[Federal Register Volume 71, Number 97 (Friday, May 19, 2006)]
[Notices]
[Pages 29215-29216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7565]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 34865]


Arkansas Midland Railroad Company, Inc.--Petition for Declaratory 
Order--Caddo Valley Railroad Company

AGENCY: Surface Transportation Board, DOT.

ACTION: Institution of declaratory order proceeding; request for 
comments.

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SUMMARY: In response to a petition filed by the Arkansas Midland 
Railroad Company, Inc. (AKMD), the Board is instituting a declaratory 
order proceeding under 49 U.S.C. 721 and 5 U.S.C. 554(e) to determine 
if the right of first refusal provided in 49 U.S.C. 10907(h), to 
repurchase a line sold under the Feeder Line Development Program, 
applies when a transfer of control of a feeder line operator occurs by 
stock sale. Responses to the petition have been filed by Caddo Valley 
Railroad Company (CVR); Bean Lumber Company and Curt Bean Lumber 
Company (Bean Companies); GS Roofing Products Company, Inc. (GS) and 
CertainTeed Corporation (CertainTeed); and Pioneer Railcorp (Pioneer) 
(jointly, Respondents). International Paper Company (IP) also has 
submitted a response. The Board seeks public comment on this issue.

DATES: Comments are due June 19, 2006. Replies are due June 29, 2006.

ADDRESSES: Send an original and 10 copies of any comments, referring to 
STB Finance Docket No. 34865, to: Surface Transportation Board, 1925 K 
Street, NW., Washington, DC 20423-0001. In addition, send one copy of 
comments to (1) AKMD's representative, William C. Sippel, Fletcher & 
Sippel LLC, 29 North Wacker Drive, Suite 920, Chicago, IL 60606-2832; 
(2) CVR and Bean Companies' representative, Richard H. Streeter, Barnes 
& Thornburg LLP, 750 17th Street, NW., Suite 900, Washington, DC 20006-
4675; (3) GS and CertainTeed's representative, Mark J. Andrews, 
Strasburger & Price, LLP, 1800 K Street, NW., Suite 301, Washington, DC 
20006; (4) Pioneer's representative, Daniel A. LaKemper, Pioneer 
Railcorp, 1318 S. Johanson Road, Peoria, IL 61607; and (5) IP's 
representative, Edward D. Greenberg, Galland, Kharasch, Greenberg, 
Fellman & Swirsky, P.C., 1054 Thirty-First Street, NW., Washington, DC 
20007-4492.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1609. 
[Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at: 1-800-877-8339].

SUPPLEMENTARY INFORMATION: AKMD's petition for declaratory order 
concerns the Norman Branch line between Gurdon and Birds Mill, AR, 
which AKMD was forced to sell under the Feeder Line Development Program 
at 49 U.S.C. 10907. See Caddo Antoine, et al.--Feeder Li. Acq.--
Arkansas Midland RR, 4 S.T.B. 610 (2000); GS Roofing Products Co. v. 
STB, 262 F.3d 767 (8th Cir. 2001). The Bean Companies and CertainTeed's 
subsidiary, GS, were two of the five shippers authorized to acquire the 
line. According to the petition, the shippers created a corporation, 
CVR, to own the assets of, and to operate, the line.\1\
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    \1\ It is unclear who currently owns CVR's stock.
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    AKMD claims that the shippers are now proposing to sell the stock 
ownership of CVR to Pioneer, an owner of several Class III shortline 
railroads. AKMD claims that the proposed sale of all of CVR's stock 
will subvert its first-refusal rights under 49 U.S.C. 10907(h).\2\

[[Page 29216]]

AKMD asserts that, if the stock sale goes forward, it would defeat the 
right of first refusal provision in section 10907(h) in circumstances 
such as in this case, and it asks the Board to determine that the 
proposed sale of CVR's stock cannot proceed until the Norman Branch is 
first offered to it for repurchase.
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    \2\ Section 10907(h) provides that: ``If a purchasing carrier 
under this section proposes to sell or abandon all or any portion of 
a purchased railroad line, such purchasing carrier shall offer the 
right of first refusal with respect to such line or portion thereof 
to the carrier which sold such line under this section. Such offer 
shall be made at a price equal to the sum of the price paid by such 
purchasing carrier to such selling carrier for such line or portion 
thereof and the fair market value (less deterioration) of any 
improvements made, as adjusted to reflect inflation.''
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    Respondents oppose AKMD's petition, asserting that CVR is neither 
selling nor abandoning the line, so that section 10907(h) is not 
applicable. Respondents argue that, had Congress intended to include 
stock acquisitions in section 10907(h), it would have done so. 
According to Respondents, following the stock sale, the rail line will 
continue to be an asset of CVR and, should CVR ever elect to sell or 
abandon any portion of the line, AKMD could then invoke its first-
refusal rights under section 10907(h).
    Respondents contend that the Feeder Line Development Program has 
worked as intended on the Norman Branch. They state that CVR provided 
service on the line from September 2000 until the summer of 2005, when 
the line was embargoed due to the need to make certain repairs. They 
indicate that CVR resumed service after obtaining funding from the 
State of Arkansas for those repairs. Respondents explain that CVR's 
shareholders have determined that preservation of rail service would 
best be served by having the shippers sell their stock in CVR to an 
experienced investor who is willing to operate the line. They have 
begun discussions with Pioneer, an experienced shortline operator, to 
invest in the line and fund rehabilitation. They claim that CVR is 
attempting to further the purposes of the Feeder Line Development 
Program by finding a new shareholder to enhance the future viability of 
service to shippers on the line.
    Respondents request expedited action on this matter. IP, the major 
shipper on the line, questions whether the proposed transfer of control 
of the Norman Branch to Pioneer would result in the restoration of 
service levels that existed when AKMD operated the line and agrees that 
AKMD has raised a significant legal issue that the Board needs to 
resolve on the merits.\3\
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    \3\ By pleading filed May 9, 2006, CVR has sought to file a 
reply to IP's submission, addressing IP's claims of service 
deficiencies, or, alternatively, a motion to strike. To ensure a 
complete record, CVR's reply will be accepted into the record.
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    The issue presented in AKMD's petition relating to the right of 
first refusal in section 10907(h) constitutes a matter of first 
impression at this agency and involves interpretation of the statute. A 
declaratory order proceeding is instituted to invite broad public 
comment. Any person seeking to participate in support of, or in 
opposition to, AKMD's position is invited to submit written comments to 
the Board regarding when, if ever, a stock sale triggers section 
10907(h).
    Board decisions, notices, and filings in this and other Board 
proceedings are available on our Web site at http://www.stb.dot.gov.

    Decided: May 12, 2006.

    By the Board, David M. Konschnik, Director, Office of 
Proceedings.
Vernon A. Williams,
Secretary.
 [FR Doc. E6-7565 Filed 5-18-06; 8:45 am]
BILLING CODE 4915-01-P