83 FR 23990 - HGS Railway Holdings, Inc.-Continuance in Control Exemption-HGS-FCR, LLC and HGS-ATN, LLC

SURFACE TRANSPORTATION BOARD

Federal Register Volume 83, Issue 100 (May 23, 2018)

[Federal Register Volume 83, Number 100 (Wednesday, May 23, 2018)]
[Notices]
[Pages 23990-23991]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-11054]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36180]


HGS Railway Holdings, Inc.--Continuance in Control Exemption--
HGS-FCR, LLC and HGS-ATN, LLC

    HGS Railway Holdings, Inc. (HGS Holdings), has filed a verified 
notice of exemption under 49 CFR 1180.2(d)(2) to continue in control of 
HGS-ATN, LLC (HGS-ATN), and HGS-FCR, LLC (HGS-FCR) (collectively, the 
LLCs), upon HGS-ATN's and HGS-FCR's becoming Class III rail carriers.
    This transaction is related to verified notices of exemption in 
HGS-ATN, LLC--Acquisition Exemption--CSX Transportation, Inc., Docket 
No. FD 36175 and HGS-FCR, LLC--Acquisition Exemption--CSX 
Transportation, Inc., Docket No. FD 36176. In those proceedings, the 
LLCs individually seek authority pursuant to 49 CFR 1150.31 to acquire 
rail lines from CSX Transportation, Inc. (CSXT): HGS-ATN for 
approximately 121 miles of rail line in Alabama, and HGS-FCR for 
approximately 55 miles of rail line in Georgia. The transaction is also 
related to verified notices of exemption in Alabama & Tennessee River 
Railway--Lease & Operation Exemption--HGS-ATN, LLC, Docket No. FD 
36173, and Fulton County Railway--Lease & Operation Exemption--HGS-FCR, 
LLC, Docket No. FD 36174. In those proceedings, Alabama & Tennessee 
River Railway (ATN), and Fulton County Railway, LLC (FCR), seek 
authority to lease and operate over the Alabama and Georgia lines, 
respectively.\1\
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    \1\ By decision served April 13, 2018, the Board held all five 
exemption proceedings in abeyance pending HGS Holdings' filing of 
supplemental information about its corporate family. On April 23, 
2018, HGS Holdings filed a reply and revised notice of exemption. 
The information in that filing is sufficient for the Board to remove 
all five proceedings from abeyance and publish the notices.
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    The earliest this transaction may be consummated is June 6, 2018, 
the effective date of the exemption.
    HGS Holdings is a non-carrier that owns 100 percent of the issued 
and outstanding stock of HGS-ATN and HGS-FCR, two limited liability 
companies and non-carriers that were formed for the purpose of 
acquiring certain lines from CSXT. OmniTrax Holdings Combined, Inc. 
(OmniTRAX), is a non-carrier that controls 18 Class III railroads.\2\ 
HGS Holdings and OmniTRAX share the same address, chief executive 
officer, and additional officials or officers. Together, the two 
companies' holdings appear to encompass the entirety of the rail 
carriers in the corporate family.\3\
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    \2\ OmniTRAX controls the following railroads operating in the 
identified states: ATN (Alabama); FCR (Georgia); Brownsville & Rio 
Grande International Railway, LLC (Texas); Chicago Rail Link, LLC 
(Illinois); Georgia & Florida Railway, LLC (Georgia, Florida); 
Georgia Woodlands Railroad, LLC (Georgia); Great Western Railway of 
Colorado, LLC (Colorado); Illinois Railway, LLC (Illinois); Kettle 
Falls International Railway, LLC (Washington); Manufacturers' 
Junction Railway, LLC (Illinois); Nebraska, Kansas & Colorado 
Railway, LLC (Nebraska, Kansas, Colorado); Newburgh & South Shore 
Railroad, LLC (Ohio); Northern Ohio & Western Railway (Ohio); 
Panhandle Northern Railway, LLC (Texas); Peru Industrial Railroad, 
LLC (Illinois); Sand Springs Railway Company (Oklahoma); Stockton 
Terminal and Eastern Railroad (California); and Central Texas & 
Colorado River Railway, LLC (Texas).
    \3\ HGS Holdings concedes in its April 23, 2018 supplemental 
filing that it and OmniTRAX are under joint managerial and 
operational control because individuals who are officers or 
officials at both companies are able to direct the day-to-day 
operations of the railroad subsidiaries. HGS Holdings is reminded 
that common control can be established due to other factors as well, 
e.g., common ownership. See 49 U.S.C. 11323(b), (c). To the extent 
that any additional rail carriers come under the control of an 
entity with an ownership interest in HGS Holdings or OmniTRAX, prior 
authorization by the Board could be required. Id.
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    HGS Holdings represents that: (1) The rail lines to be owned by 
HGS-ATN are located in Alabama and the rail lines to be owned by HGS-
FCR are located in Atlanta, Ga.; (2) the continuance in control is not 
part of a series of anticipated transactions that would connect the 
rail lines to be operated by HGS-ATN, HGS-FCR, and the 18 railroads in 
the OmniTRAX family; and (3) there are no Class I rail carriers in the 
HGS Holdings/OmniTRAX corporate family. Moreover, the verified notice 
shows that the rail lines to be acquired by HGS-ATN and HGS-FCR do not 
connect with each other or with any railroads in the OmniTRAX family. 
Therefore, the proposed transaction is exempt from the prior approval 
requirements of 49 U.S.C. 11323. See 49 CFR 1180.2(d)(2).
    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 Sec. Sec.  
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 carriers.

[[Page 23991]]

    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. 
Stay petitions must be filed no later than May 30, 2018 (at least seven 
days before the exemption becomes effective).
    An original and 10 copies of all pleadings, referring to Docket No. 
FD 36180 must be filed with the Surface Transportation Board, 395 E 
Street SW, Washington, DC 20423-0001. In addition, a copy of each 
pleading must be served on Karl Morell, Karl Morell & Associates, 440 
1st Street NW, Suite 440, Washington, DC 20001.
    Board decisions and notices are available on our website at 
WWW.STB.GOV.

    Decided: May 18, 2018.

    By the Board, Scott M. Zimmerman, Acting Director, Office of 
Proceedings.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2018-11054 Filed 5-22-18; 8:45 am]
BILLING CODE 4915-01-P