05-4834. Watco Companies, Inc.-Continuance in Control Exemption-Appalachian & Ohio Railroad, Inc.

Watco Companies, Inc. (Watco), has filed a verified notice of exemption to continue in control of Appalachian & Ohio Railroad, Inc. (AO), upon AO's becoming a Class III rail carrier.

The transaction is scheduled to be consummated on or shortly after March 25, 2005.

This transaction is related to a concurrently filed verified notice of exemption in STB Finance Docket No. 34653, Appalachian & Ohio Railroad, Inc.—Lease and Operation Exemption—CSX Transportation, Inc., wherein AO seeks to acquire by lease from CSX Transportation, Inc. (CSXT) and operate approximately 158.22 miles of rail lines in the State of West Virginia.^[1]

Watco, a Kansas corporation, is a noncarrier that currently controls 10 Class III rail carriers: South Kansas and Oklahoma Railroad Company (SKO), Palouse River & Coulee City Railroad, Inc. (PRCC), Timber Rock Railroad, Inc. (TIBR), Stillwater Central Railroad (SLWC), Eastern Idaho Railroad, Inc. (EIRR), Kansas & Oklahoma Railroad, Inc. (K&O), Pennsylvania Southwestern Railroad, Inc. (PSWR), Great Northwest Railroad, Inc. (GNR), Kaw River Railroad, Inc. (KRR), and Mission Mountain Railroad, Inc. (MMT).

Applicant states that: (1) The rail lines operated by SKO, PRCC, TIBR, SLWC, EIRR, K&O, PSWR, GNR, KRR, and MMT do not connect with the rail lines being leased by AO; (2) the continuance in control is not part of a series of anticipated transactions that would connect the rail lines being acquired by AO with any railroad in the Watco corporate family; and (3) neither AO nor any of the carriers controlled by Watco are Class I rail carriers. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323. See 49 CFR 1180.2(d)(2). The purpose of the transaction is to reduce overhead expenses, coordinate billing, maintenance, mechanical and personnel policies and practices of applicant's rail carrier subsidiaries, thereby improving the overall efficiency of rail service provided by the 11 railroads.

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. Accordingly, the Board may not impose labor protective conditions here, because all of the carriers involved are Class III 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 transaction.

An original and 10 copies of all pleadings, referring to STB Finance Docket No. 34654, must be filed with the Surface Transportation Board, 1925 K Street, NW., Washington, DC 20423-0001. In addition, a copy of each pleading must be served on Karl Morell, Of Counsel, 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: March 7, 2005.

By the Board, David M. Konschnik, Director, Office of Proceedings.

Vernon A. Williams,

Secretary.

Footnotes

1.  The rail lines being leased are between: (1) Milepost BUC 0.0, at Berkeley Run Jct., WV, and milepost BUC 119.0, at Cowen, WV; (2) milepost BUN 0.0, at Berryburg Jct., WV, and milepost BUN 4.0, at the Sentinel Mine near Berryburg Jct.; (3) milepost BUO 0.0, at Century Jct., WV, and milepost BUO 5.05, at the Century Mine, near Century Jct.; (4) milepost BUJ 0.0, at Buckhannon, WV, and milepost BUJ 1.65, near Buckhannon; (5) milepost BUF 0.0, at Burnsville, WV, and milepost BUF 6.2, at Gilmer, WV; (6) milepost BUR 0.0, at Cowen, and milepost BUR 1.0, near Cowen; (7) milepost BUH 0.0, at Hampton Jct., WV, and milepost BUH 17.0, at Alexander, WV; and (8) milepost BTF 0.0, at Island Creek Jct., WV, and milepost BTF 4.32, near Island Creek Jct.