[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Proposed Rules]
[Pages 23742-23744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11360]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1121 and 1150

[STB Ex Parte No. 562]


Acquisition of Rail Lines Under 49 U.S.C. 10901 and 10902--
Advance Notice of Proposed Transactions

AGENCY: Surface Transportation Board, Transportation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Surface Transportation Board, after reviewing public 
comments on labor protective requirements for line acquisitions by 
Class II railroads in Wisconsin Central Ltd.--Acquisition Exemption--
Lines of Union Pacific Railroad Company, STB Finance Docket No. 33116 
(STB served Apr. 17, 1997), proposes to establish a 60-day notice 
period for the benefit of rail employees who work on rail lines subject 
to, and to facilitate the implementation of, transactions: under 49 
U.S.C. 10902 by Class II rail carriers; under 49 U.S.C. 10902 by Class 
III rail carriers to acquire or operate additional rail lines where the 
lines to be acquired or operated, together with the acquiring carrier's 
existing lines, would produce annual revenue exceeding $5 million; and 
under 49 U.S.C. 10901 by noncarriers to acquire or operate rail lines 
where the lines to be acquired or operated would produce annual revenue 
exceeding $5 million.

DATES: Comments are due on June 2, 1997.

ADDRESSES: Send comments (an original and 10 copies) referring to STB 
Ex Parte No. 562 to: Surface Transportation Board, Office of the 
Secretary, Case Control Unit, 1925 K Street, N.W., Washington, DC 
20423-0001.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600. 
[TDD for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: We considered and recently granted the 
petition by Wisconsin Central Ltd. (WCL), a Class II carrier, for an 
exemption for its acquisition of two rail lines from Union Pacific 
Railroad Company in Wisconsin Central Ltd.--Acquisition Exemption--
Lines of Union Pacific Railroad Company, STB Finance Docket No. 33116 
(STB served Apr. 17, 1997) (WCL Exemption). By Federal Register notice 
published November 27, 1996 (61 FR 60320-21), we had described WCL's 
exemption request and its proposed employee protective arrangement, and 
had sought public comments on the issues of whether WCL's proposed 
labor protection met the statutory requirements of 49 U.S.C. 10902 and 
whether the Board should establish and/or oversee the procedural 
aspects of such arrangements in rail line acquisitions by Class II 
railroads. A number of comments were filed, including comments by WCL 
and the Transportation Trades Department of the AFL-CIO (TTD).
    In WCL Exemption, we adopted standards for implementing the labor 
protection requirement of subsection 10902(d), other than for a 
specific notice period for the seller's employees to be affected by a 
line sale. While TTD had requested a 90-day notice period, we 
determined that affected employees on the line to be sold had been 
afforded at least that amount of notice. Rather than adopt a specific 
notice period in that proceeding, we announced that we would seek 
public comments on a proposed requirement that Class II railroads 
provide a minimum of 60 days' notice in future proceedings under 
Sec. 10902. We also proposed to amend the existing class exemption 
rules so that a similar 60-day notice period is afforded in all 
transactions, involving acquisitions under Sec. 10902 by Class III 
carriers or under 49 U.S.C. 10901 by noncarriers, that would result in 
the acquiring entity becoming a carrier with annual revenues in excess 
of $5 million.
    As preliminarily concluded in WCL Exemption, we are not proposing 
that individual employee notice be required. Rather, we believe that 
requiring the posting and submission of notice to the national offices 
of the labor unions with employees on the affected line setting forth 
the terms of employment and principles of selection to be followed by 
the acquiring carrier should be sufficient.1
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    \1\ See 49 CFR 1150.35(b)(2), (c)(3); and 49 CFR 1150.45(b)(2), 
(c)(3), for current notice requirements in our class exemptions for 
larger transactions under 49 U.S.C. 10901 and 10902.
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    Sixty days is the notice period for displaced workers adopted by 
the Worker Adjustment and Retraining Notification Act, Pub. L. No. 100-
379 (August 4, 1988). That seems to be a

[[Page 23743]]

reasonable period of time in which employees directly affected by the 
acquisitions of rail lines may be asked to make decisions or to take 
actions. By ``directly affected employees,'' we mean the employees who 
actually work on the line or lines to be acquired. These employees are 
faced at a minimum with having to decide whether to accept a position 
on the acquiring entity or to exercise seniority on the carrier that is 
selling, leasing or otherwise transferring the line. In either case 
employees are faced with significant changes in their work assignments. 
And one or more of these employees may be separated from employment 
altogether and will have to seek work elsewhere.
    Employees who work on lines acquired under Sec. 10901 have as much 
need for notice as do the employees working on lines acquired under 
Sec. 10902. Although the Interstate Commerce Commission (ICC or the 
Commission) had discretionary authority to impose labor protective 
conditions in line sale cases, the Commission rarely exercised that 
authority. Nevertheless, new carriers buying or leasing lines often 
extended offers of employment to employees working on the lines 
acquired. We have no reason to believe that this practice will not 
continue. That being the case, employees affected by those transactions 
will often have to choose whether or not to accept employment with the 
new carrier. In addition, employees in Sec. 10901 transactions will, in 
many instances, have to move to new positions on their present employer 
or may have to seek new employment altogether. Under the circumstances, 
we believe that some additional advance notice involving larger 
transactions would be beneficial to employees who must make adjustments 
and decisions and would facilitate the smooth implementation of these 
transactions.2
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    \2\ We do not view this notice requirement as imposing labor 
protection which we are statutorily prohibited from imposing on 
Class III and noncarrier line acquisitions, but rather as 
establishing a procedural mechanism to ensure that transactions we 
have authorized will be implemented without disruption.
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    The acquisitions of larger lines under both Secs. 10901 and 10902 
are already subject to prior notice periods pursuant to our regulations 
at 49 CFR 1150.35 and 1150.45, respectively. In a number of those 
transactions, the ICC or the Board stayed the effect of the notices, 
thereby effectively providing for notice periods longer than those 
proposed here; see New England Central Railroad, Inc.--Acquisition and 
Operation Exemption--Lines Between East Alburgh, VT and New London, CT, 
Finance Docket No. 32432 (ICC served Dec. 9, 1994); Indiana and Ohio 
Railway Company--Acquisition Exemption--Lines of the Grand Trunk 
Western Railroad, Inc., STB Finance Docket No. 33180 (STB served Feb. 
3, 1997); and I&M Rail Link, LLC--Acquisition and Operation Exemption--
Certain Lines of Soo Line Railroad Company D/B/A Canadian Pacific 
Railway, STB Finance Docket No. 33326 (STB served Apr. 2, 1997). The 
application of a 60-day notice period for these transactions would have 
little effect on the way they have been treated to date.
    We propose to limit the 60-days' notice requirement to transactions 
in which the acquiring carrier or noncarrier will earn annual revenues 
in excess of $5 million as a result of the acquisition. More than 78% 
of the total number of freight railroads have annual revenues under $5 
million but employ fewer than 3% of the total number of rail freight 
employees; see ``Selected Statistics--U.S. Freight Railroads by Revenue 
Range'', Profiles of U.S. Railroads--1996 Edition (Association of 
American Railroads). Thus, the majority of transactions involving the 
creation of, or purchases by, Class III railroads should not be 
affected by this notice requirement, but the $5 million limit should 
embrace the transactions that affect significant numbers of rail 
freight employees.
    The Board invites comments on the proposed regulations. Written 
comments (an original and 10 copies) are due on June 2, 1997. The Board 
encourages that, in addition to submitting a paper original and copies, 
each commenter provide a copy of his comments on a 3.5-inch floppy 
diskette formatted for WordPerfect 7.0, or formatted so that it can be 
readily converted into WordPerfect 7.0.

Small Entities

    The Board certifies that this rule, if adopted, would not have a 
significant effect on a substantial number of small entities. The 
proposed regulation, while marginally increasing the notice requirement 
of the acquiring carrier or entity, would benefit individuals and 
entities affected by line transfers by providing a standard notice 
period prior to consummation of the sale.

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 1121

    Administrative practice and procedures, Railroads.

49 CFR Part 1150

    Administrative practice and procedures, Railroads.

    Decided: April 21, 1997.

    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 title 49, chapter X, parts 1121 and 1150 of the Code of Federal 
Regulations, as follows:

PART 1121--RAIL EXEMPTION PROCEDURES

    1. The authority citation for part 1121 continues to read as 
follows:

    Authority: 5 U.S.C. 553; 49 U.S.C. 10502 and 10704.

    2. Section 1121.4 is amended by adding a new paragraph (h) to read 
as follows:


Sec. 1121.4  Procedures.

* * * * *
    (h) In transactions for the acquisition or operation of rail lines 
by Class II rail carriers under 49 U.S.C. 10902, the exemption may not 
become effective until 60 days after applicant certifies to the Board 
that it has posted at the workplace of the employees on the affected 
line(s) and served a notice of the transaction on the national offices 
of the labor unions with employees on the affected line(s), setting 
forth the terms of employment and principles of employee selection.

PART 1150--CERTIFICATE TO CONSTRUCT, ACQUIRE, OR OPERATE RAILROAD 
LINES

    3. The authority citation for part 1150 continues to read as 
follows:

    Authority: 5 U.S.C. 553 and 559; 49 U.S.C. 721(a), 10502, 10901 
and 10902.

    4. Section 1150.32 is amended by adding a new paragraph (e) to read 
as follows:


Sec. 1150.32  Procedures and relevant dates--transactions that involve 
creation of Class III carriers.

* * * * *
    (e) If the projected annual revenue of the carrier to be created by 
an acquisition under this exemption exceeds $5 million, applicant must, 
at least 60 days before the exemption becomes effective, post a notice 
of intent

[[Page 23744]]

to undertake the proposed transaction at the workplace of the employees 
on the affected line(s) and serve a copy of the notice on the national 
offices of the labor unions with employees on the affected line(s), 
setting forth the terms of employment and principles of employee 
selection, and certify to the Board that it has done so.
    5. Section 1150.35 is amended by revising paragraph (a) to read as 
follows:


Sec. 1150.35  Procedures and relevant dates--transactions that involve 
creation of Class I or Class II carriers.

    (a) To qualify for this exemption, applicant must serve a notice of 
intent to file a notice of exemption no later than 14 days before the 
notice of exemption is filed with the Board, and applicant must comply 
with the notice requirement of Sec. 1150.32(e).
* * * * *
    6. Section 1150.42 is amended by adding a new paragraph (e) to read 
as follows:


Sec. 1150.42  Procedures and relevant dates for small line 
acquisitions.

* * * * *
    (e) If the projected annual revenue of the rail lines to be 
acquired, together with the acquiring carrier's projected annual 
revenue, exceeds $5 million, the applicant must, at least 60 days 
before the exemption becomes effective, post a notice of applicant's 
intent to undertake the proposed transaction at the workplace of the 
employees on the affected line(s) and serve a copy of the notice on the 
national offices of the labor unions with employees on the affected 
line(s), setting forth the terms of employment and principles of 
employee selection, and certify to the Board that it has done so.
    7. Section 1150.45 is amended by revising paragraph (a) to read as 
follows:


Sec. 1150.45  Procedures and relevant dates-transactions under section 
10902 that involve creation of Class I or II rail carriers.

    (a) To qualify for this exemption, applicant must serve a notice of 
intent to file a notice of exemption no later than 14 days before the 
notice of exemption is filed with the Board, and applicant must comply 
with the notice requirement of Sec. 1150.42(e).
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[FR Doc. 97-11360 Filed 4-30-97; 8:45 am]
BILLING CODE 4915-00-P