[Federal Register Volume 76, Number 232 (Friday, December 2, 2011)]
[Notices]
[Page 75601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30790]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. FD 35561]


Lake State Railway Company--Intra-Corporate Family Merger 
Exemption--Saginaw Bay Southern Railway Company

    Lake State Railway Company (LSRC) and Saginaw Bay Southern Railway 
Company (SBS), both Class III rail carriers, have jointly filed a 
verified notice of exemption under 49 CFR 1180.2(d)(3) for an intra-
corporate family transaction.
    Applicants state that both rail carriers operate within the state 
of Michigan. LSRC owns or operates approximately 225 miles of rail line 
extending from (a) Bay City to Gaylord, (b) Pinconning (on the Bay 
City-Gaylord line) to Alpena, and (c) Alabaster Junction (near Tawas 
City on the Pinconning-Alpena line) to Alabaster. SBS owns or operates 
over approximately 74 miles of rail line extending primarily between 
(a) a point of connection with CSX Transportation, Inc. (CSXT) at Mt. 
Morris and Saginaw, and (b) Saginaw and Midland, Bay City/Essexville 
and Paines. LSRC and SBS lines connect at Bay City. Applicants note 
that SBS provides service over its lines through use of LSRC as a 
contract operator, and LSRC, therefore, already conducts all rail 
operations on the LSRC/SBS system. Applicants are commonly controlled 
by J&JG Holding Company, Inc., a noncarrier.\1\
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    \1\ James George and J&JG Holding Co.--Continuance in Control 
Exemption--Saginaw Bay S. Ry., FD 34730 (STB served Oct. 17, 2005).
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    Pursuant to an agreement and plan of merger by the applicants, SBS 
will merge with and into LSRC, with LSRC being the surviving 
corporation. According to applicants, the consolidated entity will 
continue all existing operations of LSRC and SBS.
    Applicants point out that, for railway accounting purposes, LSRC 
functions today as an Interline Settlement System (ISS) carrier, while 
SBS functions as a Junction Settlement (JS) carrier through CSXT. 
Applicants state that after the merger of LSRC and SBS, the former SBS 
lines will be converted to the ISS status,\2\ but for administrative 
and logistical reasons, that change is not expected to occur until on 
or after March 1, 2012, two months after the formal merger is 
consummated. During the interim period, LSRC will operate the former 
SBS lines as ``doing business as'' Saginaw Bay Southern. CSXT supports 
the proposed transaction and the change from JS to ISS for accounting 
purposes.
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    \2\ The Railway Accounting Rules of the Association of American 
Railroads do not permit a railroad to be both an ISS carrier and a 
JS carrier.
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    The transaction is scheduled to be consummated on January 1, 2012.
    The purpose of the transaction is to simplify the corporate 
structure and reduce overhead costs and duplication by combining the 
two separate rail carrier corporations.
    This is a transaction within a corporate family of the type 
specifically exempted from prior review and approval under 49 CFR 
1180.2(d)(3). The parties state that the transaction will not result in 
adverse changes in service levels, significant operational changes, or 
any change in the competitive balance with carriers outside the 
corporate family.
    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 11324 and 11325 
that involve only Class III rail carriers. Accordingly, the Board may 
not impose labor protective conditions here, because all of the 
carriers involved are Class III rail carriers.
    If the 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 December 9, 2011 (at 
least 7 days before the exemption becomes effective).
    An original and 10 copies of all pleadings, referring to Docket No. 
FD 35561, 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 Thomas J. Litwiler, Fletcher & Sippel LLC, 
29 North Wacker Drive, Suite 920, Chicago, IL 60606.
    Board decisions and notices are available on our Web site at http://www.stb.dot.gov.


    Decided: November 22, 2011.

    By the Board.
Joseph H. Dettmar,
Acting Director, Office of Proceedings.
Raina S. White,
Clearance Clerk.
[FR Doc. 2011-30790 Filed 12-1-11; 8:45 am]
BILLING CODE 4915-01-P