[Federal Register Volume 63, Number 85 (Monday, May 4, 1998)]
[Notices]
[Pages 24588-24589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11669]


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DEPARTMENT OF TRANSPORTATION

[STB Ex Parte No. 627]


Market Dominance Determinations--Product and Geographic 
Competition

AGENCY: Surface Transportation Board.

ACTION: Notice of Proposal to Eliminate Product and Geographic 
Competition From Consideration in Market Dominance Determinations.

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SUMMARY: Pursuant to its decision in Review of Rail Access and 
Competition Issues, STB Ex Parte No. 575 (STB served Apr. 17, 1998), 
the Board is instituting a proceeding to consider removing product and 
geographic competition as factors in market dominance determinations in 
railroad rate proceedings. The Board requests that persons intending to 
participate in this proceeding notify the agency of that intent. A 
separate service list will be issued based on the notices of intent to 
participate that the Board receives.

DATES: Notices of intent to participate in this proceeding are due May 
12, 1998. Comments on this proposal are due May 29, 1998. Replies are 
due June 29, 1998.

ADDRESSES: An original plus 12 copies of all comments and replies, 
referring to STB Ex Parte No. 627, must be sent to the Office of the 
Secretary, Case Control Unit, ATTN: STB Ex Parte No. 627, Surface 
Transportation Board, 1925 K Street, N.W., Washington, DC 20423-0001.
    Copies of the written comments will be available from the Board's 
contractor, D.C. News and Data, Inc., located in Room 210 in the 
Board's building. D.C. News can be reached at (202) 289-4357. The 
comments will also be available for viewing and self copying in the 
Board's Microfilm Unit, Room 755.
    In addition to an original and 12 copies of all paper documents 
filed with the Board, the parties shall submit their pleadings, 
including any graphics, on a 3.5-inch diskette formatted for 
WordPerfect 7.0 (or in a format readily convertible into WordPerfect 
7.0). All textual material, including cover letters, certificates of 
service, appendices and exhibits, shall be included in a single file on 
the diskette. The diskettes shall be clearly labeled with the filer's 
name, the docket number of this proceeding, STB Ex Parte No. 627, and 
the name of the electronic format used on the diskette for files other 
than those formatted in WordPerfect 7.0. All pleadings submitted on 
diskettes will be posted on the Board's website (www.stb.dot.gov). The 
electronic submission requirements set forth in this notice supersede, 
for the purposes of this proceeding, the otherwise applicable 
electronic submission requirements set forth in the Board's 
regulations. See 49 CFR 1104.3(a), as amended in Expedited Procedures 
for Processing Rail Rate Reasonableness, Exemption and Revocation 
Proceedings, STB Ex Parte No. 527, 61 FR 52710, 711 (Oct. 8, 1996), 61 
FR 58490, 58491 (Nov. 15, 1996).1

    \1\ A copy of each diskette submitted to the Board should be 
provided to any other party upon request.
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FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600. 
[TDD for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: In STB Ex Parte No. 575, the Board conducted 
two days of informational hearings, on April 2 and 3, 1998, to examine 
issues of rail access and competition in today's railroad industry, and 
the statutory remedies and agency regulations and procedures that 
relate to those matters. As a result of those hearings, we announced, 
inter alia, that we would commence a proceeding to consider eliminating 
the product and geographic competition factors of our market dominance 
guidelines in cases challenging the reasonableness of rail 
rates.2
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    \2\ The current market dominance guidelines are set forth in 
Product and Geographic Competition, 2 I.C.C.2d 1, 20-22 (1985) 
(Market Dominance III).
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    Under 49 U.S.C. 10707, the Board can entertain a challenge to the 
reasonableness of a rail rate only if we

[[Page 24589]]

first find that the rail carrier has market dominance over the traffic 
to which the rate applies, that is, that there is no effective 
competition for that traffic. In making that determination, we now 
consider four forms of competition that may effectively constrain the 
carrier's pricing: intramodal competition (whether the shipper could 
obtain the transportation service that it needs from other railroads); 
intermodal competition (whether the shipper could obtain service by 
another transportation mode); product competition (whether the shipper 
can use a suitable substitute product that can be acquired without 
relying on the services of the same carrier); and geographic 
competition (whether the shipper can obtain the product it needs from a 
different source and/or by shipping its goods to a different 
destination using another carrier). Shippers have the burden of showing 
that there is no effective intramodal and intermodal competition; 
carriers have the burden of identifying any product and geographic 
competition and showing its effectiveness.
    At the Ex Parte 575 hearings, shippers complained about the 
difficulties associated with seeking rate relief from the Board today, 
particularly the complexity and burden of litigating issues of product 
and geographic competition, issues that they charge have transformed 
the threshold market dominance phase of a rail rate complaint into a 
full-blown antitrust-style case of its own. Shippers regard product and 
geographic competition issues as major, undue litigation obstacles that 
discourage captive shippers from even seeking regulatory relief from 
unreasonably high rates in both large and small rates cases. 
Accordingly, consistent with our determination in Ex Parte 575 to 
reexamine certain aspects of our current regulatory regime in the 
context of today's more consolidated rail industry--particularly those 
that concern the availability of regulatory relief--we are instituting 
this proceeding to consider eliminating product and geographic 
competition from our market dominance analysis.
    We note that our predecessor, the Interstate Commerce Commission 
(ICC), initially concluded that consideration of product and geographic 
competition issues would complicate rate proceedings unduly. Special 
Procedures for Making Findings of Market Dominance, 353 I.C.C. 875, 
905-06, modified, 355 I.C.C. 12 (1976) (Market Dominance I), aff'd in 
relevant part sub nom. Atchison, T. & S.F. Ry. v. ICC, 580 F.2d 623 
(D.C. Cir. 1978). The ICC subsequently reversed course and decided that 
consideration of these issues would be manageable. Market Dominance 
Determinations, 365 I.C.C. 118, 127-31 (1981) (Market Dominance II), 
aff'd sub nom. Western Coal Traffic League v. United States, 719 F.2d 
772 (5th Cir. 1983) (en banc), cert. denied, 466 U.S. 953 (1984). 
Later, recognizing that it is inherently ``much more difficult'' for 
shippers to prove the ineffectiveness of these factors than of 
intramodal and intermodal competition, the ICC placed upon the 
railroads the burden of both identifying any product and geographic 
competition and demonstrating the effectiveness of such competition in 
individual cases. Market Dominance III, 2 I.C.C.2d at 15.
    The comments presented in the Ex Parte 575 hearings suggest, 
however, that, even without bearing the burden of proof on these 
issues, shippers find that the product and geographic competition 
inquiry remains an imposing burden upon their ability to prosecute rail 
rate complaints. Aggressive use of the discovery process may be partly 
responsible for the heavy burdens associated with the inquiry into 
product and geographic competition, and we have recently taken action 
to prevent a rail carrier from effectively shifting those burdens onto 
a complaining shipper through unsupported and/or overreaching discovery 
demands. FMC Wyoming Corp. et al. v. Union Pac. R.R., STB Docket No. 
42022 (STB served Apr. 17, 1998). However, curbing individual instances 
of discovery abuses may not be sufficient to address the shippers' 
concerns. Therefore, we are instituting this proceeding to obtain 
public comment on whether we should eliminate product and geographic 
competition from consideration altogether.
    Any person that wishes to participate as a party of record in this 
matter must notify us of this intent by May 12, 1998. In order to be 
designated a party of record, a person must satisfy the filing 
requirements outlined in the ADDRESSES section. We will then compile 
and issue a service list. Copies of comments and replies must be served 
on all persons designated on the list as a party of record. Comments on 
the proposal are due May 29, 1998; replies are due June 29, 1998.
    A copy of this decision is being served on all persons on the 
service list in Ex Parte No. 575. This decision will serve as notice 
that persons who were parties of record in the Ex Parte 575 proceeding 
will not be placed on the service list in the Ex Parte 627 proceeding 
unless they notify us of their intent to participate therein.
    The Board preliminarily certifies that the proposal to eliminate 
product and geographic competition from its market dominance analysis, 
if adopted, would not have a significant effect on a substantial number 
of small entities. While the proposal, if adopted, may ease the burdens 
on those prosecuting rate complaints, we do not expect it to affect a 
substantial number of small entities. 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.

    Decided: April 28, 1998.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 98-11669 Filed 5-1-98; 8:45 am]
BILLING CODE 4915-00-P