[Federal Register Volume 76, Number 128 (Tuesday, July 5, 2011)]
[Notices]
[Pages 39156-39157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16626]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. FD 35529]


C&NC Railroad, LLC--Lease Renewal Exemption--Norfolk Southern 
Railway Company

    Under 49 CFR 1011.7(a)(2)(x)(A), the Director of the Office of 
Proceedings (Director) is delegated the authority to determine whether 
to issue notices of exemption for lease transactions under 49 U.S.C. 
10902. However, the Board reserves to itself the consideration and 
disposition of all matters involving issues of general transportation 
importance. 49 CFR 1011.2(a)(6). Accordingly, the Board revokes the 
delegation to the Director with respect to the issuance of this notice 
of exemption. The Board determines that this notice of lease renewal 
exemption should be issued, and does so here.

Notice

    C&NC Railroad, LLC (C&NC), a Class III rail carrier, has filed a 
verified notice of exemption under 49 CFR 1150.41 to renew its lease of 
approximately 21 miles of rail line from Norfolk Southern Railway 
Company (NSR).\1\ The rail lines extend from (a) milepost CB5.4 at 
Beesons, Ind., to milepost 25.30 at New Castle, Ind., and (b) milepost 
R0.1 to milepost R1.16 at New Castle. C&NC has leased and operated the 
lines since 1997.\2\ The 1997 lease agreement, by its terms, expired on 
December 9, 2009, and C&NC and NSR agreed to continue operations under 
the terms of the 1997 agreement pending renegotiation of a new lease. 
On March 11, 2011, the parties executed a new lease.\3\
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    \1\ C&NC originally filed its notice of exemption on June 3, 
2011, as a lease renewal under 49 CFR 1180.2(d)(4). That provision, 
however, applies to lease renewals ``where the Board has previously 
authorized the transaction and only an extension of time is 
involved.'' Because the new lease includes a new credit provision 
and milepost adjustments, on June 17, 2011, C&NC filed a motion for 
the notice to be considered as filed under 49 CFR 1150.41 instead of 
49 CFR 1180.2(d)(4). The motion also includes a revenue 
certification and caption summary in compliance with the 
requirements for the class exemption at Sec.  1150.41. Accordingly, 
the notice will be considered as filed under Sec.  1150.41 with a 
filing date of June 17, 2011.
    \2\ See C&NC R.R. --Lease and Operation Exemption--Line of the 
Norfolk and W. Ry. and Ind. Hi Rail, FD 33475 (STB served Oct. 31, 
1997).
    \3\ C&NC has filed the new lease agreement under seal pursuant 
to 49 CFR 1150.43(h)(1)(ii).
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    As required at 49 CFR 1150.43(h), C&NC has disclosed that the new 
lease agreement contains an interchange commitment provision that would 
provide for a lease credit whereby C&NC may reduce its lease payments 
by receiving a credit for each car interchanged with NSR. C&NC notes 
that NSR initially proposed a fixed rental payment with no option to 
reduce the rent, but C&NC requested a lease credit option to provide an 
opportunity for C&NC to earn a lower rental payment so it would be able 
to invest in improvements on the leased lines to increase traffic 
levels. According to C&NC, the interchange point with NSR is New 
Castle.
    C&NC certifies that the projected annual revenues as a result of 
the proposed transaction will not exceed those that would make it a 
Class III rail carrier and further certifies that its projected annual 
revenues would not exceed $5 million.
    The transaction is expected to be consummated on or after July 17, 
2011, the effective date of the exemption (30 days after the exemption 
was officially filed).
    If the 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 effectiveness of the 
exemption. Petitions for stay must be filed no later than July 8, 2011 
(at least 7 days before the exemption becomes effective).
    An original and 10 copies of all pleadings, referring to Docket No. 
FD 35529, must be filed with the Surface Transportation Board, 395 E 
Street, SW., Washington, DC 20423-0001. In

[[Page 39157]]

addition, a copy of each pleading must be served on Richard R.Wilson, 
Esq., 518 N. Center Street, Ste. 1, Ebensburg, PA 15931.
    Board decisions and notices are available at our Web site at http://www.stb.dot.gov.
    It is ordered:
    1. The delegation of authority to the Director of the Office of 
Proceedings, under 49 CFR 1011.7(a)(2(x)(A), to determine whether to 
issue a notice of exemption in this proceeding is revoked.
    2. This decision is effective on the date of service.

    Decided: June 28, 2011.
Andrea Pope-Matheson,
Clearance Clerk.
    By the Board, Chairman Elliott, Vice Chairman Begeman, and 
Commissioner Mulvey. Commissioner Mulvey dissented with a separate 
expression.

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    COMMISSIONER MULVEY, dissenting:
    I disagree with the Board's decision to allow this transaction 
to be processed under the Board's class exemption procedures. A 
lease agreement between C&NC and NSR has been in place since 1997. I 
can presume that the lease has been successful given the parties' 
willingness to renew it for an additional term. However, the renewal 
lease contains a new provision that provides a disincentive for C&NC 
to interchange with carriers other than NSR. C&NC's pleadings do not 
provide an adequate justification for why this new competition-
restricting provision is necessary. C&NC states that the interchange 
restriction, in the form of a ``lease credit option,'' will enable 
it to ``invest in improvements on the leased lines to increase 
traffic levels.'' But there is no reason to believe that C&NC did 
not have the same goal in the initial term of the lease, where C&NC 
did not see the need for an interchange restriction. Under these 
circumstances, I believe that the Board should be taking a close 
look at this transaction, the affected shippers, and the traffic 
flows, rather than allowing it to be consummated without regulatory 
oversight.

[FR Doc. 2011-16626 Filed 7-1-11; 8:45 am]
BILLING CODE 4915-01-P