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khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 55 / Wednesday, March 24, 2021 / Notices The verified notices of exemption at issue in these proceedings were submitted under the class exemption procedures found at 49 CFR
1180.2d2, which provide an expedited process for obtaining control authority under 11323. These streamlined class exemption procedures are reserved for transactions involving routine, uncomplicated, and noncontroversial matters, and which do not raise substantial factual and legal issues.
See S. San Luis Valley R.R.Acquis. &
Operation ExemptionIowa Pac.
Holdings, LLC, FD 35586 et al., slip op.
at 2 STB served Feb. 10, 2012
rejecting notice of exemption raising substantial questions about prior acquisitions; V & S Ry.Aban.
Exemptionin Kiowa Cnty., Colo., AB
603 Sub-No. 3X, slip op. at 2 STB
served June 17, 2014.
The Verified Notices of Exemption.
The verified notice filed by RFM and the verified notice filed by Baupost and Infravest Managers will be rejected because both matters are sufficiently complicated and non-routine to make them inappropriate for consideration under the streamlined class exemption procedures of 49 CFR 1180.4g. Both proceedings involve the unauthorized acquisitions of control of Pioneer and the Pioneer Railroads by Related Companies and entities within RFMs corporate family. RFM acquired control of Pioneer and the Pioneer Railroads, without Board authorization, from Related Companies, which itself also did not have Board authorization to control Pioneer and the Pioneer Railroads. See RFM Verified Notice 3, FD 36306 Sub-No. 1 et al. Baupost and Infravest Managers are seeking to acquire control of Pioneer and the Pioneer Railroads from Related Infrastructure Holdings, a subsidiary of RFM, which does not currently have authority to control Pioneer and the Pioneer Railroads. Although RFM has sought after-the-fact control authority, Related Companies has not. RFM has argued both that Related Companies need not seek after-the-fact control authority, and that the Board should grant that authority to Related Companies through the Boards streamlined class exemption procedures even though Related Companies did not itself request it.4 RFM Verified Notice 5 n.6, FD 36306 Sub-No. 1 et al. The facts cited during these proceedings, as described in detail above, demonstrate 4 RFM was formed by equity owners of Related Companies, but RFM and Related Companies are not under common control because the equity owners do not have control of either Related Companies or RFM. RFM Verified Notice 34 &
n.4, FD 36306 Sub-No. 1 et al.

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that these matters are not routine and require scrutiny by the Board outside of the streamlined class exemption procedures. See S. San Luis Valley R.R., FD 35586 et al., slip op. at 23.
Therefore, the verified notices in Docket Nos. FD 36451 and FD 36306 Sub-No.
1 will be rejected.
The Board also notes that the information provided during the course of these proceedings has at times been incomplete or inaccurate.5 For example, Baupost and Infravest Managers, in their notice, identified the entity from which they were acquiring control of Pioneer and the Pioneer Railroads as an affiliate of Related Infrastructure, without further detail. See Baupost Verified Notice 3, FD 36451. Later, the November 2, 2020 supplement filed in Docket No. FD 36451 provided incorrect information that identified Related Infrastructure Holdings as a subsidiary of Related Fund Management LLC, notwithstanding that the facts in the supplement regarding Related Infrastructure LLC
and its affiliates were verified by an official at Related Fund Management.
See Baupost Suppl. 12, FD 36451, Nov. 2, 2020, FD 36451. Only after the Board postponed the effective date of the exemption in Docket No. FD 36451
and requested that Related Companies seek acquisition authority did the Board learn that Related Companies had transferred control of Pioneer and the Pioneer Railroads to RFM. RFM, for its part, filed a verified notice that failed to identify the date on which RFM
acquired control of Pioneer and the Pioneer Railroads, which was later cured through its January 6 supplement.
While the record does not indicate bad faith by these parties, inaccuracies and omissions such as these raise questions that often cannot be adequately addressed under the streamlined class exemption procedures. It is important for parties to ensure that their filings in exemption and other proceedings are accurate and complete. Nevertheless, as discussed below, the Board has now received from the parties adequate information for the Board to assess, sua sponte and pursuant to the exemption standard set forth at 49 U.S.C. 10502a, the appropriateness of granting exemptions in these proceedings.6
5 Given the Boards finding that the class exemption procedures are inappropriate in light of the facts and circumstances, it need not address whether the notices were also false or misleading.
See, e.g., 49 CFR 1180.4g1ii.
6 In granting acquisition authority sua sponte, the Board would effectively proceed as though the parties had formally petitioned for exemption. The Board will consider below the value of requiring such petitions at this stage of the proceedings and the harm that could arise from the ensuing delay.

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The Sua Sponte Exemptions. As noted, the Board has now received multiple filings in these proceedings providing information about the transactions involving Related Companies and RFM that occurred without Board authority. Although there does not appear to be bad faith, this does not excuse the failures to obtain Board authorization; and while RFM has now sought to cure the defect, the Board remains troubled that the parties did not adequately consider the required authorizations at the appropriate time.
When it rejects verified notices in non-routine or controversial cases, the Board often requires parties to seek the necessary authority by petition for exemption or application. Here, however, an extensive record has already been developed through the supplemental pleadings. Additionally, the Board is mindful of the fact that the proposed acquisition by Baupost and Infravest Managers to acquire Pioneer and the Pioneer Railroads is also pending before the Board. That transaction, but for the failures of the selling entity RFM and its subsidiaries discussed above, would have met the standards for the expedited class exemption process. To require RFM to file a petition for exemption or application to remedy the prior unauthorized transactions would further delay, and possibly frustrate, Baupost and Infravest Managers proposed transaction. Baupost Letter 1, Feb. 17, 2020, FD 36451. No party has sought to oppose Baupost and Infravest Managers proposed acquisition of control of the Pioneer Railroads, and one of the stated goals of that transaction is to improve Pioneers efficiency, financial strength, and ability to meet the needs of shippers. Baupost Verified Notice 5, FD 36451. Baupost argues that further delaying its acquisition would, among other things, affect the ability of Pioneer and the Pioneer Railroads to accelerate capital expenditures.
Baupost & Infravest Managers Letter 2, Dec. 3, 2020, FD 36451.
For the reasons discussed above and based on the particular facts of this case, the Board concludes that it is appropriate to consider granting the exemptions sua sponte pursuant to 10502. See, e.g., BNSF Ry.Pet. for Declaratory Order, FD 35164 et al., slip op. at 10 STB served May 20, 2009;
Borealis Infrastructure Trust ManagementAcquis. Exemption Detroit River Tunnel Co., FD 33984 et al., slip op. at 6 STB served Dec. 19, 2001. The Board will consider here the merits of the exemptions requested in these dockets and, as discussed further
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