[Federal Register Volume 69, Number 214 (Friday, November 5, 2004)]
[Notices]
[Pages 64629-64631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24736]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Docket No. 38302S]


United States Department of Energy and United States Department 
of Defense v. Baltimore & Ohio Railroad Company, et al.

[Docket No. 38376S]

United States Department of Energy and United States Department of 
Defense v. Aberdeen & Rockfish Railroad Company, et al.

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed settlement agreement; issuance of procedural 
schedule.

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SUMMARY: On September 15, 2004, the United States Department of Energy 
and the United States Department of Defense (the Government) joined by 
Union Pacific Railroad Company (UP) filed a motion requesting approval 
of an Agreement that would settle these rate reasonableness disputes as 
between the moving parties. The Surface Transportation Board (Board) is 
adopting a procedural schedule for filing comments and replies in 
support of, or opposition to, the proposed Settlement Agreement.

DATES: The effective date of this decision is November 5, 2004. Any 
parties of record or interested persons, including the United States 
Department of Justice and the United States Department of 
Transportation, may file with the Board written comments concerning the 
proposed Settlement Agreement by December 6, 2004. Replies by the 
parties to the proposed Settlement Agreement must be filed by December 
20, 2004.

ADDRESSES: Any filing submitted in this proceeding must refer to Docket 
Nos. 38302S and 38376S and must be submitted either via the Board's e-
filing format or in the traditional paper

[[Page 64630]]

format. Any person using e-filing should comply with the instructions 
found on the Board's http://www.stb.dot.gov Web site, at the ``E-
FILING'' link. Any person submitting a filing in the traditional paper 
format should send an original and 10 paper copies of the filing (and 
also an IBM-compatible floppy disk with any textual submission in any 
version of either Microsoft Word or WordPerfect) to: Surface 
Transportation Board, 1925 K Street, NW., Washington, DC 20423-0001. In 
addition, one copy of each filing in these proceedings must be sent to 
each of the following (any such copy may be sent by e-mail, but only if 
service by e-mail is acceptable to the recipient): (1) Stephen C. 
Skubel, Room 6H087 9GC-32) U.S. Department of Energy, 1000 Independence 
Ave., SW., Washington, DC 20585; (2) Michael Glennon, Naval Sea Systems 
Command, 1333 Isaac Hull Ave, SE., Mail Stop 1150, Washington, DC 
20376-1150; (3) Michael L. Rosenthal, Covington & Burling, 1201 
Pennsylvania Ave., NW., Washington, DC 20004; and (4) Louise A. Rinn, 
Union Pacific Railroad Company, 1400 Douglas St., STOP 1580, Omaha, NE 
68179.
    Public Inspection: The motion, which includes the Settlement 
Agreement, is available for inspection in the Docket File Reading Room 
(Room 755) at the offices of the Surface Transportation Board, 1925 K 
Street, NW., in Washington, DC or on the Board's Web site at http://www.stb.dot.gov. Copies of the motion may be obtained from movants' 
representatives (Mr. Skubel or Mr. Glennon for the Government and Mr. 
Rosenthal or Ms. Rinn for UP) at the addresses listed above. The other 
filings in this proceeding will be available on the Board's Web site 
under ``E-LIBRARY/Filings.''
    Service of Decisions, Orders, and Notices: The Board will serve 
copies of its decisions, orders, and notices only on those persons 
designated on the official service list as a party of record, a member 
of the United States Congress, or a Governor. All other interested 
persons may secure copies of such decisions, orders, and notices via 
the Board's Web site under ``E-LIBRARY/Decisions & Notices'' or by 
arrangement with the Board's copy contractor, ASAP Document Solutions 
(mailing address: ASAP Document Solutions, Suite 103, 9332 Annapolis 
Rd., Lanham, MD 20706; e-mail address: [email protected]; telephone 
number: 202-306-4004). ASAP Document Solutions will handle the 
collection of charges and the mailing and/or faxing of decisions, 
orders, and notices to persons who request this service.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1609. 
(Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at: 1-800-877-8339.)

SUPPLEMENTARY INFORMATION: The Government and UP jointly request the 
Board's approval of an Agreement to settle these rate reasonableness 
complaints. The complaints, filed in March 1981 against 21 major 
railroads under former section 229 of the Staggers Rail Act of 1980, 
seek reparations and a rate prescription relating to the nationwide 
movement of radioactive naval spent fuel, other high level radioactive 
wastes, and the empty containers (casks) used for their movement. The 
railroad defendants moved to dismiss the complaints in 1996, following 
the passage of the ICC Termination Act of 1995, and the proceedings 
have been held in abeyance for much of the time since then to permit 
settlement negotiations.
    The Agreement applies broadly to the nationwide movement over UP of 
irradiated spent fuel, parts and constituents; empty casks; radioactive 
wastes; and buffer and escort cars. It is intended to serve as a model 
for settlements the Government will seek to negotiate with the 
remaining railroad defendants. The Government chose to negotiate with 
UP first because of the potential antitrust problems of negotiating 
with the railroad defendants as a group and in recognition of UP's 
central role as the destination carrier for most movements of these 
commodities.
    The Agreement, which movants describe as flexible, comprehensive, 
long-term, and system wide:
    (1) Establishes that the movement of these commodities constitute 
common carrier service; adopts guidelines for their safe handling and 
for security; and obligates UP to provide on an as needed basis ``extra 
services'' as further, or ancillary to, common carrier services;
    (2) Adopts, and asks the Board to prescribe, a rate methodology to 
apply to all future movements of these commodities. The methodology 
adopts maximum revenue-to-variable cost markups (not to exceed to 1.80, 
2.50, or 3.51 times the shipment cost, depending on commodity type) of 
UP's most current system average variable unit costs computed under the 
Board's Uniform Rail Costing System. Movants state that the proposed 
rate methodology is built on, and broadens, the rate prescription 
adopted in Trainload Rates on Radioactive Materials, East R., 364 
I.C.C. 981 (1981), and that the combination of the proposed and 
existing prescription should result in a national rate structure;
    (3) Adopts, and asks the Board to prescribe rate methodologies to 
compensate UP both for ``extra services'' and dedicated train service 
when requested by the Government and procedures to calculate equitable 
compensation for emergency related costs that UP may incur;
    (4) Adopts a procedure to update rates annually to reflect changes 
in UP's system average unit costs;
    (5) Requests that UP be dismissed as a defendant in these 
proceedings, that UP's liability (and that of its predecessors and 
subsidiaries) for reparations with respect to past and future shipments 
be extinguished, that the liability of connecting carriers for 
reparations be preserved as to their portion of the charges assessed on 
through routes that include(d) UP, and that UP not be required to 
participate in rate proceedings initiated by the Government against 
remaining railroad defendants; and
    (6) Adopts alternative dispute resolution procedures with final 
recourse to the Board and mechanisms to renegotiate portions of the 
Agreement if specific circumstances change or if changed circumstances 
make further adherence to the terms of the Agreement ``grossly 
inequitable'' to either party.
    The Government separately requests that in challenging through 
rates that involve UP, it be permitted to establish the liability of 
non-settling carriers for reparations by showing the unreasonableness 
of their divisions or proportional rates rather than the 
unreasonableness of the entire through rate to reduce the 
administrative burdens and the increased costs that would otherwise be 
incurred. Additionally, the Government requests that the Board retain 
jurisdiction over these proceedings and continue holding them in 
abeyance pending settlement negotiations with remaining railroad 
defendants.
    In support of the motion, the Government and UP claim that the 
Agreement will result in great savings to the parties and the Board 
because it will resolve cases that are pending for more than 20 years, 
prevent future litigation, and facilitate settlements between the 
Government and remaining railroad defendants. Specifically, movants 
claim that the Agreement will satisfy all of the Government's current 
and future needs for flexible and reliable common carrier service at 
rates that are substantially reduced from current levels and below what 
would likely have resulted from litigation and at the same time will

[[Page 64631]]

release UP from past and future liability for reparations while 
guaranteeing it compensation that is acceptable in view of the unique 
characteristics of these commodities and the other benefits of the 
Agreement.
    Movants point out that the Agreement is based on numerous 
compromises which balance the needs of the parties and resolve 
difficult and complex issues that would otherwise take years to 
litigate (e.g., common carrier obligation, market dominance, 
reasonableness standards, and such costing elements as liability 
exposure, costs for extra and dedicated train services, and safety 
precautions). They claim that the Agreement will bring certainty over a 
broad range of crucial operational and rate issues while providing 
flexibility (e.g., updating mechanisms, renegotiation provisions, and 
dispute resolution) over the long term to minimize the potential for 
future disputes and accommodate changing needs and technologies.
    In the movants' view, the Agreement: (1) Is in the public interest 
because it shifts the transportation focus from controversy and 
confrontation to cooperation benefitting national goals for the safe 
handling and storage of these commodities; (2) is consistent with the 
national rail transportation policy which encourages reliance on 
competition and the demand for service to establish reasonable rates 
and seeks to minimize Federal regulatory authority, promote an 
efficient rail transportation system, and foster sound economic 
conditions in transportation; and (3) affirms the Board's policy 
favoring the private settlement of disputes.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1.The parties to this proceeding and interested persons must comply 
with the procedural schedule and requirements outlined above.
    2. This decision is effective on November 5, 2004.

    Decided: November 1, 2004.

    By the Board, David M. Konschnik, Director, Office of 
Proceedings.
Vernon A. Williams,
Secretary.
[FR Doc. 04-24736 Filed 11-4-04; 8:45 am]
BILLING CODE 4915-01-P