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).

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.

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]

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. See49 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.