[Federal Register Volume 62, Number 58 (Wednesday, March 26, 1997)]
[Proposed Rules]
[Pages 14385-14388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7663]



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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1002 and 1108

[STB Ex Parte No. 560]


Arbitration of Certain Disputes Subject to the Statutory 
Jurisdiction of the Surface Transportation Board

AGENCY: Surface Transportation Board (Board).

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this proceeding, the Board is seeking public comments on 
proposed rules recommended by the Railroad-Shipper Transportation 
Advisory Council (RSTAC) that would provide a means for the binding, 
voluntary arbitration of certain disputes subject to the statutory 
jurisdiction of the Board.

DATES: Written comments on the proposed rules must be filed with the 
Board no later than April 25, 1997.

ADDRESSES: An original and 10 copies of all documents must refer to STB 
Ex Parte No. 560 and must be sent to the Office of the Secretary, Case 
Control Unit, ATTN: STB Ex Parte No. 560, Surface Transportation Board, 
1925 K Street, NW., Washington, DC 20423-0001, and serve a copy on each 
member of the Railroad-Shipper Transportation Advisory Council, as 
follows:

Mr. Randy G. Craver, Manager of Transportation, Coastal Coal Sales, 
Inc., P.O. Box 1871, Roanoke, VA 24008
Mr. Jarvis Haugeberg, General Manager, BTR Farmers Co-Op, P.O. Box 158, 
Churches Ferry, ND 58325
Mr. Jim Johnson, Traffic Manager, Empire Wholesale Lumber Co., P.O. Box 
249, 162 Gault Street, Akron, OH 44309
Mr. Kevin D. Kaufman, Vice President, Louis Dreyfus Corporation, 10 
West Port Road, Wilton, CT 06897-0810
Mr. Ronald A. Lane, Vice President and General Counsel, Illinois 
Central Corporation, 455 N. Cityfront Plaza, Chicago, IL 60611
Mr. Anthony Lomangino, President, Waste Management of New York, 123 
Varic Avenue, Brooklyn, NY 11237
Ms. Kimberly Madigan, Director, Emons Transportation Group, 122 C 
Street, NW., Suite 850, Washington, DC 20001
Mr. John H. Marino, President and COO, RailAmerica, Inc., 1800 Diagonal 
Road, Suite 150, Alexandria, VA 22314
Mr. James W. McClellan, Vice President-Strategic Planning, Norfolk 
Southern Corporation, 3 Commercial Avenue, Norfolk, VA 23510
Mr. J.C. ``Pete'' McIntyre, President and CEO, Dakota, Minnesota & 
Eastern Railroad Corporation, P.O. Box 178, Brookings Rd., SD 57066
Mr. Fred Simpson, Executive Vice President, Montana Rail Link, Inc., 
101 International Way, P.O. Box 8779, Missoula, MT 59807
Mr. Gregory T. Swienton, Senior Vice President, Coal and Agriculture 
Commodities Business Unit, Burlington Northern Santa Fe Corporation, 
Fort Worth, TX 76161-0051
Mr. Edwin E. Vigneaux, Manager, Rail Transportation, Reagent Chemical & 
Research, Inc., 1300 Post Oak Blvd., Suite 680, Houston, TX 77056
Ms. Sheryl W. Washington, Vice President, United Parcel Service, 316 
Pennsylvania Avenue, SE., Suite 300, Washington, DC 20003
Mr. Edward Wytkind, Executive Director of the Transportation Trades 
Department, AFL-CIO (TTD), 400 North Capitol Street, NW., Suite 861, 
Washington, DC 20001

FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD 
for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: On February 19, 1997, the RSTAC, which was 
established pursuant to section 726 of the ICC Termination Act of 1995, 
Public Law 104-88, 109 Stat. 803, to advise the Chairman of the Surface 
Transportation Board, the Secretary of Transportation, and 
Congressional oversight committees with respect to rail transportation 
policy issues of particular importance to small shippers and small 
railroads,1 recommended that the Board adopt rules providing for 
informal dispute resolution through arbitration. We agree with this 
recommendation and propose to adopt formal rules along the lines of 
those recommended to us by the RSTAC.
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    \1\ See Notice of Establishment of Railroad-Shipper 
Transportation Advisory Council and Request for Recommendation of 
Candidates for Membership, STB Ex Parte No. 526 (STB served and 
published Jan. 29, 1996) (61 FR 2866).
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    The proposed rules will provide an alternative for parties to use 
binding, voluntary arbitration to resolve certain disputes subject to 
the statutory jurisdiction of the Board. These procedures shall not be 
available to grant any license (e.g., construction, abandonment, 
purchase, trackage rights, merger, pooling) or exemption or to 
prescribe for the future any conduct, rules, or results of general, 
industry-wide applicability. These procedures are intended for the 
resolution of specific disputes between specific parties involving the 
payment of money or involving rates or practices related to rail 
transportation or service subject to the statutory jurisdiction of the 
Board.
    We believe that the procedure will increase cost-savings and 
decrease litigation burdens on the parties. We are proposing these 
rules with the expectation that their adoption would enable parties to 
disputes that might otherwise have to be brought to the Board for 
formal resolution instead to resolve the disputes themselves informally 
with limited Board involvement.

Request for Comments

    We invite comments on all aspects of the proposed regulations. We 
are proposing nominal filing fees of $75 for each complaint and answer 
filed under the proposed arbitration procedure and a filing fee of $150 
for appeals to the Board of arbitration decisions. The proposed filing 
fee for appeals would be the same as the fee for labor arbitration 
appeals, appeals to Board decisions, and petitions to revoke. See 49 
CFR 1002.2(f)(60) and (61). We encourage commenters to submit comments 
as computer data on a 3.5-inch floppy diskette formatted for 
WordPerfect 5.1, or formatted so that it can be readily converted into 
WordPerfect 5.1. Any such diskette submission (one diskette should be 
sufficient) should be in addition to the written submission (an 
original and 10 copies).

Small Entities

    The Board preliminarily concludes that these rules, if adopted, 
would not have a significant economic effect on a substantial number of 
small entities. Nonetheless, 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 at the final rule stage.

Environment

    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 1002

    Administrative practice and procedure, Common carriers, Freedom of 
information, User fees.

49 CFR Part 1108

    Arbitration, Dispute resolution.

    Decided: March 12, 1997.


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

    For the reasons set forth in the preamble, the Board proposes to 
amend part 1002 and to add a new part 1108 to title 49, chapter X, of 
the Code of Federal Regulations to read as follows:

PART 1002--FEES

    1. The authority citation for part 1002 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a)(4)(A) and 553; 31 U.S.C. 9701; and 49 
U.S.C. 721(a).

    2. Section 1002.2(f) is amended by adding a new paragraph (87) to 
read as follows:


Sec. 1002.2  Filing fees.

* * * * *
    (f) * * *
* * * * *
    Part VI * * *
(87) Arbitration of Certain Disputes Subject to the Statutory 
Jurisdiction of the Surface Transportation Board under 49 CFR part 
1108:

                                                                        
                                                                        
                                                                        
(i)  Complaint...................................................    $75
(ii)  Answer (per defendant).....................................     75
(iii)  Third Party Complaint.....................................     75
(iv)  Third Party Answer (per defendant).........................     75
(v)  Appeals of Arbitration Decisions............................    150
                                                                        

* * * * *
    3. A new part 1108 is added to read as follows:

PART 1108--ARBITRATION OF CERTAIN DISPUTES SUBJECT TO THE STATUTORY 
JURISDICTION OF THE SURFACE TRANSPORTATION BOARD

Sec.
1108.1  Definitions.
1108.2  Statement of purpose, organization, and jurisdiction.
1108.3  Matters subject to arbitration.
1108.4  Relief.
1108.5  Fees and costs.
1108.6  Arbitrators.
1108.7  Arbitration commencement procedures.
1108.8  Arbitration procedures.
1108.9  Decisions.
1108.10  Precedent.
1108.11  Enforcement and appeals.
1108.12  Additional matters.

    Authority: 49 U.S.C. 721(a).


Sec. 1108.1  Definitions.

    (a) Arbitrator means an arbitrator appointed pursuant to these 
provisions.
    (b) ICA means the Interstate Commerce Act administered by the ICC.
    (c) ICC means the Interstate Commerce Commission.
    (d) ICCTA means the ICC Termination Act of 1995, Pub. L. No. 104-
88.
    (e) RSTAC means the Rail-Shipper Transportation Advisory Council 
established by the ICCTA.
    (f) STB means the Surface Transportation Board.
    (g) Statutory jurisdiction means the jurisdiction conferred on the 
STB by the ICCTA, as amended from time to time, including jurisdiction 
over rail transportation or services that have been exempted from 
active regulation.


Sec. 1108.2  Statement of purpose, organization, and jurisdiction.

    (a) These provisions are intended to provide a means for the 
binding, voluntary arbitration of certain disputes subject to the 
statutory jurisdiction of the STB, either between two or more railroads 
subject to the jurisdiction of the STB or between any such railroad and 
any other person.
    (b) These procedures shall not be available to grant any license 
(e.g., construction, abandonment, purchase, trackage rights, merger, 
pooling) or exemption or to prescribe for the future any conduct, 
rules, or results of general, industry-wide applicability.
    (c) These procedures are intended for the resolution of specific 
disputes between specific parties involving the payment of money or 
involving rates or practices related to rail transportation or service 
subject to the statutory jurisdiction of the STB.
    (d) The alternative means of dispute resolution provided for herein 
are established pursuant to the authority of the STB to take such 
actions as are necessary and appropriate to fulfill its jurisdictional 
mandate and not pursuant to the Administrative Dispute Resolution Act, 
5 U.S.C. 571, et seq.
    (e) On January 1, 1996, the STB replaced the ICC and the ICCTA 
replaced the ICA. For purposes of these procedures, it is immaterial 
whether an exemption from active regulation was granted by the ICC or 
the STB.


Sec. 1108.3  Matters subject to arbitration.

    (a) Any controversy between two or more parties, subject to 
resolution by the STB, and subject to the limitations in Sec. 1108.2, 
may be processed pursuant to the provisions of part 1108, if all 
necessary parties voluntarily subject themselves to arbitration under 
these provisions after adequate notice as provided herein.
    (b) Arbitration under these provisions is limited to matters over 
which the STB has statutory jurisdiction and may include disputes 
arising in connection with jurisdictional transportation, including 
service being conducted pursuant to an exemption. An Arbitrator should 
decline to accept, or to render a decision regarding, any dispute that 
exceeds the STB's statutory jurisdiction. Such Arbitrator may resolve 
any dispute properly before him/her in the manner and to the extent 
provided herein, but only to the extent of and within the limits of the 
STB's statutory jurisdiction. In so resolving any such dispute, the 
Arbitrator will not be bound by any rules or regulations adopted by the 
STB for the resolution of similar disputes, except as specifically 
provided in part 1108.


Sec. 1108.4  Relief.

    (a) Subject to specification in the complaint, as provided in 
Sec. 1108.7, an Arbitrator may grant the following types of relief:
    (1) Monetary damages, with interest at a reasonable rate to be 
specified by the Arbitrator; and
    (2) Specific performance of statutory obligations, but for a period 
not to exceed 3 years from the effective date of the Arbitrator's 
award.
    (b) A party may petition an Arbitrator to modify or vacate an 
arbitral award in effect that directs future specific performance, 
based solely on materially changed factual circumstances.
    (1) A petition to modify or vacate an award in effect should be 
filed with the STB. The petition will be assigned to the Arbitrator 
that rendered the award unless that Arbitrator is unavailable, in which 
event the matter will be assigned to another Arbitrator.
    (2) Any such award shall continue in effect pending disposition of 
the request to modify or vacate. Any such request shall be handled as 
expeditiously as practicable with due regard to providing an 
opportunity for the presentation of the parties' views.


Sec. 1108.5  Fees and costs.

    (a) Fees will be utilized to defray the costs of the STB in 
administering this program in accordance with 31 U.S.C. 9701. The fees 
for filing a complaint, answer, third party complaint, third party 
answer, and appeals of arbitration decisions will be as set forth in 49 
CFR 1002.2(f)(87). All fees are non-refundable except as specifically 
provided and are due with the paying party's first filing in any 
proceeding.
    (b) Each party will bear its own expenses, including, without 
limitation, fees of experts or counsel. The fees of the Arbitrator will 
be paid by the party or parties losing an arbitration entirely. If no 
party loses an arbitration entirely (as determined by the Arbitrator), 
the parties shall share equally (or pro rata if more than two parties) 
the fees and expenses, if any, of the Arbitrator. Any fees for 
petitions to modify or vacate an

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arbitration award, as provided in Sec. 1108.4(b), may be established by 
the STB and will be assessed against the party filing such petition at 
the time it is filed.


Sec. 1108.6  Arbitrators.

    (a) Arbitration shall be conducted by a single arbitrator who shall 
be selected, as provided herein, from a roster of active or retired 
federal administrative law judges or other senior officials experienced 
in rail transportation or economic issues similar to those capable of 
arising before the STB. The roster of Arbitrators shall be established 
by the RSTAC in consultation with the Chairman of the STB and shall 
contain not fewer than 12 names. The RSTAC shall update the list of 
Arbitrators annually. In the event that the RSTAC fails to maintain the 
roster of Arbitrators, the STB shall do so.
    (b) The Arbitrator shall be selected by the Chairman of the STB 
from the roster established under paragraph (a) of this section on a 
random basis, so far as is practicable.
    (c) The process of selecting an Arbitrator pursuant to this 
paragraph (c) shall be conducted confidentially following the 
completion of the Arbitration Commencement Procedures set forth in 
Sec. 1108.7. Each time the Chairman of the STB is called upon to select 
an Arbitrator, the nomination promptly shall be transmitted in writing 
to the parties. Upon receipt of such name, the parties shall have 7 
calendar days to notify the Chairman of the STB whether the Arbitrator 
so nominated is acceptable to that party. If any party finds an 
Arbitrator to be unacceptable for the arbitration at hand, the Chairman 
of the STB shall repeat the nomination process. No party may find more 
than one Arbitrator to be unacceptable in any arbitration, except upon 
a showing that an Arbitrator nominee is likely to have views highly 
prejudicial to a party. The name of the Arbitrator finally agreed upon 
by the Chairman of the STB and the parties shall not be made public 
until this selection process is complete. Neither a party nor the 
Chairman of the STB shall identify publicly any party that has found an 
Arbitrator to be unacceptable.
    (d) If, at any time during the arbitration process, a selected 
Arbitrator becomes incapacitated or unable to fulfill his/her duties, a 
replacement Arbitrator will be promptly selected under the process set 
forth in paragraphs (b) and (c) of this section.
    (e) If all parties to a dispute agree among themselves on the 
selection of an Arbitrator from the roster, the parties shall submit in 
writing to the Chairman of the STB the name of the Arbitrator agreed 
to.


Sec. 1108.7  Arbitration commencement procedures.

    (a) Each demand for arbitration shall be commenced with a written 
complaint. Because arbitration under these procedures is both voluntary 
and binding, the complaint must set forth in detail the nature of the 
dispute, the statutory basis of STB jurisdiction, a clear, separate 
statement of each issue as to which arbitration is sought, and the 
specific relief sought. Each complaint shall contain a sworn, notarized 
verification, by a responsible official of the complaining party, that 
the factual allegations contained in the complaint are true and 
accurate. Each complaint must contain a statement that the complainant 
is willing to arbitrate pursuant to these arbitration rules and be 
bound by the result thereof in accordance with those rules, and must 
contain a demand that the defendants likewise agree to arbitrate and be 
so bound.
    (b) The complaining party shall serve, by overnight mail or hand 
delivery, a signed and dated original of the complaint on each 
defendant (through its legal representatives, if known, or on a 
responsible official at his or her usual place of business) and on the 
STB, accompanied by the filing fee prescribed under Sec. 1108.5(a) and 
set forth in 49 CFR 1002.2(f)(87). Each complaint served on a defendant 
shall be accompanied by a copy of part 1108.
    (c) Any defendant willing to enter into arbitration under these 
rules must, within 30 days of the date of a complaint, answer the 
complaint in writing. The answer must contain a statement that the 
defendant is willing to arbitrate each arbitration issue set forth in 
the complaint or specify which such issues the defendant is willing to 
arbitrate. If the answer contains an agreement to arbitrate some but 
not all of the arbitration issues in the complaint, the complainant 
will have 10 days from the date of the answer to advise the defendant 
and the STB in writing whether the complainant is willing to arbitrate 
on that basis. Upon the agreement of the parties to arbitrate, these 
rules will be deemed incorporated by reference into the arbitration 
agreement.
    (d) The answer of a party willing to arbitrate shall also contain 
that party's specific admissions or denials of each factual allegation 
contained in the complaint, affirmative defenses, and any counterclaims 
or set-offs which the defendant wishes to assert against the 
complainant. The right of a defendant to advance any counterclaims or 
set-offs, and the capacity of an Arbitrator to entertain and render an 
award with respect thereto, is subject to the same jurisdictional 
limits as govern the complaint.
    (e) A defendant's answer must be served on the complainant, other 
parties, and the STB in the same manner as the complaint.
    (f) A defendant willing to enter into arbitration under these 
procedures only if it is able to obtain cross-relief against another 
defendant or a non-party may serve an answer containing an agreement to 
arbitrate that is conditioned upon the willingness of any such third 
party to enter into arbitration as a third party defendant. 
Simultaneously with the service of any such conditional answer, the 
defendant making such answer shall serve a complaint and demand for 
arbitration on the party whose presence that defendant deems to be 
essential, such complaint and demand to be drawn and served in the same 
manner as provided in paragraphs (a) and (b) of this section. A 
defendant receiving such a complaint and demand for arbitration and 
that is willing to so arbitrate shall respond in the same manner as 
provided in paragraphs (c), (d), and (e) of this section.
    (g) Upon receipt of a complaint and demand for arbitration served 
by a complainant on a defendant, or by a defendant on a third-party 
defendant, the STB promptly will notify the parties serving and 
receiving such documents of any deficiencies, jurisdictional or 
otherwise, which the STB deems fatal to the processing of the complaint 
and will suspend the timetable for processing the arbitration until 
further notice. If the complainant is unwilling or unable to remedy 
such deficiencies to the satisfaction of the STB within such time as 
the STB may specify, the complaint shall be deemed to be withdrawn 
without prejudice and one-half of the complaint filing fee shall be 
refunded to the complainant. Upon satisfaction that two or more parties 
have unconditionally agreed to arbitrate under these procedures, the 
STB will so notify the parties and commence procedures for the 
selection of an Arbitrator.
    (h) An agreement to arbitrate pursuant to these rules will be 
deemed a contract to arbitrate, subject to limited review by the STB 
pursuant to Sec. 1108.11(c), for the purpose of subjecting the 
arbitration award to the provisions of 9 U.S.C. 9, allowing a judgment 
of a court to be entered upon an arbitration award, and 9 U.S.C. 10, 
allowing a court to vacate

[[Page 14388]]

an arbitration award on certain limited grounds.


Sec. 1108.8  Arbitration procedures.

    (a) The Arbitrator will establish rules, including timetables, for 
each arbitration proceeding.
    (1) The evidentiary process will be completed within 90 days from 
the start date established by the Arbitrator. The Arbitrator's decision 
will be issued within 30 days from the close of the record.
    (2) Discovery will be permitted only with the agreement of the 
parties or as directed by the Arbitrator.
    (b) Evidence will be submitted under oath. Evidence may be 
submitted in writing or orally, at the direction of the Arbitrator. 
Hearings for the purpose of cross-examining witnesses will be permitted 
at the sound discretion of the Arbitrator. The Arbitrator, at his/her 
discretion, may require additional evidence.
    (c) Subject to alteration by the Arbitrator in individual 
proceedings, as a general rule where evidence is submitted in written 
form, the complaining party will proceed first, and the defendant will 
proceed next. The parties will then be given an opportunity to file 
simultaneous replies. At the discretion of the Arbitrator, argument may 
be submitted with each evidentiary filing or in the form of a brief 
after the submission of all evidence. Pagination limits will be set by 
each Arbitrator for all written submissions of other than an 
evidentiary nature.
    (d) Any written document, such as a common carrier rate schedule, 
upon which a party relies should be submitted as part of that party's 
proof, in whole or in relevant part. The Arbitrator will not be bound 
by formal rules of evidence, but will avoid basing a decision entirely 
or largely on unreliable proof.
    (e) Where proof submitted to an Arbitrator addresses railroad 
costs, such proof should be prepared in accordance with the standards 
employed by the STB in ascertaining the costs at issue.
    (f) Where the Arbitrator is advised that any party to an 
arbitration proceeding wishes to keep matters relating to the 
arbitration confidential, the Arbitrator shall take such measures as 
are reasonably necessary to ensure that such matters are treated 
confidentially by the parties or their representatives and are not 
disclosed by the Arbitrator to non-authorized persons. If the 
Arbitrator regards any confidential submission as being essential to 
his/her written decision, such information may be included in the 
decision, but the Arbitrator will make every effort to omit 
confidential information from his/her written decision.


Sec. 1108.9  Decisions.

    (a) Decisions of the Arbitrator shall be in writing and shall 
contain findings of fact and conclusions. All such Decisions shall be 
served by the Arbitrator by hand delivery or overnight mail on the 
parties and the STB.
    (b) By agreeing to arbitrate pursuant to these procedures, each 
party agrees that the decision and award of the Arbitrator shall be 
binding and judicially enforceable in law and equity in any court of 
appropriate jurisdiction, subject to a limited right of appeal to the 
STB as provided below.


Sec. 1108.10  Precedent.

    Arbitration decisions rendered pursuant to these procedures shall 
have no precedential value.


Sec. 1108.11  Enforcement and appeals.

    (a) An arbitration decision rendered pursuant to these procedures 
may be appealed to the STB within 20 days of service of such decision. 
Any such appeal shall be served by hand delivery or overnight mail on 
the parties and the STB. Replies to such appeals may be filed within 20 
days of service of the appeal. An appeal or a reply under this 
paragraph shall not exceed 20 pages in length. The filing fee for such 
appeal will be as set forth in 49 CFR 1002.2(f)(87).
    (b) The filing of an appeal, as allowed in paragraph (a) of 
Sec. 1108.11, automatically will stay an arbitration decision pending 
disposition of the appeal. The STB will decide any such appeal within 
30 days of the date on which the reply is due. Such decision by the STB 
shall be served in accordance with normal STB service procedures.
    (c) The STB will only review cases involving issues of general 
transportation importance. The STB may vacate or amend an arbitration 
award, in whole or in part, only on the grounds that such award:
    (1) Exceeds the STB's statutory jurisdiction; or
    (2) Does not take its essence from the ICCTA.
    (d) Effective arbitration decisions rendered pursuant to these 
procedures, whether or not appealed to the STB, may only be enforced in 
accordance with 9 U.S.C. 9 and vacated by a court in accordance with 9 
U.S.C. 10.


Sec. 1108.12  Additional matters.

    Where an arbitration demand is filed by one or more plaintiffs 
against one or more defendants, the plaintiffs as a group and the 
defendants as a group shall be entitled to exercise those rights, with 
respect to the selection of arbitrators, as are conferred on individual 
arbitration parties.
[FR Doc. 97-7663 Filed 3-25-97; 8:45 am]
BILLING CODE 4915-00-P