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North Carolina & Virginia Railroad Company, L.L.C., Chesapeake &
Albemarle Railroad Division--Lease Amendment and Operation Exemption
Including Interchange Commitment--Norfolk Southern Railway Company

 

Chesapeake & Albemarle Railroad (CA), a Class III railroad and
division of North Carolina & Virginia Railroad Company, L.L.C. (NCVA),
has filed a verified notice of exemption under 49 U.S.C. 10902 to enter
into a superseding and replacement lease with Norfolk Southern Railway
Company (NSR) and operate lines of railroad between (1) milepost NS
4.00 at Providence Junction, Va., and milepost NS 8.00 at Butts, Va.,
(2) milepost NS 8.00 at Butts, Va., and milepost NS 73.59 at Edenton,
N.C., and (3) milepost WK 0.00 at Elizabeth City, N.C., and milepost WK
7.48 at Weeksville, N.C. (collectively, the Line). The Line totals
approximately 77.07 miles.


CA and NSR entered into a lease in 1990, which covered lines
between (1) milepost NS 8.00, and milepost NS 74.00, and (2) milepost
WK 0.00, and milepost WK 7.48 (Original Lease).\1\ A 2003 amendment
added a line between milepost NS 4.00, and milepost NS 8.00.\2\ In 2004
and 2007, the Board issued abandonment and discontinuance of service
exemptions for line included in the Original Lease between (1) milepost
NS 73.67 and milepost NS 74.00 at Edenton, N.C.,\3\ and (2) milepost NS
73.59 and milepost NS 73.67 at Edenton, N.C.\4\ In 2011, CA and NSR
added an amendment to extend the term of the Original Lease and strike
all provisions relating to the option to purchase.\5\ Now, CA explains
that the Original Lease has expired, and CA and NSR have reached a new
Lease Agreement (New Lease). CA and NSR intend the New Lease to
supersede and replace the Original Lease and extend the term for an
additional 10 years. CA declares that it currently operates the Line
pursuant to the Original Lease and will continue to operate the Line
under the New Lease.\6\


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\1\ Chesapeake & Albemarle R.R.--Lease, Acquis. & Operation
Exemption--S. Ry., FD 31617 (ICC served Apr. 17, 1990).


\2\ N.C. & Va. R.R.--Lease & Operation Exemption--Norfolk S.
Ry., FD 34272 (STB served Jan. 22, 2003).


\3\ Norfolk S. Ry.--Aban. Exemption--in Chowan Cty., N.C., AB
290 (Sub-No. 251X) et al. (STB served July 16, 2004). NSR
consummated the abandonment between milepost NS 73.67 and milepost
NS 74.00.


\4\ The verified notices filed by NSR and CA describe the line
to be abandoned and discontinued as between milepost NS 73.59 and
milepost NS 73.67. Likewise, NSR consummated the abandonment between
milepost NS 73.59 and milepost NS 73.67. Therefore, it appears this
milepost was erroneously stated as 73.50 in the published notice.
See Norfolk S. Ry.--Aban. Exemption--in Chowan Cty., N.C., AB 290
(Sub-No. 295X) et al. (STB served Aug. 9, 2007).


\5\ N.C. & Va. R.R., Chesapeake & Albemarle R.R. Div.--Lease
Amendment Exemption--Norfolk S. Ry., FD 35564 (Sub-No. 1) (STB
served Dec. 16, 2011).


\6\ The Original Lease, as amended in 2011, appears to have
included line from mileposts NS 73.59 to NS 74.00, which had been
abandoned prior to the 2011 lease amendment. CA does not state
whether it continued to operate over that abandoned line after the
2011 renewal.

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According to CA, the New Lease includes an interchange commitment
that is similar in structure to the interchange commitment included in
the Original Lease. As required under 49 CFR 1150.43(h)(1), CA provided
additional information regarding the interchange commitment.
CA does not project that this transaction will result in annual
revenues significant enough to establish a Class I or Class II rail
carrier. Additionally, CA confirms that its total revenues will not
exceed $5 million after the transaction; however, CA states that NCVA,
of which CA is a division, will have revenues over $5 million following
the transaction. Accordingly, CA is required by Board regulations to
send notice of the transaction to the national offices of the labor
unions with employees on the affected lines at least 60 days before
this exemption is to become effective, to post a copy of the notice at
the workplace of the employees on the affected lines, and to certify to
the Board that it has done so. 49 CFR 1150.42(e).


CA requests a waiver of the 60-day advance labor notice requirement
under 49 CFR 1150.42(e). In that request, CA argues that: (1) No
employees of the transferring carrier, NSR, will be affected by the
lease and no employees of NSR have worked on any part of the Line since
2003 and therefore, posting notices would be futile because no NSR
employees work on the Line and (2) there will be no operational changes
and no CA employees will be affected by the lease. CA's waiver request
will be addressed in a separate decision.


CA states that it expects to consummate the transaction on the
effective date of this exemption. The Board will establish the
effective date in its separate decision on the waiver request.