[Federal Register Volume 61, Number 93 (Monday, May 13, 1996)]
[Proposed Rules]
[Pages 22014-22016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11716]



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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board

49 CFR Part 1185

[STB Ex Parte No. 543]


Revision of Regulations for Interlocking Rail Officers

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board (the Board) is seeking 
comments on proposed revisions to the regulations for authorization of 
interlocking rail officers and directors.

DATES: Comments on the proposed revisions are due June 3, 1996.

ADDRESSES: Send comments (an original and 10 copies) referring to STB 
Ex Parte No. 543 to: Surface Transportation Board, Office of the 
Secretary, Case Control Branch, 1201 Constitution Avenue, NW., 
Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-7513. [TDD for 
the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: Effective January 1, 1996, the ICC 
Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (the ICCTA) 
abolished the Interstate Commerce Commission (ICC) and established 
within the Department of Transportation the Board. Section 204 of the 
ICCTA provides that ``[t]he Board shall promptly rescind all 
regulations established by the [ICC] that are based on provisions of 
law repealed and not substantively reenacted by this Act.''
    Under the prior statute at 49 U.S.C. 11322, a person wishing to 
hold a position of officer or director of more than one rail carrier of 
any size was required to seek prior ICC authorization. The ICC, 
however, exercising its general exemption authority under former 49 
U.S.C. 10505, adopted rules at 49 CFR 1185 exempting from regulation as 
a class requests to assume the position of director or officer of a 
rail carrier while holding the position of director or officer of 
another rail carrier, except where both carriers are Class I railroads. 
Exemption--Certain Interlocking Directorates, 5 I.C.C.2d 7 (1988) 
(Interlocking Directorates). The class exemption does not apply to an 
individual who is an officer or director of a Class I carrier and who 
wishes to become an officer or director of another Class I railroad; 
that individual is required to file either an application (or petition 
for an individual exemption).
    The ICCTA revised the statute so that, under new 49 U.S.C. 11328, 
individuals seeking to hold the position of officer or director only of 
Class III railroads are no longer required to seek Board authorization, 
either through exemption or through affirmative approval. We propose to 
revise 49 CFR part 1185 to reflect this statutory change and to 
eliminate other unnecessary and redundant provisions. The changes would 
clarify that the class exemption applies exclusively to interlocking 
directorates that (a) Do not involve an officer or director of a Class 
I rail carrier who seeks to become an officer or director of another 
Class I rail carrier, and (b) do not involve only Class III rail

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carriers.1 The proposed rules would also make clear that, where 
the class exemption applies, it is not necessary to make a filing with 
the Board to invoke the exemption. See Southern Electric--Petition for 
Exemption--Construction of a Rail Line in Shelby Co., AL, Finance 
Docket No. 31498 et al. (ICC served Sept. 19, 1989).
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    \1\ All other ``interlocking directorates'' are exempted as a 
class by virtue of the decision of the ICC in Interlocking 
Directorates, supra. The Board proposes to expressly affirm and 
adopt that exemption.
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    The proposed revision would also update and clarify the term 
``carrier'' for purposes of administering the interlocking officer and 
director provisions of the statute. Former 49 U.S.C. 11322, and the 
current regulations at 49 CFR 1185.2, use the term ``carrier'' as 
defined at former 49 U.S.C. 11301(a)(1).2 New 49 U.S.C. 11328 does 
not separately define ``carrier.'' We note that the general definition 
of ``rail carrier'' in new 49 U.S.C. 10102(5) refers to a person 
providing common carrier railroad transportation ``for compensation,'' 
but not to a ``sleeping car carrier'' or ``a corporation organized to 
provide transportation.'' 3
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    \2\ The definition in former section 11301(a)(1) read:
    ``carrier'' means a rail or sleeping car carrier providing 
transportation subject to the jurisdiction of the Interstate 
Commerce Commission under subchapter I of chapter 105 of this title 
(except a street, suburban, or interurban electric railway not 
operated as part of a general railroad system of transportation), 
and a corporation organized to provide transportation by rail 
carrier subject to that subchapter. (Emphasis supplied.)
    \3\ Under new 49 U.S.C. 10102(5), rail carrier is defined as:
    a person providing common carrier railroad transportation for 
compensation, but does not include street, suburban,or interurban 
electric railways not operated as part of the general system of rail 
transportation[.]
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    In defining ``carrier'' for interlocking directorate purposes, we 
propose to exclude ``sleeping car carrier'' and to add ``for 
compensation.'' We also believe that, in the context of interlocking 
directorates, the term ``rail carrier'' should be interpreted to 
embrace corporations organized to provide transportation. Because an 
individual would need Board approval after a corporation becomes a 
carrier, we believe it is appropriate to allow an individual to obtain 
early Board consideration, thereby providing more commercial certainty. 
This would also benefit the Board, by giving us an earlier opportunity 
to analyze a potential interlocking officer position or directorate. We 
thus propose the following definition of rail carrier in our proposed 
rule 1185.1(d):

    A rail carrier means a person providing common carrier 
transportation for compensation (except a street, suburban, or 
interurban electric railway not operating as part of the general 
system of rail transportation), and a corporation organized to 
provide transportation by rail carrier.

    We also propose to change the requirements for the form of the 
application to comply with our rules of practice (proposed section 
1185.3). Finally, we seek specific comment on whether to include 
proposed section 1185.4, which would revise current 49 CFR 1185.9, 
General authority, pertaining to receipt of general authority to hold a 
directorship with subsidiary or affiliated companies. We question 
whether this provision is needed, because there are two other similar 
sections, proposed section 1185.5, Common control (currently section 
1185.10) and proposed section 1185.6, Jointly used terminal properties 
(currently section 1185.11).4 All three of these provisions 
concern interlocking directorships among carriers in an established 
system. See Governing Officers, 363 I.C.C. at 681 and 683.
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    \4\ In Revised Regulations Governing Officers, 336 I.C.C. 679 
(1970) (Governing Officers), the ICC issued rules, codified at 49 
CFR 1185.10 and 11, that would allow individuals to hold 
interlocking directorate positions with carriers lawfully operated 
under common control and to hold interlocking directorate positions 
with a carrier and a terminal railroad whose facilities are operated 
or used by the carrier jointly with other carriers.
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    The Board certifies that this rule, if adopted, would not have a 
significant economic effect on a substantial number of small entities. 
In response to the statutory change, this proposed rule will reduce 
regulation and it imposes no new reporting requirements on small 
entities. Requirements for the form of the application have been 
slightly modified to conform to the Board's rules of practice. The 
Board, however, seeks comments on whether there would be effects on 
small entities that should be considered.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

List of Subjects in 49 CFR Part 1185

    Administrative practice and procedure, Railroad.

    Decided: April 23, 1996.

    By the Board, Chairman Morgan, Vice Chairman Simmons, and 
Commissioner Owen.
Vernon A. Williams,
Secretary.

    For the reasons set forth in the preamble and under the authority 
of 49 U.S.C. 721(a), title 49, chapter X, part 1185 of the Code of 
Federal Regulations is proposed to be revised to read as follows:

PART 1185--INTERLOCKING OFFICERS

Sec.
1185.1  Definitions and scope of regulations.
1185.2  Contents of application.
1185.3  Procedures.
1185.4  General authority.
1185.5  Common control.
1185.6  Jointly used terminal properties.

    Authority: 5 U.S.C. 553 and 559; 49 U.S.C. 721, 10502, and 
11328.


Sec. 1185.1   Definitions and scope of regulations.

    (a) Under 49 U.S.C. 11328, authorization of the Board is required 
before a person may hold the position of officer or director of more 
than one rail carrier, except where only Class III carriers are 
involved. Board authorization is not needed for individuals seeking to 
hold the positions of officers or directors only of Class III 
railroads. 49 U.S.C. 11328(b).
    (b) When a person is an officer of a Class I railroad and seeks to 
become an officer of another Class I railroad, an application under 49 
U.S.C. 11328(a) (or petition for individual exemption under 49 U.S.C. 
10502) must be filed. All other ``interlocking directorates'' are 
exempt as a class from the prior approval requirements of 49 U.S.C. 
11328(a). For such interlocking directorates exempted as a class, no 
filing with the Board is necessary to invoke the exemption.
    (c) An ``interlocking directorate'' exists whenever an individual 
holds the position of officer or director of one rail carrier and 
assumes the position of officer or director of another rail carrier. 
This provision applies to any person who performs duties ordinarily 
performed by a director, president, vice president, secretary, 
treasurer, general counsel, general solicitor, general attorney, 
comptroller, general auditor, general manager, freight traffic manager, 
passenger traffic manager, chief engineer, general superintendent, 
general land and tax agent or chief purchasing agent.
    (d) For purposes of this part, a rail carrier means a person 
providing common carrier railroad transportation for compensation 
(except a street, suburban, or interurban electric railway not 
operating as part of the general system of rail transportation), and a 
corporation organized to provide such transportation.


Sec. 1185.2   Contents of application.

    (a) Each application shall state the following:

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    (1) The full name, occupation, business address, place of 
residence, and post office address of the applicant.
    (2) A specification of every carrier of which the applicant holds 
stock, bonds, or notes, individually, as trustee, or otherwise; and the 
amount of, and accurate description of, the securities, owned or held 
by him, of each carrier for which he seeks authority to act. (Whenever 
it is contemplated that the applicant will represent on the board of 
directors of any carrier securities other than those owned by him, the 
application shall describe such securities, state the character of 
representation, the name of the beneficial owner or owners, and the 
general nature of the business conducted by such owner or owners.)
    (3) Each and every position with any carrier which is held by the 
applicant at the time of the application; and which he seeks authority 
to hold, together with the date and manner of his election or 
appointment thereto and, if he has entered upon the performance of his 
duties in any such position, the nature of the duties so performed and 
the date when he first entered upon their performance. (A decision 
authorizing a person to hold the position of director of a carrier will 
be construed as sufficient to authorize him to serve also as chairman 
of its board of directors or as a member or chairman of any committee 
or committees of such board; and, therefore, when authority is sought 
to hold the position of director, the applicant need not request 
authority to serve in any of such other capacities.)
    (4) As to each carrier covered by the requested authorization, 
whether it is an operating carrier, a lessor company, or any other 
corporation organized for the purpose of engaging in rail 
transportation. (If any such carrier neither operates nor owns any 
railroad, transportation by which is subject to the Act, there shall be 
filed with the application, as a part thereof, a copy of such carrier's 
charter or certificate or articles of incorporation, with amendments to 
date. When such copy has once been filed with the former Interstate 
Commerce Commission (ICC) or with the Board, reference thereto, with 
amendments, if any, will suffice.)
    (5) Thereafter a full statement of pertinent facts relative to any 
carrier which does not make annual reports to the Board, authorization 
for a position with which is sought.
    (6) Full information as to the relationship, operating, financial, 
competitive, or otherwise, existing between the carriers covered by the 
requested authorization.
    (7) Every corporation--industrial, financial, or miscellaneous--of 
which the applicant is an officer or director, and the general 
character of the business conducted by such corporation.
    (8) The reasons, fully, why the granting of the authority sought 
will not affect adversely either public or private interests.
    (9) Whether or not any other application for authority has been 
made in behalf of the applicant and, if so, the date and docket number 
thereof, by who made, and the action thereon, if any.
    (b) When application has been made in behalf of any person, a 
subsequent application by him need not repeat any statement contained 
in the previous application but may incorporate the same by appropriate 
reference.


Sec. 1185.3   Procedures.

    The original application or petition shall be signed by the 
individual applicant or petitioner and shall be verified under oath. 
Petitions and applications should comply with the Board's general rules 
of practice set forth at 49 CFR part 1104. Applications or petitions 
may be made by persons on their own behalf.


Sec. 1185.4   General authority.

    Any person who holds or may seek specific authority to hold 
positions with a carrier may also request general authority to act as 
an interlocking officer for all affiliated or subsidiary companies or 
properties used or operated by the carrier, either separately or 
jointly, with other carriers. A carrier may apply for general authority 
on behalf of an individual who has already received authority to act as 
an interlocking officer. However, a carrier may not apply for general 
authority for an individual who holds a position with another railroad 
which is not an affiliate or subsidiary of the carrier or whose 
properties are not used or operated by the carrier, either separately 
or jointly with other carriers.


Sec. 1185.5   Common control.

    It shall not be necessary for any person to secure authorization 
under the foregoing provisions to hold the position of officer or 
director of two or more carriers, if such carriers are operated under 
common control or management, either:
    (a) Pursuant to approval and authority of the ICC granted under 
former 49 U.S.C. 11343-44 (repealed effective January 1, 1996) or by 
the Board granted under 49 U.S.C. 11323-24, or
    (b) Pursuant to an exemption authorized by the ICC under former 49 
U.S.C. 10505 (repealed effective January 1, 1996) or by the Board under 
49 U.S.C. 10502, or
    (c) Pursuant to a controlling, controlled, or common control 
relationship which has existed between such carriers since before June 
16, 1933.


Sec. 1185.6   Jointly used terminal properties.

    Any person holding the position of officer or director of a carrier 
is hereby relieved from the foregoing provisions to the extent that he 
may also hold a directorship and any other position to which he may be 
elected or appointed with a terminal railroad the properties of which 
are operated or used by the carrier jointly with other carriers.

[FR Doc. 96-11716 Filed 5-10-96; 8:45 am]
BILLING CODE 4915-00-P