[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Notices]
[Pages 42676-42677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20915]


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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board 1
[Section 10706(a)(5)(A) Application No. 11]


Carbon Black Producers Pooling Agreement

AGENCY: Surface Transportation Board.

    \1\ The ICC Termination Act of 1995, Pub. L. No. 104-88, 109 
Stat. 803 (ICCTA), which was enacted on December 29, 1995, and took 
effect on January 1, 1996, abolished the Interstate Commerce 
Commission (ICC) and transferred certain functions and proceedings 
to the Surface Transportation Board (Board). Section 204(b)(1) of 
the ICCTA provides, in general, that proceedings pending before the 
ICC on the effective date of that legislation shall be decided under 
the law in effect prior to January 1, 1996, insofar as they involve 
functions retained by the ICCTA. This notice relates to a proceeding 
that was pending with the ICC prior to January 1, 1996, and to 
functions that are subject to Board jurisdiction pursuant to 49 
U.S.C. 10706(a)(5)(A). Therefore, this notice applies the law in 
effect prior to the ICCTA, and citations are to the former sections 
of the statute, unless otherwise indicated.
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ACTION: Notice of filing of agreement and request for comments.

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SUMMARY: On May 23, 1996, Degussa Corp. and Columbian Chemicals Company 
(applicants) supplemented the application they originally filed on 
December 27, 1995, seeking approval of a shipper agreement under 49 
U.S.C. 10706(a)(5)(A). Under the proposed agreement, applicants and any 
other participating carbon black producers would be permitted: (1) To 
discuss among themselves issues relating to the compensation railroads 
pay for use of producer-owned or leased cars, and to the producers' 
cost of car ownership and operation; and (2) to pool the freight cars 
they use to transport carbon black. The Board seeks public comment 
prior to acting on the application.

DATES: Comments must be filed by September 16, 1996, and applicants may 
file a reply by October 7, 1996.

ADDRESSES: Send pleadings referring to Section 10706(a)(5)(A) 
Application No. 11 to: (1) Surface Transportation Board, Office of the 
Secretary, Case Control Branch, 1201 Constitution Avenue, NW., 
Washington, DC 20423; and (2) Charles A. Spitulnik and Alicia M. 
Serfaty, Hopkins & Sutter, 888 16th Street, NW., Washington, DC 20006.

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

SUPPLEMENTARY INFORMATION: Under 49 U.S.C. 10706(a)(5)(A), shippers 
must obtain Board approval of any agreements to discuss among 
themselves the compensation to charge rail carriers for the use of 
privately owned or leased freight cars. The Board will approve an 
agreement only if it furthers the rail transportation policy of 49 
U.S.C. 10101a. When necessary, additional conditions may be imposed by 
the Board to further that policy. If an agreement is approved, the 
antitrust laws do not apply to parties and other persons with respect 
to the making and carrying out of the agreement.
    Under Shippers Equitable Compensation Action Committee, 365 I.C.C. 
939 (1982) (SECAC), collective agreements for shippers, at a minimum, 
must contain three basic safeguards to be found consistent with the 
public interest: (1) an unrestricted guarantee of the right of 
independent action by both members and non-members; (2) a requirement 
for open meetings with a correlative requirement for reasonable notice 
to members and other interested noncarrier owners or rail cars lessees; 
and (3) a requirement for formal recordkeeping of all meetings by 
transcript or sound recording.2
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    \2\ See American Petroleum Institute, Section 10706(a)(5)(A) 
Application No. 4 (ICC served Nov. 18, 1982, and July 22, 1983); 
Chemical Manufacturers Association, 367 I.C.C. 290 (1983); Institute 
of Shortening and Edible Oils, Inc., Section 10706(a)(5)(A) 
Application No. 6 (ICC served Mar. 22 and Dec. 7, 1983); and U.S. 
Clay Producers Traffic Association, Inc., Section 10706(a)(5)(A) 
Application No. 10 (ICC served Mar. 21, 1985).
     These are the same standards and requirements that are applied 
to rail carrier rate bureau applications. See Western Railroads--
Agreement, 364 I.C.C. 1 (1980).
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    In a decision served April 3, 1996, we held this proceeding in 
abeyance to give

[[Page 42677]]

applicants an opportunity to incorporate these basic SECAC safeguards 
into their application, agreement, and by-laws. Additionally, we 
directed applicants to clarify whether they were seeking approval for 
the pooling aspects of the proposed agreement, and, if they were, we 
asked them to address: (1) the substantive scope of an approval under 
section 10706(a)(5)(A); 3 and (2) whether our authority under 49 
U.S.C. 11342 to approve pooling agreements extends beyond rail carrier 
agreements.4
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    \3\  We noted that, in Western Railroads--Agreement, 1 I.C.C.2d 
131, 133 n.3 (1984), the ICC, in addressing the scope of the 
immunity it could grant, stated:
     The statute, in 49 U.S.C. 10706(a)(5)(A), provides for immunity 
under approved agreements between shippers to discuss the 
compensation to be paid shippers by rail carriers for use of rolling 
stock owned or leased by the shippers. It does not, however, provide 
immunity to shipper associations for other activities or for the 
discussion of rates generally.
    \4\  We noted that, in The Baltimore and Ohio Railroad Company, 
Et Al.--Pooling of Car Service Regarding Multi-Level Cars, Finance 
Docket No. 29653 (Sub-No. 4) (ICC served Apr. 26, 1988), the ICC 
found that its authority did not extend beyond rail carriers. There, 
the railroad pool members requested an exemption from 49 U.S.C. 
11342 to permit them to amend their agreement to include a Shipper 
Executive Committee within the existing pool management structure. 
The request was dismissed for lack of jurisdiction either to approve 
the proposed amendment or to exempt it from regulation. The decision 
specifically noted that, while the dismissal did not preclude the 
formation of a shipper committee, the shipper committee would not be 
immunized from the antitrust laws.
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    In their supplemental filing, applicants state that the proposed 
agreement was revised to comply fully with the SECAC standards and 
procedural requirements. As to the pooling aspects of the proposed 
agreement, applicants acknowledge that 49 U.S.C. 11342 is limited to 
approving agreements between or among carriers. Asserting that they 
seek approval under 49 U.S.C. 10706(a)(5)(A), and not under section 
11342, applicants state that their application referred to section 
11342 only to compare the benefits of coordination that are available 
to carriers with the benefits coordination would make available to 
applicants.
    Applicants state that the primary objective of the proposed freight 
car pool is to eliminate the costly and inefficient 100% empty car 
return practice that characterizes the rail movement of carbon black 
and has become embedded in the overall rate structure (including car 
compensation) that applies to the movement of carbon black in producer-
owned and leased cars. While acknowledging that activities under the 
proposed pool may resemble those of a typical rail pool, applicants 
contend that these activities in fact differ because they are integral 
to the producers' ability to discuss among themselves car compensation 
rates and the specific factors (including utilization and maintenance) 
that affect these rates. Accordingly, applicants state that they seek, 
and maintain that the Board may issue, approval and antitrust immunity 
for all of the activities set forth in the proposed agreement, 
including those related to the proposed freight car pool.5
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    \5\  The agreement calls for a pooled fleet of freight cars to 
move carbon black. The pool is to be managed and distributed by a 
Pool Operator who is charged with seeking optimal operating 
efficiency, consistent with the equitable treatment of all pool 
participants. A car contribution plan is to be devised, and rules, 
procedures, and formulas are to be developed to govern: (1) either 
the calculation and processing of allowances or the collection and 
distribution of compensation; and (2) the apportionment of 
maintenance and repair expenses.
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    Interested persons are invited to comment on whether the Board may 
approve the proposed agreement, under 49 U.S.C. 10706(a)(5)(A), and 
whether approval will confer antitrust immunity on the agreement's 
pooling aspects, or whether approval can or should be granted under 49 
U.S.C. 11342 to make available the antitrust immunity conferred by 49 
U.S.C. 11341(a). Also, comments are invited on the proposed agreement, 
as revised, with special attention to the following issues and how they 
may be affected if the proposed freight car pool is, or is not, 
immunized from the antitrust laws:
    (1) How will the agreement further the rail transportation policy 
of 49 U.S.C. 10101a?
    (2) Are there any anticompetitive effects that may result from the 
agreement?
    (3) Are any additional safeguards necessary to ensure that the 
agreement will not have undesirable anticompetitive effects or suppress 
competition among pool members?
    (4) What other matters should the Board consider in determining 
whether to approve the agreement?
    Copies of the original and revised applications under 49 U.S.C. 
10706(a)(5)(A) may be obtained free of charge by contacting applicants' 
representatives. In the alternative, the applications may be inspected 
at the offices of the Surface Transportation Board, Room 1221, during 
normal business hours. [Assistance for the hearing impaired is 
available through TDD service on (202) 927-5721.]
    While it does not appear that this action will have a significant 
effect on the quality of the human environment or conservation of 
energy resources, comments on these issues are also invited.
    A copy of this notice will be served on the: (1) Department of 
Justice, Antitrust Division, 10th Street & Pennsylvania Avenue, N.W., 
Washington, DC 20530; (2) Federal Trade Commission, Bureau of 
Competition, 6th Street & Pennsylvania Avenue, N.W., Washington, DC 
20580; and (3) Department of Transportation, 400 Seventh Street, S.W., 
Washington, DC 20590.

    Authority: 49 U.S.C. 10706(a)(5)(A).

    Decided: August 1, 1996.

    By the Board, Chairman Morgan, Vice Chairman Simmons, and 
Commissioner Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 96-20915 Filed 8-15-96; 8:45 am]
BILLING CODE 4915-00-P