrals, details of general system rehabilitation 
(including rehabilitation relating to the transaction, such as proposed 
yard and terminal modifications), and how these activities will lead to 
service improvements or operating economies anticipated from the 
transaction.
    Procedural Schedule. CSXT is directed to supplement its Application 
as discussed in this decision by November 21, 2023. Any person who 
wishes to participate in this proceeding as a Party of Record must file 
a notice of intent to participate no later than November 27, 2023; all 
comments, protests, requests for conditions, and any other evidence and 
argument in opposition to the Application, including filings by DOJ and 
DOT, must be filed by December 11, 2023; and responses to comments, 
protests, requests for conditions, and other opposition on the 
transportation merits of the Transaction must be filed by January 8, 
2024.\15\ 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, subject to the

[[Page 77408]]

completion of environmental review.\16\ The Board reserves the right to 
adjust the schedule as circumstances may warrant. The adopted 
procedural schedule is in Appendix to this decision.
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    \15\ CSXT proposes a round of briefs due on the same day that 
the evidentiary record is statutorily required to close. (Appl. 26); 
see also 49 U.S.C. 11325(d)(2). CSXT however provides no explanation 
as to the intent or necessity of these additional briefs, which are 
not contemplated by the governing statute or the Board's 
regulations. See 49 U.S.C. 11325(d)(2); 49 CFR 1180.4(e)(2). 
Accordingly, the Board has not included the proposed briefs in the 
procedural schedule adopted here.
    \16\ This notice will be published in the Federal Register on 
November 9, 2023, and all subsequent deadlines will be calculated 
from this date. Deadlines for filings are calculated in accordance 
with 49CFR 1104.7(a).
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    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 November 27, 2023, 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 CSXT's representative.
    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 they have 
complied with the service requirements set forth at 49 CFR 1180.4 and 
any other requirements set forth in this decision.
    Discovery. Discovery may begin immediately. The parties are 
encouraged to resolve all discovery matters expeditiously and amicably.
    Environmental Matters. NEPA requires that the Board take 
environmental considerations into account in its decision-making. Under 
the Board's environmental regulations, an acquisition under 49 U.S.C. 
11323 generally requires the preparation of an EA where certain 
thresholds would be exceeded. See 49 CFR 1105.6(b)(4). The thresholds 
for assessing environmental impacts from increased rail traffic on rail 
lines in acquisitions are an increase in rail traffic of at least 100% 
(measured in gross ton miles annually) or an increase of at least eight 
trains per day. 49 CFR 1105.7(e)(5). For air quality impacts, rail 
lines located in areas classified as being in ``nonattainment'' areas 
under the Clean Air Act (42 U.S.C. 7401-7671q) are also assessed if 
they would experience an increase in rail traffic of at least 50% 
(measured in gross ton miles annually) or an increase of at least three 
trains per day. 49 CFR 1105.7(e)(5)(ii).
    In its Application, CSXT submitted environmental information, 
including estimated volume increases on the Eastern Line by track 
segment (Exhibit 4). The estimated volume for each segment includes 
transaction-related projections for five years (through 2029), as well 
as no-action projections (traffic including increases that would occur 
without the Proposed Transaction). CSXT presented two scenarios for its 
traffic projections. The first scenario assumes that the Proposed 
Transaction would occur without the CPKC Transaction. CSXT expects that 
this scenario would not produce significant changes to the existing 
traffic because the same number of trains currently operated by MNBR 
and CSXT over the Eastern Line would be operated by CSXT post-
transaction. In the second scenario, CSXT assumes that both the 
Proposed Transaction and the CPKC Transaction would occur at the same 
time. CSXT states that the second scenario would result in an increase 
in gross-ton miles of 100%. (Appl., Ex. 4, Env't Info. 7.) According to 
CSXT, the Proposed Transaction would result in improved efficiency and 
potential traffic diversions from truck to more environmentally 
favorable rail. (Appl., Ex. 4, Env't Info. 9.)
    The NEPA Process. OEA has reviewed the data provided by CSXT, 
including its traffic projections through 2029. Based on the current 
record, neither the 8-trains-per-day nor 3-trains-per-day thresholds 
for environmental review will be exceeded as a result of the Proposed 
Transaction. However, because there will be an increase in gross-ton 
miles in excess of 100% on the line segments involved in the Proposed 
Transaction under CSXT's second scenario, the gross-ton mile threshold 
will be exceeded and therefore, OEA will prepare an EA. See 49 CFR 
1105.7(e)(5)(i); 1105.10(b). For expediency and efficiency, OEA will 
prepare one EA to encompass both the Eastern Line (including the 
Burkville-Montgomery segment) and the Western Line because these 
transactions involve contiguous sections of the same rail line; indeed, 
both CPKC and CSXT (under scenario two) provided volume forecasts 
showing exceedance of the gross ton mile thresholds based on each 
transaction being authorized and implemented. (Appl., Ex.4, Env't Info. 
6-7; see also CPKC Appl., Ex. 4, Env't Info. 38, Oct. 6, 2023, Canadian 
Pac. Kan. City Ltd., FD 36732 et al.) In addition, the environmental 
impacts from both transactions are expected to be very similar and both 
applications were filed at the same time, allowing the environmental 
review of the two transactions to proceed simultaneously.
    The EA process will address potential environmental impacts of 
activities associated with both the Western Line and the Eastern Line, 
including changes in rail line traffic and rail yard activity changes. 
OEA will prepare a Draft EA and issue it for public comment. Following 
the close of the comment period, OEA will prepare a Final EA. The Final 
EA will address the comments received on the Draft EA, present OEA's 
final conclusions regarding the potential environmental impacts of the 
transactions, and set forth OEA's final recommendations to the Board, 
including recommended environmental mitigation measures.\17\ The Board 
then will consider the entire record, including the record on the 
transportation merits, the Draft EA, the Final EA, and all public 
comments received. In its final decision, the Board will decide whether 
the Proposed Transaction should be authorized and, if so, what 
conditions, including environmental mitigation conditions, to impose.
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    \17\ The Board's general practice has been to mitigate only 
impacts resulting directly from a proposed transaction, and not to 
require mitigation for existing conditions and existing railroad 
operations. See 49 CFR 1180.1(f)(1).
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    Historic Review. The Board's regulations provide that historic 
review normally is not required for acquisitions where there would be 
no significant change in operations and properties 50 years old and 
older would not be affected. See 49 CFR 1105.8. CSXT states that rail 
operations would continue on the Eastern Line and that there are no 
plans to dispose of or alter properties that are fifty years old or 
older. (Appl., Ex. 4, Env't Info. 1.) Therefore, based on the current 
record, no historic review is required.
    Service on Parties of Record. Each Party of Record will be required 
to serve upon all other Parties of Record, within 10 days of the 
service date of this decision, copies of all filings previously 
submitted by that party (to the extent such filings have not previously 
been served upon such other parties). Each Party of Record will also be 
required to file with the Board, within 10 days of the service date of 
this decision, a certificate of service indicating that the service 
required by the preceding sentence has been accomplished. Every filing 
made by a Party of Record after the service date of this decision must 
have its own certificate of service indicating that all Parties of 
Record on the service list have been served with a copy of the filing. 
Members of the United States Congress and Governors are not Parties of 
Record and need not be served with copies of filings, unless

[[Page 77409]]

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 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. In addition, the Application may be obtained from CSXT's 
representative at the address indicated above.
    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 filed in Docket No. FD 36727 and the related 
verified notice of exemption filed in Docket Nos. FD 36724 are accepted 
for consideration.
    2. CSXT shall file the supplemental information described above by 
November 21, 2023.
    3. The filing in Docket No. AB 1335X is accepted to the extent 
discussed above. MNBR may file supplemental evidence and argument in 
support of an individual exemption in that docket by November 21, 2023.
    4. 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.
    5. NSR's request to hold this proceeding in abeyance is denied.
    6. This decision is effective on November 3, 2023.
    Decided: November 3, 2023.
    By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and 
Schultz. Board Member Schultz, joined by Board Member Fuchs, concurred 
with a separate expression.

BOARD MEMBER SCHULTZ, with whom BOARD MEMBER FUCHS joins, concurring:
    I agree that this Proposed Transaction should be classified as 
minor and that the record at this stage of the proceeding indicates 
that any anticompetitive effects of the Proposed Transaction will 
clearly be outweighed by the Proposed Transaction's anticipated 
contribution to the public interest in meeting significant 
transportation needs. On this record, I would not order CSXT to submit 
this extensive amount of supplemental information at this stage in the 
proceeding. While the Board has the authority to require the filing of 
supplemental information, the better course here would have been to 
assess whether any supplemental information is necessary after full 
analysis of all comments and requests for conditions and again after 
responses to those comments and requests, when the Board would benefit 
from the full views of shippers, railroads, and the broader public.

Jeffrey Herzig,
Clearance Clerk.

Appendix

Procedural Schedule

    October 6, 2023--Application filed.
    November 3, 2023--Board notice of acceptance of application 
served.
    November 21, 2023--CSXT's supplemental information due.
    November 27, 2023--Notices of intent to participate in this 
proceeding due.
    December 11, 2023--All comments, protests, requests for 
conditions, and any other evidence and argument in opposition to the 
application, including filings of DOJ and DOT, due.
    January 8, 2024--Responses to comments, protests, requests for 
conditions, and other opposition due. Rebuttal in support of the 
application due.
    TBD--Record closes.
    No later than 45 days after close of the record--Date by which a 
final decision will be served.\1\
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    \1\ 49 U.S.C. 11325(d)(2) provides that the Board must issue its 
final decision within 45 days of the close of the evidentiary 
record. However, under NEPA, the Board may not issue a final 
decision until after the required environmental review is complete. 
In the event the environmental review process is not able to be 
concluded in sufficient time for the Board to meet the 45-day 
provision in section 11325(d)(2), the Board will issue a final 
decision as soon as possible after that process is complete.
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    30 days after service--Board's decision becomes effective.

[FR Doc. 2023-24854 Filed 11-8-23; 8:45 am]
BILLING CODE 4915-01-P