[Federal Register Volume 74, Number 211 (Tuesday, November 3, 2009)]
[Notices]
[Pages 56913-56914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26396]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 35293]


Pinsly Railroad Company--Control Exemption--Warren & Saline River 
Railroad Company

    By petition filed on September 9, 2009, Pinsly Railroad Company 
(PRC) seeks an exemption under 49 U.S.C. 10502 from the prior approval 
requirements of 49 U.S.C. 11323-25 to acquire control of Warren & 
Saline River Railroad Company (WSR) through the purchase of all WSR 
stock from Potlatch Land & Lumber, LLC (PLL). PRC seeks expedited 
action of this petition.\1\ The Board will grant the exemption and the 
request for expedited action.
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    \1\ PRC concurrently filed a verified notice of exemption in 
Pinsly Railroad Company--Control Exemption--The Prescott and 
Northwestern Railroad Company, STB Finance Docket No. 35292 (STB 
served Sept. 25, 2009), to obtain control of The Prescott and 
Northwestern Railroad Company (PNW), a Class III rail carrier, 
through the purchase of all PNW's stock from PLL. That exemption 
became effective on October 9, 2009.
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Background

    PRC is a noncarrier holding company that currently controls five 
Class III rail carriers.\2\ WSR is a Class III rail carrier, and 
wholly-owned subsidiary of PLL, which owns and operates approximately 5 
route miles of rail line extending south and west from Warren, AR. PLL 
is the only active shipper on the WSR line. PRC states that AKMD leases 
and operates a rail line that connects with WSR at Warren.
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    \2\ These carriers are: Pioneer Valley Railroad Company, Inc. 
(PVR), which operates in Massachusetts; Florida Central Railroad 
Company, Inc. (FCR), Florida Midland Railroad Company, Inc. (FMR), 
and Florida Northern Railroad Company, Inc. (FNR), each of which 
operates in Florida; and Arkansas Midland Railroad Company, Inc. 
(AKMD), which operates several disconnected line segments in 
Arkansas.
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    PRC states that it executed a Stock Purchase Agreement with PLL on 
September 4, 2009, to acquire all of WSR's stock and assume control of 
WSR.\3\ Following consummation, PRC plans to coordinate the rail 
operations of WSR and AKMD, with service continuing 5 days per week as 
traffic warrants. PRC seeks expedited consideration of the petition so 
that it can concurrently finalize its acquisition of WSR and PNW no 
later than December 30, 2009.
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    \3\ PRC has concurrently filed a motion for protective order 
pursuant to 49 CFR 1104.14(b) in STB Finance Docket No. 35292 to 
allow PRC to file the unredacted Stock Purchase Agreement under 
seal. The motion was addressed in a separate decision served on 
October 6, 2009.
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    In support of its petition, PRC states that no shipper will lose 
rail service or any existing competitive options as a result of the 
proposed transaction. PRC also states that all WSR traffic, which 
currently moves over AKMD's line out of Warren, will continue to do so 
after PRC assumes control of WSR. Finally, PRC states that it, along 
with AKMD, will provide administrative and other support for WSR's 
operations when WSR and AKMD become affiliated carriers.

Discussion and Conclusions

    The acquisition of control of a rail carrier by a person that is 
not a rail carrier but that controls any number of rail carriers 
requires prior approval by the Board under 49 U.S.C. 11323(a)(5). Under 
49 U.S.C. 10502(a), however, the Board must exempt a transaction or 
service from regulation if it finds that: (1) Regulation is not 
necessary to carry out the rail transportation policy (RTP) of 49 
U.S.C. 10101; and (2) either (a) the transaction or service is limited 
in scope; or (b) regulation is not needed to protect shippers from the 
abuse of market power.
    An exemption from the prior approval requirements of 49 U.S.C. 
11323-25 is consistent with the standards of 49 U.S.C. 10502. Detailed 
scrutiny of the proposed transaction through an application for review 
and approval under 49 U.S.C. 11323-25 is not necessary to carry out the 
RTP. Rather, an exemption will promote that policy by minimizing the 
need for Federal regulatory control over the proposed transaction, 
promoting a safe and efficient rail transportation system, ensuring 
that a sound rail transportation system will continue to meet the needs 
of the shipping public, and reducing regulatory barriers to entry [49 
U.S.C. 10101(2), (3), (4), and (7)]. Also, by allowing PRC to integrate 
WSR into its existing family of Class III carriers, with attendant 
experience, resources, capital, and administrative support, an 
exemption will foster sound economic conditions in transportation, 
ensure effective competition and coordination between rail carriers, 
and encourage efficient management [49 U.S.C. 10101(5) and (9)]. Other 
aspects of the RTP will not be adversely affected.
    Regulation of this transaction is not needed to protect shippers 
from an abuse of market power. PRC has indicated that there will be no 
adverse impacts on rail transportation or lessening of rail 
competition. PRC will simply be incorporating WSR into its family of 
short line carriers without materially changing the operations of WSR. 
As a result, shippers potentially will benefit from greater 
efficiencies while receiving the same service. No shipper located on 
WSR's line is expected to lose rail service options as a result of the 
control transaction. The more likely result will be enhanced rail 
service, as shippers will benefit from the substantial experience and 
resources of PRC and from the connection between WSR and the other PRC-
controlled carriers. Given our finding regarding the probable effect of 
the transaction on market power, we need not determine whether the 
transaction is limited in scope.
    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 the 
carriers involved are Class III rail carriers.
    The acquisition of control is exempt from environmental reporting 
requirements under 49 CFR 1105.6(c)(2)(i) because it will not result in 
any significant change in carrier operations. Similarly, the 
transaction is exempt from the historic reporting requirements under 49 
CFR 1105.8(b)(3) because it will not substantially change the level of 
maintenance of railroad properties.
    In this proceeding, PRC has requested expedited handling of its 
petition to enable it to consummate the acquisition of control of WSR 
in conjunction with its acquisition of another Class III carrier, PNW, 
in a separate proceeding. PRC has requested that its acquisition of WSR 
become effective no later than December 30, 2009. PRC's authority to 
acquire PNW became effective on October 9, 2009. PRC's request is 
reasonable in light of the fact that the acquisition of the two Class 
III carriers was finalized under a single Stock Purchase Agreement. 
PRC's request for expedited action will be granted.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. Under 49 U.S.C. 10502, the Board exempts from the prior approval

[[Page 56914]]

requirements of 49 U.S.C. 11323-25 PRC's acquisition of control of WSR.
    2. PRC's request for expedited action is granted.
    3. Notice will be published in the Federal Register on November 3, 
2009.
    4. This exemption will be effective on December 3, 2009. Petitions 
to stay must be filed by November 13, 2009. Petitions to reopen must be 
filed by November 23, 2009.

    By the Board, Chairman Elliot, Vice Chairman Nottingham, and 
Commissioner Mulvey.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. E9-26396 Filed 11-2-09; 8:45 am]
BILLING CODE 4915-01-P