|SURFACE TRANSPORTATION BOARD DECISION DOCUMENT|
|JACKSON & LANSING RAILROAD COMPANY-LEASE AND OPERATION EXEMPTION-NORFOLK SOUTHERN RAILWAY COMPANY|
|DECISION REVOKED THE DELEGATION OF AUTHORITY TO THE DIRECTOR OF THE OFFICE OF PROCEEDINGS, UNDER 49 C.F.R. § 1011.7(b)(10), TO DETERMINE WHETHER TO ISSUE A NOTICE OF EXEMPTION IN THIS PROCEEDING AND DETERMINED THAT THE NOTICE SHOULD BE ISSUED.|
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|Full Text of Decision|
41110 SERVICE DATE – OCTOBER 6, 2010
SURFACE TRANSPORTATION BOARD
DECISION AND NOTICE
Docket No. FD 35411
JACKSON & LANSING
RAILROAD COMPANY—LEASE AND OPERATION EXEMPTION—
Decided: October 1, 2010
BY THE BOARD:
Under 49 C.F.R. § 1011.7(b)(10), the Director of the Office of Proceedings (Director) is delegated the authority to determine whether to issue notices of exemption for lease transactions under 49 U.S.C. § 10902. However, the Board reserves to itself the consideration and disposition of all matters involving issues of general transportation importance. 49 C.F.R. § 1011.2(a)(6). Accordingly, the Board revokes the delegation to the Director with respect to the issuance of this notice of exemption. The Board determines that this notice of lease and operation exemption should be issued, and does so here.
& Lansing Railroad Company (JAIL), a noncarrier, has filed a verified
notice of exemption under 49 C.F.R. § 1150.31, et seq., to
lease and operate certain rail lines from Norfolk Southern Railway Company (NSR). Pursuant to the lease agreement, JAIL will
lease the following rail lines from NSR:
(1) the Lansing Secondary, located between the connection with NSR’s
Michigan Main Line at milepost LZ 0.0 in Jackson, Mich., and milepost LZ 36.9
in Lansing, Mich. (36.9 miles in length); (2) the Lansing Manufacturers
Railroad, located between milepost XF 0.0 and milepost XF 5.1 in Lansing (5.1
miles in length); (3) the Lansing Industrial Track line segment located between
milepost XM 57.1 and milepost XM 58.9 in Lansing (1.8 miles in length); and (4)
the Lansing Industrial Track line segment between milepost UA 60.7 and milepost
UA 61.4 in Lansing (approximately 0.7 miles in length). The total length of the lines to be leased is
44.5 miles. In conjunction with the
lease of these lines, NSR will also grant to JAIL limited incidental trackage
rights over 2.6 miles of NSR’s Michigan Main Line, between milepost NS 72.73
and milepost NS 75.67 (equal to milepost LZ 0.0) in
As required at 49 C.F.R. § 1150.33(h),
JAIL has disclosed that the lease agreement contains a provision that would
provide for a “Lease Credit” whereby JAIL may reduce its lease payments by
receiving a credit for each car interchanged with NSR. JAIL notes that NSR initially proposed a
fixed rental payment with no option to reduce the rent, but JAIL insisted on a
lease credit option to provide an opportunity for JAIL to earn a lower rental
payment so it would be able to invest in improvements on the lease lines to
increase traffic levels. According to
JAIL, the affected interchange point is
This transaction is related to 2 other transactions for which notices of exemption have been simultaneously filed: Docket No. FD 35410, Adrian & Blissfield Rail Road Company—Continuance in Control Exemption—Jackson & Lansing Railroad Company, in which Adrian & Blissfield Rail Road Company seeks to continue in control of JAIL, upon JAIL’s becoming a Class III rail carrier; and Docket No. FD 35418, Jackson & Lansing Railroad Company—Trackage Rights Exemption—Norfolk Southern Railway Company, in which JAIL seeks to acquire, pursuant to an agreement with NSR, non-exclusive local and overhead trackage rights over approximately 1.06 miles of line owned by NSR and currently leased to CSX Transportation, Inc., on the Lansing Secondary, between milepost LZ 36.8 in Lansing and milepost 37.86 in North Lansing, Mich., for the sole purpose of interchanging with NSR.
JAIL certifies that the projected annual revenues as a result of the proposed transaction will not exceed $5 million, and that JAIL will be a Class III carrier.
The transaction may not be consummated until October 20, 2010, the effective date of the exemption (30 days after the exemption was filed).
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 not later than October 13, 2010 (at least 7 days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to
Docket No. FD 35411, must be filed with the Surface
Transportation Board, 395 E Street, S.W.,
Board decisions and notices are available at our website at
It is ordered:
1. The delegation of authority to the Director of the Office of Proceedings, under 49 C.F.R. § 1011.7(b)(10), to determine whether to issue a notice of exemption in this proceeding is revoked.
2. This decision is effective on the date of service.
By the Board, Chairman Elliott, Vice Chairman Mulvey, and Commissioner Nottingham. Vice Chairman Mulvey dissented with a separate expression.
VICE CHAIRMAN MULVEY, dissenting:
I disagree with the Board’s decision to allow this transaction to be processed under the Board’s class exemption procedures. In this case, I would like to have more information about the likely impact of the proposed interchange commitment prior to permitting the exemption to become effective. I believe that it is incumbent for the Board to take a close look at interchange commitments, particularly when they contain outright bans on interchange with third-party carriers or, as here, economic incentives that can only be evaluated with the provision of additional information.