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[Federal Register Volume 89, Number 220 (Thursday, November 14, 2024)]
[Notices]
[Pages 90208-90211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26469]

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SURFACE TRANSPORTATION BOARD

[Docket No. MCF 21123]

Patrick O. Regan--Acquisition of Control--Faribault 
Transportation Service, Inc., Minnesota Coaches, Inc., Marschall Line, 
Inc., Rehbein Transit Co., Inc., Minn-Dakota Coaches, Inc., Voyageur 
Bus Company, Inc., and Ready Bus Company, Inc.

AGENCY: Surface Transportation Board.

ACTION: Notice Tentatively Approving and Authorizing Finance 
Transaction.

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SUMMARY: Patrick O. Regan (Applicant) filed an application seeking 
authority to acquire control of Faribault Transportation Service, Inc. 
(FTS), through a corporate reorganization in which Applicant would 
become the majority shareholder in MNC Holding Company, a new entity 
created to serve as a holding company for FTS and other motor carriers 
and noncarrier entities. Applicant also seeks after-the-fact authority 
for several already-consummated transactions that ultimately resulted 
in Applicant's acquisition of control of six passenger motor carriers: 
Minnesota Coaches, Inc., Marschall Line, Inc., Rehbein Transit Co., 
Inc., Minn-Dakota Coaches, Inc., Voyageur Bus Company, Inc., and Ready 
Bus Company, Inc. (collectively, Affiliated Carriers). The Board is 
tentatively approving and authorizing these transactions. If no 
opposing comments are timely filed, this notice will be the final Board 
action.

DATES: Comments must be filed by December 30, 2024. If any comments are 
filed, Applicant may file a reply by January 13, 2025. If no opposing 
comments are filed by December 30, 2024, this notice shall be effective 
on December 31, 2024.

ADDRESSES: Comments, referring to Docket No. MCF 21123, may be filed 
with the Board either via e-filing on the Board's website or in writing 
addressed to: Surface Transportation Board, 395 E Street SW, 
Washington, DC 20423-0001. In addition, send one copy of comments to 
Applicant's representative: Edward Fishman, Hogan Lovells US LLP, 
Columbia Square, 555 Thirteenth Street NW, Washington, DC 20004.

FOR FURTHER INFORMATION CONTACT: Brian O'Boyle at (202) 245-0364. If 
you require an accommodation under the Americans with Disabilities Act, 
please call (202) 245-0245.

SUPPLEMENTARY INFORMATION: According to the application,\1\ Applicant, 
a noncarrier, seeks to acquire control of FTS, which is currently owned 
by Garrett O. Regan. Applicant characterizes his proposed acquisition 
as a ``corporate reorganization,'' that, if approved and consummated, 
would result in Applicant becoming the majority shareholder of MNC 
Holding Company, and Garrett O. Regan becoming a minority shareholder 
in MNC Holding Company, together with certain other minority 
shareholders.\2\ (Appl. 3.) \3\
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    \1\ Applicant originally filed the application on August 30, 
2024, but it then filed a supplement on October 15, 2024. Therefore, 
for purposes of determining the procedural schedule and statutory 
deadlines, the filing date of the application is October 15, 2024. 
See 49 CFR 1182.4(a).
    \2\ More information about the proposed corporate structure and 
ownership can be found in the application. (See Appl., Ex. 3.)
    \3\ The application does not have page numbers. The page numbers 
cited in this decision refer to the PDF page numbers of the 
application.
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    Applicant states that FTS has its principal place of business in 
Faribault, Minn., and provides student transportation service, 
including general and special education transportation, to and from 
school on a regular schedule, as well as school bus charter service for 
extracurricular activities and other special trips. (Id. at 4; Suppl. 
1-2.) Applicant states that, on limited occasions, FTS's school bus 
charter service involves trips from Minnesota into Wisconsin and other 
neighboring states (depending on the location of those activities 
involving the school bus customers served by FTS). (Suppl. 2.) FTS 
operates approximately 66 power units and employs approximately 88 
drivers. (Appl. 4.) \4\
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    \4\ Applicant indicates that FTS has two wholly owned 
subsidiaries, PEM Transportation, LLC, and Harmony Transit, LLC, 
which Applicant states are both intrastate passenger carriers not 
subject to the Board's jurisdiction. (Appl. 4 n.1.)
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    Applicant also seeks after-the-fact authorization for his 
acquisition of control of six motor carriers through six previously 
consummated transactions. Applicant states that, if approval is 
granted, each of these carriers would be brought under control of MNC 
Holding Company, with Applicant as the majority shareholder and other 
minority shareholders of the carriers becoming minority shareholders of 
MNC Holding Company. (Id. at 5.) Applicant describes the transactions 
for which he seeks after-the-fact authority as follows.
    Minnesota Coaches, Inc., Marschall Line, Inc., and Rehbein Transit 
Co., Inc.

[[Page 90209]]

According to the application, in 1994, Applicant founded and 
incorporated Family Bus Service, Inc. (Family Bus), a noncarrier, which 
is the parent company of three passenger motor carriers providing 
interstate service: Minnesota Coaches, Inc. (Minnesota Coaches), 
Marschall Line, Inc. (Marschall Line), and Rehbein Transit Co., Inc. 
(Rehbein).
    Family Bus purchased 100% ownership of Minnesota Coaches from RECO, 
Inc., a corporation owned by Applicant and his siblings (though the 
date of the transaction is not given). (Id. at 9.) Minnesota Coaches 
has its principal place of business in Hastings, Minn., and operates in 
its name and through the assumed names Hasting Bus Company, Big River 
Bus Company, and Big River Tours. (Id. at 10.) Minnesota Coaches 
provides school bus service that includes general and special education 
transportation to and from school on a regular schedule, and school bus 
charter service for extracurricular activities and special trips, 
which, on limited occasions, involve transportation between Minnesota 
and neighboring states including Wisconsin. (Id. at 10-11; Suppl. 3.) 
Minnesota Coaches also offers motorcoach contract service for 
universities, sports teams, and other business, as well as event 
specific charter services for weddings, conventions, and other events, 
concentrated primarily in the Minneapolis, Minn., St. Paul, Minn., and 
the surrounding Twin Cities area, as well as some interstate operations 
primarily in Wisconsin, Iowa, Illinois, and Missouri. (Suppl. 3, 4.) 
Minnesota Coaches operates approximately 196 power units and employs 
approximately 174 drivers. (Appl. 10.)
    In 1994, Family Bus became the sole shareholder of Marschall Line, 
which was founded in 1971 by the Marschall family. (Id. at 9.) 
Applicant states that Marschall Line has its principal place of 
business in Farmington, Minn. (Id. at 11.) Marschall Line, operating in 
its name and through the assumed name Mid-County Bus Company, provides 
school bus transportation services, which includes general and special 
education transportation to and from school on a regular schedule, and 
school bus charter service for extracurricular activities and special 
trips. (Id.; Suppl. 4-5.) Applicant states that, on limited occasions, 
the school bus charter service involves trips from Minnesota into 
Wisconsin and other neighboring states. (Suppl. 5.) Marschall Line 
operates approximately 110 power units and employs approximately 118 
drivers. (Appl. 11.)
    In 2012, Family Bus acquired the assets of Rehbein Transit, Inc., 
from the Rehbein family and formed the subsidiary, Rehbein. (Id. at 
10.) Applicant states that Rehbein, whose principal place of business 
is in Circle Pines, Minn., provides school bus services that include 
general and special education transportation to and from school on a 
regular schedule, and school bus charter service for extracurricular 
activities and special trips. (Id. at 12; Suppl. 5.) Applicant states 
that, on very limited occasions, the school bus charter service 
involves trips from Minnesota into Wisconsin or other neighboring 
states. (Suppl. 5.) Rehbein operates approximately 97 power units and 
employs approximately 91 drivers. (Appl. 12.)
    Minn-Dakota Coaches, Inc. In 1997, Applicant acquired control of 
Minn-Dakota Coaches, Inc. (Minn-Dakota), from August L. Fitch, William 
H. Barber, and Bonnie L. Barber. (Id. at 14.) Applicant controls Minn-
Dakota through his control of Ottertail Transportation, Inc., and 
Ottertail Coaches, Inc. (Id. at 13.) \5\ According to Applicant, Minn-
Dakota, whose principal place of business is in Fergus Falls, Minn., 
provides school bus transportation service that includes general and 
special education transportation to and from school on a regular 
schedule, and school charter service for extracurricular activities and 
special trips. (Id. at 15-16; Suppl. 6.) Applicant notes that some of 
these trips involve transportation between Minnesota and neighboring 
states including North Dakota. (Suppl. 6.) Applicant states that Minn-
Dakota also offers motorcoach contract service for universities, sports 
teams, and other business, as well as event specific charter services 
for weddings, conventions, and other events in the Fergus Falls area, 
with some motorcoach services conducted out of state, mostly within 
North Dakota and South Dakota, but a limited amount of activity in Iowa 
and Wisconsin, and the remainder spread out nationally based on 
customer demand for special event service. (Id. at 6-7.) Applicant 
states that Minn-Dakota operates approximately 14 power units and 
employs approximately 34 drivers. (Appl. 15.)
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    \5\ In 1997, Applicant and Michael R. Clark, a noncarrier, 
founded and incorporated Ottertail Transportation, Inc., which is 
65% owned by Applicant and 35% owned by Michael R. Clark. (Appl. 
13.) Ottertail Transportation, Inc., a noncarrier, acquired 
Ottertail Coaches, Inc., an intrastate motor carrier, which is the 
parent company to Minn-Dakota Coaches, Inc. (Id.) In 2006, Applicant 
and Michael R. Clark founded and incorporated Ottertail Trucking, 
Inc., a motor carrier of property, as a wholly owned subsidiary of 
Ottertail Transportation, Inc. (Id. at 15 n.7.) According to 
Applicant, Ottertail Trucking, Inc., is not subject to Board 
jurisdiction. (Id.)
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    Voyageur Bus Company, Inc. In 1992, Applicant and Michael J. Krois 
(Krois), a noncarrier, acquired Metropolitan School & Charter Bus 
Service, Inc., from Donald B. Regan. (Id. at 17.) In 2005, Applicant 
and Krois founded and incorporated Metro Bus Service, Inc., a 
noncarrier, and changed the name of Metropolitan School & Charter Bus 
Service, Inc., to Voyageur Bus Company, Inc., (Voyageur), which became 
a subsidiary of Metro Bus Service, Inc.\6\ (Id. at 16-17.) According to 
Applicant, Voyageur has its principal place of business in Duluth, 
Minn., and provides school bus transportation service that includes 
general and special education transportation to and from school on a 
regular schedule, and school charter service for extracurricular 
activities and special trips, with some trips on occasion involving 
transportation between Minnesota and neighboring states. (Suppl. 7-8.) 
Voyageur Bus also offers motorcoach contract services for universities, 
sports teams, and other business, as well as event specific charter 
services for weddings, conventions, and other events in the greater 
Duluth area. (Id. at 8.) Voyageur Bus's motorcoach services are 
conducted primarily in Minnesota, with some operations in Wisconsin, 
Iowa, Illinois, or other states across the U.S. based on customer 
demand for special event service. (Id.) Applicant states that Voyageur 
operates approximately 118 power units and employs approximately 125 
drivers. (Appl. 18.) Applicant further notes that Voyageur also 
operates a fleet of motorcoaches owned by Lake Superior Motorcoaches, 
Inc., a noncarrier subsidiary of Metro Bus Service, Inc., through a 
revenue-sharing arrangement. (Id. at 17 n.8 & 18.)
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    \6\ Applicant states that Krois owns 50% of Metro Bus Service, 
Inc., but does not have a controlling interest in any passenger 
motor carrier other than Voyageur. (Appl. 16.)
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    Ready Bus Company, Inc. In 2013, Applicant, Garrett O. Regan, and 
Casey O. Regan acquired the school bus assets of Ready Bus Line Company 
through River Bluff Bus Company, a corporation founded and incorporated 
in November 2013. (Id. at 19.) In December 2013, River Bluff Bus 
Company was renamed Ready Bus Company, Inc. (Ready Bus). (Id. at 18.) 
Applicant is the controlling shareholder of Ready Bus, which is 50% 
owned by Applicant, 25% owned by Garrett O. Regan, and 25% owned by 
Casey O. Regan. (Id. at 18-19.) Applicant states that Ready Bus

[[Page 90210]]

operates motorcoaches owned by River Bluff Motorcoach, Inc., a 
noncarrier that is 50% owned by Applicant.\7\ (Id. at 19 n.9.)
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    \7\ River Bluff Motorcoach, Inc. (RBM), a noncarrier, was 
founded and incorporated in November 2013, and acquired the 
motorcoach operating assets of Ready Bus Line Company. (Appl. 19.) 
Applicant states that RBM is 50% owned by Applicant and 10% each 
owned by Garrett O. Regan, Casey O. Regan, Troy J. Nelson, Mike 
Karlen, and Tom Severson. (Id.)
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    According to Applicant, Ready Bus, whose primary place of business 
is in Rochester, Minn., provides school transportation service that 
includes general and special education transportation to and from 
school on a regular schedule, and school charter service for 
extracurricular activities and special trips. (Id. at 21; Suppl. 9.) 
Applicant notes that, on limited occasions, some of these trips involve 
transportation between Minnesota and neighboring states including 
Wisconsin, depending on the location of the customer activity. (Suppl. 
9.) Ready Bus also offers motorcoach contract service for universities, 
sports teams, and other business, as well as event-specific charter 
services for weddings, conventions, and other events with service in 
Minnesota, Wisconsin, and neighboring states. (Id.) According to the 
application, most of the motorcoach service (outside of Minnesota and 
Wisconsin) is regionally concentrated in Iowa, Illinois, Missouri, and 
Indiana, and the remainder is spread out nationally based on customer 
demand for special event service. (Id. at 10.) Applicant states that 
Ready Bus operates approximately 59 power units and employs 
approximately 56 drivers. (Appl. 21.) \8\
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    \8\ Further information about these motor carriers, including 
U.S. Department of Transportation (USDOT) numbers, motor carrier 
numbers, and USDOT safety fitness ratings, can be found in the 
application. (See Appl. 26; id., Ex. 1.)
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    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 resulting from the proposed transaction, and (3) the interest 
of affected carrier employees. Applicant has submitted the information 
required by 49 CFR 1182.2, including information demonstrating 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). (See Appl. 22.)
    Acquisition of FTS. Applicant states that his proposed acquisition 
of FTS would be consistent with the public interest, as it would not 
result in any significant changes to the nature or scope of the 
operations that are conducted by FTS or any of the other motor carriers 
of passengers in the corporate family. (Id. at 23; Suppl. 17.) 
Applicant asserts that the acquisition would allow him to make 
strategic decisions regarding the operational, asset management, and 
safety compliance needs of FTS based on his years of experience in the 
school bus market and strong track record of managing successful school 
bus providers. (Suppl. 16-17.)
    Applicant asserts that there would be no negative impact on 
competition as a result of his acquisition of FTS. Applicant states 
that FTS is exclusively a school bus service provider that only 
occasionally crosses state lines. (Id. at 10-11.) According to 
Applicant, FTS does not compete for school bus contracts against the 
Affiliated Carriers, which each serve distinct school district 
communities within Minnesota. (Id. at 10 (stating that FTS provides 
service primarily in the City of Faribault and surrounding areas); see 
also id. at 13-15 (describing which school districts the other carriers 
at issue here serve.) Moreover, Applicant asserts that the existing 
school district contracts with FTS are subject to competitive bid 
procedures and that there is substantial competition for such school 
transportation services in the relevant service area from national 
providers and from local competitors. (Id. at 10-11, 17.)
    Applicant states that his acquisition of control of FTS would not 
affect fixed charges, as he would obtain control of FTS through a 
corporate reorganization that would not involve any external financing. 
(Appl. 24; Suppl. 17.) Applicant asserts that there would be no 
material effect on employee or labor conditions at FTS, as there are no 
plans for employee layoffs or reductions in staff at FTS as a result of 
the proposed restructuring transaction, nor plans for adverse changes 
to existing FTS employee benefits. (Appl. 25; Suppl. 18.)
    Historical Acquisitions of Affiliated Carriers. Applicant contends 
that the historical acquisitions of control of the Affiliated Carriers 
were consistent with the public interest because those transactions 
enabled him to strengthen the depth and quality of service provided by 
each of the Affiliated Carriers, based on Applicant's track record in 
the bus industry and the opportunity to more efficiently use the 
assets, resources, and management experience of the affiliated 
companies. (Suppl. 18.) Applicant contends that the acquisitions did 
not result in any adverse changes to the nature or scope of the 
operations that are conducted by those Affiliated Carriers; rather, the 
transactions contributed to an overall increase in the available 
motorcoach and school bus service capacity in the relevant service 
areas, as Applicant has continued to invest over time in equipment, 
operating personnel, and other resources to support the business 
activities of these Affiliated Carriers. (Id.)
    Applicant argues that there has been no negative impact on 
competition, as these Affiliated Carriers do not compete with each 
other today and generally did not compete directly with each other at 
the time of the respective acquisitions by Applicant, due to the nature 
of the services they each provide in their respective service areas. 
(Id. at 11.) Moreover, Applicant asserts that the Affiliated Carriers 
have faced (and continue to face) substantial competition in each of 
the relevant markets from national, regional, and local bus operations, 
as well as intermodal competition from motor vehicles, passenger train, 
and passenger aviation service. (Id. at 12, 19.) Applicant notes that 
two of the carriers subject to the application, Marschall Line and 
Rehbein, are exclusively school bus service providers that only 
occasionally provide interstate charter service. (Id. at 13.) Applicant 
asserts that these two carriers compete for different school bus 
contracts, do not serve the same student population, and compete in 
markets with substantial competition from national and local bus 
transportation providers. (Id. at 13-14.) Applicant states that 
Minnesota Coaches, Ready Bus, Minn-Dakota, and Voyageur, all of which 
provide both school bus and motorcoach services, also do not directly 
compete, have served different service areas, operate their assets out 
of different geographic terminals, and face intense competition from 
other bus transportation providers. (Id. at 14-16 (describing the 
different areas served and other entities with whom these four carriers 
compete for both school bus and motorcoach service).)
    Applicant asserts that, while limited debt financing was used to 
acquire some of the Affiliated Carriers, the historical acquisitions 
did not result in fixed charges that adversely affected the

[[Page 90211]]

ability of those carriers to continue to provide safe and quality 
transportation service. (Id. at 19.) Applicant states that he has no 
outstanding debts related to these transactions, has minimal overall 
debts, and was able to pay down acquisition debt promptly following the 
relevant acquisitions. (Appl. 24; Suppl. 19.)
    Applicant states that the historical acquisitions of control of the 
Affiliated Carriers have not had any material adverse effect on 
employee or labor conditions. Applicant asserts that, since those 
acquisitions, there have not been any mass layoffs or substantial 
employee restructurings, and no adverse changes to wage and benefit 
arrangements have been implemented. (Suppl. 20.)
    Based on Applicant's representations, the Board finds that the 
acquisition of FTS is consistent with the public interest and should be 
tentatively approved and authorized. The Board also finds that the 
historical acquisitions of control of the Affiliated Carriers are 
consistent with the public interest and should be tentatively approved 
and authorized after the fact. 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 the expiration of the comment period, 
this notice will take effect automatically and will be the final Board 
action in this proceeding.
    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 acquisition of FTS is approved and authorized, 
subject to the filing of opposing comments.
    2. The acquisitions of the Affiliated Carriers are approved and 
authorized after the fact, subject to the filing of opposing comments.
    3. If opposing comments are timely filed, the findings made in this 
notice will be deemed vacated.
    4. This notice will be effective December 31, 2024, unless opposing 
comments are filed by December 30, 2024. If any comments are filed, 
Applicants may file a reply by January 13, 2025.
    5. 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: November 7, 2024.

    By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz.
Aretha Laws-Byrum,
Clearance Clerk.
[FR Doc. 2024-26469 Filed 11-13-24; 8:45 am]
BILLING CODE 4915-01-P
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