```
[Federal Register Volume 63, Number 78 (Thursday, April 23, 1998)]
[Notices]
[Page 20247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10703]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 33575]

State of North Carolina--Intracorporate Family Exemption--Merger 
of Beaufort and Morehead Railroad Company Into North Carolina Railroad 
Company

    The State of North Carolina (the State), Beaufort and Morehead 
Railroad Company (B&M), and North Carolina Railroad Company (NCRR) have 
filed a verified notice of exemption to merge B&M, a Class III rail 
carrier wholly owned by the State (a noncarrier),1 into 
NCRR, a Class III rail carrier controlled by the State.2
---------------------------------------------------------------------------

    \1\ An agency of the State, the North Carolina Department of 
Transportation, owns 100% of the outstanding common stock of B&M.
    \2\ The State owns approximately 75% of the outstanding common 
stock of NCRR.
---------------------------------------------------------------------------

    The proposed merger is an element of a financial restructuring, not 
subject to Board jurisdiction, related to the proposed buyout by the 
State of the private shareholders of NCRR.3 See North 
Carolina Railroad Company--Petition to Set Trackage Compensation and 
Other Terms and Conditions--Norfolk Southern Railway Company, Norfolk & 
Western Railway Company, and Atlantic and East Carolina Railway 
Company, STB Finance Docket No. 33134 (STB served May 29, 
1997).4 The parties expected to consummate the merger on or 
after March 31, 1998.
---------------------------------------------------------------------------

    \3\ The merger will allow NCRR to issue new preferred stock in 
exchange for B&M preferred stock. The preferred stock issuance will 
evidently preserve NCRR's Federal tax status as a real estate 
investment trust after the State acquires all of its common stock.
    \4\ There, a trackage compensation proceeding was held in 
abeyance to allow the State to negotiate a buyout of the private 
shareholders of NCRR whose dissension had precipitated the 
compensation dispute.
---------------------------------------------------------------------------

    This transaction is one 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 
a 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 sections 11324 
and 11325 that involve only Class III rail carriers. Because this 
transaction involves Class III rail carriers only, the Board, under the 
statute, may not impose labor protective conditions for this 
transaction.
    If the verified notice contains false or misleading information, 
the exemption is void ab initio. Petitions to reopen the proceeding to 
revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. 
The filing of a petition to reopen will not automatically stay the 
transaction.
    An original and 10 copies of all pleadings, referring to STB 
Finance Docket No. 33575, must be filed with the Surface Transportation 
Board, Office of the Secretary, Case Control Unit, 1925 K Street, N.W., 
Washington, DC 20423-0001. In addition, a copy of each pleading must be 
served on: Betty Jo Christian, Steptoe & Johnson, 1330 Connecticut 
Avenue, N.W., Washington, DC 20036; and Farhana Y. Khera, Hogan & 
Hartson L.L.P, 555 Thirteenth Street, N.W., Washington, DC 20004-1109.

    Decided: April 15, 1998.

    By the Board, David M. Konschnik, Director, Office of 
Proceedings.
Vernon A. Williams,
Secretary.
[FR Doc. 98-10703 Filed 4-22-98; 8:45 am]
BILLING CODE 4915-00-P
```