[Federal Register Volume 77, Number 126 (Friday, June 29, 2012)]
[Notices]
[Pages 38885-38886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16003]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. FD 35634]


Midwest Rail, LLC d/b/a Toledo, Lake Erie and Western Railway--
Lease and Operation 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 under 49 U.S.C. 10502 for lease and 
operation 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 issuance of the notice of exemption for lease 
and operation of the rail line at issue in this case. The Board 
determines that this notice of exemption should be issued, and does so 
here.
    Midwest Rail, LLC d/b/a Toledo, Lake Erie and Western Railway 
(Toledo), a Class III rail carrier, has filed a verified notice of 
exemption under 49 CFR 1150.41 to lease from Norfolk Southern Railway 
Company (NSR) and operate a 1.8-mile line of railroad between milepost 
TS 13.2 near Maumee, Ohio and milepost TS 15.0 in Waterville, Ohio, 
(the Line). According to Toledo, Toledo and NSR have entered into a 
Lease Agreement (Agreement) whereby Toledo will lease the Line from 
NSR. The term of the lease is 10 years.
    Pursuant to 49 CFR 1150.43(h), Toledo has disclosed that the 
Agreement contains an interchange commitment in the form of lease 
credits, depending on the number of carloads interchanged with NSR at 
milepost TS 13.2 in a given year.\1\ According to Matthew Shawver, 
owner of Toledo, the interchange commitment will allow Toledo to 
``invest in improvements on the leased line to increase traffic 
levels.'' \2\ The Line connects only with NSR at Maumee and at 
Waterville with a 10-mile, stub-ended line leased and operated by 
Toledo.\3\
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    \1\ Concurrently with its verified notice of exemption, Toledo 
has filed under seal, pursuant to 49 CFR 1150.43(h)(1)(ii), a 
confidential, complete version of the Agreement. Toledo also filed a 
motion for protective order. The merits of Toledo's motion will be 
addressed in a separate decision.
    \2\ Pet. 6.
    \3\ Midwest Rail d/b/a Toledo, Lake Erie and W. Ry.--Lease and 
Operation Exemption--Toledo, Lake Erie and W. Ry. and Museum, Inc., 
FD 35555 (STB served Oct. 14, 2011).
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    Toledo certifies that its projected annual revenues as a result of 
this transaction will not result in Toledo becoming a Class I or Class 
II rail carrier. Toledo further certifies that its projected annual 
revenues will not exceed $5 million.
    The earliest the transaction can be consummated is July 15, 2012, 
the effective date of the exemption (30 days after the exemption was 
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. Stay petitions must be filed no later than July 6, 2012 (at 
least seven days before the exemption becomes effective).
    An original and 10 copies of all pleadings, referring to Docket No. 
FD 35634, must be filed with the Surface Transportation Board, 395 E 
Street SW., Washington, DC 20423-0001. In addition, one copy of each 
pleading must be served on John D. Heffner,

[[Page 38886]]

Strasburger & Price, LLP, 1700 K Street NW., Suite 640, Washington, DC 
20006.
    Board decisions and notices are available on our Web site at 
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 26, 2012.
    By the Board, Chairman Elliott, Vice Chairman Mulvey, and 
Commissioner Begeman. Vice Chairman Mulvey approved with a separate 
expression.
    Vice Chairman Mulvey, commenting:
    Interchange commitments have the potential to limit or, in some 
cases, to effectively eliminate, competition between rail carriers. 
Because this can result in long-term harm to shippers, I believe that 
the Board should be carefully scrutinizing transactions that include 
interchange commitments. Typically, such scrutiny is not possible 
within the Notice of Exemption process due to its short time-frames. I 
have long urged the Board to require that such transactions be analyzed 
using more detailed processes that allow the Board to consider (1) the 
nature of the interchange commitment, (2) how many shippers and 
carloads will be impacted by the interchange commitment, and (3) what 
competitive routing options are being foreclosed during the term of the 
lease.
    In this case, however, there appears to be no need for concern 
regarding competitive harm. Toledo has confirmed that it will not 
connect physically to any carrier other than NSR, the carrier from whom 
it is leasing the line. Although the lease contains a rental credit 
based on the number of cars Toledo interchanges with NSR, because 
Toledo physically cannot interchange cars with a third-party carrier in 
any event, there will be no adverse competitive impact from the 
interchange commitment. Accordingly, I vote to approve the Notice of 
Exemption process for this transaction.

Derrick A. Gardner,
Clearance Clerk.
[FR Doc. 2012-16003 Filed 6-28-12; 8:45 am]
BILLING CODE 4915-01-P