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E-M:/ Michigan Central Railway LLC

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[Federal Register: August 2, 2007 (Volume 72, Number 148)]
[Page 42465-42466]
 From the Federal Register Online via GPO Access [wais.access.gpo.gov]


Surface Transportation Board
[STB Finance Docket No. 35063]

Michigan Central Railway, LLC--Acquisition and Operation
Exemption--Lines of Norfolk Southern Railway Company

AGENCY: Surface Transportation Board.
ACTION: Notice of commencement of proceeding, revocation of exemption,
and issuance of procedural schedule.


SUMMARY: By this decision and notice, the Board is commencing a
proceeding under 49 U.S.C. 10502(b) and 49 CFR 1121.1 to consider the
petition of Michigan Central Railway, LLC (MCR) to exempt its
acquisition and operation of certain railroad lines of the Norfolk
Southern Railway Company (NSR) in Michigan and Indiana. To allow this
proceeding to go forward, we are granting MCR's petition to revoke the
application of the class exemption, which would otherwise apply to this
transaction. Our revocation of the class exemption as to this
transaction will allow us to consider the transaction in greater detail
than it could be considered under our regulations for processing
notices invoking the class exemption, and it will facilitate the
participation of interested persons pursuant to the procedural schedule
we are adopting.

DATES: Comments on MCR's petition for exemption may be filed by any
interested person by September 4, 2007. Replies by MCR and NSR are due
by September 17, 2007. The Board will issue its final decision on
October 11, 2007.

ADDRESSES: Any filing submitted in this proceeding must refer to STB
Finance Docket No. 35063 and may be submitted either via the Board's e-
filing format or in the traditional paper format. Any person using e-
filing must attach a document and otherwise comply with the
instructions found on the Board's ``<A HREF="http://www.stb.dot.gov";>http://www.stb.dot.gov</A>.'' Web site,
at the ``E-FILING'' link. Any person submitting a filing in the
traditional paper format must submit an original and 10 paper copies of
the filing (and also an electronic version) to: Surface Transportation
Board, 395 E. Street, SW., Washington, DC 20423-0001. In addition, one
copy of each filing in this proceeding must be sent (and may be sent by
e-mail only if service by e-mail is acceptable to the recipient) to:
Karl Morell, Of Counsel, Ball Janik, LLP, Suite 225, 1455 F. Street,
NW., Washington, DC 20005; and G. Paul Moates, Sidley & Austin LLP 1501
K. Street, NW., Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 245-0395.
[Federal Information Relay Service (FIRS) for the hearing impaired: 1-

SUPPLEMENTARY INFORMATION: By petition filed on July 13, 2007, in STB
Finance Docket No. 35063, MCR requests, pursuant to 49 U.S.C. 10502, an
exemption under the Board's formal (case-by-case) exemption procedures
at 49 CFR 1121.1 to authorize it to acquire some 299 miles of rail line
from NSR,\1\ to acquire through assignment from NSR some 85.5 miles of
existing trackage rights \2\ and lease rights,\3\ and to acquire yards
and stations that are related to this track.\4\ A map of the area to be
served by MCR appears in Exhibit 1 attached to its petition for

    \1\ The NSR rail lines run generally between Elkhart, IN and
Grand Rapids, MI; between Kalamazoo, MI, and a point near Ypsilanti,
MI; and between Jackson, MI, and Lansing, MI. More specifically, the
rail lines to be acquired run between the following mileposts:
Milepost KH 1.4 at Elkhart, IN, and milepost KH 27.4 at Three
Rivers, MI; milepost FB 27.3 at Three Rivers and milepost FB 102.3
at Grand Rapids, MI; milepost MH 143.03 at CP BO in Kalamazoo, MI,
and milepost MH 28 at CP Ypsi; and milepost LZ 0.0 at Jackson, MI,
and milepost LZ 36.9 at Lansing, MI.
    \2\ MCR will acquire through assignment by NSR 80 miles of
trackage rights over the line of the National Railroad Passenger
Corporation (Amtrak) between milepost MH 143.3 near Kalamazoo, MI,
and milepost MH 222.8 at the Michigan/Indiana border (east of
Michigan City, IN). Additionally, MCR will exercise NSR's trackage
rights over lines of CSX Transportation, Inc. (CSXT) between:
mileposts 0.0-1.0 M9 in Grand Rapids, MI; and mileposts LZ 36.8-37.9
and 0.0-2.2 HZ in Lansing, MI. MCR will also exercise NSR's trackage
rights over a Canadian National Railway Company (CN) line between
mileposts 176.7-175.5 in Battle Creek, MI. MCR will host trackage
rights to CSXT for a short stretch of track between mileposts LZ
36.8-37.9 in Lansing, MI. Finally MCR will host trackage rights for
CN between mileposts UP 2.2-UP 0.0, KY 0.0-KY 0.4, and FB 54.0-FB
56.3 in Kalamazoo, MI.
    \3\ Specifically, MCR will become lessor of the rail line leased
to CN between Kalamazoo (MP 9.51) and Pavilion (MP 0.4).
    \4\ MCR plans to acquire and to operate NSR yards at: Kalamazoo,
MI (Botsford); Grand Rapids, MI (Hughart); Jackson, MI; Lansing, MI
(Saginaw); and Battle Creek (Hinman), MI.

    If MCR becomes a carrier pursuant to the exemption sought here, it
will grant limited local trackage rights to NSR, approval for which is
being sought in a notice of exemption filed in a related proceeding.\5\
If the proposed transaction is consummated, MCR would become a Class II
rail carrier and would hire approximately 118 employees to operate
these rail lines. Under that trackage rights agreement, NSR will retain
the right to serve, under certain specified conditions, the General
Motors facilities at Grand Rapids and Lansing, MI, and the RSOC of
Michigan LLC automotive steel processing facility at Holt, MI, as well
as any subsequent occupant(s) of any of these facilities.

    \5\ See NSR's notice invoking the class exemption at 49 CFR
1180.2(d)(7), currently filed on July 13, 2007, in Norfolk Southern
Railway Company--Trackage Rights Exemption--Michigan Central
Railway, LLC, STB Finance Docket No. 35065 (STB served July 27,

    In another related proceeding, Watco Companies, Inc. and its wholly
owned subsidiary, Watco Transportation Services, Inc. (collectively,
Watco), have filed a notice of exemption to continue in control of MCR
upon MCR's becoming a rail carrier through its proposed acquisition and
operation of these rail lines.\6\ NSR will contribute these rail lines,
trackage rights, and related assets to MCR, subject to certain traffic
restrictions, in exchange for a noncontrolling 33% membership interest
in MCR. Watco will contribute

[[Page 42466]]

$18 million in cash and locomotives over time to MCR in exchange for a
controlling 67% membership interest. According to MCR, it will invest
more than $20 million in these lines over the first 3 years, provide
responsive service to local shippers, and develop a new traffic base.
MCR states that there will be no adverse effect on overhead traffic and
that no shipper will suffer a reduction in competition as a result of
the proposed transaction.

    \6\ See Watco's notice invoking the class exemption at 49 CFR
1180.2(d), concurrently filed on July 13, 2007, in Watco Companies,
Inc., and Watco Transportation Services, Inc.--Continuance in
Control Exemption--Michigan Central Railway, LLC, STB Finance Docket
No. 35064 (STB served July 27, 2007).

    MCR simultaneously filed a petition asking the Board to revoke the
class exemption at 49 CFR 1150.31 that otherwise would apply to allow
the agency to consider the transaction in greater detail than it could
be considered under the regulations for processing notices invoking the
class exemption. Under 49 U.S.C. 10502(d), the Board may revoke an
exemption when it finds that application of regulation is necessary to
carry out the Rail Transportation Policy of 49 U.S.C. 10101. We make
such a finding here based on the particular circumstances of this
transaction. Thus, the class exemption at 49 CFR 1150.31 will be
revoked as to this transaction to permit MCR to proceed with seeking
Board approval for the transaction through its petition for exemption.
    As part of its revocation petition, MCR also has proposed a
procedural schedule providing for comments from interested persons 50
days from the date MCR filed its petition, replies by MCR and NSR 65
days from the date the petition was filed, and a final Board decision
by 90 days from the date the petition was filed. The proposed schedule
will facilitate the participation of interested persons in this
proceeding and will provide a timely process for our issuing a final
decision. Accordingly, we will adopt the proposed procedural schedule.
    MCR's petition for exemption raises issues that require
consideration by the Board. Pursuant to 49 U.S.C. 10502(b), the Board
must determine whether to begin a proceeding within 90 days of the
filing of a petition for exemption. A decision must then be issued
within 9 months of the date when the proceeding is formally instituted.
The 90th day in this proceeding is October 11, 2007. In compliance with
the statute, this order will be issued, and a proceeding will be
formally instituted. The deadlines for the submission of comments are
set forth above.
    Board decisions, notices, and filings are available on its Web site
at <A HREF="http://www.stb.dot.gov";>http://www.stb.dot.gov</A>.
    This action will not significantly affect either the quality of the
human environment or the conservation of energy resources.

It is Ordered

    1. MCR's petition to revoke the class exemption is granted.
    2. Under 49 U.S.C. 10502(b) a proceeding is commenced to hear MCR's
petition for exemption under the formal (case-by-case) exemption
procedures at 49 CFR 1121.1, and comments in this proceeding will be
due by the dates set forth above.
    3. This decision will be published in the Federal Register on
August 2, 2007.
    4. This decision is effective on August 2, 2007.

    Decided: July 30, 2007.

    By the Board, Chairman Nottingham, Vice Chairman Buttrey, and
Commissioner Mulvey.
Vernon Williams,
 [FR Doc. E7-14975 Filed 8-1-07; 8:45 am]



Comments: http://www.epa.gov/fedrgstr/comments.htm

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