[Federal Register Volume 61, Number 54 (Tuesday, March 19, 1996)]
[Proposed Rules]
[Pages 11174-11179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6546]



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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
49 CFR Parts 1105 and 1152
[STB Ex Parte No. 537]

Abandonment and Discontinuance of Rail Lines and Rail 
Transportation Under 49 U.S.C. 10903
AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The ICC Termination Act of 1995 revised the law governing 
applications by rail carriers to abandon or discontinue service over 
lines of railroad and related offers of financial assistance that would 
continue rail service after approval of abandonment or discontinuance 
by the Surface Transportation Board (Board). The Board proposes to 
revise part 1152 to implement the changes and to streamline and update 
the pertinent regulations and to make conforming changes to the 
environmental rules at part 1105.

DATES: Comments are due on May 3, 1996.

ADDRESSES: Send comments (an original and 10 copies) referring to STB 
Ex Parte

[[Page 11175]]

No. 537 to: Surface Transportation Board, Office of the Secretary, Case 
Control Branch, 1201 Constitution Avenue NW., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 927-5660. 
[TDD for the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: The ICC Termination Act of 1995, Pub. L. No. 
104-88, 109 Stat. 803 (ICCTA), enacted on December 29, 1995, abolished 
the Interstate Commerce Commission (ICC) and transferred the 
responsibility for economic regulatory oversight of rail 
transportation, including the proposed abandonment and discontinuance 
of rail lines, to a new Surface Transportation Board (Board). The 
transfer took effect on January 1, 1996. Section 204(b)(1) of the ICCTA 
provides that proceedings and applications pending before the ICC on 
January 1, 1996, insofar as they involve functions retained by the 
ICCTA, including abandonment proceedings and applications, shall be 
decided under the law in effect prior to January 1, 1996. Abandonment 
applications and proceedings filed on or after January 1, 1996, shall 
be decided under the law as revised in the ICCTA. Under section 204(a), 
regulations, including those at 49 CFR part 1152, issued by the ICC and 
effective as of January 1, 1996, shall remain in effect ``until 
modified, terminated, superseded, set aside, or revoked in accordance 
with law by the Board * * *.'' In this notice, the Board is proposing 
to revise part 1152 to implement the changes brought about by the ICCTA 
and to streamline and update the regulations. Included in the proposed 
revisions are deletions of obsolete references. While we are not 
proposing major revisions at this time to our environmental rules at 49 
CFR part 1105, or our Trails Act rules at 49 CFR 1152.29, we are 
proposing some notice and timing changes to those regulations in this 
proceeding, because the changes are directly related to our efforts to 
streamline and improve the abandonment process. For the same reason, we 
are proposing here some conforming changes to our procedures for 
handling abandonments exempted as a class, and petitions for individual 
abandonment exemptions, to reflect statutory changes resulting from the 
ICCTA.
    In the supplementary information portion of this notice, when 
referring to the provisions of the United States Code affected by the 
ICCTA, we use the word ``former'' to refer to sections of the law in 
effect prior to January 1, 1996, and the word ``new'' to refer to 
sections of the law in effect on and after January 1, 1996. In the 
proposed rules themselves, the section references are to the law in 
effect on and after January 1, 1996.

Availability

    The full text of the proposed rules is available to all persons for 
a charge by phoning DC News and Data, Inc., at (202) 289-4357. This 
represents a change from prior practice, but because of limited 
resources, we are no longer able to publish in full, or make available 
at no cost, the text of the proposed regulations.

Background

    The key changes brought on by the ICCTA, insofar as part 1152 is 
concerned, are found in new sections 10903 and 10904 (49 U.S.C. 10903 
and 10904). Implementation of these two sections is the focus of this 
notice of proposed rulemaking. New section 10903 (``Filing and 
procedures for application to abandon or discontinue'') has replaced 
former section 10903 (``Authorizing abandonment and discontinuance of 
railroad lines and rail transportation'') and former section 10904 
(``Filing and procedure for applications to abandon or discontinue''). 
New section 10904 (``Offers of financial assistance to avoid 
abandonment and discontinuance'') has replaced former section 10905 
bearing the same title.
    Revisions found in three other new sections bear directly on the 
procedures found in part 1152. New section 10905 (``Offering abandoned 
rail properties for sale for public purposes'') has replaced former 
section 10906 bearing the same title. New section 10907 (``Railroad 
development'') has replaced former section 10910 bearing the same 
title. New section 10502 (``Authority to exempt rail carrier 
transportation'') has replaced former section 10505 bearing the same 
title.
    New section 10903 retains the requirement that rail carriers may 
abandon or discontinue service only if the present or future public 
convenience and necessity require or permit the abandonment or 
discontinuance. The new section also generally preserves requirements 
for public notice and the opportunity for public participation in 
development of a record upon which abandonment and discontinuance 
applications will be decided. New section 10903 has not retained the 
specific processing timetable found in former section 10904, but new 
section 10904 (in preserving the opportunity in former section 10905 to 
offer financial assistance for continuation of rail service) has 
established a 4-month deadline after an application is filed for the 
submission of offers of financial assistance. In large part due to this 
4-month deadline, which would seem to dictate a Board decision on the 
abandonment before the submission of an offer of financial assistance, 
we are proposing a processing schedule for abandonment and 
discontinuance applications that would provide for a Board decision on 
the merits of an application in all cases before expiration of this 4-
month period.
    With the above-noted changes found in new sections 10903 and 10904 
central to our preliminary analysis, we are seeking public comments on 
proposed revisions to part 1152, which would establish a process and 
schedule to accommodate the new law. Not every specific change to the 
existing regulations will be discussed here, but we will highlight the 
most significant proposed changes, additions, and deletions.
    We view the ICCTA as reform legislation. As a result, we are taking 
this opportunity to examine, reform and streamline the existing rules 
and process. Our goal is to revise part 1152 to meet the letter and 
spirit of the ICCTA. We are proposing new procedures but propose to 
retain elements of the current part 1152 that are consistent with 
streamlining, expedited development of a record in each proceeding, and 
prompt decisionmaking. We have also attempted to update the regulations 
to improve notice to the public and ensure ample opportunity for full 
public participation early in our proceedings, which we believe will 
ultimately result in an expeditious resolution satisfactory to the 
interested parties. Finally, certain obsolete or otherwise unnecessary 
references are proposed for deletion. Because of the importance of 
proposing rules to implement the new law as soon as possible, we 
recognize that we may have overlooked some potential improvements or 
may have proposed to retain provisions or language that no longer 
serves a useful purpose. We therefore welcome public comments on these 
proposals, and on any other areas where changes might be made, to 
streamline our abandonment regulations further and to assist us in 
carrying out the will of the Congress in the most efficient manner 
possible.

Discussion

1. Uniform Schedule

    One of the major changes we are proposing here is a new uniform 
schedule for processing all abandonment applications within the

[[Page 11176]]
statutory parameters of new sections 10903 and 10904. While new section 
10903 does not contain the requirement of former section 10904(a)(1) 
that railroads file a ``notice of intent'' with the Board (previously, 
with the ICC), the new statute continues to require that rail carriers 
prepare, publicize, and serve on designated entities advance notice of 
an abandonment or discontinuance application. We view the notice as a 
critical step in meeting the new timeframes applicable to the 
abandonment process, because the notice apprises the public of proposed 
abandonments and ensures that potential concerns are brought to light 
at an early stage in the process and addressed. Because of these 
important benefits and because of the similarity in the handling of 
notice under the former and the new statute, we propose to retain the 
existing rules regarding notices of intent, including the requirement 
that an applicant serve its notice of intent on the board. As before, 
the notice of intent would be due no more than 30 days and no less than 
15 days before the application is filed. We are also proposing to 
update the list of entities due to receive the notice, including the 
addition of the Rails to Trails Conservancy and the National 
Association of Reversionary Property Owners, to provide the earliest 
possible notice that a particular right-of-way might be used as a 
trail, helping to assure more timely trail use requests, and to 
facilitate our meeting our trail use and rail banking responsibilities 
under the National Trails System Act, 16 U.S.C. 1247(d) (Trails 
Act).\1\ These responsibilities have not been altered by the new law.

    \1\ Someone interested in trail use could become a party in the 
abandonment proceeding by filing written comments or a protest. 49 
CFR 1152.25(a). Every document filed with us must be served on all 
parties to the abandonment proceeding. 49 CFR 1104.12(a).
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    As part of our effort to make conforming changes to our 
environmental rules, we are proposing to amend 49 CFR 1105.7 and 1105.8 
to require railroads to serve their environmental and/or historic 
reports on the required agencies at least 20 days prior to filing with 
us their application, petition for exemption, or notice invoking the 
class exemption.\2\ Furthermore, as discussed in more detail below, a 
Federal Register notice would be published at the beginning of the 
abandonment application process, which has not been the case in 
abandonments decided under former 49 U.S.C. 10903, or in petitions for 
exemption under former section 10505. In addition, to facilitate 
identification of the lines proposed for abandonment we propose to 
require that railroads identify lines proposed to be abandoned by 
United States Postal Service ZIP Codes.

    \2\ The earlier distribution would expedite the environmental 
review process (by giving participating agencies additional lead 
time to conduct their analysis and review) without being unduly 
burdensome on the railroads (which would be filing the same reports 
that are now required, only sooner). Also, because consulting 
agencies should be able to complete their review in a more timely 
manner, this timing change could reduce the number of environmental 
and historic conditions imposed in abandonment decisions.
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    To permit development of a sufficient public record in all cases 
within the statutory time frames of the ICCTA, we are proposing that 
applicants present their entire case with the application, that 
protestants submit their entire opposition case no later than 45 days 
after the application is filed, and that any reply by applicants be 
filed no later than 60 days after an application is filed. This would 
produce a complete record by the 60th day after the application is 
filed. We also propose that the Board's decision on the merits be 
served no later than 110 days after the application is filed (10 days 
before the latest date for filing offers of financial assistance). A 
final decision on the merits would normally be scheduled to take effect 
in 30 days (by day 140).
    We propose to have no appeal of right to the Board's decision on 
the merits, but instead to permit only petitions to reopen, in 
accordance with the procedures set out in the proposed rules. Changes 
to the rules regarding processing of offers of financial assistance 
have also been proposed to reflect the changes made in new section 
10904.
    We anticipate that the Board often would not need all of the time 
set out in the proposed schedule for issuance of a final decision on 
the merits, especially in those instances where there is little 
opposition to the application. Therefore, we want to make clear that, 
should final decisions be served before day 110, offers of financial 
assistance would be due 10 days after the service date of that decision 
rather than on day 120. We see the 4-month statutory deadline as an 
outer limit, which does not require us to delay resolution of 
proceedings where the entire time is not needed.
    We anticipate that the application (which would include the 
applicant's case in chief), the opposition case in chief, and a reply 
would constitute a sufficient record for a decision on the application 
in almost all instances. In some cases, however, it could be 
appropriate also to hold an oral hearing. To help us identify such 
cases as early as possible, we propose that any request for oral 
hearing be due to be filed no later than 10 days after the application 
is filed. (Given the proposed requirement that a notice of intent to 
file an application continue to be filed between 15 and 30 days before 
the application, this means that a person that would potentially seek 
an oral hearing would have notice of the application at least 25 days 
before the oral hearing request would be due.) We also propose that the 
Board would promptly decide by day 15 after the filing of the 
application whether to schedule an oral hearing so that a final 
decision by the Board on the merits of the application could be reached 
by day 110.
    Accordingly, we are proposing the following schedule for Board 
consideration and decisions in abandonment and discontinuance 
application proceedings from the time the application is filed until 
the time of the Board's decision on the merits:

Day 0--Application filed, including applicant's case in chief.
Day 10--Due date for oral hearing requests.
Day 15--Due date for Board decision on oral hearing requests.
Day 20--Due date for Notice of Application to be published in the 
Federal Register.
Day 45--Due date for protests and comments, including opposition case 
in chief, and for public use and trail use requests.
Day 60--Due date for applicant's reply to opposition case and for 
applicant's response to trail use requests.
Day 110--Due date for service of decision on the merits.
Day 120--Due date for offers of financial assistance, except that if an 
application has been granted by decision issued sooner than Day 110, 
the offer of financial assistance shall be due 10 days after service of 
the decision granting the application.

2. Federal Register Publication

    Former section 10905 required that grants of abandonment 
applications be published in the Federal Register to provide notice to 
persons who might wish to make offers of financial assistance, with the 
due date triggered by the Federal Register publication itself. The 
current rules at part 1152 reflect this requirement and embrace a 
process through which a grant of an abandonment application or a 
petition for exemption for abandonment is announced to the public 
through Federal Register publication at the time of the grant. We 
propose instead to publish notice of an abandonment application or a 
petition for an individual exemption for abandonment

[[Page 11177]]
20 days after the application or petition is filed. The notice would 
describe the abandonment proposal and advise the public that offers of 
financial assistance would be due 10 days after the application or 
petition is granted or 120 days after the application or petition is 
filed, whichever occurs sooner. And, the notice would advise that 
requests for public use and trail use conditions would be due 45 days 
after the application is filed, or 40 days after the petition is filed, 
as the case may be. We also propose that abandonment applicants and 
petitioners be required to file draft Federal Register notices that the 
Board might use to announce the filing. Under our proposal, there would 
be no further Federal Register publication if and when the application 
or petition is granted.
    We propose no change for the publication of Federal Register 
notices for the procedural timing of abandonments covered by the class 
exemption embraced in subpart F. We are, however, exploring the 
possibility of proposing a new class exemption, or broadening the 
existing class exemption, and would welcome either general or specific 
public suggestions on whether and how to do so. Comments on this issue 
may be filed in this proceeding or by a separate request for new rules 
relating to the class exemption. We anticipate that any suggested 
changes to the class exemption proposed by participants in this 
proceeding would be the subject of further public comment before the 
adoption of any final substantive changes to the class exemption.

3. System Diagram Maps

    The new law retains the requirement that rail carriers prepare, 
file, and amend, as appropriate, system diagram maps that identify 
lines that are, or soon will be, the subject of an abandonment 
application. We are proposing several changes to part 1152 regarding 
the system diagram maps intended to eliminate unnecessary regulatory 
and paperwork burdens. First, because of the potential burden on small 
carriers related to preparing and filing these maps, we propose to 
require only Class I and Class II railroads to prepare and file them. 
Second, in lieu of the annual filing of these maps, which is now 
required, we are proposing a one-time filing of a complete and current 
set of maps within 60 days of the effective date of these regulations. 
While the railroad would continue to have to revise its maps when 
changing the category of its lines, we propose generally to leave it to 
the carrier to determine when changes have been extensive enough to 
warrant the filing of a new, completely updated system diagram map. We 
would, however, retain the discretion to require a carrier to file an 
updated system diagram map if that became necessary (i.e., because of a 
need to have a clear, usable map available for public planning 
purposes). Third, we propose to require only three (instead of six) 
copies whenever a system diagram map or an update is filed.
    We also propose to reject an abandonment application of a Class I 
or Class II railroad for a line that has not been identified on a 
system diagram map in category 1 (all lines or portions of lines which 
the carrier anticipates will be the subject of an abandonment or 
discontinuance application to be filed within the 3-year period 
following the date upon which the diagram, or any amended diagram, is 
filed with the Board) for at least 30 days. New section 10903 no longer 
prohibits the grant of an abandonment application for a line that has 
not been identified in category 1 for at least 4 months and where the 
abandonment faces significant opposition, but we believe that 
Congressional retention of the system diagram map requirement indicates 
a desire on the part of the Congress to provide some time for advance 
planning by shippers and state and local governments in the face of 
impending abandonments. We believe that a period of 30 days for 
identification on a system diagram map in category 1 would be adequate 
to meet planning needs.

4. Summary Application

    Because we are proposing one uniform, streamlined process for all 
applications, we propose to delete the ``Summary Application'' 
provisions.

5. Abandonment Procedures for Bankrupt Railroads

    Because our proposed streamlined process and regulations would pare 
back the filing requirements for all applications, we see no need for 
the separate procedures in subpart E for bankrupt railroads. Therefore, 
we propose to delete subpart E. We do propose, however, to include as 
special provisions for bankrupt railroads in the general abandonment 
procedures the requirements that abandonment applications filed by 
bankrupt railroads, and protests or other public responses to the 
applications, be filed with the bankruptcy court; that Board decisions 
or reports on abandonment applications by bankrupt railroads be filed 
with the bankruptcy court; and that special processing schedules would 
be established to meet court deadlines, so long as a reasonable period 
of time is allowed to obtain public responses and build a record in an 
abandonment application by a bankrupt railroad.

6. Due Dates for Filing Public Use Requests and Trail Use Requests

    Our proposals for filing of public use and trail use requests 
reflect our interest in compiling a full record for disposition as 
early as possible. In abandonment applications, we are proposing that 
trail use requests and public use requests be filed at the same time as 
protests and other written comments (within 45 days after the 
application is filed). A railroad applicant would then be required to 
respond regarding willingness to negotiate for trail use within 15 days 
(or within 60 days after the application is filed). For abandonments 
covered by the class exemption for out-of-service lines, we propose to 
continue to require trail use/rail banking requests to be filed within 
10 days after Federal Register publication of the exemption and public 
use requests to be filed within 20 days after Federal Register 
publication. For petitions for individual exemption, we propose to 
require that trail use/rail banking requests and public use requests be 
filed within 20 days after Federal Register publication of the notice 
of the filing of the petition (40 days from the filing for the 
petition). For both class exemptions and petitions for exemptions, we 
propose to require the rail carrier to respond to trail use/rail 
banking requests within 10 days after the request is filed.

7. Notice of Consummation

    Although the practice was never codified, until 1984 the ICC 
required a railroad to send the agency a letter confirming that it had 
consummated, or fully exercised, an abandonment within 1 year after the 
abandonment was authorized.3 Since then, some carriers have 
continued to send in these letters. Moreover, the courts have 
considered these letters in determining whether a line is still part of 
the interstate rail network, and thus available for trail use under 16 
U.S.C. 1247(d), or public use under former 49 U.S.C. 10906 (now 49 
U.S.C. 10905).

    \3\ An ICC (and now Board) decision authorizing abandonment is 
not a compulsory order, but rather permissive authority that the 
railroad may or may not decide to exercise. The railroad may, in 
fact, resume operations on a line that has been authorized for 
abandonment, and thereby retain that line in common carrier service 
without further approval from us.
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    In recent years, an increasing amount of ICC staff resources have 
been devoted to determining whether or not a

[[Page 11178]]
railroad's actions demonstrated an intent to consummate an abandonment. 
There also have been a significant number of court challenges involving 
this issue, particularly by landowners alleging that the ICC had lost 
jurisdiction over the property by the time a trail condition was 
imposed.
    To help clarify the consummation issue, conserve the Board's 
limited resources, and be fair to landowners, trail groups, the 
railroads, and the public, we propose to include in our new rules a 
requirement that carriers file with the Board a notice of consummation, 
once they intend to fully abandon the line (i.e., to discontinue 
operations, salvage the track, and intend that the property be removed 
from the interstate rail network). We have not proposed a deadline for 
filing, however, because carriers may want to hold open the possibility 
that new shippers will seek rail service or that the right-of-way could 
be used as a trail, subject to rail banking. Nor have we proposed a 
penalty for not filing notices of consummation. But under our proposal, 
notices that are filed would be deemed conclusive on the point of 
consummation if there are no legal or regulatory barriers to 
consummation (i.e., outstanding conditions). If no notice of 
consummation of abandonment has been filed, we would continue to look 
at the other facts and circumstances to determine if consummation of 
the abandonment had occurred.

8. Certificates of Abandonment

    The new law does not appear to require that ``certificates'' be 
issued when abandonment applications are granted. As a result, we 
propose to dispense with the issuance of certificates and will instead 
simply issue ``decisions granting'' an application. Our proposed rules, 
however, continue to refer to ``Certificates of Interim Trail Use or 
Abandonment'' in the trail use context in part to distinguish an 
application proceeding from an exemption proceeding. Public comments 
are welcome on whether we can or should similarly dispense with use of 
the ``certificate'' label in that context.

9. Contents of the Application

    As previously noted, we propose to require applicants to submit 
their entire case as part of the application. Applicants would have to 
include all relevant workpapers and supporting documents with each 
application. We are, however, also proposing significant reforms 
regarding application data requirements, as explained below.
a. Service Data
    We are proposing to streamline the requirements for abandonment 
applications by excluding all branch line (line proposed for 
abandonment) service data for time periods prior to the Base Year 
period, with the exception of data on changes in train service. The 
current regulations require data for the 2 preceding calendar years and 
that portion of the current calendar year for which data are available. 
This change had been proposed by the ICC in a notice of proposed 
rulemaking in Abandonment Proceedings: Elimination of the Revenue and 
Cost Data for All Years Prior to the Base Year Period, Ex Parte No. 274 
(Sub-No. 26) (ICC served Nov. 9, 1992), to reduce the reporting burden 
on the carriers. Favorable comments were received but a final rule was 
never issued. We propose to incorporate this change here for inclusion 
in final Board regulations. The revised regulations, if adopted, would 
not include any data for periods prior to the Base Year, except as 
noted above.
    We are also proposing changes to the service data required to be 
provided in three specific areas. First, the carload data on the line 
would have to show only the total carloads for each commodity group. 
Second, data pertaining to overhead or bridge traffic would have to be 
included only if the serving carrier will not retain this traffic after 
approval of the abandonment. Finally, only changes in train service in 
the last 2 years (instead of the last 5 years) would need to be 
discussed.
b. Financial Data
    We also propose to exclude computations for the revenue and cost 
data developed for the branch line for the prior 2 calendar years and 
any portion of the current year. Revenue and cost data would be 
computed only for the Base Year, Forecast Year, and Subsidy Year. These 
changes also had been proposed in the ICC's rulemaking in Ex Parte No. 
274 (Sub-No. 26).
    We also propose to delete the requirements that the impact of the 
abandonment on the carrier's net railway operating income (NROI) for 
the past 2 calendar years be developed, and that the impact on the NROI 
of other carriers operated under common control of the abandoning 
railroad be submitted. In addition, we propose to delete the 
requirement that the railroad's balance sheet and income statements be 
filed.
c. Other Application Changes
    We propose to delete the requirements that the carrier identify in 
detail the sources of alternate transportation available and describe 
its efforts to solicit traffic on the line. Instead, we would require 
only a general description of alternative transportation sources. We do 
not believe that it is the responsibility of the carrier to identify 
all of the options available to the shippers on the line. Most, if not 
all, of these are already known and/or used by the shippers. Moreover, 
the carrier would no longer be required to describe its efforts to 
solicit traffic on the branch line in every case. Rather the carrier 
could provide a description of its efforts if it believes that the 
information would aid its case regarding potential increases in traffic 
claimed by protestants or regarding claims of deliberate downgrading.

10. Offers of Financial Assistance

    In addition to the time limits previously discussed, new section 
10904 contains other changes for handling offers of financial 
assistance. To begin the negotiation process now, we need only find 
that the offeror is a financially responsible person, and we propose to 
revise our rules accordingly. Under new section 10904, the Board has 30 
days, rather than 60 days as before, from the date requested to issue a 
decision establishing the conditions and amount of compensation for the 
purchase or subsidy of the line. To meet the new deadline, we propose 
to require the requesting party to submit its case in chief at the time 
it makes its request and to serve the other party(ies) with a copy by 
overnight mail. The other party(ies) would have 5 days from the date of 
filing to file a reply. As before, our rules would automatically stay 
the effective date (or revoke as necessary for a class exemption) of 
the underlying abandonment decision. The rules would also continue to 
provide that, if a request to set terms and conditions is not made to 
the Board, a decision making the underlying abandonment approval (or 
exemption) effective would be served within 10 days of the due date for 
making the request.
    New section 10904 also contains an important limit on the Board's 
involvement with financial assistance in the form of an operating 
subsidy. The statute now places a 1-year limit on subsidies imposed by 
the Board, unless otherwise mutually agreed by the parties. As a 
result, under our proposed rules, subsidy agreements imposed by the 
Board would end after 1 year. Beyond this period any subsidy would

[[Page 11179]]
be strictly a contractual agreement between the carrier and the 
subsidizer without the involvement of the Board.
    Also regarding subsidies, we propose that the rules continue to 
provide for interim financial status reports, as presently included in 
the abandonment regulations. However, with certain exceptions, the 
subsidizer's final responsibility would be limited to a maximum of 15% 
over the agreed-to amount of the operating subsidy. The exceptions 
would be: (1) If the subsidizer is notified of a higher amount within 
the first 10 months of the agreement; or (2) the increase results from 
an expense that has been preapproved by the subsidizer. We believe that 
limiting potential liability in this fashion would provide needed 
certainty for a party that wishes to subsidize operation of a line 
approved for abandonment.

11. Return on Investment

    Past experience with the rules for establishing return on 
investment has resulted in the identification of several problem areas. 
To address these problems, we are proposing changes regarding the 
determination of the net liquidation value (NLV) of road properties on 
the branch line, a component used in calculating return on investment. 
These changes involve the inclusion of assets with negative net salvage 
values, adjustments to right-of-way land values, and the bases used to 
value right-of-way land.
a. Negative Salvage Values
    There are instances where the cost to remove and dismantle a 
particular asset on the branch line is higher than its resale value. 
This occurs most frequently with bridges where the cost of removal 
exceeds the market value of the salvaged materials. The Board proposes 
that these assets be included if the asset would actually be removed 
for whatever reason. For example, as a result of an abandonment 
approval, municipal zoning requirements or the land use regulations of 
a state or other governmental agency may require that a structure be 
removed or torn down. This is the type of situation where the inclusion 
of a negative net salvage value is proper. Another instance where 
inclusion might be appropriate would be when the carrier decides on its 
own to dismantle the structure even though it is not required to do so.
b. Adjustments to Land Values
    In abandonment proceedings, land values are often reduced below 
their fair market value. This reduction results from imputed real 
estate commissions, selling expenses, or discounting the present value 
of the land due to a projected sell-off period of 1 or more years. In 
past ICC cases, there has oftentimes been a lack of support for these 
types of reductions to the land value. Accordingly, our proposed 
regulations emphasize the need for parties adequately to support and 
explain any adjustments. Without the necessary support and explanation, 
we will reject these adjustments.
c. Bases for Valuing Land
    There are several methodologies acceptable for appraising right-of-
way land acreage. The methodology most frequently used is the ``across-
the-fence'' (ATF) method. This procedure estimates the values of the 
surrounding land parcels using recent comparable sales, and then 
adjusts them to reflect the physical and economic characteristics of 
the specific parcels appraised.
    In the past, parties have sometimes failed to support the 
application of unadjusted ATF values to value railroad rights-of-way. 
Differing physical characteristics such as elevation, grading and 
drainage would warrant some adjustment to the ATF value. Therefore, we 
propose, at a minimum, that some explanation be given as to why no 
adjustment is necessary. Conversely, some parties have made adjustments 
to the ATF value to arrive at right-of-way values without explaining 
the nature of the adjustments. We propose to require justification for 
the use of either unadjusted or adjusted ATF values for land acreage on 
the railroad right-of-way.

12. Holding Gains and Losses

    Holding gains and losses are computed for freight cars, 
locomotives, and road property accounts. Currently, parties may 
determine the holding gain or loss for the particular type of asset or 
parties may use the Gross National Product (GNP) Implicit Price 
Deflator rate. The GNP deflator is published by the U.S. Department of 
Commerce, Bureau of Economic Analysis (Commerce).
    In 1991, Commerce introduced a comprehensive revision of the 
national income and product accounts, including a shift to the use of 
the Gross Domestic Product (GDP), rather than the GNP, as the primary 
measure of production. The GDP is similar to the GNP, but covers only 
goods and services produced in the United States. The GDP is generally 
regarded as a better indicator of the performance of this country's 
economy.
    We propose to include the GDP deflator as the alternate basis of 
estimating the holding gain or loss in rail abandonment and subsidy 
proceedings in our new rules. This would bring our rules in line with 
the current measures used at Commerce, which has concluded that the GDP 
is ``the appropriate measure'' for most short-term monitoring of the 
U.S. economy.

13. Appendix Listing of Carriers and AB Numbers

    We propose to delete the Appendix to part 1152 that lists carriers 
and their assigned AB numbers. We preliminarily conclude that the list 
serves no useful purpose. Interested persons could instead contact the 
Board's Office of the Secretary if they have a need to ascertain a 
particular carrier's assigned AB number.

Small Entities

    The Board certifies that these regulations, if adopted, would not 
have a significant economic effect on a substantial number of small 
entities. The Board seeks comment on whether there would be effects on 
small entities that should be considered. If comments provide 
information that there would be significant effects on small entities, 
the Board will prepare a regulatory flexibility analysis before 
adopting final regulations.

Environmental Finding

    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

List of Subjects

49 CFR Part 1105

    Environmental impact statements, Reporting and recordkeeping 
requirements.

49 CFR Part 1152

    Administrative practice and procedure, Conservation, Environmental 
protection, National forests, National parks, National trails system, 
Public lands-grants, Public lands-rights-of-way, Railroads, Recreation 
and recreation areas, Reporting and recordkeeping requirements.

    Decided: March 13, 1996.

    By the Board, Chairman Morgan, Vice Chairman Simmons, and 
Commissioner Owen. Vice Chairman Simmons commented with a separate 
expression.
Vernon A. Williams,
Secretary
[FR Doc. 96-6546 Filed 3-18-96; 8:45 am]
BILLING CODE 4915-00-P