[Federal Register Volume 68, Number 27 (Monday, February 10, 2003)]
[Proposed Rules]
[Pages 6695-6697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3251]



[[Page 6695]]

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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Part 1180

[STB Ex Parte No. 282 (Sub-No. 20)]


Railroad Consolidation Procedures--Exemption for Temporary 
Trackage Rights

AGENCY: Surface Transportation Board, DOT.

ACTION: Notice of proposed exemption and rulemaking.

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SUMMARY: The Surface Transportation Board (Board) is proposing to adopt 
a new class exemption and related regulations that would be available 
for trackage rights agreements that by their terms expire on a date 
certain and would permit their authorization for a limited period of 
time. Carriers utilizing this new class exemption would not be required 
to file for discontinuance authority at the end of the authorized 
period. The temporary trackage rights would automatically terminate on 
the date specified.

DATES: Comments must be submitted by March 12, 2003.

ADDRESSES: Send an original and 10 copies of any comments referring to 
STB Ex Parte No. 282 (Sub-No. 20) to: Surface Transportation Board, 
1925 K Street, NW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600. 
[Federal Information Relay Service (FIRS) for the hearing impaired: 1-
800-877-8339.]

SUPPLEMENTARY INFORMATION:

Trackage Rights

    Acquisition by a rail carrier of trackage rights over a railroad 
line owned or operated by another rail carrier may be carried out only 
with the approval and authorization of the Board. See 49 U.S.C. 
11323(a)(6). Under 49 U.S.C. 11324(d), the Board is required to approve 
trackage rights applications unless we find that (1) as a result of a 
transaction, there is likely to be substantial lessening of 
competition, creation of a monopoly, or restraint of trade in freight 
surface transportation in any region of the United States, and (2) the 
anticompetitive effects of the transaction outweigh the public interest 
in meeting significant transportation needs.

Use of Exemption Authority

    The Staggers Rail Act of 1980 substantially broadened the authority 
of our predecessor, the Interstate Commerce Commission (ICC), and hence 
our authority, to exempt transactions from regulation. Under 49 U.S.C. 
10502, we are directed to exempt a person, class of persons, or a 
transaction or service from our regulation whenever we find that (1) 
regulation is not necessary to carry out the RTP, and (2) either the 
transaction or service is of limited scope or regulation is not needed 
to protect shippers from an abuse of market power. We may exempt not 
only a single transaction, but an entire class of transactions, as the 
ICC did when adopting the existing class exemption at 49 CFR 
1180.2(d)(7). A class exemption does not mean that a particular 
transaction is beyond our reach. Rather, it is a means by which a 
carrier may obtain an authorization without going through a full 
regulatory process, in the types of cases to which the class exemption 
applies.

Existing Class Exemption for Trackage Rights

    In Railroad Consolidation Procedures, 1 I.C.C.2d 270 (1985), the 
ICC adopted a class exemption for trackage rights based on written 
agreements and not sought in responsive applications in rail 
consolidation proceedings. See 49 CFR 1180.2(d)(7).\1\ In adopting 
those procedures, the ICC found that exempting trackage rights 
proposals as a class would promote the RTP and competition generally 
because trackage rights facilitate operating efficiencies. The ICC also 
found that the exemption was limited in scope because the class of 
exempted transactions was limited and, typically, trackage rights 
transactions either involved modifications in operations that promoted 
efficiency for the operator and maintained the status quo, or involved 
the addition of a competing carrier to a line through trackage rights 
that increased the number of carriers on the line and increased 
competition for traffic. For these reasons, the ICC also found that 
regulation of this class of trackage rights is not necessary to protect 
shippers from an abuse of market power.
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    \1\ Published in the Federal Register at 50 FR 15751. These 
rules were subsequently amended in 1986, 1993, and 1997.
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Proposed Class Exemption

    Our reason for instituting this proceeding is that authorization of 
trackage rights approved under the current class exemption remains in 
effect indefinitely, regardless of any durational contract provision. 
However, in recent years parties have sought authorization for 
temporary trackage rights that were to expire on a certain date. On a 
number of occasions, those requests have involved carriers that were 
about to perform extensive maintenance over portions of their heavily 
used track. Other requests for temporary trackage rights have involved 
the need to accommodate the short-term storage of rail cars or the need 
to make provision for local service, line relocation and rehabilitation 
projects, as well as a variety of freight, intercity passenger and 
commuter operations.
    Generally, a carrier seeking such a time-limited authorization has 
first filed a notice of exemption under 1180.2(d)(7), thereby acquiring 
authority to exercise trackage rights indefinitely over a particular 
line. Subsequently, it has filed a request that we allow the 
authorization to expire on a certain date. In the past, we have 
analyzed these subsequent filings on a case-by-case basis under 49 
U.S.C. 10502, and have routinely granted the requested petition to 
allow the authorization to expire on a specific date.\2\ In those 
individual cases, having found the time-limited authorization to be 
consistent with the statutory limited scope criterion, we have not 
found it necessary to examine whether full regulation of a temporary 
trackage rights arrangement is necessary to protect shippers from an 
abuse of market power.
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    \2\ This second filing has often taken the form of a petition 
seeking a partial revocation of the class exemption, or a petition 
seeking an exemption to permit the trackage rights operations to 
remain in effect only on a temporary basis. Regardless of the form, 
we have generally dealt with each request as a request that the 
Board permit the authorization to expire on a particular date.
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    Given our experience in those cases, we believe that both rail 
carriers and the public would benefit from a rule that expressly 
provides a class exemption from 49 U.S.C. 11323 to permit 
authorization, for a limited period of time, of trackage rights that by 
their terms expire on a date certain. We further believe that this 
proposal is consistent with the exemption criteria at 49 U.S.C. 10502, 
as next discussed.
    Individual approval of trackage rights transactions for which the 
carriers seek authorization for a limited period of time does not 
appear to be necessary to carry out the goals of the RTP. Rather, 
exempting such proposals as a class would promote the RTP by 
eliminating the need to file a second pleading seeking discontinuance 
when the agreement expires, thereby minimizing regulation of the rail 
system (49 U.S.C. 10101(2)), promoting the continuation of a sound rail 
system by facilitating the

[[Page 6696]]

process of line repair and maintenance (49 U.S.C. 10101(4)), and 
promoting coordination between rail carriers (49 U.S.C. 10101(5)). The 
proposed class exemption would also reduce the regulatory uncertainty 
of the parties, facilitate the parties' ability to reach agreement on 
temporary trackage rights, reduce the filing fees required of carriers 
seeking such rights, and encourage more use of trackage rights in 
general and temporary trackage rights in particular. 49 U.S.C. 10101 
(7), (15).
    The proposed exemption also appears to be of limited scope because 
we are limiting the class of exempted transactions. And the 
authorization for trackage rights will be limited in duration.
    In addition, it appears that regulation of this class of temporary 
trackage rights is not necessary to protect shippers from an abuse of 
market power. Providing temporary trackage rights authorization would 
not reduce competition, and temporary trackage rights authorizations 
that add no service on the line (e.g., overhead, or bridge, traffic) 
merely maintain the status quo among carriers and shippers on the line. 
Public comments are invited on all of these conclusions, as well as on 
possible negative consequences, if any, that could result from such a 
class exemption.

Implementation of the Class Exemption

    If the proposed class exemption is adopted, an eighth category of 
exempt transactions would be added to our rail consolidation 
regulations. We would amend 49 CFR part 1180 by adding new sections 
1180.2(d)(8), and 1180.4(g)(2) (iii) and (iv). Consistent with the 
regulations in part 1180, carriers seeking to use the proposed 
exemption would be required to submit the information required by 49 
CFR 1180.4(g)(1)(i). This includes the names of the applicants, a 
summary of the nature of the proposed transaction, a contact person, 
the proposed time schedule for consummation, the purpose to be 
accomplished, any other supporting statements deemed material by 
applicants, the level of labor protection to be imposed, a list of the 
states in which any part of the property of each applicant carrier is 
located, and a map showing the involved lines. In addition, the caption 
summary required in connection with this proposed class exemption must 
specify the date the authorization will expire. 49 CFR 
1180.4(g)(2)(iii). An executed copy of the written trackage rights 
agreement must also be submitted.
    As noted, section 1180.4(g)(1)(i) requires that the exemption 
notice filed with the Board indicate the level of employee protection 
to be imposed.\3\ As with other grants of trackage rights, approval of 
temporary trackage rights agreements under 49 U.S.C. 11323 must include 
the employee protective conditions set forth in Norfolk and Western Ry. 
Co.-Trackage Rights-BN, 354 I.C.C. 605 (1978), as modified by Mendocino 
Coast Ry., Inc.-Lease and Operate, 360 I.C.C. 653 (1980), aff'd sub 
nom. Railway Labor Executives' Association v. ICC, 675 F.2d 1248 (D.C. 
Cir. 1982). Accordingly, all temporary trackage rights exemptions would 
be so conditioned.
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    \3\ Under 49, U.S.C. 10502(g), in granting exemptions, we may 
not relieve a carrier of its obligations to protect employees.
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    As previously discussed, under 49 U.S.C. 10903, after a carrier 
begins trackage rights operations, even when conducted under an 
exemption, discontinuance of the service may not occur absent a 
certificate of discontinuance, or exemption therefrom, issued by the 
Board. This requirement would continue to apply to carriers utilizing 
the current trackage rights class exemption, 49 CFR 1180.2(d)(7). 
Although we normally require that a carrier seeking to terminate 
trackage rights operations file a separate request for discontinuance 
authority, this requirement of a separate filing would be unnecessary 
under the proposed new 49 CFR 1180.2(d)(8) class exemption. In these 
cases, the authority to exercise trackage rights temporarily, only 
until a particular date, would implicitly include the authority to 
discontinue service on that date. Therefore, we would not require 
separate discontinuance authority to terminate temporary trackage 
rights operations authorized under the proposed class exemption. 
Finally, we note that the proposed class exemption would be limited to 
temporary trackage rights transactions and would not operate to exempt 
any other regulated activities conducted on that track or exempt any 
associated transactions of the involved carriers.

Conclusion

    We propose under 49 U.S.C. 10502 to add a new category to the 
specific categories of exempt transactions listed at 49 CFR 1180.2(d). 
This new category, to be set forth, if adopted, at 49 CFR 1180.2(d)(8), 
would be for temporary trackage rights proposals under 49 U.S.C. 11323 
that are: (1) Based on written agreements, (2) not filed or sought in 
responsive applications in rail consolidation proceedings, and (3) 
scheduled to expire on a specific date. We also propose to add new 
subsections (iii) and (iv) to 49 CFR 1180.4(g)(2), regarding the 
caption summary to be provided by applicant and published in the 
Federal Register. The exemption as proposed would embrace temporary 
trackage rights sought for any purpose. Public comments on this 
specific proposal, its scope, and its limits are invited.
    Standard labor protective conditions would be imposed on any 
carrier using this class exemption. Carriers using this class exemption 
could discontinue service without the need to obtain a certificate or 
exemption from the Board. Comments on these proposals are also invited.

Regulatory Flexibility Analysis

    The Director of the Office of Proceedings has certified, by 
decision served concurrently with this notice and to be published in 
the Federal Register, that the proposed exemption will not have a 
significant impact on a substantial number of small entities. Exemption 
should not affect small shipper or carrier entities because the result 
of the temporary trackage rights proposed for exemption would not 
affect rail operations except to increase efficiency. No shipper would 
lose service and other shippers might receive more efficient service 
under the proposal. No carrier's operations would be significantly 
affected by the temporary trackage rights proposed for exemption.
    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 1180

    Administrative practice and procedure, Railroads.

    Authority : 49 U.S.C. 10502(b) and 5 U.S.C. 553.

    Decided: January 31, 2003.

    By the Board, Chairman Nober, Vice Chairman Burkes, and 
Commissioner Morgan.
Vernon A. Williams,
Secretary.
    For the reasons set forth in the preamble, the Surface 
Transportation Board proposes to amend part 1180 of title 49, chapter 
X, of the Code of Federal Regulations as follows:

PART 1180--RAILROAD ACQUISITION, CONTROL, MERGER, CONSOLIDATION 
PROJECT, TRACKAGE RIGHTS, AND LEASE PROCEDURES

    1. The authority citation for Part 1180 continues to read as 
follows:


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    Authority: 5 U.S.C. 553 and 559; 11 U.S.C. 1172; 49 U.S.C. 721, 
10502, 11323-11325.

    2. Amend Sec.  1180.2 by revising the first sentence of paragraph 
(d) introductory text and by adding a new paragraph (d)(8) to read as 
follows:


Sec.  1180.2  Types of Transactions.

* * * * *
    (d) A transaction is exempt if it is within one of the following 
eight categories. * * *
* * * * *
    (8) Acquisition of temporary trackage rights by a rail carrier over 
lines owned or operated by any other rail carrier or carriers that are:
    (i) Based on written agreements,
    (ii) Not filed or sought in responsive applications in rail 
consolidation proceedings, and
    (iii) Scheduled to expire on a specific date. Rail carriers 
acquiring temporary trackage rights need not seek authority from the 
Board to discontinue the trackage rights as of the expiration date 
specified under Sec.  1180.4(g)(2)(iii).
    3. Amend Sec.  1180.4 by adding new paragraphs (g)(2)(iii) and (iv) 
to read as follows:


Sec.  1180.4  Procedures.

* * * * *
    (g) * * *
    (2) * * *
    (iii) To qualify for an exemption under Sec.  1180.2(d)(8) 
(acquisition of temporary trackage rights), in addition to the notice, 
the railroad must file a caption summary suitable for publication in 
the Federal Register. The caption summary must be in the following 
form:

Surface Transportation Board

Notice of Exemption
Finance Docket No.
    (1)--Temporary Trackage Rights--(2).
    (2) (3) to grant (4) temporary trackage rights to (1) between (5). 
The temporary trackage rights will be effective on (6). The 
authorization will expire on (7).
    This notice is filed under Sec.  1180.2(d)(8). Petitions to revoke 
the exemption under 49 U.S.C. 10502(d) may be filed at any time. The 
filing of a petition to revoke will not stay the transaction.

Dated:-----------------------------------------------------------------
 By the Board.

[Insert name]
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Secretary.

    The following key identifies the information symbolized in the 
summary.
    (1) Name of the tenant railroad.
    (2) Name of the landlord railroad.
    (3) If an agreement has been entered use ``has agreed,'' but if 
an agreement has been reached but not entered use ``will agree.''
    (4) Indicate whether ``overhead'' or ``local'' trackage rights 
are involved.
    (5) Describe the temporary trackage rights.
    (6) State the date the temporary trackage rights agreement is 
proposed to be consummated.
    (7) State the date the authorization will expire.

    (iv) The Board will publish the caption summary in the Federal 
Register within 20 days of the date that it is filed with the Board. 
The filing of a petition to revoke under 49 U.S.C. 10502(d) does not 
stay the effectiveness of an exemption.
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[FR Doc. 03-3251 Filed 2-7-03; 8:45 am]
BILLING CODE 4915-00-P