Friday, September 01, 2017

STB nixes Great Lakes Basin line

Written by  William C. Vantuono, Editor-in-Chief, Railway Age

The Surface Transportation Board (STB) on Aug. 30 rejected an application filed by Great Lakes Basin Transportation, Inc. (GLBT) for authority to construct and operate a rail line in the states of Wisconsin, Illinois, and Indiana.

STB cited that it found GLBT's application "incomplete" and has discontinued environmental review.

A few highlights:

• "GLBT has failed to provide the Board with accurate financial information upon which the Board can rely to make a determination on the transportation merits of the project ... The Board must authorize the construction and operation of a new line 'unless the Board finds that such activities are inconsistent with the public convenience and necessity.' In making this determination, the Board considers the financial condition of the applicant and the financial feasibility of the project ... The Board's purpose in doing so is not to protect the applicant or possible investors, but rather, 'to protect (1) existing shippers from financial decisions that could jeopardize the carrier's ability to carry out its common carrier obligation to serve them, and (2) other affected communities from needless disruptions and environmental impacts if the applicant were to start construction but not be able to complete the project and provide the proposed service."

• "The financial information provided in GLBT's application, as supplemented, is fundamentally flawed, making it impossible for the Board to determine whether GLBT can meet the statutory criteria. Specifically, [GLBT's] balance sheet ... contains an unexplained line item for 'net income' (amounting to negative $1.2 million) that appears to account for a substantial difference between its assets and its landstockholders' equity ... Because GLBT provides no underlying information to explain the basis for this line item or its calculations, it is not possible for the Board to determine the cause of this discrepancy or evaluate the information provided. The financial information submitted by GLBT therefore cannot reasonably be relied upon by the Board to determine the financial condition of the applicant under the statutory criteria."

• "The Board does not require that construction projects be fully funded at the outset of a construction application proceeding .... [However], the financial fitness of the applicant is part of the application process ... GLBT's current assets ... are so clearly deficient for purposes of constructing a 261-mile rail line that the Board will not proceed with this application given the impacts on stakeholders and the demands upon Board resources."