82_FR_18413 82 FR 18340 - Genesee & Wyoming Inc.-Acquisition of Control Exemption-Atlantic Western Transportation, Inc. and Heart of Georgia Railroad, Inc.

82 FR 18340 - Genesee & Wyoming Inc.-Acquisition of Control Exemption-Atlantic Western Transportation, Inc. and Heart of Georgia Railroad, Inc.

SURFACE TRANSPORTATION BOARD

Federal Register Volume 82, Issue 73 (April 18, 2017)

Page Range18340-18341
FR Document2017-07828

Federal Register, Volume 82 Issue 73 (Tuesday, April 18, 2017) 
[Federal Register Volume 82, Number 73 (Tuesday, April 18, 2017)]
[Notices]
[Pages 18340-18341]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-07828]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36105]


Genesee & Wyoming Inc.--Acquisition of Control Exemption--
Atlantic Western Transportation, Inc. and Heart of Georgia Railroad, 
Inc.

    On February 27, 2017, Genesee & Wyoming Inc. (GWI), a noncarrier 
holding company, filed a petition under 49 U.S.C. 10502 and 49 CFR part 
1121 for exemption from the provisions of 49 U.S.C. 11323-24 to allow 
GWI to acquire control of Atlantic Western Transportation, Inc. (AWT), 
a noncarrier holding company, and indirect control of AWT's wholly 
owned subsidiary Heart of Georgia Railroad, Inc. (HOG), a Class III 
railroad. The Board will grant GWI's petition for exemption, subject to 
standard labor protective conditions.

Background

    GWI is a publicly traded noncarrier holding company that currently 
controls, through direct or indirect equity ownership, two Class II 
carriers and 107 Class III carriers operating in the United States. 
(Pet. 1.) HOG is a Class III carrier based in Americus, Ga., that 
leases from the Georgia Department of Transportation (Georgia DOT) and 
operates approximately 221 miles of rail lines in Georgia and Alabama. 
(Id. at 2.)
    GWI states that it seeks to acquire control of HOG through the 
acquisition of the stock of AWT, the noncarrier parent company of 
HOG.\1\ (Id.) Upon consummation, GWI would acquire direct control of 
AWT, and, because HOG is a wholly owned subsidiary of AWT, GWI would 
acquire indirect control of HOG. (Id.) HOG connects with several 
railroads, including two GWI subsidiaries: Georgia Southwestern 
Railroad, Inc. (GSWR) and Georgia Central Railway, L.P. (GC). (Id. at 
3.) GWI states that, although there are some commonly served cities 
where the railroads connect, there are no customers that are served by 
GSWR or GC, on the one hand, and HOG, on the other, and that as such 
there would be no ``2-to-1 customers'' as a result of the proposed 
transaction. (Id.) GWI further states that the joint line movements 
(which already currently exist) between HOG and the GWI-affiliated 
railroads would not be used to foreclose vertical competition over 
efficient joint line routes with unaffiliated carriers. (Id.)
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    \1\ GWI states that it and the individual shareholders of AWT 
have entered into a Stock Purchase Agreement dated February 7, 2017. 
(Pet. 2.) GWI further states that it expects to consummate the 
transaction after all of the closing conditions have been satisfied 
as set forth in the Stock Purchase Agreement, including the grant of 
this exemption from the Board, and that it hopes to consummate the 
transaction in the second fiscal quarter of 2017. (Id. at 5.)
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    GWI states that it does not contemplate any material changes to 
HOG's operations, maintenance, or service, and that HOG would continue 
to operate as a separate railroad, though HOG's senior managers would 
report to a senior vice president of Genesee & Wyoming Railroad 
Services, Inc., an affiliate of GWI. (Id. at 3, 4.) GWI states that no 
shippers would lose access to direct or indirect Class I connections, 
nor to any short line connections, or lose any service options. (Id.) 
GWI states that, as a result of this proposed transaction, HOG and its 
shippers would benefit from greater coordination and efficiencies, 
enhanced financial resources, more robust management support for 
operations and safety, and a broader set of relationships with national 
customers. (Id. at 4.) Georgia DOT does not oppose the transaction and 
asks the Board to review and approve the transaction expeditiously. 
(Id. at Ex. D.) No shippers have filed comments.

Discussion and Conclusions

    The acquisition of control of a rail carrier by a person that is 
not a rail carrier but that controls any number of rail carriers 
requires approval by the Board pursuant to 49 U.S.C. 11323(a)(5). Under 
section 10502(a), however, the Board must exempt a transaction or 
service from regulation if it finds that: (1) Regulation is not 
necessary to carry out the rail transportation policy (RTP) of 49 
U.S.C. 10101; and (2) either the transaction or service is limited in 
scope, or regulation is not needed to protect shippers from the abuse 
of market power.
    In this case, an exemption from the prior approval requirements of 
sections 11323-24 is consistent with the standards of section 10502. 
Detailed scrutiny of the proposed transaction through an application 
for review and approval under sections 11323-24 is not necessary here 
to carry out the RTP. Approval of the transaction would result in a 
change in ownership of AWT and control of HOG with no lessening of 
competition. An exemption would promote the RTP by: Minimizing the need 
for federal regulatory control over the transaction, section 10101(2); 
ensuring the development and continuation of a sound rail 
transportation system that would continue to meet the needs of the 
public, section 10101(4); fostering sound economic conditions in 
transportation, section 10101(5); reducing regulatory barriers to 
entry, section 10101(7); encouraging efficient management, section 
10101(9); and providing for the expeditious resolution of this 
proceeding, section 10101(15). Other aspects of the RTP would not be 
adversely affected.
    Nor is detailed scrutiny of the proposed transaction necessary to 
protect shippers from an abuse of market power. According to GWI, no 
shipper would lose any rail options, and operations would not 
materially change. (Pet. 9.) Although HOG connects with two GWI-owned 
carriers (GSWR and GC), GWI states that there would be no 2-to-1 
shippers as a result of the acquisition. (Id. at 10.) In addition, GWI 
states that HOG also connects directly with two Class I carriers (CSX 
Transportation, Inc. and Norfolk Southern Railway Company). (Id.) The 
Board will hold GWI to its statement that existing joint line movements 
between HOG and the GWI-affiliated railroads would not be used to 
foreclose vertical competition over efficient joint line routes with 
unaffiliated carriers. (See id. at 3.) Accordingly, based on the 
record, the Board finds that this transaction does not shift or 
consolidate market power; therefore, regulation is not necessary to 
protect shippers from the abuse of market power.\2\
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    \2\ As there is no evidence that regulation is needed to protect 
shippers from the abuse of market power, we do not need to determine 
whether the transaction is limited in scope. See 49 U.S.C. 10502(a).
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Labor Conditions

    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. Because GWI currently controls 
two Class II carriers \3\ and numerous Class III carriers, any 
employees adversely affected by this transaction will be protected by 
the conditions set forth in New York Dock Railway--Control--Brooklyn 
Eastern District Terminal (New York Dock), 360 I.C.C. 60 (1979). See 49 
U.S.C. 11326(a).
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    \3\ Buffalo & Pittsburgh Railroad, Inc. and Rapid City, Pierre & 
Eastern Railroad, Inc. (Pet., Ex. A at 1.)
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    GWI, acknowledging that New York Dock applies, seeks Board 
confirmation that neither GWI nor HOG need to commence negotiations or 
consummate implementing agreements prior to the

[[Page 18341]]

consummation of the control transaction. (Pet. 10-11.) New York Dock 
requires a railroad to give notice of ``proposed changes to be effected 
by [a] transaction'' when a railroad is ``contemplating a change or 
changes in its operations, services, facilities, or equipment as a 
result of a transaction'' that may affect employees. 360 I.C.C. at 77. 
The requirement under New York Dock to provide such notice presumes, 
however, that the carrier is capable of making a ``full and adequate 
statement'' of the expected labor changes before the transaction is 
consummated. Norfolk S. Ry--Joint Control & Operating/Pooling 
Agreements--Pan Am S. LLC (Pan Am S.), FD 35147, slip op. at 16-17 (STB 
served Mar. 10, 2009) (``Because we see no basis for negotiation of an 
implementing agreement until Applicants decide to implement labor 
changes that are related to the Transaction, we will not require that 
Applicants commence negotiations now.'').
    GWI states that it has not yet determined whether or which 
employees may be adversely affected, but acknowledges that it would be 
required to give 90-days' notice and negotiate before making changes in 
operations, services, facilities, or equipment,\4\ but that it would 
not immediately terminate or displace any HOG covered employees as a 
result of the proposed transaction, and that HOG would continue to 
honor all current employment terms and conditions. (Pet. 10-11.) The 
Board will hold GWI to these representations. Accordingly, GWI will be 
required to proceed in good faith under the notification and 
negotiation provision of Article I, section 4 of the New York Dock 
conditions before implementing employment changes, but it need not 
commence those negotiations until it is capable of making a full and 
adequate statement of the expected changes. See Pan Am S., FD 35147, 
slip op. at 16-17. See also Genesee & Wyo., Inc.--Acquis. of Control 
Exemption--Providence & Worcester R.R., FD 36064, slip op at 7 (STB 
served Dec. 16, 2016).
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    \4\ GWI states that none of HOG's 15 current employees are 
subject to collective bargaining agreements, and thus there are no 
unions with which to negotiate implementing agreements. (Id. at 10.) 
The Board notes that GWI will still be required to complete any New 
York Dock negotiations directly with affected HOG employees.
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Environmental and Historical Reporting

    This transaction is categorically excluded from environmental 
review under 49 CFR 1105.6(c)(2)(i) because it will not result in any 
significant change in carrier operations. Similarly, the transaction is 
exempt from the historic reporting requirements under 49 CFR 
1105.8(b)(3) because it will not substantially change the level of 
maintenance of railroad properties.
    It is ordered:
    1. Under 49 U.S.C. 10502, the Board exempts GWI's acquisition of 
control of AWT and HOG from the prior approval requirements of sections 
11323-24 subject to the employee protective conditions in New York Dock 
Railway--Control--Brooklyn Eastern District Terminal, 360 I.C.C. 60 
(1979).
    2. GWI must adhere to its statement that existing joint line 
movements between HOG and the GWI-affiliated railroads will not be used 
to foreclose vertical competition over efficient joint line routes with 
unaffiliated carriers.
    3. Notice will be published in the Federal Register.
    4. This exemption will be effective on May 18, 2017.

    Decided: April 12, 2017.

    By the Board, Board Members Begeman, Elliott, and Miller.
Rena Laws-Byrum,
Clearance Clerk.
[FR Doc. 2017-07828 Filed 4-17-17; 8:45 am]
 BILLING CODE 4915-01-P

18340 Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Notices Dated: April 13, 2017. customers that are served by GSWR or ensuring the development and Naomi R. Sipple, GC, on the one hand, and HOG, on the continuation of a sound rail Reports Clearance Officer, Social Security other, and that as such there would be transportation system that would Administration. no ‘‘2-to-1 customers’’ as a result of the continue to meet the needs of the [FR Doc. 2017–07796 Filed 4–17–17; 8:45 am] proposed transaction. (Id.) GWI further public, section 10101(4); fostering BILLING CODE 4191–02–P states that the joint line movements sound economic conditions in (which already currently exist) between transportation, section 10101(5); HOG and the GWI-affiliated railroads reducing regulatory barriers to entry, SURFACE TRANSPORTATION BOARD would not be used to foreclose vertical section 10101(7); encouraging efficient competition over efficient joint line management, section 10101(9); and [Docket No. FD 36105] routes with unaffiliated carriers. (Id.) providing for the expeditious resolution GWI states that it does not of this proceeding, section 10101(15). Genesee & Wyoming Inc.—Acquisition contemplate any material changes to Other aspects of the RTP would not be of Control Exemption—Atlantic HOG’s operations, maintenance, or adversely affected. Western Transportation, Inc. and Heart service, and that HOG would continue Nor is detailed scrutiny of the of Georgia Railroad, Inc. to operate as a separate railroad, though proposed transaction necessary to On February 27, 2017, Genesee & HOG’s senior managers would report to protect shippers from an abuse of Wyoming Inc. (GWI), a noncarrier a senior vice president of Genesee & market power. According to GWI, no holding company, filed a petition under Wyoming Railroad Services, Inc., an shipper would lose any rail options, and 49 U.S.C. 10502 and 49 CFR part 1121 affiliate of GWI. (Id. at 3, 4.) GWI states operations would not materially change. for exemption from the provisions of 49 that no shippers would lose access to (Pet. 9.) Although HOG connects with U.S.C. 11323–24 to allow GWI to direct or indirect Class I connections, two GWI-owned carriers (GSWR and acquire control of Atlantic Western nor to any short line connections, or GC), GWI states that there would be no lose any service options. (Id.) GWI states 2-to-1 shippers as a result of the Transportation, Inc. (AWT), a noncarrier that, as a result of this proposed acquisition. (Id. at 10.) In addition, GWI holding company, and indirect control transaction, HOG and its shippers states that HOG also connects directly of AWT’s wholly owned subsidiary would benefit from greater coordination with two Class I carriers (CSX Heart of Georgia Railroad, Inc. (HOG), a and efficiencies, enhanced financial Transportation, Inc. and Norfolk Class III railroad. The Board will grant resources, more robust management Southern Railway Company). (Id.) The GWI’s petition for exemption, subject to support for operations and safety, and a Board will hold GWI to its statement standard labor protective conditions. broader set of relationships with that existing joint line movements Background national customers. (Id. at 4.) Georgia between HOG and the GWI-affiliated GWI is a publicly traded noncarrier DOT does not oppose the transaction railroads would not be used to foreclose and asks the Board to review and vertical competition over efficient joint holding company that currently approve the transaction expeditiously. line routes with unaffiliated carriers. controls, through direct or indirect (Id. at Ex. D.) No shippers have filed (See id. at 3.) Accordingly, based on the equity ownership, two Class II carriers comments. record, the Board finds that this and 107 Class III carriers operating in the United States. (Pet. 1.) HOG is a Discussion and Conclusions transaction does not shift or consolidate Class III carrier based in Americus, Ga., market power; therefore, regulation is The acquisition of control of a rail that leases from the Georgia Department not necessary to protect shippers from carrier by a person that is not a rail of Transportation (Georgia DOT) and the abuse of market power.2 carrier but that controls any number of operates approximately 221 miles of rail rail carriers requires approval by the Labor Conditions lines in Georgia and Alabama. (Id. at 2.) Board pursuant to 49 U.S.C. 11323(a)(5). GWI states that it seeks to acquire Under 49 U.S.C. 10502(g), the Board Under section 10502(a), however, the may not use its exemption authority to control of HOG through the acquisition Board must exempt a transaction or of the stock of AWT, the noncarrier relieve a rail carrier of its statutory service from regulation if it finds that: obligation to protect the interests of its parent company of HOG.1 (Id.) Upon (1) Regulation is not necessary to carry consummation, GWI would acquire employees. Because GWI currently out the rail transportation policy (RTP) controls two Class II carriers 3 and direct control of AWT, and, because of 49 U.S.C. 10101; and (2) either the HOG is a wholly owned subsidiary of numerous Class III carriers, any transaction or service is limited in employees adversely affected by this AWT, GWI would acquire indirect scope, or regulation is not needed to control of HOG. (Id.) HOG connects transaction will be protected by the protect shippers from the abuse of conditions set forth in New York Dock with several railroads, including two market power. GWI subsidiaries: Georgia Southwestern Railway—Control—Brooklyn Eastern In this case, an exemption from the District Terminal (New York Dock), 360 Railroad, Inc. (GSWR) and Georgia prior approval requirements of sections Central Railway, L.P. (GC). (Id. at 3.) I.C.C. 60 (1979). See 49 U.S.C. 11326(a). 11323–24 is consistent with the GWI, acknowledging that New York GWI states that, although there are some standards of section 10502. Detailed Dock applies, seeks Board confirmation commonly served cities where the scrutiny of the proposed transaction that neither GWI nor HOG need to railroads connect, there are no through an application for review and commence negotiations or consummate approval under sections 11323–24 is not implementing agreements prior to the 1 GWI states that it and the individual necessary here to carry out the RTP. sradovich on DSK3GMQ082PROD with NOTICES shareholders of AWT have entered into a Stock Purchase Agreement dated February 7, 2017. (Pet. Approval of the transaction would 2 As there is no evidence that regulation is needed 2.) GWI further states that it expects to consummate result in a change in ownership of AWT to protect shippers from the abuse of market power, the transaction after all of the closing conditions and control of HOG with no lessening we do not need to determine whether the have been satisfied as set forth in the Stock of competition. An exemption would transaction is limited in scope. See 49 U.S.C. Purchase Agreement, including the grant of this 10502(a). exemption from the Board, and that it hopes to promote the RTP by: Minimizing the 3 Buffalo & Pittsburgh Railroad, Inc. and Rapid consummate the transaction in the second fiscal need for federal regulatory control over City, Pierre & Eastern Railroad, Inc. (Pet., Ex. A at quarter of 2017. (Id. at 5.) the transaction, section 10101(2); 1.) VerDate Sep<11>2014 16:55 Apr 17, 2017 Jkt 241001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\18APN1.SGM 18APN1

Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Notices 18341 consummation of the control transaction is exempt from the historic and Agreement and to that end, may transaction. (Pet. 10–11.) New York reporting requirements under 49 CFR consider matters properly before the Dock requires a railroad to give notice 1105.8(b)(3) because it will not Board. of ‘‘proposed changes to be effected by substantially change the level of FOR FURTHER INFORMATION CONTACT: Mr. [a] transaction’’ when a railroad is maintenance of railroad properties. Avelino Gutierrez, Chair, Unified ‘‘contemplating a change or changes in It is ordered: Carrier Registration Board of Directors at its operations, services, facilities, or 1. Under 49 U.S.C. 10502, the Board (505) 827–4565. equipment as a result of a transaction’’ exempts GWI’s acquisition of control of Issued on: April 14, 2017. that may affect employees. 360 I.C.C. at AWT and HOG from the prior approval 77. The requirement under New York requirements of sections 11323–24 Larry W. Minor, Dock to provide such notice presumes, subject to the employee protective Associate Administrator, Office of Policy, however, that the carrier is capable of conditions in New York Dock Railway— Federal Motor Carrier Safety Administration. making a ‘‘full and adequate statement’’ Control—Brooklyn Eastern District [FR Doc. 2017–07916 Filed 4–14–17; 4:15 pm] of the expected labor changes before the Terminal, 360 I.C.C. 60 (1979). BILLING CODE 4910–EX–P transaction is consummated. Norfolk S. 2. GWI must adhere to its statement Ry—Joint Control & Operating/Pooling that existing joint line movements Agreements—Pan Am S. LLC (Pan Am between HOG and the GWI-affiliated DEPARTMENT OF TRANSPORTATION S.), FD 35147, slip op. at 16–17 (STB railroads will not be used to foreclose Federal Railroad Administration served Mar. 10, 2009) (‘‘Because we see vertical competition over efficient joint no basis for negotiation of an line routes with unaffiliated carriers. [Docket No. FRA–2017–0002–N–13] implementing agreement until 3. Notice will be published in the Applicants decide to implement labor Federal Register. Proposed Agency Information changes that are related to the 4. This exemption will be effective on Collection Activities; Comment Transaction, we will not require that May 18, 2017. Request Applicants commence negotiations Decided: April 12, 2017. AGENCY: Federal Railroad now.’’). By the Board, Board Members Begeman, Administration (FRA), U.S. Department GWI states that it has not yet Elliott, and Miller. of Transportation (DOT). determined whether or which Rena Laws-Byrum, ACTION: Notice and request for employees may be adversely affected, but acknowledges that it would be Clearance Clerk. comments. required to give 90-days’ notice and [FR Doc. 2017–07828 Filed 4–17–17; 8:45 am] SUMMARY: Under the Paperwork negotiate before making changes in BILLING CODE 4915–01–P Reduction Act of 1995 (PRA) and its operations, services, facilities, or implementing regulations, FRA seeks equipment,4 but that it would not approval of the proposed information immediately terminate or displace any DEPARTMENT OF TRANSPORTATION collection activity below. Before HOG covered employees as a result of submitting this information collection the proposed transaction, and that HOG Federal Motor Carrier Safety Administration request (ICR) to the Office of would continue to honor all current Management and Budget (OMB) for employment terms and conditions. (Pet. approval, FRA is soliciting public Sunshine Act Meetings; Unified Carrier 10–11.) The Board will hold GWI to comment on specific aspects of the Registration Plan Board of Directors these representations. Accordingly, GWI activities identified below. will be required to proceed in good faith AGENCY: Federal Motor Carrier Safety DATES: Comments must be received no under the notification and negotiation Administration (FMCSA), DOT. later than June 19, 2017. provision of Article I, section 4 of the ACTION: Notice of Unified Carrier ADDRESSES: Submit written comments New York Dock conditions before Registration Plan Board of Directors implementing employment changes, but on the information collection activities meeting. by mail to: Ms. Kim Toone, Information it need not commence those negotiations until it is capable of Collection Clearance Officer, Office of TIME AND DATE: The meeting will be making a full and adequate statement of Information Technology, RAD–20, held on April 28, 2017, from 1:00 p.m. the expected changes. See Pan Am S., Federal Railroad Administration, 1200 to 4:00 p.m. Eastern Daylight Time. FD 35147, slip op. at 16–17. See also New Jersey Avenue SE., Mail Stop 35, PLACE: The meetings will be open to the Washington, DC 20590. Commenters Genesee & Wyo., Inc.—Acquis. of public at the Hampton Inn, 3398 Control Exemption—Providence & requesting FRA to acknowledge receipt Piedmont Rd. NE., Atlanta, GA 30305, of their respective comments must Worcester R.R., FD 36064, slip op at 7 and via conference call. Those not (STB served Dec. 16, 2016). include a self-addressed stamped attending the meetings in person may postcard stating, ‘‘Comments on OMB Environmental and Historical Reporting call 1–877–422–1931, passcode Control Number 2130–XXXX,’’ and 2855443940, to listen and participate in should also include the title of the ICR. This transaction is categorically the meetings. excluded from environmental review Alternatively, comments may be faxed STATUS: Open to the public, however, to (202) 493–6216 or (202) 493–6497, or under 49 CFR 1105.6(c)(2)(i) because it will not result in any significant change the Board may vote to close portions of emailed to Ms. Toone at Kim.Toone@ the meeting to the public to deliberate dot.gov. Please refer to the assigned sradovich on DSK3GMQ082PROD with NOTICES in carrier operations. Similarly, the on matters involving confidential OMB control number in any 4 GWI states that none of HOG’s 15 current commercial or financial information. correspondence submitted. FRA will employees are subject to collective bargaining MATTERS TO BE CONSIDERED: The summarize comments received in agreements, and thus there are no unions with Unified Carrier Registration Plan Board response to this notice in a subsequent which to negotiate implementing agreements. (Id. at 10.) The Board notes that GWI will still be required of Directors (the Board) will continue its notice and include them in its to complete any New York Dock negotiations work in developing and implementing information collection submission to directly with affected HOG employees. the Unified Carrier Registration Plan OMB for approval. VerDate Sep<11>2014 16:55 Apr 17, 2017 Jkt 241001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\18APN1.SGM 18APN1


Document Created: 2017-04-17 23:59:52
Document Modified: 2017-04-17 23:59:52
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 18340 
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