[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Proposed Rules]
[Pages 40250-40253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14625]


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SURFACE TRANSPORTATION BOARD

49 CFR Chapter X

[Docket No. EP 733]


Expediting Rate Cases

AGENCY: Surface Transportation Board.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: Pursuant to section 11 of the Surface Transportation Board 
Reauthorization Act of 2015, the Surface Transportation Board (Board or 
STB) is instituting a proceeding through this Advance Notice of 
Proposed Rulemaking (ANPR) to assess procedures that are available to 
parties in litigation before courts to expedite such litigation, and 
the potential application of any such procedures to rate cases before 
the Board. The Board also intends to assess additional ways to move 
stand-alone cost (SAC) rate cases in particular more expeditiously.

DATES: Comments are due by August 1, 2016. Reply comments are due by 
August 29, 2016.

ADDRESSES: Comments on this proposal may be submitted either via the 
Board's e-filing format or in the traditional paper format. Any person 
using e-filing should attach a document and otherwise comply with the 
instructions at the E-FILING link on the Board's Web site, at http://stb.dot.gov. Any person submitting a filing in the traditional paper 
format should send an original and 10 copies to: Surface Transportation 
Board, Attn: EP 733, 395 E Street SW., Washington, DC 20423-0001. 
Copies of written comments will be available for viewing and self-
copying at the Board's Public Docket Room, Room 131, and will be posted 
to the Board's Web site. Information or questions regarding this ANPR 
should reference Docket No. EP 733 and be in writing addressed to: 
Chief, Section of Administration, Office of Proceedings, Surface 
Transportation Board, 395 E Street SW., Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: Allison Davis: (202) 245-0378. 
[Assistance for the hearing impaired is available through the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: Section 11 of the Surface Transportation 
Board Reauthorization Act of 2015, Public Law 114-110, 129 Stat. 2228 
(2015) (STB Reauthorization Act) directs the Board, not later than 180 
days after the date of the enactment of the Act, to ``initiate a 
proceeding to assess procedures that are available to parties in 
litigation before courts to expedite such litigation and the potential 
application of any such procedures to rate cases.'' 129 Stat. 2228. In 
addition, section 11 requires the Board to comply with a new timeline 
in SAC cases.\1\
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    \1\ The statute previously required the Board to issue a 
decision no later than 270 days after the close of the record, which 
the Board measured from the filing of closing briefs. Under the STB 
Reauthorization Act, the Board is now required to issue a decision 
no later than 180 days after the close of the record, which by 
statute is now defined to exclude closing briefs. See 49 U.S.C. 
10704(d)(2). Thus, pursuant to the STB Reauthorization Act, the time 
available to the Board to issue a decision after closing briefs has 
been reduced from 270 days to 150 days. The Board has adopted a new 
timeline to comply with this provision. Revised Procedural Schedule 
in Stand-Alone Cost Cases, EP 732, slip op. at 2-5 & n.3 (STB served 
Mar. 9, 2016).
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    In advance of initiating this proceeding, Board staff held informal 
meetings with stakeholders \2\ to explore and discuss ideas on: (1) How 
procedures to expedite court litigation could be applied to rate cases, 
and (2) additional ways to move SAC cases forward more expeditiously.
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    \2\ Board staff met with individuals either associated with and/
or speaking on behalf of the following organizations: American 
Chemistry Council; Archer Daniels Midland Company; CSX 
Transportation, Inc.; Economists Incorporated; Dr. Gerald Faulhaber; 
FTI Consulting, Inc.; GKG Law, P.C.; Growth Energy; Highroad 
Consulting; L.E. Peabody; LaRoe, Winn, Moerman & Donovan; consultant 
Michael A. Nelson; Norfolk Southern Railway Company; Olin 
Corporation; POET Ethanol Products; Sidley Austin LLP; Slover & 
Loftus LLP; Steptoe & Johnson LLP; The Chlorine Institute; The 
Fertilizer Institute; The National Industrial Transportation League; 
and Thompson Hine LLP. We note that some participants expressed 
individual views, not on behalf of the organization(s) with which 
they are associated.
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    Based on the Board's experience in processing rate cases, as well 
as the feedback received during the informal meetings, the Board has 
generated a number of ideas to expedite rate cases. We now seek formal 
comment on procedures used to expedite court litigation that could be 
applied to rate cases and the ideas listed below to expedite SAC 
through this ANPR.\3\ In their comments, parties may address any 
relevant matters, but we specifically seek comment on the following 
potential changes to SAC rate cases.
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    \3\ Since 2014, the Board has also undertaken a number of 
internal changes to process SAC cases more efficiently. Although 
these changes will not require any stakeholder action, the Board 
expects that they will lead to improvements in the way the Board 
manages case workflow. These changes include greater use of 
technical conferences with parties early in proceedings, issuance of 
evidentiary instructions following the technical conferences, 
internal management structure changes for rate cases, improving 
communication and coordination among Board staff, and setting 
additional milestone markers within our internal workflow.
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Pre-Filing Requirement

    In order to expedite SAC cases, several stakeholders suggested that 
the Board could require a complainant to file a notice before filing 
its complaint.\4\ This would create a ``pre-complaint'' period, during 
which the railroad would have time to start preparing for litigation, 
including gathering documents and data necessary for the discovery 
stage, which in turn could

[[Page 40251]]

benefit both parties by accelerating the discovery process.
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    \4\ In the context of major and significant mergers, the Board 
requires a pre-filing notification. See 49 CFR 1180.4(b).
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    If a pre-filing notice were adopted, the Board could also use this 
pre-complaint period to provide parties the opportunity to engage in 
early-stage mediation, and appoint a mediator upon receipt of the pre-
filing notice.\5\ This would not prevent parties from engaging in 
mediation at any other time during the proceeding, and the Board could 
encourage the parties to do so.
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    \5\ Currently, the Board's regulations state that, in a SAC 
case, a shipper must engage in mediation with the railroad upon 
filing a formal complaint and that a mediator will be assigned 
within 10 business days of the filing of the shipper's complaint. 49 
CFR 1109.4(a) and (b).
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    We therefore seek comment on the merits of adopting a pre-filing 
requirement in SAC cases, and, if a pre-filing notice were adopted, the 
information that should be contained in that notice and the appropriate 
time period for filing the notice (e.g., 30 or 60 days prior to the 
filing of a complaint). Parties may also comment on the idea of 
offering or requiring mediation during a pre-complaint period, or any 
other period during the rate case.

Discovery: Standardized Requests and/or Disclosures

    In order to expedite litigation, some federal courts have focused 
on streamlining discovery by, among other things, requiring early 
disclosures. See, e.g., Fed. R. Civ. P. 26(a)(1). In the informal 
meetings, several stakeholders stated that standardizing discovery 
would help expedite rate cases and reduce the number of disputes 
between the parties. Several stakeholders explained that, over the 
years, the initial discovery requests relating to both the SAC and 
market dominance portions of SAC cases have become relatively 
consistent, and that formalizing such requests could be helpful. 
Accordingly, the Board could require the parties to either serve 
standard discovery requests or disclosures of information with the 
filing of their complaints and answers.
    For example, on the filing of the complaint, the complainant could 
be required to either: (a) Serve a standard set of discovery requests 
on the defendant railroad covering data pertinent to creation of the 
stand-alone railroad (SARR), or (b) serve a standard set of disclosures 
pertinent to market dominance. Then, on the filing of the railroad's 
answer, the railroad could be required to either: (a) Serve a standard 
set of discovery requests on the complainant pertinent to market 
dominance, or (b) serve a standard set of disclosures pertinent to 
creating the SARR.
    Based on the informal discussions with stakeholders, the standard 
initial information related to creation of the SARR might include: 
Waybill data; train and carload data; timetables; track charts; 
authorizations for expenditure; grade, curve, and profile data; Wage 
Forms A & B; Geographic Information System data; forecasts; and 
contracts. Standard information related to market dominance might 
include: Forecasts for issue traffic, alternative transportation 
options, and states in which the SARR might operate.
    Alternatively, rather than requiring requests or disclosures of 
traffic data related to the SARR, some stakeholders suggested that the 
Board could collect data that could be used in rate cases. The data 
could be made available to complainants upon the filing of a complaint 
and a protective order being entered. We are concerned, however, about 
how to standardize the data and the burdens collection of the data 
could impose.
    Another potential standardized disclosure that the Board could 
consider involves software that is not available to the general public. 
The Board could consider requiring the disclosure by each party of any 
such software it intends to use in its evidentiary submissions by, for 
example, the close of discovery. Such early disclosure may avoid 
disputes on appropriate software after the evidence has been presented.
    We therefore seek comment on the advisability of adopting 
standardized discovery requests and/or disclosures or a database of 
standardized traffic data as discussed above, as well as the 
appropriate content and timing of such requests and/or disclosures. 
Because the Board generally does not have an opportunity to review 
uncontested discovery requests, it would be beneficial to the Board for 
parties to include in their comments copies of their initial discovery 
requests served in recent SAC cases, where applicable, to provide 
guidance on common discovery topics.

Discovery: Other Ideas

    Some federal courts have also streamlined discovery in other ways, 
such as by adopting limits on discovery. If the Board requires 
mandatory initial discovery requests or disclosures, such that the core 
information necessary for a SAC case is accounted for, the Board could 
then limit the number of additional discovery requests allowed by each 
party. The Board could allow a party to obtain discovery beyond the set 
limit only upon a showing of good cause, for example. We seek comment 
on the merits of limiting discovery requests in conjunction with 
adopting standardized initial requests/disclosures, and what, if any, 
those limits should be.
    Stakeholders also indicated that the Board could either encourage 
or require more requests for admissions (particularly with respect to 
the issue of market dominance) to narrow the scope of contested issues 
and to avoid the unnecessary presentation of evidence. To encourage 
thorough and honest consideration of the requests, if a party denies a 
request for admission with no basis for doing so, that party would pay 
for the litigation of the issue. See 49 CFR 1114.27 (providing for 
requests for admission); 49 CFR 1114.31(c) (providing for ``the 
reasonable expenses incurred in making that proof''). We seek comment 
on whether the use of requests for admissions might assist parties and 
expedite SAC cases.
    In the informal meetings, stakeholders also indicated that some 
discovery disputes over scope and terminology occur with regularity, 
and that the Board could obviate those disputes through 
standardization. For example, when an interrogatory or request for 
production asks for information from a date certain ``to the present,'' 
the Board could define that term by rule to avoid continued disputes 
from case to case. We therefore seek comment on how the Board might 
appropriately define ``to the present,'' as well as comment on any 
other term or scope issue that could be standardized to avoid 
unnecessary discovery disputes.
    Finally, to encourage parties to resolve discovery disputes among 
themselves, the Board could consider a rule similar to one used by 
federal courts requiring parties filing motions to compel to certify 
that they have attempted to confer with the opposing party. See Fed. R. 
Civ. P. 37(a)(1) (``The motion [to compel disclosure or discovery] must 
include a certification that the movant has in good faith conferred or 
attempted to confer with the person or party failing to make disclosure 
or discovery in an effort to obtain it without court action.''). The 
Board could also consider whether such a requirement should be used for 
other types of motions, such as modifications to the procedural 
schedule. See, e.g., 49 CFR 1111.10(a) (requiring parties in complaint 
proceedings to ``meet, or discuss by telephone, discovery and 
procedural matters within 12 days after an answer to a complaint is 
filed.''). We seek comment on the merits of such a requirement.

[[Page 40252]]

Evidentiary Submissions: Standardization

    In the informal meetings, stakeholders indicated that 
standardization of certain evidence could not only reduce the number of 
litigated issues, thereby expediting the case, but would also allow 
parties before a rate case has even started to more accurately assess 
their respective positions and the potential outcome of the case. 
Stakeholders cautioned, however, that standardization has the potential 
to favor one side or the other; thus the Board should be cognizant of 
those implications when selecting methods of standardization.
    Standardization could be done in a number of ways. For example, the 
Board could standardize unit costs based on actual railroad data or 
prior rate cases; standardize sources of data that parties can rely on; 
or standardize a methodology to be used for particular items.
    There are various areas in a SAC case that may be well-suited to 
some form of standardization or simplification. For example, rather 
than deciding each individual element within the general and 
administrative (G&A) section, the Board could estimate G&A as a 
percentage of the SARR's total revenue or based on the SARR's traffic 
levels, or the Board could adopt one party's entire G&A evidence over 
the other. For maintenance of way (MOW), the parties could develop MOW 
expenses by developing a general unit cost by dividing MOW operating 
costs by the Trailing Gross Ton Miles found in the R-1 multiplied by 
the General Overhead ratio found in the Board's Uniform Rail Costing 
System. Construction costs might be standardized by using R-1 data or 
the carriers' depreciation studies to develop the cost per track mile. 
Similarly, the Board could develop standardized locomotive acquisition 
costs using data from the R-1 reports (Schedule 710S) and the carriers' 
periodic depreciation studies. Finally, the Board could use Wage Forms 
A&B to standardize wages/salaries.
    Although we invite comment on any item that commenters believe 
should be standardized, we seek comment on the specific areas listed 
above.

Evidentiary Submissions: Other Ideas

    Stakeholders also discussed ways to address the exceedingly large 
number of contested issues in each case, and how that affects the 
presentation of evidence. The Board could consider early resolution of 
certain issues through interim rulings to narrow the scope of the case 
or to avoid the evidentiary misalignment that occurs when parties build 
their cases on top of fundamental disagreements, as well as encouraging 
motions practice as a means of managing the scope and timing of cases. 
For example, if the railroad believes a complainant's operating plan 
cannot be corrected, the Board could require the railroad to file a 
motion to dismiss rather than submitting a reply based on a different 
operating plan in order to avoid the problem of misaligned evidentiary 
submissions. In other words, the Board could determine that a railroad 
may not submit an entirely new operating plan in its reply. Assignment 
of attorneys' fees or extension of rate prescriptions could be used to 
discourage frivolous motions to dismiss. Depending on the technical 
challenge presented by a case, the Board could dismiss a case without 
prejudice.
    Another concern that impacts the Board's ability to process cases 
efficiently and the parties' ability to respond to each other's 
evidence relates to the scope of the pleadings. Many stakeholders 
expressed concern that the scope of rebuttal filings is often 
disproportionate to that of opening filings and that final briefs are 
often more akin to surrebuttal than a summary of key issues. To address 
these concerns, the Board could more strictly enforce the evidentiary 
standard set forth in Duke Energy Corp. v. Norfolk Southern Railway, 7 
S.T.B. 89, 100 (2003), which requires that the complainant ``must 
present its full case-in-chief in its opening evidence,'' in 
conjunction with consideration of motions to strike inappropriate 
rebuttal evidence. Additionally, the Board could consider putting a 
page limit on rebuttal evidence (e.g., cannot be longer than opening, 
or must be no more than half the length of opening). The Board could 
also limit final briefs to certain subjects on which the Board would 
like further argument rather than allowing generalized argument.
    Next, to address concerns about parties' rate case presentations 
relying on software that is not available to the general public, some 
stakeholders suggested that the Board should restrict a party's ability 
to use such software in its rate presentation unless it provides a 
temporary license to the opposing party. If the Board required parties 
to provide temporary licenses to use non-publicly availably software, 
whenever parties used such software in their rate case presentations, 
such provision could be made along with a disclosure of the software 
being used, as discussed earlier.
    Finally, to give parties more time to ensure that public versions 
of filings are appropriately redacted without delaying the case, the 
Board could consider staggering the filing of public and highly 
confidential versions of the parties' pleadings. For example, parties 
could file their highly confidential pleadings and workpapers according 
to the procedural schedule, but have an additional period of days to 
file their public versions. We seek comment on these ideas, and others, 
relating to whether interim rulings, narrowing the scope of pleadings, 
software requirements, and staggering public and confidential versions 
would assist parties, minimize disputes, and expedite SAC cases.

Interaction With Board Staff

    During the informal meetings, numerous stakeholders expressed that 
increased interaction with Board staff during all stages of a SAC case 
would be beneficial. To that end, during and/or after the submission of 
evidence, the Board could make more aggressive use of written questions 
from staff and/or technical conferences with the parties to clarify the 
record. If technical conferences are used, the Board could provide 
advance notice of the topics to be discussed to promote an efficient 
and productive conference. An early technical conference could be 
useful to establish ground rules and issue-specific Board expectations. 
The Board could also consider assigning a staff member as a liaison to 
the parties to facilitate greater interaction. This could allow the 
Board to be more available to the parties, particularly toward the 
beginning of a case, to answer questions about the process and to 
intervene informally (e.g., hold status conferences) if it would help 
discovery or other matters move more smoothly. Both technical 
conferences and additional interaction with Board staff would be 
encouraged at any time during the proceeding.

Regulatory Flexibility Act

    Because this ANPR does not impose or propose any requirements, and 
instead seeks comments and suggestions for the Board to consider in 
possibly developing a subsequent proposed rule, the requirements of the 
Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612 (RFA) do not apply 
to this action. Nevertheless, as part of any comments submitted in 
response to this ANPR, parties may include comments or information that 
could help the Board assess the potential impact of a subsequent 
regulatory action on small entities pursuant to the RFA.
    It is ordered:

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    1. Initial comments are due by August 1, 2016.
    2. Replies are due by August 29, 2016.
    3. This decision is effective on its date of service.

    Decided: June 14, 2016.

    By the Board, Chairman Elliott, Vice Chairman Miller, and 
Commissioner Begeman.

Raina S. Contee,
Clearance Clerk.
[FR Doc. 2016-14625 Filed 6-20-16; 8:45 am]
 BILLING CODE 4915-01-P