[Federal Register Volume 87, Number 24 (Friday, February 4, 2022)]
[Notices]
[Page 6644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02360]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36576]


Fortress Investment Group LLC--Exemption for Intra-Corporate 
Family Transaction--Ohio River Partners Shareholder LLC, Katahdin 
Railcar Services, LLC, Union Railroad Company, Gary Railway Company, 
Delray Connecting Railroad Company, Texas & Northern Railroad Company, 
and Lake Terminal Railroad Company

    Fortress Investment Group LLC (Fortress), for the benefit of 
Fortress Transportation and Infrastructure Investors LLC (FTAI) and 
FTAI Infrastructure Inc. (FTAI Infrastructure),\1\ (collectively, the 
Parties), has filed a verified notice of exemption for an intra-
corporate family transaction under 49 CFR 1180.2(d)(3), which exempts 
from the prior approval requirements of 49 U.S.C. 11323 
``[t]ransactions within a corporate family that do not result in 
adverse changes in service levels, significant operational changes, or 
a change in the competitive balance with carriers outside the corporate 
family.'' 49 CFR 1180.2(d)(3).
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    \1\ The verified notice states that FTAI Infrastructure is a 
newly created subsidiary of FTAI, which is a Delaware limited 
liability company managed by an affiliate of Fortress.
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    According to the verified notice, FTAI indirectly owns controlling 
interests in seven common carrier railroads: Ohio River Partners 
Shareholder LLC (ORPS); Katahdin Railcar Services LLC (KRS); Union 
Railroad Company (URR); Gary Railway Company (GRW); Delray Connecting 
Railroad Company (DCR); Texas & Northern Railroad Company (TNR); and 
Lake Terminal Railroad Company (LTR).\2\ The verified notice states 
that ORPS is a non-operating carrier,\3\ and that the remaining 
railroads are each Class III carriers.\4\ Under the proposed 
transaction, FTAI will engage in an intra-corporate reorganization that 
will result in FTAI Infrastructure's control of ORPS, KRS, URR, GRW, 
DCR, TNR, and LTR. The verified notice states that the purpose of the 
transaction is to separate FTAI's aviation-related assets and 
liabilities from its railroad and energy infrastructure businesses. 
According to the verified notice, an affiliate of Fortress will 
continue managing FTAI Infrastructure and, indirectly, the seven 
railroads. Fortress states that the proposed transaction does not 
impose or involve an interchange commitment by or affecting the 
railroads, and that it will have no impact on the day-to-day operations 
of the seven railroads.
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    \2\ The verified notice states that FTAI owns 100% of the equity 
interests of Transtar, LLC, which owns and controls URR, GRW, DCR, 
TNR, and LTR. See Fortress Inv. Grp. LLC--Acquis. & Continuance in 
Control Exemption--Ohio River Partners S'holder LLC, FD 36521 (STB 
served June 30, 2021).
    \3\ The verified notice states that ORPS owns a 12.2-mile 
freight rail line between milepost 60.5 near Powhatan Point, Ohio, 
and milepost 72.2 near Hannibal, Ohio (the Omal Line). KRS has 
assumed the right and common carrier obligation to operate the Omal 
Line. Katahdin Railcar Servs. LLC--Change in Operators Exemption--
Ohio Terminal Ry., FD 36487 (STB served Mar. 30, 2021); see also 
Fortress Inv. Grp. LLC--Exemption for Intra-Corp. Fam. Transaction--
Ohio River Partners S'holder LLC, FD 36402 (STB served May 15, 
2020).
    \4\ According to the verified notice, the operating revenues of 
URR and GRW exceed the dollar threshold for Class II carrier status, 
but URR and GRW are designated as Class III carriers because they 
are switching and terminal carriers. See 49 CFR 1201.1-1(d).
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    Unless stayed, the exemption will be effective on February 20, 2022 
(30 days after the verified notice was filed). Fortress states that the 
Parties intend to consummate the proposed transaction as soon as 
practicable after that date and final approval of the proposed 
transaction by FTAI's board of directors.\5\
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    \5\ The verified notice states that the proposed transaction 
will be authorized by FTAI's board of directors pursuant to a 
written resolution in substantially the form attached to the 
verified notice as Exhibit 2.
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    The verified notice states that the transaction will not result in 
adverse changes in service levels, operational changes, or a change in 
the competitive balance with carriers outside the corporate family. 
Therefore, the transaction is exempt from the prior approval 
requirements of 49 U.S.C. 11323. See 49 CFR 1180.2(d)(3).
    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. However, 49 U.S.C. 11326(c) 
does not provide for labor protection for transactions under 49 U.S.C. 
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.
    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 February 11, 
2022 (at least seven days before the exemption becomes effective).
    All pleadings, referring to Docket No. FD 36576, should be filed 
with the Surface Transportation Board via e-filing on the Board's 
website. In addition, one copy of each pleading must be served on 
Fortress's representative, Terence M. Hynes, Sidley Austin LLP, 1501 K 
Street NW, Washington, DC 20005.
    According to Fortress, this action is categorically excluded from 
environmental review under 49 CFR 1105.6(c) and historic reporting 
under 49 CFR 1105.8(b).
    Board decisions and notices are available at www.stb.gov.

    Decided: January 31, 2022.

    By the Board, Scott M. Zimmerman, Acting Director, Office of 
Proceedings.
Stefan Rice,
Clearance Clerk.
[FR Doc. 2022-02360 Filed 2-3-22; 8:45 am]
BILLING CODE 4915-01-P