Global Passenger Services, L.L.C.ControlBortner Bus Company, et al.

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Docket No. MC-F-20924]

Global Passenger Services, L.L.C.--Control--Bortner Bus Company,

et al.

AGENCY: Surface Transportation Board.

ACTION: Notice tentatively approving finance transactions.

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SUMMARY: Global Passenger Services, L.L.C. (Global or applicant), a

noncarrier, filed an application under 49 U.S.C. 14303 to acquire

control of 20 motor passenger carriers, consisting of 15 existing

subsidiaries--Bortner Bus Company (Bortner), C&D Transportation, Inc.

(C&D), Comet Bus Lines Corporation (Comet), Connolly's Limousine

Service, Inc. (Connolly's), Country & Western Tours, Inc. (C&W Tours),

Franciscan Lines, Inc. (Franciscan), George Ku, Inc. (George Ku),

Golden Touch Transportation, Inc. (GTT), Golden Touch Limousine of

Florida, Inc. (GTT of FL), JJ Kelly Charter Bus Service Co. (JJ Kelly),

The Palmeri Motor Coach Corporation (Palmeri), PROTRAV Services, Inc.,

d/b/a PROTRAV Charter Coach Services (PROTRAV Charter), PROTRAV

Services, Inc. (PROTRAV Services), Santa Barbara Transportation

Corporation (SBTC), and Tiger Air Express, Inc. (Tiger)--and 5 new

target companies, Hemphill Brothers Coach Co., Inc. (Hemphill),

Hansruedi and Marcia Muggli, d/b/a The Transportation Company (TTC),

Pacific Explorer Lines, Inc. (Pacific), Stardust Executive

Transportation, Inc. (Stardust), and Sunnyland Acquisition Corp.

(SAC).1 Persons wishing to oppose the application must

follow the rules under 49 CFR part 1182, subpart B. The Board has

tentatively approved the transaction, and, if no opposing comments are

timely filed, this notice will be the final Board action.

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\1\ Global incorporated SAC, a noncarrier, to acquire the assets

of Sunnyland Stages, Inc. (SSI), a Missouri corporation and motor

passenger carrier.

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DATES: Comments are due by August 31, 1998. Applicant may reply by

September 21, 1998. If no comments are received by August 31, 1998,

this notice is effective on that date.

ADDRESSES: Send an original and 10 copies of comments referring to STB

Docket No. MC-F-20924 to: Surface Transportation Board, Office of the

Secretary, Case Control Unit, 1925 K Street, N.W., Washington, DC

20423-0001. In addition, send one copy of comments to applicant's

representative: Mark J. Andrews, Barnes & Thornburg, 1401 Eye Street,

N.W., Suite 500, Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 565-1600. [TDD for

the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: Global, a Delaware limited liability

company, was created on May 15, 1997. According to Global, it was

unaware of the requirements of 49 U.S.C. 14303 prior to January

1998.2 After reviewing its records, Global determined that

interstate and/or intrastate passenger authority had been issued to 15

entities out of the 30 corporations that it directly or indirectly

controls at this time. Upon discovering this unresolved control issue,

Global filed an application to acquire control, through indirect stock

ownership, of the existing subsidiaries'Bortner,3

C&D,4 Comet,5 Connolly's,6 C&W Tours,

7 Franciscan, 8 George Ku, 9 GTT,

10 GTT of FL, 11 JJ Kelly, 12 Palmeri,

13 PROTRAV

[[Page 38690]]

Charter, 14 PROTRAV Services, 15 SBTC,

16 and Tiger 17 and of the target companies,

Hemphill, 18 TTC, 19 Pacific, 20

Stardust, 21 and SAC. 22 According to Global, the

stock of the target companies has been placed in voting trusts pending

disposition of this proceeding.

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\2\ Immediately upon its creation, Global acquired the shares of

two regulated motor passenger carriers--one with interstate

authority and one with intrastate authority. Because the initial

acquisition of the shares of a single interstate carrier did not

require Board authorization, Global assumed that the subsequent

stock acquisition of additional interstate carriers required no

Federal approval.

\3\ Bortner is a Pennsylvania corporation. It holds federally

issued operating authority in MC-111191 and intrastate operating

authority in Ohio and Pennsylvania. Bortner provides charter and

special operations between points in the United States (including

Alaska and Hawaii).

\4\ C&D is a Tennessee corporation. It holds federally issued

operating authority in MC-191957. C&D provides charter and special

operations between points in the United States (except Alaska and

Hawaii).

\5\ Comet is a Florida corporation. It holds federally issued

operating authority in MC-231149. Comet provides charter and special

operations between points in the United States (except Hawaii).

\6\ Connolly's is a Pennsylvania corporation. It holds federally

issued operating authority in MC-176826 and intrastate operating

authority in Pennsylvania. Connolly's provides charter and special

operations between points in the United States.

\7\ C&W Tours is a Tennessee corporation. It holds federally

issued operating authority in MC-263068. C&W provides charter and

special operations between points in the United States.

\8\ Franciscan is a California corporation. It holds federally

issued operating authority in MC-140403 and intrastate operating

authority in California. Franciscan provides charter and special

operations between points in the United States (including Alaska,

but excluding Hawaii).

\9\ George Ku is a Pennsylvania corporation. It holds federally

issued operating authority as a common and contract carrier in MC-

31422 and intrastate operating authority in Ohio and Pennsylvania.

George Ku provides charter and special operations between points in

the United States (except Hawaii).

\10\ GTT is a Delaware corporation. It holds federally issued

operating authority as a contract carrier in MC-235493 and

intrastate operating authority in Florida.

\11\ GTT of FL, a wholly owned subsidiary of GTT, is a

corporation that holds no interstate authority but is licensed by

Dade County, FL, for intrastate passenger service. The fact that

these operations appear to be entirely within the State of Florida

is not determinative of Board jurisdiction. It is well settled that

service within a single state may be interstate commerce and subject

to our jurisdiction when there is a through ticket or some other

arrangement between the involved carriers for through transportation

to or from a point in another state. Also, if the participants to a

finance transaction are motor carriers of passengers, subject to

Board jurisdiction under 49 U.S.C. 13501, then under 49 U.S.C.

14303(f), they are subject to our exclusive and plenary jurisdiction

in all matters relating to their consolidation, merger, and

acquisition of control, and this extends to intrastate operating

rights. See Colorado Mountain Express, Inc. and Airport Shuttle

Colorado, Inc., d/b/a Aspen Limousine Service, Inc.--Consolidation

and Merger-- Colorado Mountain Express, STB Docket No. MC-F-20902

(STB served Feb. 28, 1997).

\12\ JJ Kelly is a Florida corporation. It holds federally

issued operating authority in MC-172787. It provides charter and

special operations between points in the United States (except

Alaska and Hawaii).

\13\ Palmeria is a Pennsylvania corporation. It holds federally

issued operating authority in MC-167547 and intrastate operating

authority in New Jersey and Pennsylvania. It provides passenger

service as a contract carrier between points in Tennessee and

Kentucky, and charter and special operations between points in the

United States (except Alaska and Hawaii).

\14\ PROTRAV Charter is a California corporation. It holds

federally issued operating authority in MC-227448 and intrastate

operating authority in California. It provides charter and special

operations between points in the United States (except Alaska and

Hawaii).

\15\ PROTRAV Services, a wholly owned subsidiary of PROTRAV

Charter, is a corporation that holds no interstate authority but is

licensed by Nevada for intrastate passenger service. For a

discussion of the effect of intrastate operating authority, see

supra note 11.

\16\ SBTC is a California corporation. It holds federally issued

operating authority in MC-198757 and intrastate operating authority

in California. SBTC engages primarily in school transportation

activities, which are not regulated.

\17\ Tiger is a Missouri corporation. It holds federally issued

operating authority as a common and contract carrier in MC-217893

and intrastate operating authority in Indiana and Missouri. It

provides passenger service over certain regular routes in Arkansas,

Missouri, and Oklahoma, and charter and special operations between

points in the United States (except Alaska and Hawaii).

\18\ Hemphill is a Tennessee corporation. It holds federally

issued operating authority in MC-336635. It provides charter and

special operations between points in the United States.

\19\ TTC is a California corporation. It holds federally issued

operating authority in MC-182176 and intrastate operating authority

in California. It provides charter and special operations, beginning

and ending at San Francisco and Mateo Counties, CA, and extending to

points in Oregon, Washington, Nevada, Arizona, Utah, and New Mexico.

\20\ Pacific is a California corporation. It holds federally

issued operating authority in MC-251473 and intrastate operating

authority in California. It provides charter and special operations

between points in the United States (except Alaska and Hawaii).

\21\ Stardust is a California corporation. It holds federally

issued operating authority in MC-304399 and intrastate operating

authority in California. It provides charter and special operations

between points in the United States.

\22\ SAC is a Delaware corporation. It is the transferee of

SSI's federally issued operating authority in MC-52479 and

intrastate operating authority in Missouri. It provides passenger

service over certain regular routes in Arkansas and Missouri, and

special and charter operations between points in the United States

(except Hawaii). Because the acquisition of SSI has been structured

as an asset transaction, Global reports that it has trusteed

(presumably placed in trust) SAC, which will become a carrier upon

its acquisition of SSI's assets.

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Global submits that the instant transactions have not reduced and

will not reduce competition in the bus industry or competitive options

available to the traveling public. It also submits that it has no

intention of changing the operations of any of the existing

subsidiaries or target companies as a result of the approvals sought

here. Global asserts that each of the subsidiaries and target companies

faces substantial competition from other bus companies and

transportation modes. It estimates that, at the end of 1997, its

regular-route, charter and special operations accounted for

approximately 0.54% of the relevant market for such services in the

United States. It believes that its control of the target companies

will increase that market share by only one-tenth of a percentage

point.

Global also submits that its control of the subsidiaries and target

companies has produced and will produce substantial benefits, including

interest cost savings from restructuring of debt and reduced operating

costs from Global's enhanced volume purchasing power. Specifically,

Global claims that the carriers it acquires benefit from the lower

insurance premiums it has negotiated and from volume discounts for

equipment and fuel. Global also asserts that it improves the efficiency

of all acquired carriers, while maintaining responsiveness to local

conditions, by providing centralized services to support decentralized

operational and marketing managers. Centralized support services are

provided in such areas as legal affairs, accounting, purchasing, safety

management, equipment maintenance, driver training, human resources,

and environmental compliance. In addition, Global states that it

facilitates vehicle sharing arrangements between acquired entities, so

as to ensure maximum utilization and efficient operation of equipment.

According to Global, the involved transactions offer ongoing benefits

for employees of acquired carriers not only because of the efficiencies

described above, but also because Global's policy is to honor all

collective bargaining agreements of acquired carriers.

Global certifies that: (1) none of the involved subsidiaries or

target companies has been assigned a safety rating of less than

satisfactory by the U.S. Department of Transportation; (2) all involved

carriers maintain sufficient liability insurance; (3) none of the

involved carriers has been or is either domiciled in Mexico or owned or

controlled by persons of that country; and (4) approval of the

transactions will not significantly affect either the quality of the

human environment or the conservation of energy resources. Additional

information may be obtained from applicant's representative.

Under 49 U.S.C. 14303(b), we must approve and authorize a

transaction we find consistent with the public interest, taking into

consideration at least: (1) The effect of the transaction on the

adequacy of transportation to the public; (2) the total fixed charges

that result; and (3) the interest of affected carrier employees. The

prior consummation of the transactions involving the 15 existing

subsidiaries does not bar approval of the application under section

14303 if the evidence establishes that the transaction would be

consistent with the public interest in other respects, and for the

future.23 Approval is granted in such circumstances when the

record contains strong affirmative evidence of public benefits to be

derived from the resulting control, warranting the view that the public

should not be penalized by being deprived of those benefits. Moreover,

in this case, the record shows an absence of intent to flout the law or

of a deliberate or planned violation. See Kenosha Auto Transport

Corp.--Control, 85 M.C.C. 731, 736 (1960).

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\23\ Global seeks nunc pro tunc approval of the control of the

15 existing subsidiaries that it already controls. While we are

granting our tentative approval, the need for retroactive effect has

been demonstrated. Global evidently recognizes that it should have

sought our approval sooner but, under the circumstances, the Board

does not intend to pursue enforcement actions against Global for the

previously unauthorized common control.

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On the basis of the application, we find that the proposed

acquisition of control is consistent with the public interest and

should be authorized. If opposing comments are timely filed, this

finding will be deemed vacated and a procedural schedule will be

adopted to reconsider the application. If no opposing comments are

filed by the expiration of the comment period, this decision will take

effect automatically and will be the final Board action.

This decision will not significantly affect either the quality of

the human environment or the conservation of energy resources.

It is ordered:

1. Global's control of the existing subsidiaries and the target

companies is approved and authorized, subject to the filing of opposing

comments.

2. If timely opposing comments are filed, the findings made in this

decision will be deemed vacated.

3. This decision will be effective on August 31, 1998, unless

timely opposing comments are filed.

4. A copy of this notice will be served on: (1) the U.S. Department

of Transportation, Office of Motor Carriers-HIA 30, 400 Virginia

Avenue, SW, Suite 600, Washington, DC 20024; and (2) the U.S.

Department of Justice, Antitrust Division, 10th Street & Pennsylvania

Avenue, N.W., Washington, DC 20530.

Decided: July 9, 1998.

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By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

[FR Doc. 98-19128 Filed 7-16-98; 8:45 am]

BILLING CODE 4915-00-P