[Federal Register Volume 75, Number 213 (Thursday, November 4, 2010)]
[Notices]
[Pages 68020-68021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27938]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. FD 35439]


Watco Holdings, Inc., Watco Companies, Inc., and Watco 
Transportation Services, Inc.--Corporate Family Transaction Exemption

    Watco Holdings, Inc. (Holdings), Watco Companies, Inc. (Watco), 
Watco Transportation Services, Inc. (Transportation Services), and the 
rail carrier subsidiaries have jointly filed a verified notice of 
exemption under 49 CFR 1180.2(d)(3) for a corporate family transaction. 
Watco, a noncarrier, is a Kansas corporation that controls 
Transportation Services, also a noncarrier and a Kansas corporation. 
Watco indirectly controls 22 Class III railroads (the Watco Railroads): 
South Kansas and Oklahoma Railroad Company (SKO); Palouse River & 
Coulee City Railroad, Inc.; Timber Rock Railroad, Inc.; Stillwater 
Central Railroad, Inc.; Eastern Idaho Railroad, Inc; Kansas & Oklahoma 
Railroad, Inc.; Pennsylvania Southwestern Railroad, Inc.; Great 
Northwest Railroad, Inc.; Kaw River Railroad, Inc.; Mission Mountain 
Railroad, Inc; Mississippi Southern Railroad, Inc.; Yellowstone Valley 
Railroad, Inc.; Louisiana Southern Railroad, Inc.; Arkansas Southern 
Railroad, Inc.; Alabama Southern Railroad, Inc.; Vicksburg Southern 
Railroad, Inc.; Austin Western Railroad, Inc.; Baton Rouge Southern 
Railroad, LLC (BRSR); Pacific Sun Railroad, LLC (PSRR); Grand Elk 
Railroad; Alabama Warrior Railway, LLC (AWR); and Boise Valley 
Railroad, Inc.
    Under the proposed transaction, all but 4 of the Watco Railroads, 
SKO, PSRR, AWR, and BRSR, will reorganize. Holdings, which is a new 
Kansas noncarrier holding company, will indirectly control all of the 
Watco Railroads. There are several steps to the proposed transaction. 
The existing stockholders of Watco will form Holdings, and Holdings 
will become the parent to Watco and thus will indirectly control the 22 
Watco Railroads. In addition, Watco will convert from a Kansas 
corporation to a Delaware limited liability company and will continue 
to control Transportation Services. In turn, Transportation Services 
will convert from a Kansas corporation to a Kansas limited liability 
company and will continue to directly control 21 of the Watco 
Railroads: all but BRSR.\1\ Further, each of the Watco Railroads except 
SKO, PSRR, AWR, and BRSR will be converted to either a limited 
liability company or a C corporation, depending on applicable State 
law. Each of the Watco Railroads will remain incorporated in the same 
state of its incorporation today.
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    \1\ The parties state that BRSR will continue to be controlled 
by separate, wholly owned subsidiaries of Watco.
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    The transaction is scheduled to be consummated on or after November 
18, 2010, the effective date of the exemption (30 days after the notice 
was filed). The purpose of this transaction is to facilitate Watco's 
ability to obtain financing.
    This is a transaction 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 
any change in the competitive balance with carriers outside the Watco 
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 49 U.S.C. 11324 
and 11325 that involve only Class III rail

[[Page 68021]]

carriers. Accordingly the Board may not impose labor protective 
conditions here because all of the carriers involved are Class III rail 
carriers.
    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 transaction. Petitions for stay 
must be filed no later than November 10, 2010 (at least 7 days before 
the exemption becomes effective).
    An original and 10 copies of all pleadings, referring to Docket No. 
FD 35439, must be filed with the Surface Transportation Board, 395 E 
Street, SW., Washington, DC 20423-0001. In addition, one copy of each 
pleading must be served on Karl Morell, Ball Janik LLP, 1455 F Street, 
NW., Suite 225, Washington, DC 20005.
    Board decisions and notices are available on our Web site at http://www.stb.dot.gov.

    Decided: November 1, 2010.

    By the Board.
Rachel D. Campbell,
Director, Office of Proceedings.
Andrea Pope-Matheson,
Clearance Clerk.
[FR Doc. 2010-27938 Filed 11-3-10; 8:45 am]
BILLING CODE 4915-01-P