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National Express LLC--Acquisition of Control--Free Enterprise System/Royal, LLC

American Government Special Collections Reference Desk

American Government Buses Topics:  National Express

National Express LLC--Acquisition of Control--Free Enterprise System/Royal, LLC

Jeffrey Herzig
Surface Transportation Board
29 March 2019


[Federal Register Volume 84, Number 61 (Friday, March 29, 2019)]
[Notices]
[Pages 12014-12016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06057]


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SURFACE TRANSPORTATION BOARD

[Docket No. MCF 21085]


National Express LLC--Acquisition of Control--Free Enterprise 
System/Royal, LLC

AGENCY: Surface Transportation Board.

ACTION: Notice tentatively approving and authorizing finance 
transaction.

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SUMMARY: On February 27, 2019, National Express LLC (National Express) 
and Sodrel Holding Company, Inc. (Sodrel Holding) (collectively, 
Applicants), both noncarriers, jointly filed an application for 
National Express to acquire control of Free Enterprise System/Royal, 
LLC (Royal) from Sodrel Holding. The Board is tentatively approving and 
authorizing the transaction, and, if no opposing comments are timely 
filed, this notice will be the final Board action.

DATES: Comments must be filed by May 13, 2019. Applicants may file a 
reply by May 28, 2019. If no opposing comments are filed by May 13, 
2019, this notice will be effective on May 14, 2019.

ADDRESSES: Send an original and 10 copies of any comments referring to 
Docket No. MCF 21085 to: Surface Transportation Board, 395 E Street SW, 
Washington, DC 20423-0001. In addition, send one copy of comments to 
Applicants' representatives: (1) Andrew K. Light, Scopelitis, Garvin, 
Light, Hanson & Feary, P.C., 10 W Market Street, Suite 1400, 
Indianapolis, IN 46204; and (2) John G. Treitz, Stoll Keenon Ogden 
PLLC, 500 West Jefferson Street, Suite 2000, Louisville, KY 40202-2828.

FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: On February 27, 2019, National Express LLC 
(National Express) and Sodrel Holding Company, Inc. (Sodrel Holding) 
(collectively, Applicants), both noncarriers, jointly filed an 
application under 49 U.S.C. 14303 for National Express to acquire 
control of Free Enterprise System/Royal, LLC (Royal) from Sodrel 
Holding. The Board is tentatively approving and authorizing the 
transaction, and, if no opposing comments are timely filed, this notice 
will be the final Board action. Persons wishing to oppose the 
application must follow the rules at 49 CFR 1182.5 and 1182.8.
    According to the application, National Express is a noncarrier 
holding company organized under the laws of Delaware that is indirectly 
wholly owned and controlled by a publicly held, British corporation, 
National Express Group, PLC (Express Group). (Appl. 1-2.) Applicants 
state that Express Group indirectly controls the following 17 motor 
passenger carriers (collectively, National Express Affiliated Carriers) 
that hold interstate carrier operating authority in the United States 
(id. at 2-8): \1\
---------------------------------------------------------------------------

    \1\ Additional information about these motor carriers, along 
with Royal and the carriers affiliated with Sodrel Holding discussed 
below, including U.S. Department of Transportation (USDOT) numbers, 
motor carrier numbers, and USDOT safety fitness ratings, can be 
found in the application. (See id. at 2-10, sched. A.)
---------------------------------------------------------------------------

     Aristocrat Limousine and Bus, Inc., which provides public 
passenger charter services in New Jersey, New York, and Pennsylvania, 
and intrastate passenger charter services in New Jersey;
     Beck Bus Transportation Corp., which primarily provides 
student school bus transportation services in Illinois, and charter 
passenger services to the public;
     Chicagoland Coach Lines LLC, formerly known as National 
Express Coach, LLC, and National Express Transit--Yuma, which does not 
have any current operations;
     Durham School Services, L.P., which primarily provides 
student school bus transportation services in several states, and 
charter passenger services to the public;
     MV Student Transportation, Inc., which primarily provides 
student school bus transportation services, and charter passenger 
services to the public;
     New Dawn Transit LLC, which primarily provides non-
regulated school bus transportation services in New York, and charter 
passenger services to the public;
     Petermann Ltd., which primarily provides non-regulated 
school bus transportation services in Ohio, and charter passenger 
services to the public;
     Petermann Northeast LLC, which primarily provides non-
regulated school bus transportation services primarily in Ohio and 
Pennsylvania, and charter passenger services to the public;
     Petermann Southwest LLC, which primarily provides non-
regulated school bus transportation services in Texas, and charter 
passenger services to the public;
     Petermann STSA, LLC, which primarily provides non-
regulated school bus transportation services primarily in Kansas, and 
charter passenger services to the public;
     Quality Bus Service LLC, which primarily provides non-
regulated student school bus transportation services primarily in New 
York, and charter passenger services to the public;
     Queen City Transportation, LLC, which primarily provides 
non-regulated school bus transportation services in Ohio, and charter 
passenger services to the public;
     Trans Express Inc., which provides interstate and 
intrastate passenger transportation services in New York;
     Trinity, Inc., which provides non-regulated school bus 
transportation services in southeastern Michigan, and charter service 
to the public;
     Trinity Student Delivery LLC, which primarily provides 
non-regulated school bus transportation services in

[[Page 12015]]

northern Ohio, and passenger charter services to the public;
     White Plains Bus Company, Inc., d/b/a Suburban Paratransit 
Service, which primarily provides non-regulated school bus 
transportation services in New York, paratransit services, and charter 
services to the public; and
     Wise Coaches, Inc., which provides interstate passenger 
charter services in Tennessee and its surrounding states, and 
intrastate passenger charter and shuttle services in Tennessee.
    Applicants state that Royal, the carrier being acquired, is an 
Indiana limited liability company that holds interstate carrier 
operating authority in the United States. Royal operates primarily as a 
motor carrier providing interstate and intrastate passenger charter 
services in Illinois and Indiana, and their surrounding states, and 
corporate and university shuttle services for employees and students in 
the greater metropolitan area of Chicago, Ill. (the Service Area). 
(Appl. 9.)
    According to the application, Mr. Michael E. Sodrel holds all of 
the equity stock of Sodrel Holding. (Id. at 8.) Sodrel Holding, the 
seller and a noncarrier, is an Indiana corporation that holds all of 
the issued and outstanding equity membership interests in Royal. (Id.) 
Sodrel Holding also owns all of the outstanding equity stock or 
interests in three other motor passenger carriers that hold interstate 
carrier operating authority in the United States (Sodrel Affiliated 
Carriers) (id. at 8-10):
     The Free Enterprise System Inc., which provides interstate 
and intrastate passenger charter services in Illinois, Indiana, and 
Kentucky;
     Star of America LLC, which does not currently have any 
operations; and
     Student Transit, LLC, which provides non-regulated school 
bus transportation services in Indiana.
    Applicants state that the National Express Affiliated Carriers, 
Royal, and the Sodrel Affiliated Carriers are the only carriers with 
regulated interstate operations involved in this application. (Id. at 
11.)
    Applicants state that, through this transaction, National Express 
will acquire all of the outstanding equity membership interest in 
Royal, giving National Express direct 100% control of Royal. (Id. at 
10.)
    Under 49 U.S.C. 14303(b), the Board must approve and authorize a 
transaction that it finds consistent with the public interest, taking 
into consideration at least: (1) The effect of the proposed transaction 
on the adequacy of transportation to the public, (2) the total fixed 
charges that result, and (3) the interest of affected carrier 
employees. Applicants have submitted the information required by 49 CFR 
1182.2, including information to demonstrate that the proposed 
transaction is consistent with the public interest under 49 U.S.C. 
14303(b), see 49 CFR 1182.2(a)(7), and a jurisdictional statement under 
49 U.S.C. 14303(g) that the aggregate gross operating revenues of the 
involved carriers exceeded $2 million during the 12-month period 
immediately preceding the filing of the application, see 49 CFR 
1182.2(a)(5).
    Applicants assert that the proposed transaction is not expected to 
have a material, detrimental impact on the adequacy of transportation 
services available to the public. (Appl. 11.) They state that National 
Express expects that services to the public will be improved as 
operating efficiencies are realized. (Id.) They state that for the 
foreseeable future, Royal will continue to provide the services it 
currently provides under the same name, but will operate within the 
National Express corporate family, which is experienced in passenger 
transportation operations. (Id.) Applicants further state that Royal is 
experienced in some of the same market segments already served by some 
of the National Express Affiliated Carriers, and the transaction is 
expected to result in improved operating efficiencies, increased 
equipment utilization rates, and cost savings derived from economies of 
scale within Royal, which will help ensure the provision of adequate 
service to the public. (Id. at 12.) They also assert that adding Royal 
to National Express' corporate family will enhance the viability of the 
overall National Express organization and the operations of the 
National Express Affiliated Carriers by adding the Service Area to 
their areas serviced. (Id.)
    Applicants claim that neither competition nor the public interest 
will be adversely affected by the proposed transaction. (Id. at 14.) 
Applicants state that the population and demand for charter and shuttle 
services in the Service Area are expected to increase in the 
foreseeable future, and that Royal competes directly with other 
passenger charter and shuttle service providers, including ABC 
Transportation Services, Aries Charter Transportation, Chicago Charter 
Bus, Chicago Classic Coach, Ideal Charter, Infinity Transportation, 
Signature Transportation Group, and Windy City Limousine. (Id.) 
According to Applicants, a number of passenger transportation arrangers 
or brokers for charter services operate within the Service Area, and 
passenger motor coach charter providers also compete ``with a number of 
scheduled airlines and scheduled rail transportation within the Service 
Area.'' (Id.) With regard to interstate charter service offerings, 
Applicants also state that the Service Area is geographically dispersed 
from the service areas of the National Express Affiliated Carriers, and 
there is very limited overlap in the service areas and customer bases 
among the National Express Affiliated Carriers and Royal. (Id.)
    Applicants state that there are no material fixed charges 
associated with the transaction. (Appl. 12.) Regarding the interests of 
employees, Applicants claim that the transaction is not expected to 
have substantial impacts on employees or labor conditions, nor does 
National Express anticipate a measurable reduction in force or changes 
in compensation levels and/or benefits. (Id.) Applicants submit, 
however, that staffing redundancies could result in limited downsizing 
of back-office or managerial-level personnel. (Id.)
    The Board finds that the acquisition as proposed in the application 
is consistent with the public interest and should be tentatively 
approved and authorized. If any opposing comments are timely filed, 
these findings will be deemed vacated, and, unless a final decision can 
be made on the record as developed, a procedural schedule will be 
adopted to reconsider the application. See 49 CFR 1182.6. If no 
opposing comments are filed by expiration of the comment period, this 
notice will take effect automatically and will be the final Board 
action.
    This action is categorically excluded from environmental review 
under 49 CFR 1105.6(c).
    Board decisions and notices are available at www.stb.gov.
    It is ordered:
    1. The proposed transaction is approved and authorized, subject to 
the filing of opposing comments.
    2. If opposing comments are timely filed, the findings made in this 
notice will be deemed vacated.
    3. This notice will be effective May 14, 2019, unless opposing 
comments are filed by May 13, 2019.
    4. A copy of this notice will be served on: (1) The U.S. Department 
of Transportation, Federal Motor Carrier Safety Administration, 1200 
New Jersey Avenue SE, Washington, DC 20590; (2) the U.S. Department of 
Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW, 
Washington, DC 20530; and (3) the U.S. Department of Transportation, 
Office of the General Counsel, 1200 New Jersey Avenue SE, Washington, 
DC 20590.

    Decided: March 25, 2019.


[[Page 12016]]


    By the Board, Board Members Begeman, Fuchs, and Oberman.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2019-06057 Filed 3-28-19; 8:45 am]
 BILLING CODE 4915-01-P

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