|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|WISCONSIN DEPARTMENT OF TRANSPORTATION—PETITION FOR DECLARATORY ORDER—RAIL LINES IN ALMENA, CAMERON, AND RICE LAKE, BARRON COUNTY, WIS.|
|DECISION GRANTED WISCONSIN DEPARTMENT OF TRANSPORTATION’S (WISDOT’S) PETITION TO INSTITUTE A DECLARATORY ORDER PROCEEDING, BUT DENIED THE REQUEST TO DECLARE THAT THE PROPOSED TRANSACTION WOULD NOT CAUSE WISDOT TO BECOME A RAIL CARRIER AND WOULD NOT REQUIRE AUTHORIZATION UNDER 49 U.S.C. § 10901 (OR AN EXEMPTION UNDER 49 U.S.C. § 10502).|
| 25 KB|
|Approximate download time at 28.8 kb: 63 Seconds|
If you do not have Acrobat Reader, or if you have problems reading our files with your current version of Acrobat Reader, the latest version of Acrobat Reader is available free at www.adobe.com.
|Full Text of Decision|
40728 SERVICE DATE – SEPTEMBER 23, 2010
SURFACE TRANSPORTATION BOARD
Docket No. FD 35366
OF TRANSPORTATION—PETITION FOR DECLARATORY ORDER—RAIL LINES IN ALMENA, CAMERON,
Decided: September 21, 2010
Digest: The Board finds that the Wisconsin Department
of Transportation would become a rail carrier if it acquires parts of a rail
On April 2, 2010, the
Wisconsin Department of Transportation (WisDOT) filed a petition for a declaratory
order asking us to determine that we do not have regulatory authority over
its proposed acquisition of two line segments owned by Progressive Rail, Inc.
(PGR), d/b/a Wisconsin Northern Railroad, in
In the proposed transaction, WisDOT plans to purchase
two segments of a rail line from PGR, a Class III railroad, through a Purchase
and Sale Agreement and a Quitclaim Deed.
The two segments of rail line total 23.97 miles in length and are
In WisDOT’s original filing on April 2, 2010, the Quitclaim Deed did not include an easement reserving a right for PGR to provide common carrier service. Subsequently, WisDOT filed, on April 15, 2010, an amended Quitclaim Deed with an easement stating that PGR shall retain an “exclusive easement, for the benefit of itself and authorized third parties, as long as the Grantor [i.e., PGR] and authorized third parties have the ability and authority to meet their common carrier obligation.” WisDOT did not, however, amend the Purchase and Sale Agreement or any of the accompanying agreements to reflect the easement interest.
In addition, as part of the proposed transaction, WisDOT would enter into a Land Use Agreement and also a “Grant Agreement for the Rail Service Continuation” (the Grant Agreement) with the Wisconsin West Rail Transit Authority (WWRTA). Pursuant to those two agreements, WisDOT would transfer certain rights to the property to WWRTA. The Land Use Agreement states that WWRTA “shall establish, construct, develop, maintain and operate a railroad on, over and across these properties for railroad purposes, and should have use and access to the property.” Under the Grant Agreement, WisDOT would also grant WWRTA use of the property and also the right to enter into an agreement with PGR for PGR to provide freight rail service. The Grant Agreement states that WWRTA will “grant [PGR] the right to operate over [the lines] under [WWRTA] jurisdiction as a common carrier railroad providing exclusive originating and terminating freight rail service….In such operation, [PGR] shall have the power and authority to exclusively control, manage, staff and plan for the provision of freight rail service.” The Grant Agreement also states that WWRTA “agrees to provide, through contractual agreement with [PGR], freight rail service.”
Through another contractual arrangement termed the Operating Agreement, WWRTA would lease the property to PGR and would grant PGR the exclusive right and license to use the land for the purpose of providing freight rail service. In return, PGR would provide common carrier service and pay rent to WWRTA. The chart attached as Appendix 1 to this decision illustrates the transaction.
WisDOT argues that, pursuant to these various agreements, it would acquire the lines without acquiring the common carrier obligation or authority. WisDOT states that it has entered into its agreements with WWRTA so that WWRTA can contract with PGR to operate exclusively as a common carrier railroad over the lines. WisDOT asserts that it has intentionally and specifically structured the transaction to comport with the terms and conditions of State of Maine and its progeny, as neither it nor WWRTA desires or is equipped to provide common carrier rail service. As a result, WisDOT claims, the conveyance of the lines does not constitute the acquisition of a railroad line within the scope of 49 U.S.C. § 10901; thus, the transaction does not require the Board’s regulatory authorization.
DISCUSSION AND CONCLUSIONS
acquisition of an active rail line, and the common carrier obligation that goes
with it, requires Board approval under 49 U.S.C. § 10901, even if the
acquiring entity is a noncarrier, including a state. See Common Carrier Status of
States, State Agencies, 363 I.C.C. 132, 133 (1980), aff’d sub nom.
Simmons v. ICC, 697 F.2d 326 (D.C. Cir. 1982). Our authorization is not required, however,
when only the physical assets will be conveyed and the common carrier rights
and obligations that attach to the line will not be transferred to the
purchaser. See State of
WisDOT has not proposed a transaction that would unambiguously
allow PGR to retain the rights and ability to carry out its common carrier
obligation. Although the Quitclaim Deed purports
to reserve the common carrier obligation for PGR, the other agreements seemingly
transfer rights related to the common carrier obligation from WisDOT to WWRTA
to PGR. The result is an ambiguous and
contradictory transaction that does not allow us to make the requisite State
Pursuant to the easement, PGR retains its right to operate as a carrier. At the same time, however, pursuant to the Operating Agreement with WWRTA, PGR also acquires the right to provide rail service from WWRTA. If, however, the easement actually does what it purports to do, WWRTA could not acquire the right to provide rail service in the first place and could not then transfer to PGR. Similarly, pursuant to the Land Use Agreement, WisDOT purports to grant WWRTA the right to operate a railroad, a right that, pursuant to the terms of the easement, WisDOT could not acquire. For the same reason, WisDOT does not have the right to empower and direct WWRTA in the Grant Agreement to give PGR the right to provide freight rail service. Finally, PGR’s warranty in the Purchase and Sale Agreement that the property “is sufficient to enable [WisDOT] or its assigns to conduct rail operations thereon substantially in the same manner that [PGR] conducts operations on the [property]” contravenes the terms of the Quitclaim Deed containing PGR’s easement.
In addition, the easement itself contains
ambiguous language that may limit the railroad’s right to provide common
carrier service. The easement is
effective as long as PGR has “the ability and authority to meet [its] common
carrier obligation.” Thus, unspecified
but clearly envisioned limitations could restrict PGR’s
ability and authority to provide common carrier service and thereby limit the easement.
This is not the permanent, exclusive
easement language that State of
Based on this record, we find that
the proposed transaction is not consistent with State of
This decision will not significantly affect either the quality of the human environment or the conservation of energy resources.
It is ordered:
1. WisDOT’s petition that we institute a declaratory order proceeding is granted, although its request that we find this transaction covered by State of Maine is denied, as discussed above.
2. This decision will be effective on its service date.
By the Board, Chairman Elliott, Vice Chairman Mulvey, and Commissioner Nottingham.
 The digest constitutes no part of the decision of the Board but has been prepared for the convenience of the reader. It may not be cited to or relied upon as precedent. See Policy Statement on Plain Language Digests in Decisions, EP 696 (STB served Sept. 2, 2010).
 WisDOT seeks a determination that the Board lacks “jurisdiction” over the proposed transaction, as well as a determination that we lack “regulatory authority” over it. The two terms are not synonymous. This agency would continue to have jurisdiction over the rail property, even if we were to conclude that we would not exercise regulatory authority over it. See Friends of the Aquifer, FD 33966, slip op. at 4 (STB served Aug. 15, 2001).
 According to WisDOT, WWRTA is a public entity and consortium of interested Wisconsin counties created under Wisconsin law, in part, to oversee the preservation of rail service on certain rail lines acquired by the State of Wisconsin.
 Land Use Agreement, p. 2.
 Grant Agreement, Article 5.0, Section 5.1(b), p. 8-9.
 Grant Agreement, Article 5.0, Section 5.2, p. 9.
 The granting of a permanent, exclusive
easement by a state where the carrier reserves the right and obligation to
provide common carrier service distinguishes a State of