[Federal Register Volume 72, Number 148 (Thursday, August 2, 2007)]
[Notices]
[Pages 42465-42466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14975]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 35063]


Michigan Central Railway, LLC--Acquisition and Operation 
Exemption--Lines of Norfolk Southern Railway Company

AGENCY: Surface Transportation Board.

ACTION: Notice of commencement of proceeding, revocation of exemption, 
and issuance of procedural schedule.

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SUMMARY: By this decision and notice, the Board is commencing a 
proceeding under 49 U.S.C. 10502(b) and 49 CFR 1121.1 to consider the 
petition of Michigan Central Railway, LLC (MCR) to exempt its 
acquisition and operation of certain railroad lines of the Norfolk 
Southern Railway Company (NSR) in Michigan and Indiana. To allow this 
proceeding to go forward, we are granting MCR's petition to revoke the 
application of the class exemption, which would otherwise apply to this 
transaction. Our revocation of the class exemption as to this 
transaction will allow us to consider the transaction in greater detail 
than it could be considered under our regulations for processing 
notices invoking the class exemption, and it will facilitate the 
participation of interested persons pursuant to the procedural schedule 
we are adopting.

DATES: Comments on MCR's petition for exemption may be filed by any 
interested person by September 4, 2007. Replies by MCR and NSR are due 
by September 17, 2007. The Board will issue its final decision on 
October 11, 2007.

ADDRESSES: Any filing submitted in this proceeding must refer to STB 
Finance Docket No. 35063 and may be submitted either via the Board's e-
filing format or in the traditional paper format. Any person using e-
filing must attach a document and otherwise comply with the 
instructions found on the Board's ``http://www.stb.dot.gov.'' Web site, 
at the ``E-FILING'' link. Any person submitting a filing in the 
traditional paper format must submit an original and 10 paper copies of 
the filing (and also an electronic version) to: Surface Transportation 
Board, 395 E. Street, SW., Washington, DC 20423-0001. In addition, one 
copy of each filing in this proceeding must be sent (and may be sent by 
e-mail only if service by e-mail is acceptable to the recipient) to: 
Karl Morell, Of Counsel, Ball Janik, LLP, Suite 225, 1455 F. Street, 
NW., Washington, DC 20005; and G. Paul Moates, Sidley & Austin LLP 1501 
K. Street, NW., Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 245-0395. 
[Federal Information Relay Service (FIRS) for the hearing impaired: 1-
800-877-8339.]

SUPPLEMENTARY INFORMATION: By petition filed on July 13, 2007, in STB 
Finance Docket No. 35063, MCR requests, pursuant to 49 U.S.C. 10502, an 
exemption under the Board's formal (case-by-case) exemption procedures 
at 49 CFR 1121.1 to authorize it to acquire some 299 miles of rail line 
from NSR,\1\ to acquire through assignment from NSR some 85.5 miles of 
existing trackage rights \2\ and lease rights,\3\ and to acquire yards 
and stations that are related to this track.\4\ A map of the area to be 
served by MCR appears in Exhibit 1 attached to its petition for 
exemption.
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    \1\ The NSR rail lines run generally between Elkhart, IN and 
Grand Rapids, MI; between Kalamazoo, MI, and a point near Ypsilanti, 
MI; and between Jackson, MI, and Lansing, MI. More specifically, the 
rail lines to be acquired run between the following mileposts: 
Milepost KH 1.4 at Elkhart, IN, and milepost KH 27.4 at Three 
Rivers, MI; milepost FB 27.3 at Three Rivers and milepost FB 102.3 
at Grand Rapids, MI; milepost MH 143.03 at CP BO in Kalamazoo, MI, 
and milepost MH 28 at CP Ypsi; and milepost LZ 0.0 at Jackson, MI, 
and milepost LZ 36.9 at Lansing, MI.
    \2\ MCR will acquire through assignment by NSR 80 miles of 
trackage rights over the line of the National Railroad Passenger 
Corporation (Amtrak) between milepost MH 143.3 near Kalamazoo, MI, 
and milepost MH 222.8 at the Michigan/Indiana border (east of 
Michigan City, IN). Additionally, MCR will exercise NSR's trackage 
rights over lines of CSX Transportation, Inc. (CSXT) between: 
mileposts 0.0-1.0 M9 in Grand Rapids, MI; and mileposts LZ 36.8-37.9 
and 0.0-2.2 HZ in Lansing, MI. MCR will also exercise NSR's trackage 
rights over a Canadian National Railway Company (CN) line between 
mileposts 176.7-175.5 in Battle Creek, MI. MCR will host trackage 
rights to CSXT for a short stretch of track between mileposts LZ 
36.8-37.9 in Lansing, MI. Finally MCR will host trackage rights for 
CN between mileposts UP 2.2-UP 0.0, KY 0.0-KY 0.4, and FB 54.0-FB 
56.3 in Kalamazoo, MI.
    \3\ Specifically, MCR will become lessor of the rail line leased 
to CN between Kalamazoo (MP 9.51) and Pavilion (MP 0.4).
    \4\ MCR plans to acquire and to operate NSR yards at: Kalamazoo, 
MI (Botsford); Grand Rapids, MI (Hughart); Jackson, MI; Lansing, MI 
(Saginaw); and Battle Creek (Hinman), MI.
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    If MCR becomes a carrier pursuant to the exemption sought here, it 
will grant limited local trackage rights to NSR, approval for which is 
being sought in a notice of exemption filed in a related proceeding.\5\ 
If the proposed transaction is consummated, MCR would become a Class II 
rail carrier and would hire approximately 118 employees to operate 
these rail lines. Under that trackage rights agreement, NSR will retain 
the right to serve, under certain specified conditions, the General 
Motors facilities at Grand Rapids and Lansing, MI, and the RSOC of 
Michigan LLC automotive steel processing facility at Holt, MI, as well 
as any subsequent occupant(s) of any of these facilities.
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    \5\ See NSR's notice invoking the class exemption at 49 CFR 
1180.2(d)(7), currently filed on July 13, 2007, in Norfolk Southern 
Railway Company--Trackage Rights Exemption--Michigan Central 
Railway, LLC, STB Finance Docket No. 35065 (STB served July 27, 
2007).
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    In another related proceeding, Watco Companies, Inc. and its wholly 
owned subsidiary, Watco Transportation Services, Inc. (collectively, 
Watco), have filed a notice of exemption to continue in control of MCR 
upon MCR's becoming a rail carrier through its proposed acquisition and 
operation of these rail lines.\6\ NSR will contribute these rail lines, 
trackage rights, and related assets to MCR, subject to certain traffic 
restrictions, in exchange for a noncontrolling 33% membership interest 
in MCR. Watco will contribute

[[Page 42466]]

$18 million in cash and locomotives over time to MCR in exchange for a 
controlling 67% membership interest. According to MCR, it will invest 
more than $20 million in these lines over the first 3 years, provide 
responsive service to local shippers, and develop a new traffic base. 
MCR states that there will be no adverse effect on overhead traffic and 
that no shipper will suffer a reduction in competition as a result of 
the proposed transaction.
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    \6\ See Watco's notice invoking the class exemption at 49 CFR 
1180.2(d), concurrently filed on July 13, 2007, in Watco Companies, 
Inc., and Watco Transportation Services, Inc.--Continuance in 
Control Exemption--Michigan Central Railway, LLC, STB Finance Docket 
No. 35064 (STB served July 27, 2007).
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    MCR simultaneously filed a petition asking the Board to revoke the 
class exemption at 49 CFR 1150.31 that otherwise would apply to allow 
the agency to consider the transaction in greater detail than it could 
be considered under the regulations for processing notices invoking the 
class exemption. Under 49 U.S.C. 10502(d), the Board may revoke an 
exemption when it finds that application of regulation is necessary to 
carry out the Rail Transportation Policy of 49 U.S.C. 10101. We make 
such a finding here based on the particular circumstances of this 
transaction. Thus, the class exemption at 49 CFR 1150.31 will be 
revoked as to this transaction to permit MCR to proceed with seeking 
Board approval for the transaction through its petition for exemption.
    As part of its revocation petition, MCR also has proposed a 
procedural schedule providing for comments from interested persons 50 
days from the date MCR filed its petition, replies by MCR and NSR 65 
days from the date the petition was filed, and a final Board decision 
by 90 days from the date the petition was filed. The proposed schedule 
will facilitate the participation of interested persons in this 
proceeding and will provide a timely process for our issuing a final 
decision. Accordingly, we will adopt the proposed procedural schedule.
    MCR's petition for exemption raises issues that require 
consideration by the Board. Pursuant to 49 U.S.C. 10502(b), the Board 
must determine whether to begin a proceeding within 90 days of the 
filing of a petition for exemption. A decision must then be issued 
within 9 months of the date when the proceeding is formally instituted. 
The 90th day in this proceeding is October 11, 2007. In compliance with 
the statute, this order will be issued, and a proceeding will be 
formally instituted. The deadlines for the submission of comments are 
set forth above.
    Board decisions, notices, and filings are available on its Web site 
at http://www.stb.dot.gov.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

It is Ordered

    1. MCR's petition to revoke the class exemption is granted.
    2. Under 49 U.S.C. 10502(b) a proceeding is commenced to hear MCR's 
petition for exemption under the formal (case-by-case) exemption 
procedures at 49 CFR 1121.1, and comments in this proceeding will be 
due by the dates set forth above.
    3. This decision will be published in the Federal Register on 
August 2, 2007.
    4. This decision is effective on August 2, 2007.

    Decided: July 30, 2007.

    By the Board, Chairman Nottingham, Vice Chairman Buttrey, and 
Commissioner Mulvey.
Vernon Williams,
Secretary.
 [FR Doc. E7-14975 Filed 8-1-07; 8:45 am]
BILLING CODE 4915-01-P