[Federal Register Volume 76, Number 7 (Tuesday, January 11, 2011)]
[Notices]
[Page 1666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-350]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB FD 35343]


Susquehanna Union Railroad Company--Control Exemption--North 
Shore Railroad Company, Nittany & Bald Eagle Railroad Company, Shamokin 
Valley Railroad Company, Juniata Valley Railroad Company, Lycoming 
Valley Railroad Company, and Union County Industrial Railroad Company

    On April 12, 2010, Susquehanna Union Railroad Company (SURC), a 
noncarrier holding company, filed a petition for exemption (petition) 
from the prior approval requirements of 49 U.S.C. 11323(a)(4) to 
acquire 100% stock control of 6 Class III railroads: North Shore 
Railroad Company, Nittany & Bald Eagle Railroad Company, Shamokin 
Valley Railroad Company, Juniata Valley Railroad Company, Lycoming 
Valley Railroad Company, and Union County Industrial Railroad Company 
(collectively, System Carriers). By a decision served on August 27, 
2010, the Board instituted a proceeding. The Board will grant the 
exemption.\1\
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    \1\ SURC's petition also requested that the Board preempt and 
nullify, under 49 U.S.C. 11321(a), a provision of an operating 
agreement between SEDA-COG Joint Rail Authority (JRA) and certain 
System Carriers that lease and operate separate lines owned by JRA. 
The provision requires JRA to approve any change of control of 
certain System Carriers. In a letter filed on July 28, 2010, JRA 
states that the parties successfully concluded settlement 
negotiations and that it consents to the proposed transaction.
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    SURC is a noncarrier holding company owned by Richard D. Robey. 
Robey also is the sole owner of the System Carriers. Currently, 
significant management, budgeting, maintenance, and operational 
functions for the 6 System Carriers take place at a central office in 
Northumberland, Pa., all overseen by Robey. SURC states that, for the 
purpose of conforming the corporate structure of the System Carriers 
with the day-to-day functional management and operations of the System 
Carriers, it seeks to consolidate the System Carriers into SURC. SURC 
would obtain 100% stock control of the System Carriers by a noncash 
tender of 100% of shares in the System Carriers stock from Robey to 
SURC in exchange for issuance of additional shares of SURC to Robey. As 
a result, Robey would own and control the 6 System Carriers through 
SURC.
    The acquisition of control of at least 2 rail carriers by a person 
that is not a rail carrier requires prior approval by the Board under 
49 U.S.C. 11323(a)(4). 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.\2\
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    \2\ This transaction would normally be subject to the Board's 
class exemption under 49 CFR 1180.2(d)(3), which exempts a 
transaction that is within a corporate family that does not result 
in adverse changes in service levels, significant operational 
changes, or a change in the competitive balance with carriers 
outside the corporate family. However, SURC instead filed a petition 
for exemption in light of the now resolved issues arising from the 
operating agreement with JRA.
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    In this case, 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 and ensuring the development and continuation of a sound 
rail transportation system that will continue to meet the needs of the 
shipping public. 49 U.S.C. 10101(2) and (4). By allowing the 
consolidation of control of the System Carriers through SURC, an 
exemption would encourage the efficient management of the System 
Carriers. 49 U.S.C. 10101(9). An exemption also would allow for the 
expeditious handling and resolution of this transaction. 49 U.S.C. 
10101(15). 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. SURC has indicated that the proposed 
transaction will not result in a change in rail operations or a 
lessening of competition. The transaction involves only a nominal 
change of control by means of consolidating 100% stock control of the 
System Carriers, which Robey currently owns and controls, into a 
noncarrier holding company, which is owned and controlled by Robey, as 
well. 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 Sec. Sec.  
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.
    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 
requirements of 49 U.S.C. 11323-25 SURC's acquisition of stock control 
of the System Carriers.
    2. Notice will be published in the Federal Register on January 11, 
2011.
    3. This exemption will be effective on February 10, 2011. Petitions 
for stay must be filed by January 21, 2011. Petitions to reopen must be 
filed by January 31, 2011.

    By the Board, Chairman Elliott, Vice Chairman Nottingham, and 
Commissioner Mulvey.
Andrea Pope-Matheson,
Clearance Clerk.
[FR Doc. 2011-350 Filed 1-10-11; 8:45 am]
BILLING CODE 4912-01-P