[Federal Register Volume 71, Number 144 (Thursday, July 27, 2006)]
[Notices]
[Pages 42718-42719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12041]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 34813]


New York New Jersey Rail LLC and New York Cross Harbor Railroad 
Terminal Corp.--Corporate Family Transaction Exemption

    New York New Jersey Rail LLC (NYNJR) and New York Cross Harbor 
Railroad Terminal Corp. (NYCH) (collectively, petitioners) have filed a 
verified notice of exemption under 49 CFR 1180.2(d)(3) for a 
transaction within a corporate family.\1\ Under the proposed 
transaction, NYCH will transfer its operating rights and common carrier 
obligations to NYNJR. NYNJR will assume all of NYCH's rights and 
obligations to provide rail service as a common carrier.
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    \1\ Petitioners originally filed their notice of exemption on 
December 22, 2005. By decision served on January 10, 2006, the 
Board, at the request of petitioners, held the proceeding in 
abeyance until further notice to allow Consolidated Rail Corporation 
(Conrail) to discuss its concerns with petitioners regarding the 
effect of the proposed transaction on NYCH's contractual obligations 
to Conrail. After reaching an agreement with Conrail, petitioners 
filed an amended notice on February 24, 2006. Subsequently, the New 
York City Economic Development Corp. (NYCEDC), acting in its 
capabity as contractor to the City of New York (the City), filed a 
motion to request that the Board hold the proceeding in abeyance 
until the City had confirmation from petitioners that the City's 
rights, pursuant to a permit dated September 1, 1984, would not be 
compromised, altered or otherwise modified by the proposed 
transaction. On July 11, 2006, NYCEDC withdrew its request to hold 
the proceeding in abeyance. By letter filed on July 12, 2006, 
petitioners indicated that their exemption request is now unopposed 
and requet that the Board proceed with notice of the proposed 
transaction.
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    NYCH, a Class III short line railroad, owns, leases and operates 
railroad tracks and facilities at Greenville, NJ,\2\ Jersey City, NJ, 
and Brooklyn, NY, and operates between these points by means of a car 
float across New York Harbor. NYNJR is a newly formed limited liability 
company established and owned by Mid Atlantic New England Rail, LLC 
(MANER),\3\ an entity owned and controlled by Gordon Reger (Mr. Reger), 
a noncarrier individual. Entities controlled by Mr. Reger own a 
majority of NYCH's outstanding stock and, by reason of that ownership, 
indirectly control NYCH. Mr. Reger currently controls one other short 
line railroad, New Amsterdam & Seneca Railroad Company, LLC.\4\
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    \2\ NYCH leases Conrail's Greenville Yard, pursuant to an 
agreement dated December 15, 2002.
    \3\ MANER established NYNJR to facililtate the acquisition of 
and/or investment in short line and regional railroad companies, 
such as NYNJR.
    \4\ See Gordon Reger--Continuance in Control Exemption--New 
Amsterdam & Seneca Railroad Company, LLC, STB Finance Docket No. 
34825 (STB served Feb. 23, 2006).
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    The transaction was scheduled to be consummated on or after March 
3, 2006 (7 days after the amended notice of exemption was filed).
    This is a transaction within a corporate family of the type 
specifically exempted from prior review and approval under 49 CFR 
1180.2(d)(3). According to the parties, the transaction will not result 
in adverse changes in service levels, significant operational changes, 
or changes in the competitive balance with carriers outside the 
corporate family. Petitioners state that the proposed corporate changes 
will be limited to entities controlled by Mr. Reger.\5\ Petitioners 
also state that the proposed transfer of NYCH's rights and obligations 
to NYNJR will facilitate better access to equity and debt capital which 
will enable the improvement of the Greenville, NJ, and Brooklyn, NY 
rail yards and the condition of NYCH's equipment, create a safer 
working environment for railroad employees, and increase the railroad's 
ability to serve the freight transportation needs of the public in the 
New York, New Jersey, New England, and Mid Atlantic markets.
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    \5\ NYCH states that it will not transfer to NYNJR its 
Greenville Yard lease until it obtains Conrail's consent. 
Furthermore, NYCH's ability to transfer its assets to NYNJR is 
subject to the terms of its 2002 Greenville Yard lease with Conrail 
and its settlement agreement with Conrail.
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    Under 49 U.S.C. 10502(g), the Board may not use its exemption 
authority to relieve a rail carrier of its statutory obligation to 
protect the interests of its employees. Section 11326(c), however, does 
not provide for labor protection for transactions under sections 11324 
and 11325 that involve only Class III rail carriers. Accordingly, the 
Board may not impose labor protective conditions here, because all of 
the carriers involved are Class III carriers.
    If the amended verified notice contains false or misleading 
information, the exemption is void ab initio. Petitions to revoke the 
exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing 
of a petition to revoke will not automatically stay the transaction.
    An original and 10 copies of all pleadings, referring to STB 
Finance Docket No. 34813, must be filed with the Surface Transportation 
Board, 1925 K Street, NW., Washington, DC 20423-0001. In addition, a 
copy of each pleading must be served on John D. Heffner, Esq., John D. 
Heffner, PLLC, 1920 N Street, NW., Suite 800, Washington, DC 20036.

[[Page 42719]]

    Board decisions and notices are available on our Web site at http://www.stb.dot.gov.

    Decided: July 21, 2006.

    By the Board, David M. Konschnik, Director, Office of 
Proceedings.
Vernon A. Williams,
Secretary.
 [FR Doc. E6-12041 Filed 7-26-06; 8:45 am]
BILLING CODE 4915-01-P