|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|NORFOLK SOUTHERN RAILWAY COMPANY, PAN AM RAILWAYS, INC., ET AL.-JOINT CONTROL AND OPERATING/POOLING AGREEMENTS-PAN AM SOUTHERN LLC|
|DECISION APPROVED THE JOINT CONTROL AND OWNERSHIP OF PAN AM SOUTHERN LLC, A NEW RAIL CARRIER, BY NORFOLK SOUTHERN RAILWAY COMPANY, PAN AM RAILWAYS, INC., AND TWO OF ITS RAIL CARRIER SUBSIDIARIES, BOSTON AND MAINE CORPORATION AND SPRINGFIELD TERMINAL RAILWAY COMPANY, AND THE RELATED OPERATION AGREEMENTS, SUBJECT TO SEVERAL LABOR PROTECTION, ENVIRONMENTAL PROTECTION, AND OTHER CONDITIONS. HOWEVER, THE BOARD DENIED THE REQUEST FOR POOLING AUTHORITY UNDER 49 U.S.C. 11322.|
|Approximate download time at 28.8 kb: 2 Minutes|
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|
39179 SERVICE DATE – LATE RELEASE MARCH 10, 2009
This decision will be printed in the bound volumes of
the STB printed reports at a later date.
SURFACE TRANSPORTATION BOARD
STB Finance Docket No. 35147
− JOINT CONTROL AND OPERATING/POOLING AGREEMENTS −
PAN AM SOUTHERN LLC
Decided: March 10, 2009
The Board approves the joint control and ownership of Pan Am
Southern LLC, a new rail carrier, by Norfolk Southern Railway Company, Pan Am
Railways, Inc., and two of its rail carrier subsidiaries,
In this proceeding, Norfolk Southern Railway Company (Norfolk Southern), Pan Am Railways, Inc. (PARI) (a noncarrier railroad holding company), and two of PARI’s rail carrier subsidiaries, Boston and Maine Corporation (B&M) and Springfield Terminal Railway Company (Springfield Terminal) (collectively, Applicants) seek Board approval under 49 U.S.C. 11322 and 11323: (1) for Norfolk Southern and B&M to jointly own and control Pan Am Southern LLC (PAS), a new rail carrier to be formed, and (2) for the agreements pursuant to which Springfield Terminal would operate the lines of PAS and establish rates for PAS. Together, the various component parts of the application and related filings (see note 1, above) are referred to collectively as the Transaction.
In this decision, we approve the primary application and related filings, subject to conditions, except that we deny the request for pooling authority under 49 U.S.C. 11322. We conclude that this end-to-end transaction is not likely to result in a substantial lessening of competition or the creation of a monopoly or restraint of trade and that the imposition of limited competitive conditions can ameliorate any potential concerns. The Board also has engaged in a thorough environmental review. After carefully considering the results of the environmental analysis, we impose conditions to ameliorate the potential adverse environmental effects of the Transaction.
Pursuant to the Transaction, PAS
would operate over approximately 437 miles of track (PAS Lines). The PAS Lines consist
of 238.3 miles of rail lines to be owned by PAS, as well as 198.4 miles of track
over which PAS would have trackage rights.
The east-west main line section of the PAS Lines, called the Patriot
Corridor, would be comprised of 139.7 miles of track to be owned by PAS extending
The application states that
addition to the primary application, which was submitted on May 30, 2008, Applicants
filed three related notices of exemption.
First, pursuant to 49 CFR 1150.35(a), Applicants filed a notice of
intention to file (and did file on June 27, 2008) a notice of
exemption in STB Finance Docket No. 35147 (Sub‑No. 1), for PAS to
acquire from B&M the 437 miles of rail lines and trackage rights involved
in the Transaction and to operate over the lines as a common carrier. Second, Applicants filed a notice of
exemption in STB Finance Docket No. 35147 (Sub-No. 2), for
By decision served in this
proceeding on June 26, 2008, and published in the Federal Register
on June 27, 2008, at 73 FR 36586, we accepted for consideration the primary
application and related filings. Based
on the information provided in the application, we classified the proposed
Transaction as a “minor transaction” under 49 CFR 1180.2(c). Under 49 CFR 1180.2, a
transaction that does not involve two or more Class I railroads is considered
to be minor if, based on the application itself, it appears that (1) the
transaction would clearly not have anticompetitive effects, or (2) any
anticompetitive effects would clearly be outweighed by the transaction's
contribution to the public interest in meeting significant transportation needs. We determined that, on the face of the application,
there did not appear to be a likelihood of anticompetitive effects resulting from
this Transaction because the
By decision served on July 21, 2008, we denied the petition of the Clarendon & Pittsford Railroad (CPR), Green Mountain Railroad (GMR), Vermont Railway (VR), and the Washington County Railway (WCR)—an affiliated group of Class III railroads known as the “Vermont Railway System” (VRS)—to reclassify the Transaction as “significant” under 49 CFR 1180.2(b) and to revise the procedural schedule. We also denied a petition for the same relief sought jointly by United Transportation Union and Brotherhood of Locomotive Engineers and Trainmen (UTU/BLET).
Comments, protests, and/or requests for conditions were filed by the following parties of record: Batten Kill Railroad (Batten Kill); Brotherhood of Maintenance of Way Employes Division/IBT and Brotherhood of Railroad Signalmen (jointly, BMWE/BRS); Captain Dirck Hecking and Locomotive Engineer William Remington; CaroVail, a division of Carolina Eastern, Inc. (CaroVail); Committee to Improve Rail Service in Maine (CIRSM); the Commonwealth of Massachusetts’ Executive Office of Transportation and Public Works (EOTPW), also representing MBTA; Connecticut Department of Transportation (Connecticut DOT); GATX Corporation (GATX); International Association of Machinists and Aerospace Workers and International Brotherhood of Electrical Workers (IAMAW/IBEW); Milford‑Bennington Railroad Company, Inc. (Milford‑Bennington); Montreal, Maine & Atlantic Railway, Ltd. (MMA); Morristown & Erie Railway, Inc., d/b/a/ Maine Eastern Railroad (MER); Amtrak; New England Southern Railroad Company (NESR); New York State Department of Transportation (NYSDOT); Pioneer Valley Railroad Company, Inc. (Pioneer Valley); P&W; State of Maine; UTU/BLET; U.S. Clay Producers Traffic Association, Inc. (confidential and public versions) (U.S. Clay Producers); VRS; and Vermont Agency of Transportation (VTrans). The Board also received letters commenting on various environmental and other issues related to this transaction from Members of Congress, including: United States Senators Edward M. Kennedy (MA) and John F. Kerry (MA); and United States Representatives Kirsten Gillibrand (NY), John W. Olver (MA), James McGovern (MA), and Niki Tsongas (MA).
DISCUSSION AND CONCLUSIONS
Statutory Criteria. The acquisition of control of a rail carrier by another rail carrier or by a noncarrier that controls another rail carrier requires Board approval. 49 U.S.C. 11323(a)(3), (5). Because the proposed Transaction does not involve the merger or control of two or more Class I railroads, this Transaction is governed by 49 U.S.C. 11324(d), which directs us to approve the application unless we find that: (1) as a result of the transaction, there is likely to be substantial lessening of competition, creation of a monopoly, or restraint of trade in freight surface transportation in any region of the United States; and (2) the anticompetitive effects of the transaction outweigh the public interest in meeting significant transportation needs.
In assessing transactions subject to section 11324(d), our primary focus is on whether there would be adverse competitive impacts that are both likely and substantial. If so, we also consider whether the anticompetitive impacts would outweigh the transportation benefits or could be mitigated through conditions. The Board also has the authority to consider the potential environmental effects of the transaction and to impose appropriate conditions to mitigate adverse environmental impacts.
Based on the record here, we conclude that the Transaction is not likely to cause a substantial lessening of competition or to create a monopoly or a restraint of trade. The lines involved in the Transaction are end-to-end, with no parallel routes. This agency has long held that end-to-end transactions are unlikely to generate the types of competitive problems that often arise in parallel transactions. Applicants explain that no shipper on the line would have reduced competitive rail service options as a result of the Transaction. No party has identified any rail route or rail service option that would become unavailable to a shipper. Indeed, rather than adversely affecting competition, it appears that the Transaction would significantly increase competition between railroads by providing an upgraded east-west main line route to compete with a parallel main line route operated by CSXT.
Our conclusion that the Transaction would not adversely affect competition is reinforced by our analysis of the comments of the participating parties. The commenting parties generally ask us to attach conditions upon our approval of the Transaction. Under 49 U.S.C. 11324(c), we have broad authority to impose conditions on a transaction subject to section 11324(d) to ameliorate competitive harm that would result from the transaction. See Kansas City Southern – Control – The Kansas City Southern Railway Company, et al., STB Finance Docket No. 34342 slip op. at 16 (STB served Nov. 29, 2004) (KCS-Tex Mex). However, most of the conditions sought by the parties in this case do not relate to the preservation of competition.
The requested conditions fall into three broad categories. The first broad category includes proposals to remedy perceived pre‑existing problems, such as service failures, lack of investment, failure to pay bills, and failure to establish interchanges with other carriers or to route enough traffic through the interchanges that already exist. We will not impose any of these conditions because none are based on a competitive effect of the transaction or would even address any kind of effect caused by the transaction.
The second broad category of conditions includes proposals designed to ensure that the Transaction would not result in the future re‑routing of interline traffic away from connecting short line carriers. We decline to impose any conditions in this category. The proponents of conditions in this category have not shown that they are necessary to remedy any potential anticompetitive effect. Nor has any party given us reason to conclude that any new single-line movements created through the Transaction would lead the Applicants to vertically foreclose competition over efficient routes and refuse to cooperate with unaffiliated carriers.
The conditions in a third broad category were proposed to avoid service reductions over connecting Springfield Terminal lines that would not be transferred to PAS, such as reduced train service, maintenance, or investments on such lines. As described in greater detail below, we are not imposing any of those conditions here because none are based on competitive harm. However, we will hold Applicants to all representations made on the record in this proceeding.
Kill and CaroVail. Batten Kill and CaroVail have requested a
related set of interchange conditions. Batten Kill is a short line railroad in
CaroVail, a bulk
shipper of fertilizer products, has a plant at
not impose the conditions sought by Batten Kill and CaroVail. These conditions do not relate to any
competitive harm caused by the proposed Transaction. Moreover, the problems cited by Batten Kill
and CaroVail pre‑date the Transaction and would not be exacerbated by the
Transaction. The Transaction documents
do not restrict interchange with the Batten Kill at
CIRSM. CIRSM—a group of business, political and civic leaders—asks us to impose conditions that would (1) require PARI to implement an extensive upgrade of rail service and equipment within Maine, and (2) sequester the $47.5 million that PARI would receive from Norfolk Southern for the payment of debts and improving service. In support of these conditions, CIRSM argues that: (1) Springfield Terminal has overdue debt to car leasing companies and railroads; (2) it is financially ailing; (3) its service has been the subject of complaints; (4) its locomotive fleet is old and unreliable; (5) its infrastructure in Maine is in poor condition; and (6) conditions are needed to ensure that PARI does not reallocate rail resources from its Maine operations to the new PAS system. As evidence of PARI’s inability to provide adequate service, CIRSM cites the Boston-Maine Airways Corporation airline certification proceeding (described in the comment of Captain Dirck Hecking and Locomotive Engineer William Remington) and PARI’s alleged management skills.
not impose the conditions requested by CIRSM.
These conditions do not relate to any competitive harm caused by the
proposed Transaction. Moreover, the service
problems cited by CIRSM predate the Transaction and would not be made worse by
the Transaction. CIRSM has given us no
reason to believe that PARI would be less able to pay bills or would have less
incentive to allocate resources to
We will not impose the conditions requested by Connecticut DOT. Those conditions all relate to matters that have no connection to the Transaction and are not based on any alleged competitive harm. The inactive connections, lack of interchange agreements, and lack of traffic on the Waterbury Branch all pre‑date the Transaction, and Connecticut DOT has not shown that any of these situations would be aggravated by the Transaction.
Nor will we grant Connecticut DOT’s request for additional time to study what it asserts is “the possible re‑routing of traffic away from the newly‑established interchange between the New England Central Railroad Company and the Providence & Worcester Railroad Company at Willimantic.” We have not received any information that would lead us to believe that Applicants might affect the alleged re‑routing in a way that forecloses competition or advances any purpose other than the attraction of traffic to an upgraded, more efficient route over the Patriot Corridor, which is the purpose of the Transaction. Thus, we have no reason to believe the matter warrants a delay of this proceeding for further study.
is a short line railroad that connects at
We will not impose the conditions requested by Milford‑Bennington. None of its conditions relate to any harm to competition and, in any event, they all seek to remedy matters that pre‑date the Transaction and would not be made worse by the Transaction. The enforcement of any prior promises or obligations that Springfield Terminal may have made or undertaken concerning branch line service may be pursued in a different proceeding or forum, but such promises or obligations are not an appropriate subject for conditions in this proceeding.
MMA. MMA, a short line
We will not impose the conditions
requested by MMA. This agency has
consistently rejected the notion that the creation of
new single-line movements in an end‑to‑end acquisition necessarily would
lead the acquiring carrier to vertically foreclose competition over efficient
routes by refusing to cooperate with unaffiliated carriers. MMA has given us no reason to believe that
NESR. NESR is a Class III
railroad operating between
NESR, however, is concerned that the Transaction could adversely affect B&M’s ability to satisfy its obligations to existing or future judgment creditors. While NESR recognizes that B&M’s receipt of $47.5 million from Norfolk Southern in return for the interest that Norfolk Southern would acquire in PAS could ordinarily be expected to improve NESR’s ability to collect on debts allegedly owed by B&M, NESR is concerned that B&M might attempt to argue that Board approval of the Transaction prevents creditors from attaching the $47.5 million payment. NESR asks us to clarify in our decision that no act of the Board could impede an effort by NESR to collect against the $47.5 million payment. NESR also points to other pending litigation involving monetary claims against the PARI system.
Applicants have conceded on the record that third parties will retain the same rights to collect debts from B&M and/or Springfield Terminal as they had prior to the proposed Transaction. See Applicants’ Response to Comments at 37. Accordingly, there is no need for further clarification from the Board on this issue, as we will hold the Applicants to their representations made on the record in this proceeding.
NYSDOT. NYSDOT supports the
application as conferring a “significant benefit to the State of
We will not impose the interchange
condition for the benefit of Batten Kill, for the reasons stated above, in our
discussion concerning that carrier.
Moreover, the Transaction does not raise the type of notification issues
addressed in Disclosure of Rail Interchange Commitments, as the
Transaction documents contain no restrictions on the ability of
additional conditions proposed by NYSDOT concern the circumstances under which
Second, NYSDOT points to what it considers to be two inconsistent provisions within the Agreement concerning the definition of a “Major Service Standard Failure.” According to NYSDOT, one provision seems to state that this would occur if trains do not operate according to prescribed service standards 85% of the time, measured with a 60-minute leeway in any given rolling 90‑day period, and the other provision seems to state that such a failure would occur if trains do not operate according to prescribed service standards 90% of the time, measured with a 30-minute leeway in any given rolling 90‑day period. NYSDOT urges us to require that Applicants clarify these provisions to hold PAS to the higher service measurement—operation according to prescribed service standards 90% of the time with a 30-minute leeway.
In their response, Applicants agree with NYSDOT’s recommendation that the higher standard should apply. Thus, no action is required on our part.
P&W. P&W connects with Springfield Terminal at
Applicants have indicated that the Barbers interchange will be maintained to permit Springfield Terminal to continue interchange with CSXT and that the Transaction should not affect the flow of interline traffic through Barbers. See Application at 37; see also Williams V.S. at 13 (explaining that the parties’ trackage rights agreement “will permit Pan Am to maintain its current interchanges with P&W at Barbers, MA”). P&W has not shown that relief from the Board is warranted.
The settlement agreement is reasonable and no party has submitted comments opposing it. It resolves NECR’s competitive issues related to the Transaction and facilitates the Transaction by providing for the assignment of trackage rights necessary to implement it. Therefore, as requested by the parties, we will impose the terms of the settlement agreement as a condition to our approval of the Transaction.
We will not impose the conditions requested by U.S. Clay Producers. With regard to its requests for the same service alternatives for shippers on non‑PAS lines, we do not impose conditions merely to attempt to equalize options of shippers that benefit from an acquisition with those who do not. With regard to collecting private car compensation, we note that Applicants have conceded on the record that third parties will retain the same rights to collect debts from PARI and its subsidiaries as they had prior to the proposed Transaction. See Applicants’ Response to Comments at 37.
VTrans. VTrans supports the Transaction in light of the general representations made by Applicants that the Transaction would not eliminate any competitive options and would not have any adverse effects on commuter or other passenger service, including efforts to upgrade or restore passenger service over certain lines, and other specific representations on the record. In view of certain specific representations made by Applicants, VTrans proposes the following conditions: (1) require PAS to “maintain connections at existing gateways”; (2) require PAS to surrender its exclusive right (as the successor to Springfield Terminal) to serve shippers over the route along the Brattleboro‑Windsor segment of the Connecticut River Line over which Springfield Terminal operates via trackage rights should PAS fail to comply with the minimum 3 days per week service standard that the ICC imposed when it granted the trackage rights to B&M in 1990; and (3) require PAS to honor existing PARI system commitments to restore rail passenger service between Springfield and East Northfield, MA, as well as between Mechanicville and Hoosick Junction, NY.
As previously discussed, we will hold Applicants to the representations that they have made on the record in this proceeding regarding existing interchange and contractual relationships. See [p. 6], supra. VTrans has failed, however, to show that any further relief is proper. Any service issues may be pursued through an appropriate proceeding under the appropriate statutory provisions or the proceeding in which the ICC imposed service obligations.
VRS. VRS is a group of
affiliated carriers that operate almost entirely in
requests that the Transaction be approved, but only with conditions. According to VRS, Springfield Terminal has
not been providing adequate service as a connecting carrier to VRS
carriers. VRS also maintains that
Applicants intend to downgrade service on routes that are not included in the
east-west Patriot Corridor main line that is slated for upgrading, in
particular the route along the Connecticut River Line over which Springfield
Terminal operates via trackage rights.
VRS states that
not impose the conditions sought by VRS.
VRS’s service complaints do not relate to competition and they predate
the Transaction. We also reject the
premise that the Transaction would result in the downgrading of service over
the Connecticut River Line simply because other track would be upgraded. The main purpose of the Transaction is to
upgrade service over a main line route, allowing
VRS also defends its proposed conditions as necessary to ensure that the Transaction would not shift vital traffic from the lines of VRS carriers to the lines of other carriers. While Applicants state that they do not expect any major shift in traffic flows, rehabilitation of the Patriot Corridor should make that rail corridor more efficient, thereby allowing it to attract traffic from the competing CSXT line. Thus, some shippers may ultimately make less use of competing VRS/CSXT interline routes. But the possibility of two efficient interline options for shippers is a competitive benefit of the Transaction, even if VRS and CSXT see a reduction in volume. The conditions proposed by VRS would defeat the purpose of this Transaction—by attempting to ensure that traffic continued to move over VRS routes that do not involve the Patriot Corridor when it would move more efficiently over the Patriot Corridor. VRS has not established that the Transaction would foreclose its ability to compete with PAS or render it unable to compete.
Labor Protection Conditions
As required under 49 U.S.C. 11326(a), we will impose the standard New York Dock labor protection conditions on our approval of the primary application in STB Finance Docket No. 35147 and the N&W labor protection conditions on our approval of the related notices of exemption for the grant of trackage rights in STB Finance Docket No. 35147 (Sub-Nos. 2 and 3). Under 49 U.S.C. 10901(c), we are expressly precluded from imposing any labor protection conditions on our approval of an acquisition of a line by a noncarrier—the subject of the related notice of exemption in STB Finance Docket No. 35147 (Sub-No. 1).
The unions argue that the entire Transaction is subject to the agency’s standard labor protection conditions because all of the transactions, including the transaction in the Sub-No. 1 proceeding, are related to, and part of, a greater transaction requiring approval under 49 U.S.C. 11323. They also argue that PAS’s acquisition of the Springfield Terminal lines is subject to section 11323, rather than section 10901, and that we therefore must dismiss the Sub-No. 1 notice and approve the Transaction under section 11323 alone.
The unions argue that employees need labor protection for the entire Transaction because PAS’s acquisition of the lines from Springfield Terminal could adversely affect Springfield Terminal employees in the future, notwithstanding Applicants’ plan to have Springfield Terminal operate the lines under contract, using its existing employees working under their existing collective bargaining agreement, for the foreseeable future. According to the unions, the Transaction agreements provide no guarantee that Springfield Terminal will continue to operate the lines for PAS under contract; UTU/BLET maintain that Springfield Terminal could become unable to serve PAS under contract due to its current financial condition and its extensive involvement in litigation that could affect its financial status. The unions argue that Applicants’ statements that they expect to operate PAS’s lines using Springfield Terminal employees working under their existing collective bargaining agreement should constitute a binding representation that they will continue to do so; BMWE/BRS further ask us to require that either (1) Springfield Terminal continue to operate the line for PAS, or (2) Applicants give hiring priority to all Springfield Terminal employees and maintain their collective bargaining agreement with that carrier if there is a change of operators on PAS.
UTU/BLET also allege that Springfield Terminal and its corporate family have improperly refused to meet with them to negotiate or to discuss an implementing agreement under New York Dock, on the grounds that no agreement is necessary because no employees will be adversely affected by the Transaction. UTU/BLET ask us to require that Applicants either (1) negotiate an implementing agreement under New York Dock before the Transaction may be implemented, or (2) give hiring priority to all Springfield Terminal employees and maintain their collective bargaining agreement with that carrier if there is a change of operators on PAS.
Applicants, while disputing the unions’ view of the scope of our labor protection conditions, nonetheless offer a concession. Applicants state that “ . . . they will not contend that a claimed adverse effect is attributable to the asset acquisition alone and not to any other element of the Transaction.” This voluntary concession by the Applicants on the record resolves the issue between the parties and we need not address it further, as we are holding the Applicants to all representations made on the record in this proceeding.
UTU/BLET also ask us to direct Springfield Terminal and its corporate family to negotiate an implementing agreement under New York Dock before closing on the Transaction. The requirement in New York Dock that an implementing agreement be negotiated prior to consummation of a transaction presumes that the carrier is capable of making the required “full and adequate statement” of the expected labor changes before the transaction is consummated, including an “estimate of the number of employees in each class to be affected by” the transaction. In some consolidation proceedings subject to New York Dock, the effect of the transaction on employees is readily apparent, allowing carriers to provide statements of labor changes and use them as a basis for negotiating an implementing agreement prior to closing the transaction. Here, however, for the foreseeable future, there will be no adverse effect because work will continue to be performed under contract by the same Springfield Terminal employees who are performing it now. Because we see no basis for negotiation of an implementing agreement until Applicants decide to implement labor changes that are related to the Transaction, we will not require that Applicants commence negotiations now. If such a decision is made, Applicants will be required to proceed in good faith under the notification and negotiation provisions of Article I, section 4 of the New York Dock conditions before they implement the employment changes. At such a time, issues involving hiring priority and the preservation of collective bargaining rights agreement will be resolved, either in the implementing agreement or by arbitration under the New York Dock conditions.
supports the Transaction. According to
Amtrak, the Transaction would help passenger service by: (a) improving a line between Mechanicville
and Hoosick Junction, NY, which would be part of a planned passenger service
route between Albany, NY, and Rutland, VT; and (b) facilitating the
introduction of passenger service over Springfield Terminal’s line between
Springfield and East Northfield, MA, by transferring that line to PAS with its
enhanced financial resources. Amtrak has
not objected to PAS’s plan to assume Springfield Terminal’s right to operate
over Amtrak’s line between
EOTPW/MBTA and Applicants
have settled issues arising out of PAS’s plan to assume the rights of
Springfield Terminal and B&M to operate over certain state‑owned
lines used for passenger service in
We encourage the settlement of such issues through negotiations. We will impose the terms of the Settlement Agreement of October 20, 2008, as a condition to our approval of the Transaction because the parties have requested it. The trackage rights granted by EOTPW/MBTA permit PAS to operate over lines necessary for it to offer service that is more efficient and competitive with the single-line service offered by CSXT.
Related Notices of Exemption
We are also allowing the exemptions proposed in the related notices of exemption to take effect on the effective date of this decision. The actions proposed in these notices satisfy the exemption criteria and, as discussed in this decision, are consistent with the statutory criteria that apply to the overall Transaction. As discussed above, we will impose the standard N&W labor protection conditions on the related Sub‑No. 2 and Sub‑No. 3 exemptions.
Docket No. 35147 (Sub-No. 1). On
June 27, 2008, PAS filed a notice of exemption pursuant to 49 CFR 1150.35(a) for
authority to acquire and to operate the lines and trackage rights that are at
issue in this proceeding. In particular,
B&M would contribute certain railroad lines in
Docket No. 35147 (Sub-No. 2). On May
30, 2008, Applicants filed, as part of their primary application, a notice
pursuant to the class exemption at 49 CFR 1180.2(d)(7) and 1180.4(g) for
Norfolk Southern to acquire overhead trackage rights over approximately 151.33
miles of track that would be owned or operated by PAS between Mechanicville, NY,
and Ayer, MA. According to Norfolk Southern,
these trackage rights would enable Norfolk Southern to provide direct rail
transportation of intermodal traffic to and from the existing intermodal
terminal at Ayer and the new automotive terminal that the Applicants propose to
construct at nearby San Vel, MA, in the event that PAS fails to provide haulage
services at the service level required under the Transaction Agreement.
STB Finance Docket No. 35147 (Sub-No. 3). On May 30, 2008, Applicants filed, as part of their primary application, a notice pursuant to the class exemption at 49 CFR 1180.2(d)(7) and 1180.4(g), for Springfield Terminal to acquire overhead trackage rights over approximately 6.4 miles of track that would be owned by PAS between Willows and Harvard Station, MA. these trackage rights would enable Springfield Terminal to provide direct rail transportation for its own account between its current lines east of CPF 312 and its current line south of Harvard Station. These trackage rights also would enable Springfield Terminal to continue to interchange traffic on its own account directly with CSXT and the P&W at points south of Harvard Station. Springfield Terminal would not exercise any of the trackage rights until the later of (1) the effective date of the notice of exemption (including compliance with any conditions imposed on the exemption by the Board) or (2) the closing of the agreements for which the Board’s approval is being sought in the primary application. As discussed above, we are imposing the standard N&W labor protection conditions on this exemption.
Request for a Declaratory Order Under 49 U.S.C. 11321
Section 11321 provides that a rail carrier participating in a transaction approved by the Board under section 11323 is exempt from all other law to the extent necessary to carry out the transaction and operate the assets acquired in the transaction. This agency has interpreted section 11321 as giving carriers the right to abrogate existing contractual terms if necessary. In their application (at 38, citation omitted), Applicants made the following request:
PAS’s use of the trackage rights now held by Springfield Terminal and to be assigned by it to PAS is essential to the Transaction and the realization of its benefits. While Applicants expect to obtain consents to all such assignments from the owners of the lines in question, Applicants request that the Board’s order approving the Application include a declaratory order pursuant to 49 U.S.C. § 11321(a) that PAS and any contract operator of PAS Lines will have authority to conduct operations over the trackage rights lines as fully and to the same extent as Springfield Terminal could, notwithstanding any clauses in any such trackage rights agreements limiting or prohibiting Springfield Terminal’s unilateral assignment of its operating rights to another person.
As discussed earlier, NECR and Applicants have reached an agreement under which NECR will consent to the assignment from the PARI system to PAS of trackage rights over NECR’s Connecticut River Line. See p. , supra. EOTPW/MBTA have also settled the issues relating to the assignment of B&M and Springfield Terminal easements. Accordingly, the request for a declaratory order has been rendered moot with respect to the assignments referred to in the aforementioned two settlement agreements. To the extent that Applicants seek a declaratory order with respect to other assignments, we will grant it. The assignments proposed in the Transaction are necessary to carry out a Transaction that is being approved under the statutory provisions covered by section 11321(a) and to operate the PAS lines.
In their application (at 38-39), Applicants describe the Divisions Agreement by which Springfield Terminal would establish rates and transportation contracts and ancillary charges for PAS, including rates and contracts for through movements interlined with other carriers, Norfolk Southern and Springfield Terminal. They seek approval under the pooling provisions of 49 U.S.C. 11322 to the extent that such approval may be needed.
It is not apparent from the face of the Application or the Transaction documents why pooling authority would be necessary to effectuate the Transaction. This agency has long held that pooling authority is necessary only for arrangements between parties that would otherwise be competitors. See Canadian Nat’l Ry, Grand Trunk et al.—Control—IL Central Corp. et al., 4 S.T.B. 122 (1999). Here, it does not appear that the Transaction is an arrangement between parties that would otherwise be competitors but for the Transaction. The purpose and effect of this end-to-end Transaction is merely to improve the flow of traffic interchanged between the parties over the Patriot Corridor, and Applicants have not explained how Springfield Terminal’s operation of PAS under contract with that carrier could alter this purpose and effect. Parties can easily return to the Board to request approval if a pooling agreement is needed in the future.
Requirements of NEPA. The
National Environmental Policy Act, 42 U.S.C. 4321‑43 (NEPA), requires
that the Board examine the environmental effects of proposed federal actions
and inform the public concerning those effects.
Baltimore Gas & Elec. Co. v. Natural Resources Defense Council,
Under both the regulations of the President’s Council on Environmental Quality and our own environmental rules, actions are separated into classes that prescribe the level of documentation required in the NEPA process depending on the likelihood of significant environmental effects. Actions that generally have significant effects on the environment require the preparation of a full Environmental Impact Statement (EIS). Actions that may, or may not, have a significant impact ordinarily require the preparation of a more limited Environmental Assessment (EA). Finally, actions whose environmental effects are ordinarily insignificant normally may be excluded from NEPA review across the board, without a case-by-case review (“categorical exclusion”).
The Board generally prepares an EA in mergers, acquisitions or changes of control under 49 U.S.C. 11323 where the proposal would exceed certain thresholds -- generally an increase in rail traffic of at least 3 or 8 trains a day or 100% in traffic (measured in gross ton miles annually). 49 CFR 1105.6(b)(4); 49 CFR 1105.7(e)(4), (e)(5). There normally is no formal environmental review in mergers or acquisitions that do not meet these thresholds, 49 CFR 1105.6(c)(2)(i), although the Board may reclassify a particular transaction if the circumstances warrant it, 49 CFR 1105.6(d).
The Environmental Review Process Here. In their application, Applicants stated that the Transaction would have only insignificant environmental effects and therefore would not require a formal environmental review under NEPA. In June 2008, after consultation with the Board’s Section of Environmental Analysis (SEA), Applicants prepared and circulated for public review and comment an Environmental Appendix providing additional details and explanation in support of their assertion. In response, a number of parties filed comments expressing environmental concerns. In light of these concerns, Applicants consulted with SEA again and proposed that an EA be prepared that would address all relevant environmental issues raised by the proposed Transaction. In a decision served September 25, 2008, the Board agreed that an EA was warranted.
SEA served an EA on November 14,
2008, that thoroughly evaluated the potential environmental impacts of the
Transaction (including activities related to the construction and operation of
the two new rail facilities that are planned—the Mechanicville Facility at
On January 30, 2009, SEA issued a Post EA that specifically responds to the public comments (Chapter 1), revises and updates certain information in the EA (Chapter 2), and sets forth SEA’s final recommended mitigation, including additional mitigation developed in response to comments on the EA (Chapter 3).
Our Conclusions on the Environmental Issues. After reviewing the entire environmental record, we adopt all of SEA’s analysis, recommendations, and conclusions, including those not specifically discussed here. We are satisfied that SEA took the requisite “hard look” at potential environmental impacts and accurately identified and independently evaluated the potential environmental effects associated with the project. Based on the environmental record, we conclude that, with the environmental mitigation conditions set forth in the Post EA, all of which we adopt (see Appendix B), the proposed Transaction will have no significant environmental impacts. Therefore, preparation of an EIS is not required.
As the EA and Post EA show, the Transaction should produce
substantial transportation benefits.
According to applicants, the Transaction will enhance the Patriot
The environmental impacts associated with the Transaction are expected to be minimal. As the EA explains, no substantial changes in railroad operations or rail traffic patterns are anticipated. Effects on local roadways and intersections in the vicinity of the two new proposed rail facilities and the existing intermodal facility in Ayer (where improvements are planned) should be minor. EA at S-2. The Transaction is expected to decrease truck traffic in the area by 19,000 trucks per year by 2012 as shippers choose to ship their goods using the more efficient rail service that would be available to them as a result of the Transaction. EA at 3.8-5. Because there is a substantial fuel efficiency advantage to rail versus truck transportation (railroads are, on average, at least 3 times more fuel efficient than trucks on a ton-mile basis), the Transaction likely would result in a decrease in overall energy consumption and, thus, an overall reduction in air pollution emissions from current operations. EA at 3-85 to 3-86. Existing conditions for grade-crossing delay and safety also are expected to improve. EA at S-2.
The primary potential environmental
impacts are related to the proposed new Mechanicville Facility and the San Vel
Automotive Facility. But as explained in
more detail in the EA, the Mechanicville Facility would occupy a currently unused
site in an industrial area that was primarily used as rail yards some years
ago. The site of the San Vel Automotive
Facility has already been designated for development of an automobile transload
facility and is the subject of a consent decree entered into with the Town of
As explained in the Post EA, our
environmental conditions are reasonable and feasible mitigation to address the environmental
concerns that have been raised about the various facilities. Condition 18 requires the Applicants to abide
by the conditions set forth in the Ayer Consent Decree. In addition, as requested by
There is also extensive mitigation (Conditions 4 to 13, 18) to protect water resources during the construction and operation of the Mechanicville and San Vel facilities (including conditions involving wetlands and stormwater pollution prevention, and the requirement that Applicants comply with the provisions of the Ayer Consent Decree related to prevention of seepage of contaminants into the soil and groundwater). We agree with SEA’s conclusion (Post EA at S-8) that, with this mitigation, impacts to water resources will be minor.
In sum, we conclude that the mitigation conditions in the Post EA are adequate to prevent the planned construction and operation of the Mechanicville and San Vel facilities from having any significant environmental impacts.
It is ordered:
1. The application is approved, subject to the following conditions:
(a) The applicable New York Dock and N&W labor protection conditions;
(b) Terms of the settlement agreements between Applicants and RailAmerica, and Applicants and EOTPW/MBTA;
(c) Applicants must adhere to any and all of the representations they made on the record during the course of this proceeding, whether or not such representations are specifically referenced in this decision;
(d) Norfolk Southern must notify the Board 30 days before exercising its trackage rights to haul intermodal and automotive traffic directly over PAS lines in the event of a “Major Service Standard Failure” as defined in the Master Norfolk Southern Joint Use Agreement; and
(e) The environmental conditions set forth at Appendix B.
2. The following related transactions are exempted from regulation under 49 U.S.C. 10502:
(a) In STB Finance Docket No. 35147 (Sub-No. 1), the acquisition and operation referenced in the notice filed on June 27, 2008, pursuant to the class exemption at 49 CFR 1150.35.
(b) In STB Finance Docket No. 35147 (Sub-No. 2), the trackage rights referenced in the notice filed on May 30, 2008, pursuant to the class exemption at 49 CFR 1180.2(d)(7) and 1180.4(g), subject to the N&W labor protection conditions.
(c) In STB Finance Docket No. 35147 (Sub-No. 3), the trackage rights referenced in the notice filed on May 30, 2008, pursuant to the class exemption at 49 CFR 1180.2(d)(7) and 1180.4(g), subject to the N&W labor protection conditions.
3. Pursuant to 49 U.S.C. 11321(a) and subject to the settlement agreements between (a) Applicants and EOTPW/MBTA and (b) Applicants and NECR, PAS and any contract operator of PAS Lines will have authority to conduct operations over the trackage rights lines as fully and to the same extent as Springfield Terminal could, notwithstanding any clauses in any such trackage rights agreements limiting or prohibiting Springfield Terminal’s unilateral assignment of its operating rights to another person.
4. Applicants’ request for pooling authority under 49 U.S.C. 11322 is denied.
5. Applicants must comply with all the conditions imposed in this decision whether or not such conditions are specifically referenced in these ordering paragraphs.
6. Any conditions that were requested by any party in this proceeding that have not been specifically imposed in this decision are denied.
7. This decision is effective on April 9, 2009.
By the Board, Chairman Nottingham, Vice Chairman Mulvey, and Commissioner Buttrey.
Anne K. Quinlan
1) Applicants shall consult with NYSDOT to address NYSDOT’s concerns about the construction of the proposed highway access to Route 67 at the proposed Mechanicville Facility.
2) Applicants shall incorporate into the final design for the proposed Mechanicville Facility appropriate measures, including the use of down-lighting, to minimize the impacts of the facility’s lighting onto residential areas adjacent to the proposed Mechanicville Facility.
Hazardous Waste Sites
3) Applicants shall comply with all applicable NYSDEC regulations in the event that any hazardous waste sites subject to NYSDEC oversight are encountered during construction of the proposed Mechanicville Facility.
4) Applicants shall complete delineation of all wetlands in the area of potential impact associated with the proposed Mechanicville Facility and the proposed San Vel Automotive Facility before final design of the respective facility, and shall negotiate compensatory mitigation to compensate for unavoidable impacts to jurisdictional wetlands, if any, as part of the Clean Water Act Section 404 permit for placement of fill in wetlands, to be issued by the United States Army Corps of Engineers.
5) As part of the Section 404 Clean Water Act process, Applicants shall comply with requirements of a Section 401 Water Quality Certification, if such certification is found to be necessary, from NYSDEC (for the Mechanicville Facility) and the Massachusetts Department of Environmental Protection (MDEP) (for the San Vel Automotive Facility).
6) Applicants shall design the proposed Mechanicville Facility and the proposed San Vel Automotive Facility to avoid and minimize impacts to wetlands, to the extent practicable.
7) Applicants shall implement and comply with the terms and conditions of Stormwater Pollution Prevention Plans (SWPPPs) for the proposed Mechanicville Facility, consistent with applicable State Pollutant Discharge Elimination System requirements, and the proposed San Vel Automotive Facility, consistent with applicable National Pollutant Discharge Elimination System requirements under the Clean Water Act. The final SWPPP and Stormwater Management Report for the San Vel Automotive Facility shall include specific parameters for the monitoring well network including at a minimum: chloride, volatile organic compounds, dissolved metals, and basic field parameters such as pH, conductivity, and temperature.
8) Applicants shall use silt fences during construction of the proposed Mechanicville Facility and the proposed San Vel Automotive Facility, to minimize or avoid the potential erosion of exposed soils/stockpiles and the delivery of fine sediments to surface waters and to avoid impacts to waters beyond the respective project footprints.
9) During construction of the proposed Mechanicville Facility and the proposed San Vel Automotive Facility, Applicants shall use water as needed to control fugitive dust emissions.
10) During construction of the proposed Mechanicville Facility and the proposed San Vel Automotive Facility, Applicants shall conduct land clearing activities only in areas where earthwork is necessary; shall reuse topsoil wherever practicable, and stockpile topsoil for application during reclamation of disturbed areas; and shall restore disturbed areas as soon as practicable after construction ends. Applicants shall also use stabilization fabric on created earthen slopes having a slope steeper than 2:1 to control erosion.
11) During construction of the proposed Mechanicville Facility and the proposed San Vel Automotive Facility, Applicants shall preserve existing vegetation where practicable, especially near wetlands and other waters. If weather or season precludes the prompt reestablishment of vegetation, Applicants shall implement temporary erosion control measures.
12) During or after construction of the proposed Mechanicville Facility and the proposed San Vel Automotive Facility, Applicants shall revegetate the bottom and sides of drainage ditches using natural recruitment from native seed sources in the stockpiled topsoil or a seed mix free of invasive plant species. Such restoration is for the rapid and permanent reestablishment of native ground cover on disturbed areas, to prevent soil erosion and minimize delivery of fine silt particles to surface waters.
13) Applicants shall store any hazardous substances related to construction in a secure location when not in use, and shall dispose of all construction waste at approved disposal facilities.
14) Applicants shall consult with the Massachusetts Natural Heritage and Endangered Species Program to address its concerns about the state-protected threatened Blanding’s Turtle, and shall abide by all reasonable terms and conditions, if any, that may result from the Massachusetts Natural Heritage and Endangered Species Program review process for construction activity within a Priority Habitat.
15) Applicants shall design the proposed San Vel Automotive Facility to avoid and minimize impacts to potential habitat for the Blanding’s Turtle, to the extent practicable.
16) During the final design process for the proposed Mechanicville Facility, Applicants shall address relevant provisions of NYSDOT’s Environmental Procedures Manual in connection with issues related to appropriate precautionary measures to avoid the spread of invasive species during construction.
17) Applicants shall not initiate construction in areas potentially affected by historical properties within the proposed Mechanicville Facility footprint, or take any steps to alter the historic integrity of historic properties, including sites, buildings, structures, and objects within the project Area of Potential Effect that are eligible for listing or listed in the National Register of Historic Places, until the Board's responsibilities under the Section 106 process of the National Historic Preservation Act, 16 U.S.C. 470f, have been satisfied.
Applicants shall abide by the conditions set
forth in the Consent Decree between Guilford Rail Systems and the Town of
negotiated Consent Decree was previously entered into by Guilford Rail Systems
(“Guilford,” a prior name of Pan Am Railways Inc.’s [PARI] railroad operating
group) and the Town of Ayer that resolved litigation to address potential
environmental impacts. The proposed Transaction
now pending before the Board does not alter any terms of that Consent Decree or
otherwise alter the relationship between those entities. PARI is the holding company for the railroad
operating group formerly known as Guilford Rail Systems, and Pan Am Southern,
LLC (PAS) would be a successor to PARI as to the terms of the Consent Decree. As such, Applicants do not dispute that PAS would
be bound by the terms of the Consent Decree.
Similarly, the proposed Transaction now pending before the Board does
not alter the Consent Decree as it applies to the Town of