[Federal Register Volume 71, Number 24 (Monday, February 6, 2006)]
[Notices]
[Pages 6130-6131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-1558]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Ex Parte No. 575]


Review of Rail Access and Competition Issues--Renewed Petition of 
the Western Coal Traffic League

AGENCY: Surface Transportation Board, DOT.

ACTION: Request for comments.

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SUMMARY: The Surface Transportation Board is requesting comments on the 
renewed petition of the Western Coal Traffic League (WCTL) for a 
rulemaking to address agreements to sell or lease a rail line that 
restrict the ability of the purchaser or tenant to interchange traffic 
with competitors of the seller or landlord railroad.

DATES: Opening comments may be filed by any interested member of the 
public by March 8, 2006. Reply comments may be filed by March 28, 2006.

ADDRESSES: Any filing submitted in this proceeding must refer to STB Ex 
Parte No. 575 and may be submitted either via the Board's e-filing 
format or in the traditional paper format. Any person using e-filing 
must 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 must submit 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. Because all comments will be 
posted to the Board's Web site, persons filing them with the Board need 
not serve them on other participants but must furnish a hard copy on 
request to any participant.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1609. 
[Federal Information Relay Service for the hearing impaired: 1-800-877-
8339.]

SUPPLEMENTARY INFORMATION: Since enactment of the Staggers Rail Act of 
1980, larger railroads have sold or leased many rail lines to small, 
newly created short line railroads. Some of the lease or sale 
agreements have had ``paper barrier'' provisions that limit the 
incentive or ability of the short line railroad to interchange traffic 
with connecting carriers that could compete with the lessor or vendor. 
Such paper barriers may result from credits for cars interchanged with 
the lessor or vendor, or they may involve a penalty for traffic 
interchanged with a competitor of the lessor or vendor, or a total ban 
on such interchange.
    Concerns about such paper barriers were raised in STB Ex Parte No. 
575, Review of Rail Access and Competition Issues, an ongoing umbrella 
proceeding to examine various issues concerning competition between 
railroads.\1\ In response, on September 10, 1998, the Association of 
American Railroads (AAR) and the American Short Line and Regional 
Railroad Association (ASLRRA) executed a broad ``Railroad Industry 
Agreement'' (``RIA'' or ``agreement'') that addressed paper barriers as 
well as various other issues.\2\
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    \1\ In STB Ex Parte No. 575, the Board initiated a broad review 
of several railroad access and competition issues. Review of Rail 
Access and Competition Issues, 3 S.T.B. 92 (1998).
    \2\ The broader RIA was evaluated by the Board in STB Docket No. 
S5R 100. In that proceeding, the Board requested comments on, and 
granted interim approval for, the rate-related provisions of the 
broader agreement for which the parties requested approval. Assn. of 
American Railroads et al.--Agreement--49 U.S.C. 10706, 3 S.T.B. 673 
(1998). The Board subsequently granted final approval of these rate-
related provisions. Assn. of American Railroads et al.--Agreement--
49 U.S.C. 10706, 3 S.T.B. 910 (1998). The Board made no findings as 
to the paper barrier and other non-rate provisions because approval 
for them was not sought. The original 1998 version of the RIA is 
included in Attachment 2 of the renewed petition of WCTL, filed on 
March 21, 2005, that is the subject of this notice. The agreement 
has been amended at least once: see the comments of the Rail 
Industry Working Group filed May 2, 2005.
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    The provisions of the RIA specifically pertaining to paper barriers 
establish a few general principles,\3\ applicable only

[[Page 6131]]

to new traffic (traffic that did not exist when a line was spun off), 
and illustrate their application by presenting the outcome (access/no 
access) under hypothetical situations with diagrams illustrating the 
relationships between the parties. The paper barrier provisions do not 
grant enforcement rights to shippers. Rather, the RIA provides for non-
binding arbitration under Board auspices and creates a Rail Industry 
Working Group (RIWG) that can issue interpretations and provide a forum 
for discussion.
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    \3\ See, e.g., the following provisions:
    Paper Barriers:
    Only legitimate paper barriers should be enforceable. Paper 
barriers are restrictions on interchange imposed by contract at the 
time of creation of the Short Line. Legitimate paper barriers are 
those that are designed as fair payment for the sale or rental value 
of the line that created the Short Line. Such barriers should not 
restrict the Short Line's ability to develop New Traffic with 
another carrier if the selling or leasing Large Railroad can not or 
will not participate in the New Traffic. Excessive per car charges 
or other penalties imposed if a car is interchanged to another Large 
Railroad (other than legitimate paper barriers) are unreasonable and 
should not be permitted.
    3. Paper Barriers and New Routes (applies to participating Class 
I and III Railroads)
    (a) General Premise: If the requested Access or routing helps 
the connecting Short Line and does not harm the Large railroad, then 
the request should be approved as it will improve shipper rail 
service while strengthening the rail industry.
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    By petition filed on December 21, 1998, in STB Ex Parte No. 575, 
WCTL asked the Board to initiate a separate rulemaking to consider 
eliminating unreasonable paper barriers. WCTL argued that the agreement 
negotiated between AAR and ASLRRA did not adequately deal with the 
barriers. WCTL proposed rules that would restrict paper barriers. By 
decision served on March 2, 1999, the Board deferred action on WCTL's 
petition in order to gain experience under the AAR/ASLRRA agreement 
with respect to paper barriers.
    By petition filed on March 21, 2005, WCTL renewed its 1998 request 
for rulemaking on the paper barrier issue. WCTL asserts that, since 
1999, there have been significant changes in the Board's policies 
regarding competition, citing in particular the Board's revised merger 
guidelines for Class I railroads.\4\ WCTL argues that, given the 
benefit of experience, unreasonable paper barriers should be subject to 
challenge by shippers as well as short lines and that any restrictions 
on these provisions should cover pre-existing traffic as well as new 
traffic. WCTL proposes specific rules that would establish a rebuttable 
presumption that a paper barrier is unreasonable and contrary to the 
public interest if the paper barrier (1) lasts longer than 5 years, (2) 
includes any financial penalty for interchanging traffic with another 
carrier, or (3) includes a credit for interchanging traffic with the 
seller or landlord railroad against a rental or sale price that 
reflects a return on the ``fair market value'' of the properties sold 
or leased that is greater than the railroad industry's cost of capital.
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    \4\ See Major Rail Consolidation Procedures, 5 S.T.B. 539 
(2001). WCTL argues that these procedures require that the Board be 
proactive in taking steps to promote competition.
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    Replies in support of WCTL's petition were filed on April 29, 2005, 
by Entergy Services, Inc. (Entergy); and on May 2, 2005, by Albany & 
Eastern Railroad Company (AERC) and jointly by Arkansas Electric 
Cooperative Corporation and Entergy Arkansas, Inc. (Arkansas Electric/
Entergy).
    Replies in opposition to WCTL's petition were filed on May 2, 2005, 
by: ASLRRA; AAR; and RIWG. On May 5, 2005, the Union Pacific Railroad 
Company filed a statement rebutting statements in the replies of 
Arkansas Electric/Entergy and Entergy, to which Entergy responded on 
May 17, 2005. BNSF Railway Company responded to the AERC filing on May 
20, 2005.
    We are especially interested in comments that: (a) Discuss our 
statutory authority to address pre-existing paper barriers; (b) 
identify and describe existing paper barriers so that we can determine 
the extent of the problem alleged by WCTL; (c) identify and quantify 
any problems experienced by shippers as a result of paper barriers; (d) 
address the short and long term economic impacts of paper barriers; (e) 
address the effectiveness of the existing AAR/ASLRRA agreement on paper 
barriers; and (f) include information about the RIA, including the most 
recent version, amendment history, interpretations, proceedings, 
handbooks, etc.
    Board filings, decisions, and notices are available on its Web site 
at http://www.stb.dot.gov.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: January 30, 2006.

    By the Board, Chairman Buttrey and Vice Chairman Mulvey.
Vernon A. Williams,
Secretary.
[FR Doc. E6-1558 Filed 2-3-06; 8:45 am]
BILLING CODE 4915-01-P