[Federal Register Volume 59, Number 163 (Wednesday, August 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20842]


[[Page Unknown]]

[Federal Register: August 24, 1994]


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INTERSTATE COMMERCE COMMISSION
49 CFR Parts 1039 and 1145

[Ex Parte No. 346 (Sub-No. 36)]

 

Rail General Exemption Authority--Exemption of Non-Ferrous 
Recyclables and Railroad Rates on Recyclable Commodities

AGENCY: Interstate Commerce Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is considering whether to exempt partially from 
regulation the rail transportation of non-ferrous recyclables set forth 
in the Appendix. If these commodities are exempted, they will be added 
to the list of exempt commodities in the Commission's regulations as 
set forth below, and the exemption will be subject to the conditions 
and limitations provided therein.

DATES: Comments are due on September 23, 1994.

ADDRESSES: Participants must send an original and 10 copies of their 
statement referring to Ex Parte No. 346 (Sub-No. 36) to: Office of the 
Secretary, Case Control Branch, Interstate Commerce Commission, 
Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-5610. [TDD for 
hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: The Association of American Railroads (AAR), 
numerous member railroads in their individual capacities,1 and the 
Institute of Scrap Recycling Industries, Inc. (ISRI) (collectively, 
petitioners) have petitioned the Commission to institute a proceeding 
to consider the partial exemption from regulation under 49 U.S.C. 10505 
of the rail transportation of 28 non-ferrous recyclable 
commodities.2 The proposed exemption would be effected by: (a) 
Adding the non-ferrous recyclables listed below to the list of exempt 
commodities set forth at 49 CFR 1039.11(a), (b) adding conforming 
language at the beginning of the list in paragraph (a),3 and (c) 
modifying 49 CFR 1039.14(b)(5), as set forth below.4 The proposed 
exemption would apply to all rail carriers nationwide, and would 
encompass all provisions of Subtitle IV of Title 49 of the United 
States Code, subject to the exceptions set forth in 49 CFR 1039.11, 
except the provisions of 49 U.S.C. 10731(e) relating to maximum rates.
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    \1\These railroads are: Burlington Northern Railroad Co., 
Chicago and North Western Railway Company, Consolidated Rail Corp., 
CSX Transportation, Inc., Norfolk Southern Railway Co., The 
Atchison, Topeka and Santa Fe Railway Company, Soo Line, Inc., 
Southern Pacific Transportation Co., and Union Pacific Railroad Co.
    \2\Accompanying the proposal are supporting verified statements 
from AAR, AAR member railroad Consolidated Rail Corp., and ISRI.
    \3\We are not entirely clear on where petitioners intend for 
this conforming language to be inserted. Petitioners should clarify 
this matter.
    \4\The Commission previously determined that exemptions for non-
ferrous recyclables can best be effected by amending 49 CFR 1145.9, 
rather than 49 CFR 1039. Exempt. from Regulation--Rail Transp. of 
Scrap Paper, 9 I.C.C.2d 957, 964 (1993). Petitioners propose 
completely revising 49 CFR part 1145 and instead identifying the 
exempted commodities in 49 CFR 1039.
---------------------------------------------------------------------------

    In addition, on the theory that the existing regulations are not 
compatible with a market-driven transportation system, AAR and ISRI 
have petitioned the Commission for consideration of substantial 
amendments to 49 CFR part 1145, Railroad Rates on Recyclable 
Commodities, as set forth below.5 Thus, petitioners seek exemption 
from regulation, other than maximum rate regulation (and the 
limitations at 49 CFR 1039.11(a)), for the rail transportation of non-
ferrous recyclables, and the substitution of the new maximum rate 
regulations they propose for the existing regulations. As discussed 
below, although there is some opposition to this proposal, we are 
instituting this rulemaking in order to obtain additional information 
and public comment.
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    \5\Petitioners do not propose amending or deleting the reference 
in 49 CFR 1039.11(a) to 49 CFR 1145.9. Such action, if the rules 
were adopted, would appear necessary.
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Proponents' Views

    Section 10505 requires us to grant an exemption when we find that: 
(1) Regulation is not necessary to carry out the national rail 
transportation policy of 49 U.S.C. 10101a (NRTP); and (2) either (a) 
the transaction or service is of limited scope, or (b) regulation is 
not needed to protect shippers from an abuse of market power. 
Petitioners assert that their proposal meets these criteria.
    Petitioners propose the subject commodities for exemption for the 
following reasons:
    (1) Continued regulation of these commodities is not necessary to 
carry out the NRTP at 49 U.S.C. 10101a. According to petitioners, 
although the transportation of this traffic is highly competitive, an 
exemption would further increase competition for this traffic and 
promote numerous NRTP goals, such as (a) increased competition for the 
traffic, (b) safe and efficient transportation, (c) reduced 
administrative burdens for both rail carriers and shippers, and (d) 
increased ratemaking flexibility and financial stability for rail 
carriers (including, by eliminating tariff and contract filing 
requirements, the ability to respond more quickly to market changes and 
shipper demand for resulting rates and services). Current competition 
is reflected in statistics on rates and revenue from rail 
transportation of non-ferrous recyclables.6
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    \6\AAR reports that, from 1981 to 1991, real revenue per car for 
transportation of non-ferrous recyclables declined 42%. AAR adds 
that rail market share in 1991 for each non-ferrous recyclable 
commodity was 25% or less of the market total.
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    (2) The involved rail transportation is limited in scope. The 
transportation of non-ferrous recyclables is a small percentage of 
total rail transportation, and shippers have access to alternative 
transportation modes. Moreover, the proposed exemption would not 
relieve carriers of their obligations under 49 U.S.C. 10731(e).
    (3) This traffic is generally competitive, subject to intermodal, 
intramodal, and geographic competition, making regulation unnecessary 
to protect shippers from market power abuse. Moreover, shippers would 
continue to have the protection of the mandatory rate cap under 49 
U.S.C. 10731(e).
    Regarding the proposed amendments to 49 CFR part 1145, petitioners 
state that the proposed streamlined procedure is designed ``to assure 
that rate adjustments do not exceed applicable aggregate maximum rate 
ratios,'' and ``to simplify the implementation of the [rate] cap and to 
be compatible with an environment in which carriers must change rates 
frequently in response to changing market conditions.'' Petition at 14. 
Petitioners further assert that, ``By agreeing not to request the even 
greater flexibility of complete deregulation, AAR and ISRI have removed 
the need for the Commission to make a finding with respect to whether 
continued regulation of maximum rates is necessary for all non-ferrous 
recyclable issues.'' Id. at 15 (note omitted).
    According to petitioners, the new maximum rate regulations they 
propose ``are designed to be self-policing thus permitting the shipper 
and railroad to work out adjustments without Commission intervention.'' 
Id. at 20. Parties may ask the Commission to resolve a dispute only if 
the shipper and railroad are unable to agree on the relief to be 
provided under the regulations. Id.

Opposition to Petition

    Huron Valley Steel Corporation (Huron)7 and Star Recycling, 
Inc. (Star) have filed in opposition to petitioners' proposal. They 
argue that the Commission should dismiss the petition because the 
proposal would preclude the Commission from fulfilling its statutory 
mandate with respect to recyclables rate levels, and therefore would 
violate 49 U.S.C. 10731(e). We withhold our final determination with 
respect to their requests for dismissal, and elect to treat their 
pleadings as opposition to AAR and ISRI's petition, and invite comment 
on Huron and Star's contentions.
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    \7\Huron is a member of ISRI, but previously advised ISRI that 
it opposes the petition and that ISRI was not to file the petition 
on its behalf.
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    Huron and Star reason that the Commission has no statutory 
authority to grant petitioners' proposed exemption. They argue that 
Congress singled out recyclable or recycled materials other than iron 
or steel as a specific exemption from the general deregulatory and 
procompetitive purposes of the Staggers Rail Act of 1980,8 and 
that the Commission's mandate is not limited or preempted by the 
Commission's exemption authority at 49 U.S.C. 10505.
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    \8\Pub. L. No. 96-448, 94 Stat. 1905 (1980). Section 204 of the 
Act, codified at 49 U.S.C. 10731(e), specifically addressed 
recyclables.
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    Star contends that the proposal ``would devastate the ability of 
shippers of recyclables to obtain adequate and efficient rail 
transportation services'' by permitting rail carriers ``to refuse to 
provide a level service meeting shippers' needs (or any service at 
all), absent the shippers' agreement to transportation contracts that 
would then be outside the Commission's rate jurisdiction, and would 
therefore render any controls over rate levels illusory.'' Star motion 
at 3. Huron asserts that the partial exemption being sought fails to 
meet the criteria of 49 U.S.C. 10505.
    In addition, Star contends that the ``streamlined'' rate procedures 
proposed to be substituted at 49 CFR part 1145 also would undermine the 
Commission's carefully established balance ``between avoidance of 
regulatory burden on the carriers and effective supervision of 
recyclables rate levels.'' Star motion at 2. Huron argues that the 
proposed rules ``would be both cumbersome and costly''; that they would 
constitute ``an impermissible delegation of the ICC's public duties to 
private groups''; and that they would contravene the law by permitting 
the railroads to charge rates that are 10 percent above the statutory 
cap. Huron reply at 33, 41.
    We invite comments and data concerning the proposal and its 
opposition. Although we believe that the approach suggested by the 
railroads and ISRI may have merit, publication of this notice, along 
with the rules as proposed by AAR and ISRI, is not intended to suggest 
a predisposition regarding the rules at this time. The proposal makes 
substantial changes to a set of rules that were recently adopted by the 
Commission at the suggestion of a coalition of shipper and carrier 
interests by, for example, providing a 10 percent rate cushion and 
eliminating the prejustification requirement for above-the-cap rate 
groups. Proponents should show how the new system will benefit shippers 
and carriers and will otherwise advance the objectives of the NRTP. 
Proponents should also explain in some detail how the new rules will 
work in practice.9
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    \9\For example, proponents may wish to address in depth 
operational questions such as how an ``average rate'' is to be 
``frozen,'' and how the rules are designed to work with regard to 
proportional rates and combinations of local rates.
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    The opponents of the proposal have focused largely on our statutory 
authority to issue a partial exemption in light of the specific 
statutory language regarding recyclables. Although we welcome 
additional comments on our statutory authority to adopt the exemption, 
commentors objecting to the proposal should, in addition, point out in 
practical terms why, in their view, the proposal will be unfair to 
them, or otherwise will not achieve its stated objective. Commentors 
may also address the appropriateness of the proposed exemption for any 
of these commodities on an individual basis.

Environmental and Energy Considerations

    We preliminarily conclude that, if an exemption is granted, it will 
not significantly affect either the quality of the human environment or 
the conservation of energy resources. We invite comments in this area.

Initial Regulatory Flexibility Analysis

    Pursuant to 5 U.S.C. 605(b), we preliminarily conclude that an 
exemption would not have a significant economic impact on a substantial 
number of small entities. No new regulatory requirements would be 
imposed, directly or indirectly, on such entities. The impact, if any, 
would be to reduce the amount of paperwork, tariff filing, and related 
activities. If an exemption were granted, it would be based on a 
finding that (a) the transportation at issue is of limited scope, and/
or (b) regulation of this transportation is not necessary to protect 
shippers (including small shippers) from abuse of market power. See 49 
U.S.C. 10505(a). Such findings, if made, would indicate that a 
substantial number of small entities would not be significantly 
affected. We invite comments in this area.

List of Subjects

49 CFR Part 1039

    Agricultural commodities, Intermodal transportation, Manufactured 
commodities, Railroads.

49 CFR part 1145

    Railroads, Rates, Recyclable commodities.

    Decided: August 16, 1994.

    By the Commission, Chairman McDonald, Vice Chairman Phillips, 
Commissioner Morgan. Commissioner Simmons dissented in part with a 
separate expression.
Vernon A. Williams,
Acting Secretary.

                         Non-Ferrous Recyclables                        
------------------------------------------------------------------------
    STCC                         Commodity description                  
------------------------------------------------------------------------
2051118......  Bakery waste or sweeping: feed.                          
22941........  Textile waste: garnetted, processed, or recovered.       
22973........  Textile fibres, noils, nubs for spinning.                
22994........  Packing cloths or rags: processed textile wastes.        
24293........  Shaving or sawdust.                                      
30311........  Declaimed rubber.                                        
3229924......  Cullet (broken glass).                                   
33312........  Copper matte, flue dust, or residues: skimmings,         
                tailings, scale.                                        
33322........  Lead matte, flue dust, slag skimmings, etc.              
33332........  Zinc dross, residue, ashes, skimmings.                   
33342........  Aluminum residue: ashes, skimmings, slag, smelting       
                residues.                                               
33398........  Misc. non-ferrous residue, inc. solder skimmings, type   
                metal dross, tin, nickel dross.                         
40112........  Ashes: fly ash, coal cinders, photo silver ash,          
                incinerator ash, metal bearing.                         
40212........  Brass, bronze, copper, or alloy scrap, tailings, or      
                wastes.                                                 
40213........  Lead, zinc, or alloy scrap: lead borings, zinc castings. 
40214........  Aluminum scrap: borings, grindings, turnings, foil scrap.
4021960......  Tin scrap: metallic tin, clippings, drippings, shavings, 
                for remelting.                                          
40221........  Textile waste: waste cotton, rope, rags, nec.            
40231........  Wood scrap: woodpulp waste, spent wood, waste bark.      
40251........  Chemical or petroleum waste: spent acid, lubricating     
                grease, waste oil.                                      
40261........  Rubber or plastic scrap, clippings or trimmings.         
4029114......  Municipal garbage waste, solid, digested and ground.     
4029176......  Auto shredder residue.                                   
4111434......  Bags, old: Burlap, gunny, jute, or nec.                  
4111580......  Old bags for conversion into bale coverings.             
42111........  Non-revenue mvmt. of containers moving in reverse of     
                loaded direction.                                       
42112........  Non-revenue mvmt. of shipping devices moving in reverse  
                of loaded direction.                                    
42311........  Revenue mvmt. of containers moving in reverse of loaded  
                direction.                                              
------------------------------------------------------------------------

    For the reasons set forth in the preamble, title 49, chapter X, 
parts 1039 and 1145 of the Code of Federal Regulations are proposed to 
be amended as follows:

PART 1039--EXEMPTIONS

    1. The authority citation for part 1039 would continue to read as 
follows:

    Authority: 49 U.S.C. 10321 and 10505; and 5 U.S.C. 553.

    2. In section 1039.11, paragraph (a) is proposed to be amended by 
adding the following sentence at the end of the text preceding the 
table and by adding the following entries at the end of the table to 
read as follows:


Sec. 1039.11  Miscellaneous commodities exemptions.

    (a) * * * The following commodities are exempted from all 
regulation except maximum rate regulation pursuant to 49 U.S.C. 
10731(e), subject to the exceptions set forth in this section unless 
otherwise exempted from maximum rate regulation. 

------------------------------------------------------------------------
    STCC No.                STCC tariff                   Commodity     
------------------------------------------------------------------------
                                                                        
                              * * * * * * *                             
2051118.........  6001-V, eff. 1-1-94.............  Bakery waste or     
                                                     sweeping: feed.    
22941...........  ......do........................  Textile waste:      
                                                     garnetted,         
                                                     processed, or      
                                                     recovered.         
22973...........  ......do........................  Textile fibres,     
                                                     noils, nubs for    
                                                     spinning.          
22994...........  ......do........................  Packing cloths or   
                                                     rags: processed    
                                                     textile wastes.    
24293...........  ......do........................  Shaving or sawdust. 
30311...........  ......do........................  Reclaimed rubber.   
3229924.........  ......do........................  Cullet (broken      
                                                     glass).            
33312...........  ......do........................  Copper matte, flue  
                                                     dust, or residues: 
                                                     skimmings,         
                                                     tailings, scale.   
33322...........  ......do........................  Lead matte, flue    
                                                     dust, slag         
                                                     skimmings, etc.    
33332...........  ......do........................  Zinc dross, residue,
                                                     ashes, skimmings.  
33342...........  ......do........................  Aluminum residue:   
                                                     ashes, skimmings,  
                                                     slag, smelting     
                                                     residues.          
33398...........  ......do........................  Misc. non-ferrous   
                                                     residue, inc.      
                                                     solder skimmings,  
                                                     type metal dross,  
                                                     tin, nickel dross. 
40112...........  ......do........................  Ashes: fly ash, coal
                                                     cinders, photo     
                                                     silver ash,        
                                                     incinerator ash,   
                                                     metal bearing.     
40212...........  ......do........................  Brass, bronze,      
                                                     copper, or alloy   
                                                     scrap, tailings, or
                                                     wastes.            
40213...........  ......do........................  Lead, zinc, or alloy
                                                     scrap: lead        
                                                     borings, zinc      
                                                     castings.          
40214...........  ......do........................  Aluminum scrap:     
                                                     borings, grindings,
                                                     turnings, foil     
                                                     scrap.             
4021960.........  ......do........................  Tin scrap: metallic 
                                                     tin, clippings,    
                                                     drippings,         
                                                     shavings, for      
                                                     remelting.         
40221...........  ......do........................  Textile waste: waste
                                                     cotton, rope, rags,
                                                     nec.               
40231...........  ......do........................  Wood scrap: woodpulp
                                                     waste, spent wood, 
                                                     waste bark.        
40251...........  ......do........................  Chemical or         
                                                     petroleum waste:   
                                                     spent acid,        
                                                     lubricating grease,
                                                     waste oil.         
40261...........  ......do........................  Rubber or plastic   
                                                     scrap, clippings or
                                                     trimmings.         
4029114.........  ......do........................  Municipal garbage   
                                                     waste, solid,      
                                                     digested and       
                                                     ground.            
4029176.........  ......do........................  Auto shredder       
                                                     residue.           
4111434.........  ......do........................  Bags, old: burlap,  
                                                     gunny, jute, or    
                                                     nec.               
4111580.........  ......do........................  Old bags for        
                                                     conversion into    
                                                     bale coverings.    
42111...........  ......do........................  Non-revenue mvmt. of
                                                     containers moving  
                                                     in reverse of      
                                                     loaded direction.  
42112...........  ......do........................  Non-revenue mvmt. of
                                                     shipping devices   
                                                     moving in reverse  
                                                     of loaded          
                                                     direction.         
42311...........  ......do........................  Revenue mvmt. of    
                                                     containers moving  
                                                     in reverse of      
                                                     loaded direction.  
                                                                        
                                                                        
                              * * * * * * *                             
------------------------------------------------------------------------

Sec. 1039.14  [Amended]

    3. Section 1039.14, paragraph (b)(5) is proposed to be amended by 
adding parentheses around the words ``other than iron and steel'', 
removing the period and adding the following words to the end of the 
sentence: ``to the extent not otherwise exempted from regulation.''
    4. Part 1145 is proposed to be revised to read as follows:

PART 1145--RAILROAD RATES ON RECYCLABLE COMMODITIES

Sec.
1145.1  Purpose.
1145.2  Definitions.
1145.3  Announcement of statutory cap levels.
1145.4  Initial challenge to individual movements.
1145.5  Treatment of contract rates.
1145.6  Regulation of recyclable rates.
1145.7  Commission review.
1145.8  Interest.
1145.9  Jurisdiction.

    Authority: 5 U.S.C. 553; 49 U.S.C. 10321, 10505, 10731, and 
10707a.


Sec. 1145.1  Purpose.

    This part establishes procedures to encourage shippers and carriers 
to negotiate directly with one another to secure mutually-satisfactory 
rates on recyclable commodities or, if such agreement cannot be 
reached, procedures to regulate rates on recyclable commodities in 
compliance with 49 U.S.C. 10731(e), and to afford relief, including 
liquidated damages, rate freezes, rate reductions, reparations and/or 
such other relief as may be deemed appropriate. The Commission will:
    (a) Determine annually the statutory cap levels to apply for the 
ensuing calendar year for individual Class I carriers, regions, and the 
nation;
    (b) Determine, in response to requests from either shippers or 
carriers for dispute resolution the applicable individual carrier ratio 
(in a single line move), or weighted average ratio (in a joint line 
move);
    (c) Adjudicate disputes over whether challenged rates comply with 
this part and whether any relief is warranted; and
    (d) Issue orders directing rate freezes, reductions, payments of 
reparations, and/or such other relief as may be deemed necessary to 
comply with this part.


Sec. 1145.2  Definitions.

    (a) Above-cap rate means a rate that produces a revenue/variable 
cost ratio above the Pertinent Statutory Cap Level, on an annual 
weighted average basis, using all movements of a particular recyclable 
commodity for a particular shipper between a specific origin and 
destination over a specified route in a full calendar year.
    (b) Annual Rate-Variable Cost Ratio means the ratio of the Weighted 
Average Rate to the Weighted Average Variable Cost.
    (c) Base Year means the calendar year before the year in which the 
movements that are the subject of a shipper challenge actually 
occurred.
    (d) Below-cap rate means a rate that produces a revenue/variable 
cost ratio equal to or below the Pertinent Statutory Cap Level, on an 
annual weighted average basis, using all movements of a particular 
recyclable commodity for a particular shipper between a specific origin 
and destination over a specified route in a full calendar year.
    (e) Challenge Year means the calendar year in which a shipper files 
a complaint with a carrier(s).
    (f) Complaint Year means the calendar year in which the movements 
that are the subject of a shipper challenge actually occurred.
    (g) Freeze Rate means:
    (1) A Transition Rate that has been found to be above the Pertinent 
Statutory Cap Level;
    (2) A non-Transition Rate that has been frozen at a level above the 
Pertinent Statutory Cap Level, but equal to or below 10 percentage 
points above the Pertinent Statutory Cap Level; or
    (3) A non-Transition Rate found to be more than 10 percentage 
points above the Pertinent Statutory Cap Level, reduced to 10 
percentage points above the Pertinent Statutory Cap Level, and frozen 
at that level.
    (h) Pertinent Statutory Cap Level means the cap ratio level that is 
computed for each individual carrier (if a single-line rate) or 
weighted average of the individual carrier ratios of participating 
carriers (if a through rate) for the Base Year.
    (i) Recyclable commodities, for purposes of this part, means 
recyclable material defined at 49 U.S.C. 10731(a)(1), other than 
recyclable or recycled iron or steel.
    (j) Statutory cap levels means the railroad revenue to variable 
cost ratio level referred to in 49 U.S.C. 10731(3), determined:
    (1) As a national ratio;
    (2) As regional ratios for the Eastern and Western regions;
    (3) As individual carrier ratios for each Class I railroad; and
    (4) As the weighted average of the individual carrier ratios for 
each carrier participating in a through movement over a specified 
through route, weighted by the proportion of the variable cost of the 
through movement accounted for by each participating carrier.
    (k) Ten percentage points above the statutory ratio means a rate 
that produces a revenue-variable cost ratio ten percentage points above 
the Pertinent Statutory Cap Level. For example, if the Pertinent 
Statutory Cap Level is 150 percent of variable cost, ten percentage 
points above the cap is 160 percent of variable cost.
    (l) Transition Rate means a Weighted Average Rate that has not been 
increased by more than the increase in the Rail Cost Adjustment Factor 
(Adjusted) since the Base Year.
    (m) Weighted Average Rate means the total paid for all movements of 
a particular recyclable commodity by a particular shipper between a 
specific origin and destination over a specified route in a full 
calendar year, divided by the total number of movements or units of 
shipment of that commodity for that shipper between the specific origin 
and destination over the specified route in that year, to produce an 
average charge per car, hundred weight, or other rate unit and an 
average weight per car.
    (n) Weighted Average Rate-Cost Ratio Cap means the Rate-Variable 
Cost Ratio Cap of each carrier participating in a through movement, 
multiplied by that carrier's percentage of the through movement 
Weighted Average Variable Cost, and summed for all carriers 
participating in the through movement.
    (o) Weighted Average Variable Cost means the sum of the variable 
cost of each movement of a particular recyclable commodity for a 
particular shipper between a specific origin and destination over a 
specified route in a full calendar year divided by the total number of 
movement units of that commodity for that shipper between the specific 
origin and destination over the specified route in that year.


Sec. 1145.3  Announcement of statutory cap levels.

    Each calendar year, as soon as the Commission can do so, and based 
on the latest cost and revenue data available, the Commission will 
state the statutory cap levels required to apply for the Complaint 
Year. These cap levels will be stated:
    (a) As a national ratio;
    (b) As regional ratios for the Eastern and Western regions; and
    (c) As individual carrier ratios for each Class I railroad (each 
non-Class I railroad will apply the regional ratio for the region in 
which its operations predominate).


Sec. 1145.4  Initial challenge to individual movements.

    (a) Shipper complaint to carrier. A shipper may institute a 
complaint if it asserts, with supporting evidence, that the rate-
variable cost ratio of a Weighted Average Rate charged for movements of 
a particular recyclable commodity from a specific origin to a specific 
destination over a specified single line or through route exceeded the 
Pertinent Statutory Cap Level.
    (1) Complaints to a carrier(s) shall be accompanied by sworn 
testimony, including cost evidence, either adjusted or unadjusted, 
using the Commission's personal computer-based Phase III URCS Costing 
Model (or a successor model), and evidence of a particular recyclable 
commodity shipments made or received within the Complaint Year over a 
specified route between a specific origin and destination.
    (2) Complaints to a carrier(s) must show that the Weighted Average 
Rate-Variable Cost Ratio exceeded the Pertinent Statutory Cap Level. In 
making the showing, a complaint shall use costs from the Base year, 
indexed to the Complaint Year. The statutory cap ratios shall be those 
computed by the Commission based on the data from the Base Year. Any 
rates charged pursuant to a written contract entered into pursuant to 
49 CFR 1145.5 shall not be included in the weighted average for 
purposes of calculating the Weighted Average Rate. The shipper must 
state with specificity the relief sought and the reasons and evidence 
supporting the shipper's claim for relief. The claim shall be served on 
each carrier participating in the moves not later than February 28th of 
the Challenge Year, by first class mail or express delivery, or by any 
other means agreed upon by shipper and carrier(s).
    (b) Carrier(s) reply to shipper's complaint. (1) If the carrier(s) 
agrees with the shipper's evidence, the carrier(s) shall reply to the 
complaining shipper in writing, stating its intention to enter into a 
settlement agreement for relief, as appropriate. The carrier(s) shall 
serve its reply on the shipper not later than April 30th of the 
Challenge Year by first class mail, express delivery, or by any other 
means agreed upon by shipper and carrier(s).
    (2) If the carrier(s) disagrees with the shipper's evidence, the 
carrier(s) shall file a reply, accompanied by sworn testimony, 
including cost evidence, either adjusted or unadjusted, using the 
Commission's personal computer-based Phase III URCS Costing Model (or a 
successor model), pointing out any errors in the data and calculations 
submitted to it by the shipper. The carrier(s) shall serve its reply on 
the shipper not later than April 30th of the Challenge Year by first 
class mail, express delivery, or by any other means agreed upon by 
shipper and carrier(s).
    (c) Shipper rebuttal. The shipper may file a rebuttal not later 
than May 30th of the Challenge Year by first class mail, express 
delivery, or by any other means agreed upon by shipper and carrier(s).
    (d) Settlement negotiations. Shipper and carrier(s) shall negotiate 
in good faith to reach a voluntary settlement of the issues in any 
complaint brought under this part.
    (1) Any settlement reached under this part shall be in writing and 
signed by a representative of both the shipper and the carrier(s) 
within 60 days of the last filing.
    (2) If shipper and carrier(s) do not reach a settlement within 60 
days of the last filing, then the shipper shall serve notice on the 
carrier(s) if it intends to submit the matter to the Interstate 
Commerce Commission for resolution, not later than August 10th of the 
Challenge Year, and both shipper and carrier(s) shall make a joint 
filing to the Commission of all written evidentiary material previously 
provided to the other party, with separate transmittal letters (not to 
exceed four pages) from the shipper and carrier(s) which shall state 
the relief requested but shall not include any new evidence, not later 
than August 31st of the Challenge Year.
    (e) The Commission shall determine whether the challenged rate 
exceeds the Pertinent Statutory Cap Level, and, if so, determine the 
appropriate remedy under this part.
    (f) Filings made under this part shall be prepared in a manner 
consistent with the rules of practice at 49 CFR parts 1100 through 1102 
and 1104.


Sec. 1145.5  Treatment of contract rates.

    Rates charged on movements pursuant to a rate contract executed in 
writing between a shipper and a carrier will not be included in 
calculating the annual Rate-Variable Cost Ratio of any shipper 
complaint about a recyclable rate. Movements made pursuant to ``rate 
quotations,'' ``exempt tariff circulars,'' or similar types of rate 
publications normally used for exempt traffic in lieu of published 
common carrier tariffs filed with the Commission pursuant to 49 U.S.C. 
10762, incorporating the terms of the Uniform Straight Bill of Lading, 
and used without other writing or agreement between the shipper and 
carrier for line haul service, shall not come within the definition of 
a contract under this section.


Sec. 1145.6  Regulation of recyclable rates.

    (a) Determination of whether a rate is a transition rate. (1) A 
shipper complaining to a carrier will compute the percentage increase 
in the RCAF between the third quarter of the year of the Complaint Year 
and the third quarter of the Base Year. If there has been a decline in 
the RCAF between two years, then the percentage increase shall be 
deemed to be zero.
    (2) A shipper complaining to a carrier will compute the percentage 
increase in the Weighted Average Rate between the Base Year and the 
Complaint Year. If there has been a decline or no change, then the rate 
of change shall be deemed to be zero.
    (3) If the percentage increase in the Weighted Average Rate in the 
Complaint Year over the Base Year is either zero or is less than or 
equal to the percentage increase in the RCAF, the rate in question is a 
Transition Rate. If the percentage increase is greater than the 
increase in the RCAF, the rate is not a Transition Rate.
    (4) For purposes of comparing rates in the Base Year with rates in 
the Complaint Year, the Weighted Average Rate per hundred weight or ton 
shall be used.
    (b) Shipper protection against increases in Transition Rates. (1) 
Upon shipper complaint showing that the Annual Rate-Variable Cost Ratio 
of a Weighted Average Rate that is a Transition Rate was above the 
Pertinent Statutory Cap Level, a Transition Rate will be frozen for the 
Challenge Year and that Freeze Rate will not be further increased via 
RCAF increases or otherwise.
    (2) Upon the shipper's complaint to the carrier in the next year, 
demonstrating that [the] Weighted Average Rate charged per hundred 
weight or ton exceeded the Freeze Rate and the Pertinent Statutory Cap, 
the shipper will be entitled to liquidated damages equal to the amount 
by which the Weighted Average Rate for the previous year exceeded the 
Freeze Rate for that year, multiplied by the quantity actually shipped.
    (3) If in any following year, the Weighted Average Rate produces a 
ratio that exceeds the pertinent Statutory Cap Level, but the rate is 
below an existing Freeze Rate, the existing Freeze Rate will remain in 
place for that year; however, if the Weighted Average Rate produces a 
ratio below the Pertinent Statutory Cap Level, or no showing is made 
that the rate produces a ratio above the Pertinent Statutory Cap Level, 
the rate is unfrozen.
    (c) Relief with respect to rates other than Transition Rates. (1) 
Upon a shipper's complaint to a carrier showing that the Weighted 
Average Rate has been increased above the Pertinent Statutory Cap 
Level, to a level less than or equal to ten percentage points above the 
Pertinent Statutory Cap Level in the previous year, the shipper shall 
be entitled to a Freeze Rate on the movement at that level for the year 
in which the challenge was filed with the carrier.
    (2) Upon a shipper complaint to a carrier showing that a Weighted 
Average Rate in the Complaint Year produced a ratio that was more than 
10 percentage points above the Pertinent Statutory Cap Level, the 
shipper shall receive as liquidated damages an amount equal to the 
difference between the Weighted Average Rate actually charged and the 
Weighted Average Rate that would have applied if the Rate had been at a 
level producing a ratio equal to 10 percentage points above the 
Pertinent Statutory Cap Level, multiplied by the quantity actually 
shipped, and a Freeze Rate for the next year will be set at that level 
equal to 10 percentage point above the Pertinent Statutory Cap.
    (3) Upon a shipper complaint to a carrier demonstrating that a 
Weighted Average Rate exceeded a Freeze Rate in the next Complaint 
Year, that shipper shall receive liquidated damages equal to the 
difference between the Weighted Average Rate and the Freeze Rate, and 
the Freeze Rate will remain in place for another year.
    (4) Upon shipper complaint to the carrier in a subsequent year 
showing that the Weighted Average Rate produced a ratio exceeding the 
Pertinent Statutory Cap Level, but was below an existing Freeze Rate, 
the existing Freeze Rate will remain in place for another year. If the 
Weighted Average Rate was below the Pertinent Statutory Cap Level, or 
no showing is made that it is above the Pertinent Statutory Cap Level, 
then the rate is unfrozen.
    (d) Treatment of through rates. (1) Once liquidated damages are 
determined to be owed, whether by agreement of shipper and carrier or 
by the Commission, the collecting carrier shall pay liquidated damages 
to the shipper for carriers for whom the carrier collected charges.
    (2) If the challenged rate is a combination of local or 
proportional rates or is a multiple independent factor through rate 
(MIFTR rate), no carrier whose local or proportional rate or MIFTR rate 
factor divided by the individual carrier's variable cost produces a 
rate-variable cost ratio below the individual carrier Pertinent 
Statutory Cap Level will owe liquidated damages, nor will that 
carrier's local or proportional rate or MIFTR rate factor be frozen. No 
carrier participating in a through movement will contribute a greater 
amount per hundred weight or ton shipped than the amount by which its 
Weighted Average Rate (or factor) exceeded the Weighted Average Rate 
set at the carrier's individual Pertinent Statutory Cap Level except 
that the carriers participating in the through rate will be jointly and 
severally liable to the shipper for the full amount of the damages 
suffered by the shipper.
    (e) In the event shipper and carrier(s) do not agree on whether a 
rate is a Transition Rate, the Pertinent Statutory Cap Level, the 
Weighted Average Rate, Weighted Average Variable Cost, or any other 
matter arising under these regulations, the shipper or carrier(s) may 
submit the dispute to the Commission for resolution pursuant to the 
regulations of this part.


Sec. 1145.7  Commission review.

    Four years after the regulations of this part are implemented, the 
Commission will institute a proceeding and invite comments from all 
interested parties on the operation of the regulations of this part, 
and whether the regulations of this part should be further revised. The 
Commission will review the record developed in the proceeding and take 
whatever action it deems to be required.


Sec. 1145.8  Interest.

    Interest on liquidated damages or on reparations ordered by the 
Commission pursuant to this part will be calculated in accordance with 
the Commission's regulations on interest, 49 CFR part 1141.


Sec. 1145.9  Jurisdiction.

    The Commission has regulatory jurisdiction over all rates on 
recyclable commodities subject to this part, and no showing of railroad 
market dominance is required. The provisions of this part shall not 
apply, however, to any non-ferrous recyclable commodity to the extent 
the Commission exempts it from maximum rate regulation.

[FR Doc. 94-20842 Filed 8-23-94; 8:45 am]
BILLING CODE 7035-01-P